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1The Exponent Group of Journals For Shares And Stock Market, Volume 4, Number 4, Sep 2016 - Nov 2016
Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
Volume: 4 - Number 4 Sep 2016 - Nov 2016
* ThisjournalispublishedinassociationwithShree Aniruddha Upasana Foundation.* Theviewsexpressedinthisjournalarethoseoftheauthorsandtheeditormaynotnec essarilyagreewiththesame.* Copyright©2012.Allrightsreserved.Nopartofthispublicationmaybereproduced ordistributedinanyformorbyanymeanswithoutthepriorwrittenpermissionofthe publisher.* AlldisputesaresubjecttoMumbaiJurisdictiononly.* Allcorrespondencemaybeaddressedto:-
EditorsDesk,ExponentGroupofJournalsEmail:[email protected],[email protected]
The Dean & Editor-in-chief
Samir Dattopadhye
Editorial Board :
Dr. Shivanand Nichanaki
Girindra Vasudeo
Sanjay Thakkar
Sushil Mulye
Sanket Pradhan
Dharmesh Trivedi
Prashant Talpade
Assistant EditorVaibhav Karnik
Contents
WhatisBlack SanjayThakkar4Money DemonetisationGirindraVasudeo9
EffectofDemonetisationPrashantTalpade12ontheIndianStockMarket
TrumpPresidency-SanjayThakkar14HowcanitImpactIndia
InvestinginGlobalDharmeshTrivedi17MutualFunds
UnionBudget2017DharmeshTrivedi19
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3The Exponent Group of Journals For Shares And Stock Market, Volume 4, Number 4, Sep 2016 - Nov 2016
Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
Editorial
- Prashant TalpadeEmail: [email protected]
November2016wasaboutmajoreventsnotjustinIndiabutevenUSA.Ontheeveningof8thNovember,PrimeMinisterNarendraModicarriedoutasurgicalstrikeonblackmoneybyeliminatingoldRs500andRs1000currencynotesfromcirculation.WhileinUSA,RepublicanDonaldTrumpdefeatedDemocraticnomineeHillaryClintontobecomethe45thPresidentofUSA. Demonetizationwasaboldandhistoricdecisiontakenprimarilytocurbblackmoneythatwasbeingusedtofundterrorism.Theblackmarketwhichismainlycashdrivenwasbadlyaffected.Inaddition,theshortageoflowerdenominationnotesaffectedtradeacrossdifferentsectorsoftheeconomy.Inthiseditionwewillseewhatisblackmoney,itssourcesanditseffectsoneconomy.WehavealsoexplainedtheimpactofDemon-etizationonthestockmarketandvarioussectors.
DonaldTrump’sAmericafirstpolicyandchangestotheH-1BprogramcouldadverselyaffectIndianITcompa-niesandotherprofessionals.TrumpiskeenonreducingtheoutsourcingofjobsandgivingprioritytoAmeri-cans,hencethedecisionsthathetakesshallhaveaneffectonoureconomy.InthiseditionwetakealookathowTrumpspresidencycanaffectIndia.
WealsotakealookathowtheUnionBudgetispreparedandpresented.UnionBudget2017willbeuniqueasitendsthe92yearoldpracticeofseparaterailwaybudget.
Lastlywetakealookatadvantagesanddisadvantagesofinvestmentsininternationalmutualfunds.
4 The Exponent Group of Journals For Shares And Stock Market, Volume 4, Number 4, Sep 2016 - Nov 2016
Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
What is Black Money
- Sanjay ThakkarE-mail: [email protected]
Black money is a term used in common parlancetorefer tomoneythat isnot fully legitimate in thehandsoftheowner. Thiscouldbefortwopossiblereasons.
1. Firstisthatthemoneymayhavebeengeneratedthroughillegitimateactivitiesnotpermissibleun-derthelaw,likecrime,trafficking(human,drugs,arms), terrorism, and corruption, all of whicharepunishableunderthelegalframeworkofthestate.
2. Second and perhapsmore likely reason is thatthewealthmayhavebeengeneratedandaccu-mulatedbyfailingtocomplywiththetaxrequire-ments.
AlthoughblackmoneyinIndiaisdecadesoldprob-lem, it has become real threat post liberalization.Illegalactivities suchascrimeandcorruption,non-compliance with taxation requirements, complexproceduralregulations,culturalandsocialpractices,globalizationalongwithweakinstitutional,policy,le-galandimplementationstructureshavefurtheraug-mentedtheblackmoneyeconomy.
Concept of Black Money
Blackmoneyistax-evadedincome.Itcanbeearnedboth through legal and illegalmeans. Its legitimatesourceisthattheincome-earnersdonotrevealtheirwholeincomefortaxpurposes.
Forexample,governmentdoctorsearningmoneybyprivatepracticeevenwhen they getnon-practisingallowance;teachersearningmoneythroughtuitions,examinationsandbookroyaltyandnotincludingitinincome-taxreturns;advocateschargingmuchhigherfeethanshownintheiraccountbooks,andsoforth.Itsillegitimatesourceisbribe,smuggling,black-mar-
keting,sellingcommoditiesatpriceshigherthanthecontrolledprices,takingpugreeforhouse,shop,etc.,sellinghouseatahighpremiumpricebutshowingitatmuchlowerpriceintheaccountbooks,andsoon.
Itispossibletoconvertblackmoneyintowhitemon-eyandviceversa.Forexample,whenapersonman-agestogetthereceiptfromtheshopkeeperbypay-ingsales-taxforacommoditybutdoesnotpurchaseitactually,hegeneratesblackmoneyasreimburse-mentismadetohimagainstthereceipt.
Themoneynotactuallypaid is theblackmoney inthiscase.Insuchcase,theshopkeepersellsthesamecommodity to another person without giving himanyreceiptforit.
On the other hand, if a person purchases second-handcarandpaysRs.90,000foritoutofwhitemon-eybutgetsareceiptofonlyRs.60,000,thebalanceofRs.30,000becomesblackmoneyfortheseller.Inthiscase,whitemoneybecomesblackmoney. Magnitude of Black Money
It is not easy to calculate the magnitude of blackmoneyinanysociety.TheeconomistsintheUnitedStates, the United Kingdom, Norway, Sweden andItalyadopteddifferentmeasuresbutcouldnotesti-matetheamountinvolvedinblackmoney.
NorwayandSwedenusedquestionnairemethodforeliciting answers from persons whether they hadparticipatedinillegalactivitiesasbuyersorsellers.
Italyattempted toestimate theundergroundecon-omybyfindingoutthedifferencebetweenthesizeof the labour-force officially reported and actuallyemployed.Thisenabledtheauthoritiestodetermineproductivityintheundergroundsector.
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Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
TheUnitedKingdomtriedtoassessparalleleconomybycomparingtheofficialestimatesoftheGrossNa-tional Product (GNP) made from the consumptionsidewiththosemadefromtheincomeside.
Inspiteofthevariedmethodsused,itisnotpossibletoestimatethemagnitudeofblackmoneyinasoci-ety,eventhoughitisdescribedasaworld-widephe-nomenon.
ItissaidtobeinoperationnotonlyinthedevelopingcountriesbutalsointhedevelopedcountriesliketheUnited States, the United Kingdom, Russia, Japan,Canada,France,Germany,etc.
AstudyconductedbytheIMFaboutadecadeandahalfbackshowedthatinregardtothesizeoftheun-dergroundmoney,IndiaholdsthefirstrankfollowedbytheUnitedStatesandCanadahavingthesecondandthethirdranks.
Thoughitisquitedifficulttoestimatethequantumofblackmoneywithaccuracybutmanyattemptshaveso far beenmade in India for quantifying it and inmostofthecasesthefindingsappeartobefarfromreality.
However, most of such studies undertaken in ourcountry in recent years put the quantum of blackmoneyintheneighbourhoodof40percentofgrossdomesticproduct(GDP). Accordingly, Indian Institute of Public Finance andPolicy (IIPFP) finds that out of the total amount ofblackmoney,48percentisgeneratedfromevasionofpersonal incometaxalone,28percentfromun-der-reportingofproductionand18percentfromun-der-registrationofimmovablepropertysothatthesethreemaincomponentsexhaustabout94percentillegalincomegeneration.
Guesstimates based on ‘Global Financial Integrity’claim that the amount exceeds ‘USD1.4 trillion’ intotal.
Swiss Bankers Association and the Government ofSwitzerlandthrashedthereports&saidthatthetotalamountheldinallSwissbanksbycitizensofIndiaisabout‘US$2billion’. InFebruary2012,thedirectorofIndia’sCentralBu-
reauof Investigationsaidthat IndianshaveUS$500billion of illegal funds in foreign tax havens, morethananyothercountry. InMarch2012,thegovernmentof Indiaclarifiedinits parliament that the CBI director’s statement on$500billionofillegalmoneywasanestimatebasedonastatementmadetoIndia’sSupremeCourtinJuly2011
Sources of Black Money Asdiscussedabovethesourcesofblackmoneyarebroadly of two categories- illegitimate activity andtaxevasioneveniftheactivityislegitimate.Inparticularfollowingaresomeofthemechanismsthroughwhichblackmoneyiscirculated,utilizedandtheprofitsearnedarefurtherinvestedinothersec-torstogeneratefurthermoney.
1. Realestate:Duetorisingpricesofrealestate,thetax incidence applicable on real estate transac-tionsintheformofstampdutyandcapitalgainstaxcancreateincentivesfortaxevasionthroughunder-reportingoftransactionprice.
2. Bullion and jewellery market: The purchase al-lows the buyer the option of converting blackmoney into gold and bullion,while it gives thetrader the option of keeping his unaccountedwealthintheformofstock,notdisclosedinthebooksorvaluedatlessthanmarketprice.
3. Financial markets transactions: IPO manipula-tions,riggingofmarketsuchasuseofshellcom-panies.
4. Public procurement: Public procurement hasgrownphenomenallyovertheyears–involume,scale,andvarietyaswellascomplexity.TheCom-petitionCommissionof Indiahadestimated to-talpublicprocurementfigureforIndiaataround10to11lakhcroreperyearandprovidesamplescopeof corruptiondue to riggedprocurementprocess.
5. Non-profitorganizations:Taxationlawsallowcer-tainprivilegesandincentivesforpromotingchar-itableactivitieswhicharemisusedandmanipu-lated.HighlightedbyFATFaswell.Usedtoparkfundsofcorruptpoliticiansandbusinessmen.
6. InformalSectorandCashEconomy:Cashtransac-tions, large un-banked and under-banked areascontributetothelargecasheconomyinIndia.
7. Trade-based Money Laundering (TBML): Dis-guisingtheproceedsofcrimeandmovingvalue
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Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
through the use of trade transactions in an at-temptatlegitimizingtheirillicitorigins.
8. TaxHavens:Taxhavensaretypicallysmallcoun-tries/ jurisdictions, with low or nil taxation forforeignerswhodecidetocomeandsettlethere.Strong confidentiality or secrecy regardingwealthandaccounts,very liberalregulatoryen-vironmentandallowopaqueexistence,whereanentity caneasilybe setupwithout indulging inanymeaningfulcommercialactivityandyetclaimtobeagenuinebusinessunit,merelybygettingitself incorporatedor registered in that jurisdic-tion.Thismakesthemhighlydesirablelocationsformultinationalentitieswishingtoreducetheirglobal tax liabilities. Multinational entities con-sisting of a network of several corporate andnon-corporatebodiessetupconduitcompaniesintaxhavensandartificiallytransfertheirincometosuchconduitcompaniesinviewofthelowtaxregimethere.
9. InvestmentthroughInnovativeDerivativeInstru-ments:SuchasParticipatoryNotes(P-notes).
10. Hawala: It is an informal and cheapmethod oftransferringmoneyfromoneplacewithoutusingbanksetc.Itoperatesoncodesandcontactsandnopaperworkanddisclosureisrequired.
Detrimental to economic health: Thereisadistortionininvestmentineconomy.Withblackmoneytheinvestmentismadeinhighendandluxurygoods. Hugelossoftaxesamountingtobillions.Blackmoneyleadstofurthercorruptionbycreatingaviciouscycle. Generatingblackmoneymeansthatqualityiscom-promisedinpublicsectorprojectswhereblackmon-eyisusedtomanipulatetendersandofferkickbacks. Investmentsthatmusthavebeenmadeinthecoun-trygivingthenecessaryboosttoeconomyareinvest-edelsewhere. Since,RBIcannotcontroltheblackmoneycashflowineconomy,itdilutesitspoliciestargetinginflation.Highpricesofrealestateespecially inbigcitiesareduetodeeppocketsfilledwithblackmoney. Forward trading of goods by cash rich speculatorscausefluctuationinpricesduetohoarding.
Nationalsecurityisthreatenedbecauseblackmoneyis used to finance criminal activities. Black moneygeneratedfromdrugsandsmugglingisbeingusedtooperateterrornetworks.
Steps taken by government to curb black money generation and flow:
Tax Reforms: Taxdeductionat source inwhich thetaxisdeductedfromthepaymentitselfbythepayee.
Voluntary Income Disclosure Schemes: The gov-ernment allows reporting black money generatedthroughtaxevasioninagiventimeframe.
Removing currency after certain time:Sothatunac-countedwealth is either brought into economy orbecomes useless.
Encouraging Cashless transactions:Governmenthasrecently announced tax benefits formaking onlinepayments.
Legislative Framework:
PreventionofMoneyLaunderingAct,2002(amend-edmultipletimeslatestin2012) LokpalandLokayuktaAct PreventionofCorruptionAct,1988 TheUndisclosedForeignIncomeandAssets(Imposi-tionofTax)Bill,2015 BenamiTransactionsProhibitionAct,1988amendedin 2016 TheRealEstate (RegulationandDevelopment)Act,2016
International Cooperation: Multilateral Convention on Mutual AdministrativeAssistanceinTaxMatters FinancialActionTaskForce UnitedNationsConventionagainstCorruption UnitedNationsConventionagainstTransnationalOr-
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Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
ganizedCrime InternationalConventionfortheSuppressionoftheFinancingofTerrorism United Nations Convention against Illicit Traffic inNarcoticDrugsandPsychotropicSubstances EgmontGroup for international intelligencegather-ingregardingmoneylandingandterrorismfinancing CooperationthroughG20,Bilateralagreements.
Recent Steps 1. Withtheaimofunearthingblackmoneystashed
abroad, parliament has passed theUndisclosedForeign Income and Assets (Imposition of Tax)Bill,2015, in theparliament.Salient featuresoftheBillareasfollows
• Taxonallforeignincomewillhavetobepaidat
theflatrateof30percentwithoutanyexemp-tion,deduction,andsetofforcarryforwardloss-esthattheIncomeTaxActpermits.
• Enhanced punishment of jail for 3-10 years forwillful evasion of tax on foreign income alongwithapenaltyequaltothreetimestheamountoftaxevadedor90percentoftheundisclosedincomeorthevalueoftheasset.
• One-timecomplianceopportunity:Aone-timecompliance opportunity to persons who haveany undisclosed foreign assets (for all previousassessmentyears)willbeprovidedfora limitedperiod.Suchpersonswouldbepermittedtofileadeclarationbeforeataxauthority,andpayapen-altyattherateof100%.
• Bill empowers the Centre to enter into agree-mentswithothercountries for theexchangeofinformation, recovery of tax and avoidance ofdoubletaxation.
2. Indiaisaimingtoestablisharealtimeautomat-
ic information sharing systemby 2017. It seeksto enter into Multilateral Competent AuthorityAgreement (MCAA). To implement the MCAA,governmenthasamendedtheITAct,2008.
3. Underpressure from Indiaandothercountries,Switzerlandhasmadekeychangesinitslocallawsgoverning assistance to foreign nations in theirpursuitofblackmoneyallegedlystashedinSwissbanks. These amendments, would allow India
andothercountriestomake‘grouprequests’forinformationaboutsuspectedblackmoneyhoard-ers. Switzerlandhasdisclosed certainnames toIndianauthoritiestoo.
4. Special Investigation Team (SIT) appointed by
governmentonthedirectionsofSupremeCourtonblackmoney.
5. Demonetization: Demonetization is a currencysidestep.Thatitselfwillnotfightblackincome.Themostimportantpolicyshouldbetaxadmin-istrationwhere the tax authorities canmonitorexpenditureandmatchingitwithincomeoftherespectiveindividuals.
Analysis of the Recent steps by Government In1997theamnestyschemeforblackmoneyholdersgotdeclarationsofaroundRs33,000croreandtaxescollectedamountedmorethanRs10,000crore.
At present under the Income declaration scheme,Rs65,250croreofundisclosedassetsweredeclaredinonetimecompliancewindow,yieldingRs29,362croreintaxes. Way forward
The black money menace is still untamed and lotmore needs to be done to tackle it. Some of thestrengtheningstepsthatcanbetakenare: 1. Appropriate legislative framework related to:
PublicProcurement,PreventionofBriberyoffor-eignofficials,citizensgrievanceredressal,whistleblowerprotection,UIDAdhar.
2. Settingupandstrengtheninginstitutionsdealingwithillicitmoney:DirectorateofCriminalInvesti-gationCell forExchangeof Information, IncomeTaxOverseasUnits- ITOUsatMauritiusandSin-gaporehavebeenveryuseful,StrengtheningtheForeignTAX,TaxResearchandInvestigationDivi-sionoftheCBDT.
3. Developing systems for implementation: Inte-gratedTaxpayerDataManagementSystem(ITD-MS)and360-degreeprofiling,SettingupofCyberForensicLabsandWorkStations,implementationofGoodsandServicesTaxandDirectTaxCode.
4. Impartingskillstopersonnelforeffectiveaction:Bothdomesticandinternationaltrainingpertain-ing to theconcernedarea. For instance, theFi-
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Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
nancial IntelligenceUnit-Indiamakesproactiveefforts toregularlyupgradetheskillsof itsemployeesbyprovidingthemopportunitiesfortrainingonanti-moneylaundering,terroristfinancing,andrelatedeconomic issues.
5. ElectoralReforms:Electionsareoneofthebiggestchanneltoutilizetheblackmoney.Appropriatere-formstoreducemoneypowerinelections.
Thus,aholisticandallroundattackfromwithinandoutsidethecountryistheneedofthehour.Indiashouldquicklytakeupappropriatereformsathomethatwillaidincurbingtheblackmoneygenerationandcircula-tioninthecountryalongwiththeuseofbilateralandmultilateralmechanismstodealwithroundtrippingandstashingofmoneyoutsidethecountry.
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Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
Demonetisation
- Girindra VasudeoEmail: [email protected]
Amonthplus into India’sdemonetisation initiative,long linesofpeople looking toexchangenotes stillspew out of banks, some sectors of the economycontinuestrugglingwiththelackofreadilyavailablecash,grassrootsbusinessesarestillbeingrevolution-izedwithelectronicpaymentcapabilities,andmassesofpeoplecontinuetransitioning towardsnewwaysofpayingforbasicgoodsandservices.
On8thNovember2016,86%ofIndia’scurrencywasnullifiedinagreatdemonetisationeffortthataimedtocleanouttheblackmarket’scashsupplyandcoun-terfeitnoteswhichcompletelydisruptedthesocial,politicalandeconomicspheresoftheworld’ssecondlargest emergingmarket. All 500 and 1,000 rupeenotes were instantaneously voided and a 50-dayperiodensuedwherethepopulationcould(ideally)redeemtheircancelledcashfornewlydesigned500and2,000rupeenotesordepositthemintobankac-counts.
India has done this before. In 1946, all 1,000 and10,000 rupeenoteswere recalled. In1978, 1,000,5,000and10,000rupeenotesweredemonetised.
This recentboutofdemonetisationwasplanned insecretbyasmall,tight-knitgroupledbyPrimeMin-isterModi and it overtook the country like a flashflood.Thissurprisewasbydesign,asitwasfeared
thatiftheblackmarketcaughtwindofwhatthegov-ernmentwasplanning,theywouldfindwaystorap-idlyunloadtheir illicitcashandtheinitiativewouldflopononeofitsinitially-statedgoals.
It is nearing twomonths since thehighdenomina-tionnoteswereabruptlyscrappedon8thNovember2016.About85%ofcurrencyinvaluewasconvertedintoillegaltenderanditbecamemandatoryforyoutodeposit theseoldnotes intoyourbankaccountsbytheyearend.Ofcoursetheunderlyingassump-tionwasthattheoldnotespossessedbyyouwereall“tax-paid”notes.
Theplanhaslaudableaims.Itsinitialpopularitywasbasedontheideathatthegreedyrich,withtheirill-gotten“blackmoney”storedinstacksofbanknotes,willcometothesurface. Thosewhocannotjustifythesourcesof theirwealthwill facepunitivetaxes.ItalsoalignedwithMr.Modi’smanifestopledgetonormalize India’s black economy, estimated by theWorldBank in2010tobeworthaboutone-fifthofofficialGDP.TheideaisthatIndiawillbecomemoreefficientasmorepeopleandmoremoneyenterthebanking system, counterfeit currency will becomeworthless,India’swoefullylowtaxbasewillexpand,andgovernmentcofferswillenjoyawindfallofcashexpropriatedfromthecorrupt.
Assooften,theburdenofthisreformhasfallenmostheavilyonthepoor.Overfour-fifthsofIndia’swork-ersareinthe“informal”sector,paidincash.Untoldnumbershavebeenlaidoffbecausetheiremployerscannotpaythem.Tensofmillionshavequeuedforhoursatcashmachinesandbankbranchestogetridoftheuselessnotesandgetholdofsomespendingmoney.Anewbusinesshassprungupinlaunderingcashforafeeforthosewithoutthetimeorinclina-tiontoqueueorwithmorenotesthantheycanac-countfor.
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Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
Cash is used for 98% by volume of all consumertransactionsinIndia.Withfactoriesidle,smallshopsstrugglingandashortageofcashtopayfarmersfortheirproduce,theeconomyisstuttering.Therearereportsthatsalesoffarmproductshavefallenbyhalfandthoseofconsumerdurablesby70%. Apart from the noble intent of the government tocounter 1. Blackmoney2. Fakemoney3. Terroristfundingtheramificationsofthissurgicalstrikeledtothefol-lowing: • Apathyofpoor/middleclass/ruralpeople• Slowingdownoftheeconomy• Joblossesofthedailyworkers/artisansetc.
ThelongtermeffectsofIndia’sdemonetisationgam-bit remainunclear, largelybecausenoothermajoreconomyhasattemptedsuchanexperimentexceptduringacrisis.Butwithgrowthslowingandjobloss-es,theshort-termprognosisappearsgrim.
Whilstthecountry’seconomistsareperformingad-vancedmentalgymnasticstodefendthismove,theythemselves appear to be hazy in theirmind aboutthepathahead.
India’seconomywith its intrinsicresiliencewillcer-tainly recover in the long run but it has certainlyimpaired itsprogress intheshorttomediumterm.Theoptimists,on theotherhand,have said that itwilleventually rootoutcorruption,simplify the taxstructureandlaythefoundationforagrowingrobusteconomy.Thereisalsoaviewthatdemonetisationwillinvigoratethesluggishbankingsectorwithcheapfunds.Weneedtopraywithfoldedhandsthattheshorttermpaininjectedbywithdrawingtheoldnotesis really“short term”andwill leadus toadawnofuncorruptandgrowingeconomy.Astepinthisdirec-tionisthatthegovernmentmitigatesthewoesofthepeoplebyfindingwaysofprintingnewmoneymorequickly.
Themost interestingthingregardingthedemoneti-sation is that people have devised various uniquemethods for transforming their black money intowhiteone.Someofthesemethodsareasfollows:
• Depositingmoney intheaccountsof theirpoor
relativesandfriends.• Enticing the people with some percentage of
moneyforexchange.• Askingtheiremployeestostand in longqueues
infrontofbanksandATMsforgettingmoneyex-changed.
• HiringpeopleforasumrangingfromRs.500/-toRs.700/- for being apart of the longqueues infrontofbanks/ATMs.
• Convertingblackmoneyintogold.• Payingafewmonths’salariesinadvance.• Payingbackloansforcibly.• Usingtheirinfluence/linkswithbankemployees,
and so on.
Weshallseeagreatimpactofthismoveofthegov-ernmenton Indian society andeconomy. Thefirstimpact will be that people will have lower spend-ingpower,whichwouldmeanthattheywouldonlyspendonnecessitiesandavoidexpenditureonluxu-rygoods.
There will also be no ostentatious expenditure onweddingsandotherceremonies. Thiswill result insocietygrowinglessmaterialisticandmoreprudent.With counterfeit currency destroyed, the Indianeconomywill experienceanupward swing. At thesametime,thereisapossibilitythattherealestatesectormaysufferadownwardspiralandcrash.
Hopefully,alldailynecessitiesoflifewillgetcheaperandthe Indiancurrencywillearnrespect in the in-ternational market. Terror-related funding will becurbedandthereforesowillterroristactivities.Cor-ruptionwillalsobecontainedaspeoplewillstopac-cumulating“blackmoney”andusingitforunethicalmeans.
Asmajorityoftheoldnoteshavecomebacktothebank,itisimperativetoinvestigateandensurethatnoportionofthesenoteshasbeenusedtolaunderblack money into banking channels. Those foundguiltyshouldcomeunderthestrictestpunitivemea-suresofthegovernment.
Finally,weneedtoappreciatethatonly25%ofthecurrencyprior todemonetisation isback incircula-tion. This isnotallowing theeconomy to functionproperly. People are hoardingwhatever new cashthey have and this could result in “demand slow-
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Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
down”aspeoplewouldpostponepurchases.Itwilltakesometimeforthecurrencyincirculationtoimproveenoughfortheeconomytogetbackontrack.
Thereisverylittledoubtthatthegovernmentwillexpeditetheexerciseofremonetisationbyinjectingnewnotesinthesystemtoextricatetheeconomyfromgoingintoanegativespiral. MayourIndianeconomycomebackontrackattheearliestandsparkleontheglobalcanvasslikeashiningstar.
12 The Exponent Group of Journals For Shares And Stock Market, Volume 4, Number 4, Sep 2016 - Nov 2016
Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
On 8thNov, 2016, PM Narendra Modi announcedthe cancellation of Rs 500 and Rs 1000 notes (akademonetization) which resulted in 86% of the cir-culated money being removed from the economyovernight.Thiswasprimarilydonetocurbtheblackmoney,makeallthecounterfeitcurrencyworthlessandattackterrorismatitsroots.
Tounderstandtheimpactonthestockmarket,let’sfirstunderstandhowsignificantamovethisis.Inthepast many countries have attempted demonetiza-tion,somesuccessfullyandsomeunsuccessfully,butallof themweredonewhentheireconomieswerehaving major problems like hyper-inflation in Ger-manyinthe1920s.This isthefirsttimethataper-fectlyhealthyeconomyhasattempteditandthattooto targetblackmoney.Because this isafirst, therearevariedopinionsamongsteconomistsonwhattheimpactwillbeinthefuture. Theimmediateimpactofremovingsomuchmoneyfromcirculationisofcoursetheimpactitcanhaveonseveralsectorsthataredrivenbytheblackeconomylikerealestate,constructionetc,butmoresoalsothesectorsthataremoredrivenbycash,becausetheyarethefirstthatareaffectedwhensomuchmoneyissuddenlyremovedfromcirculation.
Hereishowthevarioussectorshavebeenimpactedafter the demonetizationmove andwhatwe thinkcouldhappeninthefuture:
Real Estate
SinceRealEstateisdrivenbytheblackeconomy,thiswasthesectorthatwasprobablytheworsthitofallthesectors.TheNiftyRealtyindexgappeddownafterthedayof thedemonetizationmoveandcorrected-25%(asindicatedinthechartbelow,theNIFTYRE-ALTYbouncedoftheAuto-SRverystrongsupportof
152.5onaweeklychart)beforerecoveringabit.Itisstilldownalmost-16%from8thNov.
Sincemany real estate properties have a big blackmoneycomponent,theyareexpectedtogothroughatleasta20-30%correction,andhenceforthefore-seeable2quartersatleast,chancesarethatthissec-torwillprobablygolowerbeforeitstartstoimprove.
Consumer Durables
Thissectorisprimarilydrivenbycashandhencehasalsobeenhithard.Itisdownbyalmost11.7%sincethedemonetizationannouncement.
Banking
TheBankingsectortookanimmediatehitthedayaf-ter theannouncementbut recoveredonNov10th.But,ithasbeensubsequentlycorrectingasitisstillgrappling with trying to replenish the cash in theeconomy. However, this is one sector which is ex-pectedtobenefit inthe longtermbecausea lotoftheblackmoneywillbedepositedinbankaccountsandtheexcessfundsinthebankingsystemwillalsohelpaddressthenon-performingassets(NPA)prob-lem thatmany of the banks are facing due to badloans.Due to theseNPAproblems, a lot of the in-frastructurefundingetchasalsobeenaffectedandhopefully, that should also be addressedwhen thecurrentcashcrunchisreducedandeconomyclawsbacktonormalcy.
Infrastructure
Theinfrastructuresectorisdrivenbymassiveinvest-mentsfromgovernmentaswellasloansfrombanks.One of the healthy effects of demonetization is toincreasethe liquidity in thebankingsystemaswellas increase the funds that the government has for
Effect of Demonetisation on Indian Stock Market
- Prashant TalpadeEmail: [email protected]
13The Exponent Group of Journals For Shares And Stock Market, Volume 4, Number 4, Sep 2016 - Nov 2016
Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
spendingonitemslikeinfrastructure,welfareetc,sothe Infrastructure isanobviousbeneficiaryof that.ThefactthattheNIFTYINFRAindexhasnotbeenaf-fectedmuch(asisconfirmedbythefactthatitisupmarginallysinceNov8thinthechartbelow):
Information Technology
TheITsectorhasbeenlargelyunaffectedbythede-monetizationasitisexportorientedandhencerela-tivelybetterpositioned tohandle shocks in the In-dian economy.Moreover it is probably also largelyacashlesssectorandhencealsonotaffectedduetothecashbeing takenoutof theeconomy.TheNIF-TYITchartbelowshowsthattheITsectorisactuallydoingbetterthanfromwhatitwasonNov8th.
Inconclusion,wecanprobablysummarizetheeffectofdemonetizationontheoveralleconomyasfollows: 1. Intheshortterm,GDPwillbedownforatleasta
1-2quartersbeforerecovering.
2. AlotofblackmoneywillbeconvertedtowhiteandbedepositedintothebankswhichwillinturnhelpintheNPAproblemthatbanksarefacing.
3. In the longer term, reducing of black moneyeconomyinthefutureshouldbringmorepeoplein the taxnetandhence lower taxesaswellasinterestrateswhichwillbodewellfortheoveralleconomy.
Althoughthiswaswhatiscalledasurgicalstrikeonblackmoneyandwillhaveimmediateimpactontheexistingblackmoney,mosteconomistsagreethough,thatthismoveisnotsufficientandseveralotherre-formsliketaxreforms,realestatereformsetcneedtobeundertaken to curb theblackmoneygenera-tioninthefuture.
14 The Exponent Group of Journals For Shares And Stock Market, Volume 4, Number 4, Sep 2016 - Nov 2016
Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
Trump Presidency - How Can It Impact India
- Sanjay ThakkarEmail: [email protected]
AsRepublicanpresidentialcandidateDonaldTrumphas frequently targeted India through his rheto-ric, recently accusing India andChinaof takingun-fair “advantageof theUnitedStates”andhasusedwidely televised debates and pep rallies to pilloryoutsourcing. Indianbusiness leadersareconcernedthataTrumppresidencycouldnegativelyimpactthecountry.
India’sChiefEconomicAdviserArvindSubramaniantold the Advancing Asia Conference hosted by theIMF: “My concern is that Trump inhis last debate,said–‘H-1B,whateveritis,IuseitbutIdon’tlikeit.IwanttoscrapallH-1Bvisas.’That’sveryworryingforIndia’sexport-ledgrowthgoingforward.”
India’s software services accounted for $82 billion-worthofexportsinthefinancialyearendinginMarch2015,accordingtotheReserveBankofIndia;60%ofthatfigurecamefromNorthAmerica.
IndianoutsourcinggiantsTataConsultancyServices,InfosysandWiproareheavyusersoftheH-1Bvisas.TheIT industryhasgenuineconcernsasTrumphasshifted his position several times on theH-1B pro-gram.Earlyinhiscampaign,Trumpproposedrestrict-
ingtheprogramandcriticiseditforgivingawaycov-etedentry-levelITjobstoworkersflownincheaperfromcountrieslikeIndia.
Then, during the thirdRepublicandebate, he com-plained that a paucity of H-1B visas was makingAmericalosetalentedpeople.“TheygotoHarvard.They go to Yale. They go to Princeton. They comefromanothercountry,andthey’reimmediatelysentout.Iamallinfavourofkeepingthesetalentedpeo-pleheresotheycangotoworkinSiliconValley,”saidTrump.
TheRepublicanfront-runnerthenreversedhisclaimafterthedebate.Inastatementreleasedonhiscam-paignwebsite, Trump saidhedoesn’t actually sup-porttheH-1Bvisas.Instead,hesaidhewould“endforever”usingH-1Bworkersforcheaperlabour,andstucktohisinitialproposalofarecruitmentrequire-mentforemployers.
Inhis2011bookTimeToGetTough,Trumpalsoad-vocated a 15% tax on companies for outsourcingjobstoplaceslikeIndia,anda20%taxforimportinggoodsandservices.
“OutsourcingisasoldasAdamSmith.Youcan’tturneconomics on its head. Services will move wheretheyarecheaper.USconsumershavebenefitedfromahigherqualityofservicesfromIndiaatacheaperprice,”saidRajivKhanna,presidentofthepowerfulIndia-AmericaChamberofCommerce.
“Trumphasoverruledhimself severaltimeson theH-1Bvisaprogram,whichisgood.Itshowsheisflex-ible. If Trump imposes a 15% duty then those ser-vicescomingtoUScompanieswilljustbe15%moreexpensive.ItisnotasifthereiscapacityintheUStoperformthoseservices,”saidKhanna.“Iwouldn’tbeasupsetastheIndiancompaniesareasthisiselec-
Trump Presidency - How Can It Impact India
- Sanjay ThakkarEmail: [email protected]
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tionrhetoric.”
Obama and Indian IT
In2008,then-candidateBarackObamahadpromisedvoters thathewouldwork to slowtheoutsourcingofAmericanjobstoothercountries,proposingtore-vampafederaltaxcodethatencouragescompaniestomaintainoverseasoperations.Ayearlater,Obamaaspresidentcameoutwithaplantorevamptaxrulesandendthetaxdeferralsystem.Underthisplan,out-sourcerswithbigIndianoperationscouldhavebeenhitwithahigher35%taxbillifdeferralswereelimi-nated.Intheend,however,Obama’splansgotaca-gey response from theUSCongress. Thebroad taxchangeshavenothappened.Still, that’s not to say everything has been smoothsailing for India’s IT industry duringObama’s presi-dency.Trump’santi-outsourcingtalkcomesatatimewhenthe Indian IT industry isalreadyfeeling likeapunchingbagforUSprotectionism.InDecember,theUSCongress passed a bill named the “9/11Healthand Compensation Act” to fund continued health-careforfirst-responders.Tokeepthedollarsflowing,theBilldoubledthefeeforH-1Bvisasforeverynewapplicantto$4,000andto$4,500foreveryL-1visa,whichisneededforintra-companytransfers.
Thesechangeswillbeinforceforthenext10yearsandarelikelytocosttheIndianITindustry$400mil-lionayear,accordingtoNASSCOM.
Trump’s globophobia
Trumpsaysthat,ifelected,he’dgetAppletobuilditscomputersintheUSratherthaninothercountries.He has promised to slap a 35% duty on Ford carsmadeinMexicoandotherforeigncountries.Trump’sprotectionistwildtalkisdisconcertingfortherapidlygrowingUScarmanufacturingindustryinIndia.UScargiantFordhasmanufacturingplantsinChen-nai,Puneandanewfactory—whichcost$1billiontobuild —inSanand,Gujarat.Fordsays itplanstousetheGujaratfactorytotriplethenumberofcarsitexportsoutofIndia.
“TogetherwearedeliveringPrimeMinister(Naren-dra)Modi’s vision for India,”Mark Fields, chief ex-ecutiveofFord,saidattheFordfactoryopeningonThursdayMarch242016.“Wearehappytobemak-inginIndiaforIndiaandfortheworld.”
Ford’smoveshowssupportforModi’s“Makein In-dia”campaigntogetmoreUScompaniestomanu-factureinandexportfromIndia.
But ifTrumphashisway, thingswillbeverydiffer-ent.Trump,whohasbeensellinghimselfasasmartbusinessman, proposes to slapmassive tariff taxesonAmerica’slargesttradepartners.
“IwouldtaxChinaoritsproductscomingin,”TrumptoldTheNewYorkTimesearlierthisyear.AsforMex-ico,hehassaid:“everycarandeverytruckandeverypartmanufactured in theirplants thatcomeacrosstheirborder,we’regoingtochargeyoua35%tax.” If Trump has hisway, highUS tariff barrierswouldextend to car and auto partsmade in India,whichalready exports more passenger cars than China.ForeigncarmakersinIndia,suchasHyundai,SuzukiMotor,Nissan,GeneralMotors,FordandVolkswagenAG,haveseentheirpassenger-carexportsjumpover60%inthelastfiveyears,to620,000passengervehi-clesin2014.Chinatrailedbehindwith533,000autoexportslastyear. AnanonymousseniorexecutiveatUSbeveragegiantPepsiCo, said, “Trump’s anti-free trade crusade ap-pealstounionmembersandleft-winglaborbosses.
Trump wants voters to believe Mexicans, ChineseandIndiansare‘rippingusoff.’Butitisn’tazerosumgame.” Timmons Roberts, a professor of environment andsocietyatBrownUniversity,saysTrumphashitasen-sitiveAmericannerveon fearsofwhat isderisivelycalled “globophobia”. Sadly, what muscle-flexingTrumpdoesn’ttellvoters isthattheAmericanpeo-plewillfinallyenduppayingthesetaxes,which,aswithanylevies,willbeembeddedinthepriceoftheproduct.
It’s unusual for foreign diplomats to express con-cernaboutcandidates in themiddleofapresiden-tialcampaign.ButTrump’santi-freetradecampaignandrantsagainstminoritieshasspurredforeigndip-lomats,includingfromIndia,tocomplaintotheU.Sstatedepartment.“Asthe[Trump]rhetorichascontinued,andinsomecases ampedup, so, too, have concerns by certainleadersaroundtheworld,”onestatedepartmentof-ficialwasquotedassaying,citingIndia,SouthKorea,
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JapanandMexicoamongcountrieswhosediplomatshadraisedthematter.
Trump vs. Clinton on foreign policy
TheWashingtonPostreportedthatinameetingwithitseditorialboard,Trumplaidouthis“unabashedlynoninterventionistapproachtoworldaffairs,”includ-ingaplanto“significantlydiminish”USinvolvementinNATO, and he questioned “the value ofmassivemilitaryinvestmentsinAsia”.HearguedthatthebestwaytohaltChina’smilitaryairfieldsonreclaimedis-landsintheSouthChinaSeawastothreatenitsac-cesstoAmericanmarkets.
“This is a man who knows nothing about foreignpolicy.Trumpwants towithdrawAmerica fromtheworld.Hisforeignpolicyisincoherentandbereftofmeaningfulideas,”saidSouthAsiaexpertSumitGan-guly,whoholdstheRabindranathTagoreChairinIn-dianCulturesandCivilizationsatIndianaUniversity,Bloomington. Ganguly added, “On the other hand, Hillary Clin-ton is a seasoned foreign policy professional. Thisissomeonewho isknowledgeableabout theworldandwhocanreason,incontrasttoTrump,whoisademagogue.Clintonwouldmean,fortheworld,anemphasisonfreetrade.ShewouldprobablymeananinterventionistUSforeignpolicy,anactivistAmericanforeignpolicy.”
Astheformersecretaryofstate,Clinton’ssignatureinitiativebecameknownas theObamaadministra-tion’s“pivottoAsia.”WhiletheUSwasboggeddownin Iraq and Afghanistan, China had the headroomtoexpand its influence intheregionwithallies likeNorthKorea,Pakistan,MyanmarandSriLanka.Ris-ing China spurred Clinton to consolidate America’stieswithregionalpowerslikeIndia,Japan,Australia,Indonesia and the Philippines in a policy pivot to-
wardsAsia.
ThereweremanyreasonsClintonwasmissedbyIn-diaasJohnKerryreplacedherassecretaryofstateforObama’ssecondtermaspresident,nottheleastbecauseshematurelyacceptedthatIndiaandthe.Swillnotseeeye-to-eyeonallissues,norwilltheirin-terestsalwaysconcur.YetshewasagoodfriendtoIndiaandensuredtherelationshipwasnotcantan-kerous.
According to Indian diplomats, Clinton understoodthe glue that bound India and Iran, which otherWashington elites found so hard to fathom. Shetampeddownconcern inWashingtonabout India’soiltradewithIran.HereffortsensuredthatIndiawasexemptedfromfinancialsanctionsin2012alongwithsixothercountries.InsteadofbeinganalarmistshesawIndia’straditionaltieswithIranaspartofIndia’ssmarteco-diplomacy.
“ItwouldbeinterestingtoseehowClintonhandlesPakistan.IhavebeendisappointedwiththeObamaadministration’s willingness to coddle Pakistan de-spiteitscontinuedutilisationofterroriststoaccom-plishitssecurityandforeignpolicygoals,”saidGan-guly.
WhenClintonwasAmerica’stopdiplomat,shecon-sistently prodded Pakistan on terrorist havens andstucktodeliveringatoughmessage.
WithClintonasthepragmaticalternative,Indiacanonly hope that Trump’s presidential bid eventuallyflamesout.
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Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
Investing in Global Mutual Funds
- Dharmesh TrivediEmail: [email protected]
Background Till2006,mutualfundswereonlypermittedtoinvestonlyininternationalcompanieswhohavea10%stakeincompanylistedontheIndianbourses.Inthefinancebillof2006,thecurbsonthetypeofsecuritiesanMutualfundscaninvestwasremoved.FurtherthegovernmentincreasedtheoverseasinvestmentfromUSD1bntoUSD2bn
Benefits of investments in International Mutual funds
• Itwillgivecapitalappreciationwithlowervolatility• Diversificationintheinvestments• Itcanensureasteadyflowofdividendsbyinvestingindividendstocks.• Itensuresspreadingtherisk.• Takebenefitoftheboominthegrowingeconomies.• ProfessionalManagementandbettertransparency.
Disadvantage • Foreignexchangefluctuations• Repatriationofthecapitalduetoexchangecontrolsregulations.• NAVcouldfluctuateduetothechangesintheinterestratesorchangeinthecreditpolicies.
Lookingattheadvantagesandthedisadvantages,onecaneasilyconcludethattheadvantagesoutweighthedisadvantagesandinthepresentscenariowhenthereislotofuncertaintyitisworthexploring.
Tax on the Investment in International Mutual fund
ItissimilartoDebtmutualfund • Longtermwithoutindexation–10%• Longtermwithindexation–20% BestInternationalMutualfunds
Asondatethebestinternationalfundstoinvestareasunder
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Name of the Mutual Fund
AUM (In Crs)
Returns1 month
Returns 1 Year
Returns 3 Years
MotilalOswalMOSTshares Nasdaq100–ETFfund
64 3% 19% 15%
ICICIPruUSBluechipEquity
166 2% 20% 9%
DSPBRworldGoldfund
317 24% 65% 7%
ICICIpruGlobalstableEquity
97 2% 14% 9%
ICICIUSEquityFund 166 2% 20% 10%TataGrowingEcoInfra-B
53 .7% 49% 16%
HSBCBrazilFund 1 -3% 44% 9%DSPBRUSFlexibleEq-uityfund
68 3% 22% 10%
KotakUSEquityfund .83 2% 18% 11%
Conclusion:
Normallywealwayssay“Be Indian Buy Indian”,butintheinvestmentphilosophyweneedtochangethestrategytomaximizethereturnsanddiversifytheriskandhenceoneshouldtrytobe“Be Indian Buy Global”.
Reference: • www.moneycontrol.com
19The Exponent Group of Journals For Shares And Stock Market, Volume 4, Number 4, Sep 2016 - Nov 2016
Exponent Group of Journals - Empowering the common man In Association with Shree Aniruddha Upasana Foundation
Union Budget 2017: How is the Budget prepared by the Finance Ministry of India?
- Dharmesh TrivediEmail: [email protected]
Themost significant budget by theNarendraModigovernmentwillbepresentedonFebruary1,2017.TheUnionBudget2017willmarktheendoftheco-lonial practice of presenting the Railway Budget inadvance and will play a significant role in definingtheroadmapahead.Budget2017,whichwillbepre-sentedbyFinanceMinisterArunJaitley,playsamoreimportantroleinthebackdropofcurrencydemone-tisation,whichcausedvariousdisruptionsintheeco-nomicgrowth.Thisbudgetwillalsopartwaysfromthe traditional method of presenting the plan andnon-planexpenditureclassificationandwill insteadprovide a clear line between the recurrent spend-ingandtheproductivespending.While thebudgetwillbesubmittedforthepeopleofthecountry,itisimportanttoknowhowtheUnionBudget ismade.Therearevarioussteps involved in thepreparationandpresentationoftheUnionBudget.
1. The initial process
ThebudgetthatispresentedinFebruaryeveryyear
requiresalotofresearch.ThepreparationofUnionBudgetbeginsinAugustorSeptemberwhenallthestakeholders are informed, and the notification ofthebudgetisissued.ThisiswhytheannouncementofcombiningtheRailwayBudgetwiththeFiscalBud-getwasannouncedinSeptember2016.
2. Gathering Information
OncethetimelineissetwithaproperoutlineoftheBudget, the Finance Ministry begins asking otherministers for their receipts and their financial re-quirements for the upcoming fiscal year. A broadoverall goal for thedifferent sectorsof thegovern-mentisdecidedbythedifferentdepartmentsoftheFinance Ministry. In the period where the futureneeds arepredicted, the chief economic adviser intheFinanceMinistryreviewsthefinancialyeargoneby and presents an economic survey, which is re-leasedonedaybeforethepresentationofbudgetinParliament.Viewandadviseofleadingstakeholdersincludingindustry,representativesofworkers,farm-ersetc.andothereconomistsissolicitedanddeliber-ationsareheldinthisstageofinformationgathering.UnionBudget2017onFebruary1:Top3significanttaxchangesexpectedfromArunJaitleyinthisBudget
3. Preparation of the Union Budget
Thepreparationofunionbudgetrequiresacloseas-sociationoftheFinanceMinistrywiththePrimeMin-ister’s Office. Once the information received fromvarioussurveysandstudiesinthepreviousstepsareanalysed,thepolicyforthebudgetismade.Thispro-cessishighlyconfidentialandtheFinanceMinistryismadeoutofboundsforjournalistswhenthisprocessisbeingexecuted.TheprocessusuallybeginsinDe-cemberwhentheareaaroundtheofficeofFinanceMinistry isputunderclosesurveillanceandtheof-
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ficialsareplacedinquarantineaweekinadvance.
4. Printing of the Budget
VariousstoriesaresurroundingtheprintingoftheBudgetpapers.Theprintingoftheunionbudgetbeginsfifteendaysbeforetheofficialpresentation.Aritual‘halwaceremony’isconductedtomarkthebeginningoftheprintingprocesswherein‘halwa’ispreparedinabig‘kadhai’(largefryingpot)andservedtotheentirestaffintheministry.The‘halwaceremony’wasconductedonJanuary19,2017,astheprintingofthebudgetpapersbegan.Variousstaffoftheministryhastostaybackattheministryafterthehalwaceremony,markingcompleteisolationfromtheirfriendsandfamilyuntilthepresentationofbudgetbytheFinanceMinisterinLokSabha. 6. Presenting the Union Budget 2017
TheunionbudgetispresentedbythefinanceministerandhisteamintheLokSabhaeveryyear.Themem-bersoftheparliamentaregivenagistofthebudgetthatistobepresented.Thisisfollowedbytheactualpresentationwherethefinanceministerannouncesthevariousallocations.ThisrevelationismadeintheLokSabha,whichisthehouseofthepeople,insteadoftheRajyaSabhaasthebudgetisalsoconsideredasamoneybill.MoneybillscannotbepassedorstalledbytheRajyaSabhaandthehouseifstaterepresentativescanmerelymakeamendmentstothebills.