finly february 2015
DESCRIPTION
FINly Magazine of Finstreet Finance Committee of SIMSRTRANSCRIPT
MADE IN INDIA
MAKE IN INDIa
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ISSUE No 41 FEBRUARY 2015
FINly
Cover Story
05Educational Section
12Finstret Fiesta WInning Article Make in India
vsMade in India
16Pravartana
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Trivia
Contents
ContributorsEditor in Chief: Irina
Editors:Sahil, Sourajeet Pradhani, Tamoghna , Shreya and Nirali
Design: Rohit
Sahil
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Cover Story
CHANGE OF STANCE OF RBI
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Shreya Devan
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Educational Section
Types of Banks and their functions
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Internet banks, direct banks or virtual banks are do not have any brick and mortar structures but in-turn allow customers to access these banks through mobile applications, computer etc. Typically an internet bank provide services which are provided by a brick and mortar bank like collecting deposits, making payments of interest etc online. They offer better interest interest etc online. They offer better interest rates and lesser fees to attract customers.
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Reserve Bank of India (RBI) is the cen-tral bank of India which was established in 1935 and was nationalised in 1949. RBI is the regulator of Indian Financial System and issuer of currency as well as monetary policy. It also controls and supervises banks and non banking financial companies operating in India.financial companies operating in India.
Apart from banks there some non banking financial institutions or companies (NBFCs or NBFIs) which contribute towards money flow in to the economy.
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- Sourajeet Pradhani
The contribution of the primary sector towards the GDP is only 14-16%, The contribution of the primary sector towards the GDP is only 14-16%, while three-fourth of our population depends on it. Due to this reason India faces grave unemployment. Subsequently the government had to rely upon programs like MGNREGA and DBT to tackle the unemploy-ment menace. These programs do not add any skill sets to people. The repercussions of such policies of the government are far reaching, since it brought the national exchequers to their knees. Also it led to huge fiscal deficit. Hence to address the twin issue of growth and unemployfiscal deficit. Hence to address the twin issue of growth and unemploy-ment, India had to rely upon the manufacturing sector. The advantage India has vis-a-vis China is its demographic profile. The young popula-tion cannot be satiated by providing them employment in the primary
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Finstreet Fiesta Article Writing CompetitionWinner
MAKE IN INDIA VS
MAKE FOR INDIA
The campaign also aims at providing em-ployment and invests in human capital. This requires enhancing the quality and spread of healthcare, nutrition and sanitation.Apart from these basic needs, appropriate educa-tion, vocational training and imparting skill sets in the labour market are the various objectives of this campaign.
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Showing yet again his proclivity to diverge from government’s views if required, RBI governor Raghuram Rajan recently rede-fined the definition of ‘Make in India’ and came up with the con-cept of ‘Make for India’. When ‘Make in India’ is looking to at-tract foreign investment, Rajan has suggested budgetary incen-tives for household savings to ensure that the country’s invest-ment is highly financed by the domestic savings. These so called connotations largely reflect the government policies and the stance taken by the central bank. It is a positive sign since it re-flects the independent functioning of the RBI in the FinMin-RBI nexus. The RBI governor has accentuated various aspects which forms the core of ‘Make for India’ campaign.Firstly, while ‘Make in India’ focuses on export led growth, (since the IIP has been negative, WPI has reached zero) ‘Make for India’ addresses the objectives should be achieved through domestic sources. This can be achieved through a progressive taxation policy that would encourage domestic savings. The world cannot accommodate another China at this junction. Also there is a huge difference between the emerging countries and the industrial nations. Secondly, the manufacturing sector in inthe industrial nations. Secondly, the manufacturing sector in in-dustrial countries is capital intensive in nature as compared to the labour intensive in India. Thirdly, when India is going to com-pete with China in terms of exports, it won’t be easy since China has already got a head start and have a significant advantage over India.
The whole purpose of ‘Make in India’ campaign was to send a posi-tive signal to the world that India has come of age with the arrival of the new dynamic leader and ready to assimilate the global world. It was a novel concept to attract foreign investors especially the FDI to usher a new era of manufacturing led growth. The image of the coun-try had taken a big toll due to the umpteen corruption scandals associ-ated with the previous government and lack of competitiveness. Hence the Prime Minister should be given credit for his vision and pro-activeness. The announcement itself has raised the market senti-ments to a new level, setting new records at SENSEX. The FDI inflow has increased and there have been continuous trade engage-ments with other countries.On the other hand, the brave call by our RBI governor, indicating the nuances as well as the loopholes of ‘Make in India’, has made all of us contemplate regarding the real scenario. Now it is imperative for the FinMin and the central bank to work in tandem, evaluate the op-tions available, complementing each other and come up with a pru-dent fiscal and monetary policy, to redefine the image of new India.
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Melange, the inter-collegiate managerial-cultural fest of K. J. Somaiya Institute of Management Studies and Research, Mumbai, is round the corner. The flagship event of SIMSR, Melange is the amalgamation of cultural, managerial and informal ele-ments which makes it one of the biggest college events in India. As an integral part of Melange, Finstreet presents Pravartana 2015, a financial prod-uct modeling contest. It is a pan-India contest open to all MBA/PGDM students where participating teams have to come up with a new and innovative financial product and analyze the risk and returns of the portfolio using different parameters like NAV, Maturity period, Target customers, risk and return etc. The teams will be asked to develop a structured product which is a pre-packaged investment strategy based on instruments available in the capital market, derivative market, commodity market and debt market. Participants can make use of products like bonds, equities, market and debt market. Participants can make use of products like bonds, equities, ETFs, index based products, etc. The competition consists of three rounds, the first being an online quiz round followed by a synopsis submission detailing the designed product and finally the stage round where the finalist teams will be presenting their product.Like every year, this year too we have witnessed overwhelming participation from the prestigious B-Schools of India, which is an encouraging sign of increasing enthusiasm for the financial markets among the country’s youth. The journey has already begun and may the best team win!We are thankful to our sponsor, NSDL, for being associated with Pravartana and wholeheartedly supporting the event.
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PRAVARTANA 2015
The word ‘Buck’ came to be known as a dollar because originally a buck referred to a deerskin or buckskin was commonly used as money.
The symbol $ is derived from the Spanish dollar sign. In 1972, the US considered choosing the Spanish peso as the country’s currency. The abbreviation for the Spanish peso (PS) later transformed into a $.
