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Why is India trying to kill off the industry of domestic hedge funds ?
By contrast, equity investment in India by overseas financial investors is upward of $400 billion
By Andy Mukherjee | Bloomberg
Last Updated at July 16, 2019 06:57 IST
Illustration by Ajay Mohanty
India is killing off the one industry that can bring badly behaving tycoons into line while nudging savers away from an unproductive lust for gold.
That industry is domestic hedge funds, which have taken seven years to reach $6 billion in investment commitments from nothing. By contrast, equity investment in India by overseas financial investors is upward of $400 billion.
Even that measly $6 billion figure for so-called Category 3 Alternative Investment Funds overstates the industry’s development. Some managers of vanilla mutual funds now seek the AiF registration to avoid regulatory restrictions on what they can pay distributors for selling to mom-and-pop investors. Alternatives that are meant for the rich don’t have such restraints. But leave aside the pretenders. Rather than encourage a community of investment vigilantes who target firms falsifying accounts or stealing from investors, the Indian taxman is threatening to disband it.
The increase to 42.7% from 35.9% in the tax rate on annual earnings over 50 million rupees ($730,000), announced in the first annual budget after Prime Minister Narendra Modi’s reelection, has a more vocal victim: overseas funds investing in India. These are seeing red. Often structured as trusts or associations, they too will have to pay the higher levy that applies on all non-corporate income. The head of the tax authority in New Delhi has told them they’re “collateral damage.”
Offshore investors can always find other markets. What will onshore hedge fund managers do, except leave the country perhaps? Singapore doesn’t tax capital gains; in India profits on cash equities bought and sold within a year will be charged at 21%, up from 18%. It gets even more draconian. Alternative funds now have to withhold 42.7% of all income on derivatives trading before they pass on the returns to investors. This is bread and butter business for long-short hedge funds, which frequently use derivatives to mount leveraged bets. Worse, the ultimate investors won’t be able to set off that tax against any other business losses.
The Securities and Exchange Board of India, or SEBI, has always been suspicious of the source of capital for hedge funds investing in India from Singapore or Hong Kong. It believes dirty money – proceeds of crime, corruption or tax evasion – comes back home from offshore financial centers after being laundered. Whatever the rational basis of those fears, the regulator’s efforts to set up from scratch a domestic industry in alternative assets is being torpedoed by the taxman. “They may be unwittingly about to kill off the onshore hedge fund industry that SEBI created, even before it has begun to crawl,” Vijay Krishna-Kumar, head of IDFC Asset Management’s liquid alternatives investment, told me.
That would be a shame. Stamping out short sellers will tilt an already-skewed playing field even more toward long-only investors. Those who profit only when share prices rise will happily overlook corporate skulduggery, especially if the tycoons riding roughshod over minority shareholders make the fund managers feel important by giving them access. At this rate, India’s abysmal governance standards will never improve.
At $6 trillion, India’s household wealth is a fraction of China’s $52 trillion. Even so, the country had 343,000 dollar millionaires this time last year, according to Credit Suisse Group AG. For them, it’s important to have access to assets uncorrelated with stock market returns that they can replicate with index funds. If hedge funds die because of taxation, the rich in India will be left with two sub-optimal options. “Offshore tax centers can breathe easy now,” says Krishna-Kumar. “India will remain an underdeveloped market where only gold and property would be your alternatives.”
So much of India’s private wealth is trapped in gold that any more will be a colossal social waste. For a country that aims to elevate GDP to $5 trillion by the end of Modi’s second term in 2024, from $2.8 trillion now, India needs risk capital to go into productive assets. Yet policy makers are jacking up tax rates on the one avenue for risk-taking they should be nourishing. The money they collect will be chump change compared with the cost of the hedge fund industry’s arrested development.
Cronyism thrives on finance – and only finance can stop it. Without an industry that has their back, which analyst will pore over obscure company filings; meet suppliers, customers, and regulators; and use LinkedIn and Google Maps to verify whether employees and facilities exist? In India, taking on important people means risking one's livelihood – and even liberty. If nothing else, the domestic alternatives business is worth saving because it can speak truth to power and put its money where its mouth is.
Why is India trying to kill off the industry of domestic hedge funds?
Can somebody explain this to me in layman terms please.
By contrast, equity investment in India by overseas financial investors is upward of $400 billion
By Andy Mukherjee | Bloomberg
Last Updated at July 16, 2019 06:57 IST
Illustration by Ajay Mohanty
India is killing off the one industry that can bring badly behaving tycoons into line while nudging savers away from an unproductive lust for gold.
That industry is domestic hedge funds, which have taken seven years to reach $6 billion in investment commitments from nothing. By contrast, equity investment in India by overseas financial investors is upward of $400 billion.
Even that measly $6 billion figure for so-called Category 3 Alternative Investment Funds overstates the industry’s development. Some managers of vanilla mutual funds now seek the AiF registration to avoid regulatory restrictions on what they can pay distributors for selling to mom-and-pop investors. Alternatives that are meant for the rich don’t have such restraints. But leave aside the pretenders. Rather than encourage a community of investment vigilantes who target firms falsifying accounts or stealing from investors, the Indian taxman is threatening to disband it.
The increase to 42.7% from 35.9% in the tax rate on annual earnings over 50 million rupees ($730,000), announced in the first annual budget after Prime Minister Narendra Modi’s reelection, has a more vocal victim: overseas funds investing in India. These are seeing red. Often structured as trusts or associations, they too will have to pay the higher levy that applies on all non-corporate income. The head of the tax authority in New Delhi has told them they’re “collateral damage.”
Offshore investors can always find other markets. What will onshore hedge fund managers do, except leave the country perhaps? Singapore doesn’t tax capital gains; in India profits on cash equities bought and sold within a year will be charged at 21%, up from 18%. It gets even more draconian. Alternative funds now have to withhold 42.7% of all income on derivatives trading before they pass on the returns to investors. This is bread and butter business for long-short hedge funds, which frequently use derivatives to mount leveraged bets. Worse, the ultimate investors won’t be able to set off that tax against any other business losses.
The Securities and Exchange Board of India, or SEBI, has always been suspicious of the source of capital for hedge funds investing in India from Singapore or Hong Kong. It believes dirty money – proceeds of crime, corruption or tax evasion – comes back home from offshore financial centers after being laundered. Whatever the rational basis of those fears, the regulator’s efforts to set up from scratch a domestic industry in alternative assets is being torpedoed by the taxman. “They may be unwittingly about to kill off the onshore hedge fund industry that SEBI created, even before it has begun to crawl,” Vijay Krishna-Kumar, head of IDFC Asset Management’s liquid alternatives investment, told me.
That would be a shame. Stamping out short sellers will tilt an already-skewed playing field even more toward long-only investors. Those who profit only when share prices rise will happily overlook corporate skulduggery, especially if the tycoons riding roughshod over minority shareholders make the fund managers feel important by giving them access. At this rate, India’s abysmal governance standards will never improve.
At $6 trillion, India’s household wealth is a fraction of China’s $52 trillion. Even so, the country had 343,000 dollar millionaires this time last year, according to Credit Suisse Group AG. For them, it’s important to have access to assets uncorrelated with stock market returns that they can replicate with index funds. If hedge funds die because of taxation, the rich in India will be left with two sub-optimal options. “Offshore tax centers can breathe easy now,” says Krishna-Kumar. “India will remain an underdeveloped market where only gold and property would be your alternatives.”
So much of India’s private wealth is trapped in gold that any more will be a colossal social waste. For a country that aims to elevate GDP to $5 trillion by the end of Modi’s second term in 2024, from $2.8 trillion now, India needs risk capital to go into productive assets. Yet policy makers are jacking up tax rates on the one avenue for risk-taking they should be nourishing. The money they collect will be chump change compared with the cost of the hedge fund industry’s arrested development.
Cronyism thrives on finance – and only finance can stop it. Without an industry that has their back, which analyst will pore over obscure company filings; meet suppliers, customers, and regulators; and use LinkedIn and Google Maps to verify whether employees and facilities exist? In India, taking on important people means risking one's livelihood – and even liberty. If nothing else, the domestic alternatives business is worth saving because it can speak truth to power and put its money where its mouth is.
Why is India trying to kill off the industry of domestic hedge funds?
Can somebody explain this to me in layman terms please.
Data could be key in driving India towards a $5 trillion economy
The national data system is the mortar on which the scaffolding of the Indian economy will rest.
IANS | Updated: Jul 27, 2019, 11.53 AM IST
While oil was the central resource around which the world revolved in the twentieth century, the battle ground has shifted in recent times. Data is the oil of the digital era. A recently released documentary on Netflix, The Great Hack, based on the Cambridge Analytica scandal claims that data has become more valuable than oil as of last year. Even though the documentary focuses on the perils of personal data in the hands of a few corporates, there is a case to be made for how the right data in right hands can act as a powerful development tool.
India, for instance, has set an ambitious goal for itself of becoming a $5 trillion economy by 2024. A lot has been discussed and debated on the development target and its feasibility, but it cannot be denied that the goal is a worthy one to pursue and would require a focused approach by the government on key growth areas to obtain the desired results. Achieving optimal returns with limited resources in a short time frame will be a challenging ask. Data will play a key role in adopting a focused approach in this case.
The infrastructure of the national data system in India will be put to a test during these years. They are the mortar on which the scaffolding of the Indian economy will rest. Data needs to play a larger and larger role in the daily decision-making process of the government as it will make governance more informed and localized. Michael Lewis exemplified in his highly acclaimed book, Moneyball, on how the general manager of Oakland Athletics, Billy Beane, managed to build a better baseball team with less money using statistics and data analytics. His evidence-based approach allowed him to allocate resources judiciously and immediately brought the team at par with more well-endowed clubs.
Today, baseball teams have moved on from signing players based on gut instinct to using data analytics to inform its key decisions. Likewise, the Indian economy needs to adopt such an evidence-based decision-making approach. It will allow governments to gain a more holistic view of its citizens and help them better respond to the dynamically changing needs of the public. Since good governance is all about delivery, data should be the conduit on which it is based. Data-driven policy making also has the benefit of driving a more informed and rational public debate across the country.
On a promising note, data is already proving effective in generating societal returns across India. The relocation of people in Odisha before cyclones that could potentially kill thousands is one such example. Another major indication of data usage transforming into good governance came from the electoral results of the recent general elections. The BJP government in its first term had identified 115 districts as "aspirational" using a set of socio-economic indicators, which were quite simply the most underdeveloped regions in India. The poorest households in these districts were directly targeted with various social welfare schemes. In a recognition of the government efforts, the voters elected the BJP into power in over 60 per cent of the "aspirational" districts. Thus, data-based policy making evidently has a substantial impact on the people.
The Indian government has recognized the relevance of data in policymaking and put in place mechanisms that will deliver better quality of public data on development parameters. The Ministry of Housing and Urban Affairs has launched the DataSmart Cities to leverage data that can provide actionable intelligence on city governance. The Swachh Bharat Abhiyan (Clean India Mission) has been supplemented with a data-based initiative, the Swachh Survekshan (Cleanliness Survey) to access the performance of Indian regions on cleanliness and instill among them a competitive spirit.
Such steps towards data-based governance are in the right direction but need to be heavily ramped up to achieve the $5 trillion target. A large volume of data is still not available in digital format, which needs to be addressed. A lot of government departments are also reluctant or slow in sharing data. This trend needs to change and periodicity of data needs to be maintained to ensure timely and effective decision-making. Moreover, even when data is collected and published regularly, many government departments collect and collate them in silos using different formats and technology. This impedes its effective and efficient usage.
In times when data is becoming the most prized commodity, building a robust mechanism of its collection, publication and usage for policy decisions can give India a significant developmental push. However, it must also be noted that a critical dimension of data usage is the protection of personal information of citizens. It is a powerful tool that can transform lives but comes with privacy risks. A responsible usage of data analytics in governance is the need of the hour.
(Amit Kapoor is chair, Institute for Competitiveness. He can be contacted at [email protected] and tweets @kautiliya. Chirag Yadav, senior researcher, Institute for Competitiveness, has contributed to the article. Their recent book, The Age of Awakening, is now in stands.)
Data could be key in driving India towards a $5 trillion economy
The national data system is the mortar on which the scaffolding of the Indian economy will rest.
IANS | Updated: Jul 27, 2019, 11.53 AM IST
While oil was the central resource around which the world revolved in the twentieth century, the battle ground has shifted in recent times. Data is the oil of the digital era. A recently released documentary on Netflix, The Great Hack, based on the Cambridge Analytica scandal claims that data has become more valuable than oil as of last year. Even though the documentary focuses on the perils of personal data in the hands of a few corporates, there is a case to be made for how the right data in right hands can act as a powerful development tool.
India, for instance, has set an ambitious goal for itself of becoming a $5 trillion economy by 2024. A lot has been discussed and debated on the development target and its feasibility, but it cannot be denied that the goal is a worthy one to pursue and would require a focused approach by the government on key growth areas to obtain the desired results. Achieving optimal returns with limited resources in a short time frame will be a challenging ask. Data will play a key role in adopting a focused approach in this case.
The infrastructure of the national data system in India will be put to a test during these years. They are the mortar on which the scaffolding of the Indian economy will rest. Data needs to play a larger and larger role in the daily decision-making process of the government as it will make governance more informed and localized. Michael Lewis exemplified in his highly acclaimed book, Moneyball, on how the general manager of Oakland Athletics, Billy Beane, managed to build a better baseball team with less money using statistics and data analytics. His evidence-based approach allowed him to allocate resources judiciously and immediately brought the team at par with more well-endowed clubs.
Today, baseball teams have moved on from signing players based on gut instinct to using data analytics to inform its key decisions. Likewise, the Indian economy needs to adopt such an evidence-based decision-making approach. It will allow governments to gain a more holistic view of its citizens and help them better respond to the dynamically changing needs of the public. Since good governance is all about delivery, data should be the conduit on which it is based. Data-driven policy making also has the benefit of driving a more informed and rational public debate across the country.
On a promising note, data is already proving effective in generating societal returns across India. The relocation of people in Odisha before cyclones that could potentially kill thousands is one such example. Another major indication of data usage transforming into good governance came from the electoral results of the recent general elections. The BJP government in its first term had identified 115 districts as "aspirational" using a set of socio-economic indicators, which were quite simply the most underdeveloped regions in India. The poorest households in these districts were directly targeted with various social welfare schemes. In a recognition of the government efforts, the voters elected the BJP into power in over 60 per cent of the "aspirational" districts. Thus, data-based policy making evidently has a substantial impact on the people.
The Indian government has recognized the relevance of data in policymaking and put in place mechanisms that will deliver better quality of public data on development parameters. The Ministry of Housing and Urban Affairs has launched the DataSmart Cities to leverage data that can provide actionable intelligence on city governance. The Swachh Bharat Abhiyan (Clean India Mission) has been supplemented with a data-based initiative, the Swachh Survekshan (Cleanliness Survey) to access the performance of Indian regions on cleanliness and instill among them a competitive spirit.
Such steps towards data-based governance are in the right direction but need to be heavily ramped up to achieve the $5 trillion target. A large volume of data is still not available in digital format, which needs to be addressed. A lot of government departments are also reluctant or slow in sharing data. This trend needs to change and periodicity of data needs to be maintained to ensure timely and effective decision-making. Moreover, even when data is collected and published regularly, many government departments collect and collate them in silos using different formats and technology. This impedes its effective and efficient usage.
In times when data is becoming the most prized commodity, building a robust mechanism of its collection, publication and usage for policy decisions can give India a significant developmental push. However, it must also be noted that a critical dimension of data usage is the protection of personal information of citizens. It is a powerful tool that can transform lives but comes with privacy risks. A responsible usage of data analytics in governance is the need of the hour.
(Amit Kapoor is chair, Institute for Competitiveness. He can be contacted at [email protected] and tweets @kautiliya. Chirag Yadav, senior researcher, Institute for Competitiveness, has contributed to the article. Their recent book, The Age of Awakening, is now in stands.)
Data could be key in driving India towards a $5 trillion economy
Despite slowdown, realty sector gets $2.7 billion fund inflows in first half of 2019
With 50 percent of total investments, commercial assets has seen highest amount of investments.
By: PTI | Published: July 26, 2019 9:15:06 PM
Despite occupying the least share, investment into industrial assets, mainly comprising warehousing and logistics sector, has observed considerable interest in 2018 and 2019, notes the report.
Despite the continuing slowdown in the real estate sector driven mainly by various regulatory changes, the industry saw amongst $2.7 billion flowing into the market in the first half of 2019, says a report.
According to a report by Vestian-Ficci, the momentum of investment in the realty sector between 2015 and 2018 continued in the first half of 2019, with nearly $2.7 billion flowing in. Between 2015 and 2018, fund inflows stood touched $25.7 billion.
“The year 2019 has started on a positive note with about $2.7 billion flowing into real estate recorded in the first half. Improvement in infrastructure, roads, and the metro networks coupled with the increased speed of technology implementation can further boost investor interest,” the report said.
One of the major trends observed in the last decade has been the rise in institutional investment in real estate, particularly PE investments that has been a key factor in keeping the market confident about its revival, said the report, adding nearly 80 percent of institutional investments are accounted for by PE investors.
With 50 percent of total investments, commercial assets has seen highest amount of investments. The investment value in the segment was recorded at $14.2 billion during 2015-18, depicting several large-scale deals. This was followed by warehousing and logistics sector.
Despite occupying the least share, investment into industrial assets, mainly comprising warehousing and logistics sector, has observed considerable interest in 2018 and 2019, notes the report.
Some of the major deals into the logistic space is Logos India investing nearly USD 100 million in Casagrand Distripark in Chennai and Embassy Industrial Parks pumping around USD 50 million into DRA Projects in Bengaluru.
Despite slowdown, realty sector gets $2.7 billion fund inflows in first half of 2019
With 50 percent of total investments, commercial assets has seen highest amount of investments.
By: PTI | Published: July 26, 2019 9:15:06 PM
Despite occupying the least share, investment into industrial assets, mainly comprising warehousing and logistics sector, has observed considerable interest in 2018 and 2019, notes the report.
Despite the continuing slowdown in the real estate sector driven mainly by various regulatory changes, the industry saw amongst $2.7 billion flowing into the market in the first half of 2019, says a report.
According to a report by Vestian-Ficci, the momentum of investment in the realty sector between 2015 and 2018 continued in the first half of 2019, with nearly $2.7 billion flowing in. Between 2015 and 2018, fund inflows stood touched $25.7 billion.
“The year 2019 has started on a positive note with about $2.7 billion flowing into real estate recorded in the first half. Improvement in infrastructure, roads, and the metro networks coupled with the increased speed of technology implementation can further boost investor interest,” the report said.
One of the major trends observed in the last decade has been the rise in institutional investment in real estate, particularly PE investments that has been a key factor in keeping the market confident about its revival, said the report, adding nearly 80 percent of institutional investments are accounted for by PE investors.
With 50 percent of total investments, commercial assets has seen highest amount of investments. The investment value in the segment was recorded at $14.2 billion during 2015-18, depicting several large-scale deals. This was followed by warehousing and logistics sector.
Despite occupying the least share, investment into industrial assets, mainly comprising warehousing and logistics sector, has observed considerable interest in 2018 and 2019, notes the report.
Some of the major deals into the logistic space is Logos India investing nearly USD 100 million in Casagrand Distripark in Chennai and Embassy Industrial Parks pumping around USD 50 million into DRA Projects in Bengaluru.
Despite slowdown, realty sector gets $2.7 billion fund inflows in first half of 2019
Why is everything in dollars . Did India changed the currency or speaking English now should also include american currency?
Superdry to nearly double store count in India over next three years
British fashion clothing brand Superdry is set to nearly double store count in India over the next three years, adding over 30 stores in the market that it entered in 2012, through a franchise partnership with Reliance Brands Ltd, part of Reliance Industries.
Currently, Superdry that sells T-shirts, lowers, jackets and accessories for men and women has 35 stores in the country. The retailer, selling across multiple online sellers such as Myntra, and Ajio, is also rolling out its own e-commerce platform by mid-August. It also has presence in shop-in-shops here.
“We started in 2012 and over the period it has started to resonate very well with the Indian customers. I think it’s one of the most successful brands we have in the Reliance brand portfolio on the fashion side. We have 35 stores now as we talk today, and many shop-in-shops. The brand has grown from strength to strength to an extent that now our run rate of opening stores is at least 15-20 stores every year going forward," Manu Sharma, Business Head, Superdry said in an interview.
Sharma said improved mall supply over the last few years has prompted the brand to add more stores. Moreover, the brand has cut prices across its portfolio and recently added a personal care range to include fragrances to make the brand more accessible to younger and aspirational shoppers.
Around three years ago, the brand rationalised prices of its apparel, making the brand’s entry price points cheaper. “We were slightly expensive than the UK pricing—which is our cheapest market. Now, after UK, India is the cheapest market because we’ve ensured that the entry price points are at par with the UK pricing; we might be slightly higher in the mid to exit price points," Sharma said.
Last year it added SuperdrySport stores in India, a sub-brand that sells more gym wear for both men and women.
More recently the retailer rolled out its range of grooming products to include perfumes and body sprays for men and women, and hair and body washes starting at ₹399, that Sharma said is likely to draw more shoppers into the fold for the brand.
Currently these are being retailed across some of the brand’s outlets but will soon be distributed through major department and beauty stores across India.
“Grooming is a growing space. We want to be part of the story. We want to get in to a very strong positioning especially in men’s fragrance, toiletries line. That’s currently what we’re betting on but we’ll expand the range as we go on. We priced the product very very aggressively, something we’ve never done," Sharma said.
He said over the years the brand’s target audience in India has evolved to reach more mature shoppers. “Typically, people aged between 15-30 is the core target group for the brand that we have and beyond that we have, over the period started resonating a lot with customers in the higher age bracket as well.
This, Sharma said, is the result of the brand introducing shirts, polos etc which now appeal to middle-aged working consumers.
Reliance Brands Ltd is subsidiary of Reliance Industries Ltd and manages over 40 brands in its portfolio including luxury and premium fashion labels such as Kate Spade, Muji, Steve Madden, Superdry, Diesel, Hunkemoller, Iconix, Juicy Couture, among others.
Superdry to nearly double store count in India over next three years
British fashion clothing brand Superdry is set to nearly double store count in India over the next three years, adding over 30 stores in the market that it entered in 2012, through a franchise partnership with Reliance Brands Ltd, part of Reliance Industries.
Currently, Superdry that sells T-shirts, lowers, jackets and accessories for men and women has 35 stores in the country. The retailer, selling across multiple online sellers such as Myntra, and Ajio, is also rolling out its own e-commerce platform by mid-August. It also has presence in shop-in-shops here.
“We started in 2012 and over the period it has started to resonate very well with the Indian customers. I think it’s one of the most successful brands we have in the Reliance brand portfolio on the fashion side. We have 35 stores now as we talk today, and many shop-in-shops. The brand has grown from strength to strength to an extent that now our run rate of opening stores is at least 15-20 stores every year going forward," Manu Sharma, Business Head, Superdry said in an interview.
Sharma said improved mall supply over the last few years has prompted the brand to add more stores. Moreover, the brand has cut prices across its portfolio and recently added a personal care range to include fragrances to make the brand more accessible to younger and aspirational shoppers.
Around three years ago, the brand rationalised prices of its apparel, making the brand’s entry price points cheaper. “We were slightly expensive than the UK pricing—which is our cheapest market. Now, after UK, India is the cheapest market because we’ve ensured that the entry price points are at par with the UK pricing; we might be slightly higher in the mid to exit price points," Sharma said.
Last year it added SuperdrySport stores in India, a sub-brand that sells more gym wear for both men and women.
More recently the retailer rolled out its range of grooming products to include perfumes and body sprays for men and women, and hair and body washes starting at ₹399, that Sharma said is likely to draw more shoppers into the fold for the brand.
Currently these are being retailed across some of the brand’s outlets but will soon be distributed through major department and beauty stores across India.
“Grooming is a growing space. We want to be part of the story. We want to get in to a very strong positioning especially in men’s fragrance, toiletries line. That’s currently what we’re betting on but we’ll expand the range as we go on. We priced the product very very aggressively, something we’ve never done," Sharma said.
He said over the years the brand’s target audience in India has evolved to reach more mature shoppers. “Typically, people aged between 15-30 is the core target group for the brand that we have and beyond that we have, over the period started resonating a lot with customers in the higher age bracket as well.
This, Sharma said, is the result of the brand introducing shirts, polos etc which now appeal to middle-aged working consumers.
Reliance Brands Ltd is subsidiary of Reliance Industries Ltd and manages over 40 brands in its portfolio including luxury and premium fashion labels such as Kate Spade, Muji, Steve Madden, Superdry, Diesel, Hunkemoller, Iconix, Juicy Couture, among others.
Superdry to nearly double store count in India over next three years
Opinion | Cashless India could be a model for the world
3 min read . Updated: 06 Jun 2019, 08:42 AM IST, Bloomberg
- From nothing to 800 million monthly transactions in less than three years, India’s UPI has taken off
- Growing smartphone use and crashing data costs have helped cashless economy to grow immensely
Online sales, though, are a sliver of overall Indian retail. Photo: Pradeep Gaur/Mint
India aims to curb cash – but this time it wants to do it properly.
A cashless society wasn’t the original goal of the country’s draconian currency ban in November 2016. But when an acute shortage of banknotes gave a fillip to digital wallets, that purpose was added as an afterthought to justify an act of farcical state overreach.
View attachment 7195
The real innovation in mobile payments in India began a few months prior to the cash ban. It’s called a unified payment interface, or UPI. The name is clunky, but the idea is simple. One smartphone owner who’s a customer of Bank A can request a payment from, or initiate a payment to, another owner who has an account with Bank B. Neither party needs to know anything more than each other’s mobile number or a virtual ID. They don’t even need to use the same mobile app to transact.
In this, India was ahead of even Asian money centers like Singapore and Hong Kong. With more than 140 Indian banks sharing the interface, and Alphabet Inc.’s Google and Facebook Inc.’s WhatsApp offering instantaneous payment services on it, UPI has become a keenly watched experiment. By the looks of it, things are going well: From nothing to 800 million monthly transactions in less than three years, India’s UPI has taken off. Growing smartphone use and crashing data costs have helped immensely.
Now a committee set up by the central bank under Nandan Nilekani, the technology entrepreneur best known for creating the world’s largest repository of citizens’ biometric data, wants to expand the platform to foreign-currency remittances by the non-resident Indian diaspora as well as to settle residents’ payments when they travel overseas. “This is like Chinese users being able to use WeChat in many jurisdictions," Nilekani’s panel said in its report released this week.
Assuming the suggestion gets implemented, India will have its own WeChat Pay. But since it’s an open-source technology, there won’t be one Tencent Holdings Ltd. owning it. Google and WhatsApp will fight for market share. So will PhonePe, now owned by Walmart Inc. as well as new entrant Amazon Pay, which hasn’t made much of a dent globally into PayPal’s dominance of e-commerce. Indian banks that run their own UPI services, as well as Indian tycoon Mukesh Ambani’s JioMoney, will be in the race, together with Paytm, a popular digital wallet.
View attachment 7196
Who will succeed in this crowded field? News reports give a lead to Google, though that could change as people-to-merchant payments start to dominate people-to-people transactions. In e-commerce payments, competition will be stiff between Amazon.com Inc. and Walmart. Online sales, though, are a sliver of overall Indian retail. With more than 300 million subscribers for his Jio mobile service, Ambani now wants to win over small stores, which are reluctant to go cashless because of high card fees. If his telecom, retail and payments operations can jump the hurdle of a new data privacy law and come together seamlessly, a Jio phone user visiting her neighborhood grocer could get discount vouchers via SMS from Unilever’s Indian unit and in-store credit offers from State Bank of India. And if Jio runs a so-called open-banking platform to help small stores order goods and manage cash, consumer spending will circulate between merchants’ and suppliers’ accounts held at Jio Payments Bank. The float will be Ambani’s moat.
View attachment 7197
Despite all the drama around the currency ban, cash is still king in India. After growing fivefold in five years, annual per capita digital transactions have reached 22, compared with 34 in Indonesia and 782 in Singapore in 2017. Nilekani’s panel is pushing for 220 by March 2021. That’s a lot of transactions in a country of 1.3 billion people. With fair competition between local players and global tech, 10-fold growth may not be a pipe dream. Walmart shareholders, worried about the costly Flipkart acquisition, will be rooting for PhonePe. Masayoshi Son and Warren Buffett will keep an eye on their Paytm stakes. Everyone will watch Ambani.
India going cashless will be as much a story of Prime Minister Narendra Modi’s second term as it was of his first. This time around, it may have a happier ending.
This story has been published from a wire agency feed without modifications to the text.
Opinion | Cashless India could be a model for the world
India 52nd most innovative nation globally, says Global Innovation Index; up from 57 last year
The 12th edition of the Global Innovation Index (GII) -- an annual ranking of countries in terms of their capacity for innovation and success in it has ranked India as the 52nd most innovative country globally in its 12th edition.
Among the top 100 innovation hubs or clusters identified by GII this year were India’s Bengaluru, New Delhi, and Mumbai.
The 12th edition of the Global Innovation Index (GII) — an annual ranking of countries in terms of their capacity for innovation and success in it has ranked India as the 52nd most innovative country globally in its 12th edition. Published by INSEAD, Cornell University, and World Intellectual Property Organisation (WIPO), India has consistently improved its ranking in GII since 2015 when it was ranked at 81 followed by 66, 60, and 57 positions in 2016, 2017, and 2018 respectively. GII 2019 has ranked innovation performance of 120 economies globally relying on 80 indications. India, for the first time, hosted the launch of GII.
“Innovation has become central to the government’s innovation policy. India has emerged as the most innovative economy in the Central and South Asian region. This is the biggest rise among the world’s major economies. India’s rise in 4 years from 81 in 2015 to 52 is a remarkable achievement that reflects India’s innovation performance relative to other countries,” said Naresh Prasad, Assistant Director-General & Chief of Staff, WIPO during the launch of GII on Wednesday.
“We are very pleased with the progress that we have made but we know we have a long way to go. We would like to partner with other countries and share best practices with them on innovation,” said Ramesh Abhishek, Secretary, Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry.
Switzerland led the GII 2019 as the most innovative country on earth followed by Sweden, the US, the Netherlands, the UK, Finland, Denmark, Singapore, Germany, and Israel. The pecking order remained the same as last year with Israel as the only new country breaking into the top 10 rankings.
Among the top 100 innovation hubs or clusters identified by GII this year were India’s Bengaluru, New Delhi, and Mumbai. “Our aspiration should be to get in top 10 in years ahead,” said Naushad Forbes, Past President, CII and Co-Chairman, Forbes Marshall. “We invest around 0.4 of our GDP on research done in higher education. The global average is 4 per cent. So we need to improve this by a factor of 10,” said Forbes adding that the funding should shift to autonomous labs in the higher education system.
“Innovation doesn’t come new to India,” said Piyush Goyal Minister of Commerce and Industry and Minister of Railways. Historically Aryabhatta invented number Zero which probably is the mother of all invention in mathematics, science etc, Goyal said. “We are a couple of ranks shorter than our desires (for rank this year) were, but I still have a lot of satisfaction that we are making significant progress and culture of innovation is taking centre stage,” he added.
India 52nd most innovative nation globally, says Global Innovation Index; up from 57 last year
The 12th edition of the Global Innovation Index (GII) -- an annual ranking of countries in terms of their capacity for innovation and success in it has ranked India as the 52nd most innovative country globally in its 12th edition.
The 12th edition of the Global Innovation Index (GII) — an annual ranking of countries in terms of their capacity for innovation and success in it has ranked India as the 52nd most innovative country globally in its 12th edition. Published by INSEAD, Cornell University, and World Intellectual Property Organisation (WIPO), India has consistently improved its ranking in GII since 2015 when it was ranked at 81 followed by 66, 60, and 57 positions in 2016, 2017, and 2018 respectively. GII 2019 has ranked innovation performance of 120 economies globally relying on 80 indications. India, for the first time, hosted the launch of GII.
“Innovation has become central to the government’s innovation policy. India has emerged as the most innovative economy in the Central and South Asian region. This is the biggest rise among the world’s major economies. India’s rise in 4 years from 81 in 2015 to 52 is a remarkable achievement that reflects India’s innovation performance relative to other countries,” said Naresh Prasad, Assistant Director-General & Chief of Staff, WIPO during the launch of GII on Wednesday.
“We are very pleased with the progress that we have made but we know we have a long way to go. We would like to partner with other countries and share best practices with them on innovation,” said Ramesh Abhishek, Secretary, Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry.
Switzerland led the GII 2019 as the most innovative country on earth followed by Sweden, the US, the Netherlands, the UK, Finland, Denmark, Singapore, Germany, and Israel. The pecking order remained the same as last year with Israel as the only new country breaking into the top 10 rankings.
Among the top 100 innovation hubs or clusters identified by GII this year were India’s Bengaluru, New Delhi, and Mumbai. “Our aspiration should be to get in top 10 in years ahead,” said Naushad Forbes, Past President, CII and Co-Chairman, Forbes Marshall. “We invest around 0.4 of our GDP on research done in higher education. The global average is 4 per cent. So we need to improve this by a factor of 10,” said Forbes adding that the funding should shift to autonomous labs in the higher education system.
“Innovation doesn’t come new to India,” said Piyush Goyal Minister of Commerce and Industry and Minister of Railways. Historically Aryabhatta invented number Zero which probably is the mother of all invention in mathematics, science etc, Goyal said. “We are a couple of ranks shorter than our desires (for rank this year) were, but I still have a lot of satisfaction that we are making significant progress and culture of innovation is taking centre stage,” he added.
India 52nd most innovative nation globally, says Global Innovation Index; up from 57 last year
Because our media is now reaching the global audience, and everybody understands dollars.
Also it's a very good standard to compare things and most of the times we are actually talking about real dollars itself, be it forex or FDI, it's real dollars incoming or outgoing.
India's auto parts makers warn of 1 million job cuts if slowdown continues
India's auto parts industry could be forced to slash a fifth of its 5 million or so workforce if the slowdown in vehicle sales continues, the president of the country's largest industry group for auto parts makers said.
India's auto industry is in the middle of one of its worst slumps. Passenger vehicle sales fell 18.4 percent in the first quarter, and monthly passenger vehicle sales in June fell by the biggest margin in 18 years.
The slump has prompted automakers to cut production and automakers and parts makers to cut jobs.
The drop in production "has led to a crisis like situation in the auto component sector," Ram Venkataramani, president of the Automotive Component Manufacturers Association of India (ACMA), said in a statement late on July 24. "If the trend continues, an estimated 1 million people could be laid-off."
The slump in the auto sector, which accounts for nearly half of India's manufacturing output, has been a major factor behind the slide in economic growth to a five-year low earlier this year.
Venkataramani said investments in the auto sector have been frozen due to a lack of government clarity on its electric vehicles (EVs) policy. He said a government plan to speed up the rollout of EVs would raise India's import bill and damage prospects for auto components manufacturers.
Venkataramani also called for a cut in the goods and services tax for the vehicles and auto component sector.
India's auto parts industry could be forced to slash a fifth of its 5 million or so workforce if the slowdown in vehicle sales continues, the president of the country's largest industry group for auto parts makers said.
India's auto industry is in the middle of one of its worst slumps. Passenger vehicle sales fell 18.4 percent in the first quarter, and monthly passenger vehicle sales in June fell by the biggest margin in 18 years.
The slump has prompted automakers to cut production and automakers and parts makers to cut jobs.
The drop in production "has led to a crisis like situation in the auto component sector," Ram Venkataramani, president of the Automotive Component Manufacturers Association of India (ACMA), said in a statement late on July 24. "If the trend continues, an estimated 1 million people could be laid-off."
The slump in the auto sector, which accounts for nearly half of India's manufacturing output, has been a major factor behind the slide in economic growth to a five-year low earlier this year.
Venkataramani said investments in the auto sector have been frozen due to a lack of government clarity on its electric vehicles (EVs) policy. He said a government plan to speed up the rollout of EVs would raise India's import bill and damage prospects for auto components manufacturers.
Venkataramani also called for a cut in the goods and services tax for the vehicles and auto component sector.
India's auto parts makers warn of 1 million job cuts if slowdown continues
India's auto parts industry could be forced to slash a fifth of its 5 million or so workforce if the slowdown in vehicle sales continues, the president of the country's largest industry group for auto parts makers said.
India's auto industry is in the middle of one of its worst slumps. Passenger vehicle sales fell 18.4 percent in the first quarter, and monthly passenger vehicle sales in June fell by the biggest margin in 18 years.
The slump has prompted automakers to cut production and automakers and parts makers to cut jobs.
The drop in production "has led to a crisis like situation in the auto component sector," Ram Venkataramani, president of the Automotive Component Manufacturers Association of India (ACMA), said in a statement late on July 24. "If the trend continues, an estimated 1 million people could be laid-off."
The slump in the auto sector, which accounts for nearly half of India's manufacturing output, has been a major factor behind the slide in economic growth to a five-year low earlier this year.
Venkataramani said investments in the auto sector have been frozen due to a lack of government clarity on its electric vehicles (EVs) policy. He said a government plan to speed up the rollout of EVs would raise India's import bill and damage prospects for auto components manufacturers.
Venkataramani also called for a cut in the goods and services tax for the vehicles and auto component sector.
India's auto parts industry could be forced to slash a fifth of its 5 million or so workforce if the slowdown in vehicle sales continues, the president of the country's largest industry group for auto parts makers said.
India's auto industry is in the middle of one of its worst slumps. Passenger vehicle sales fell 18.4 percent in the first quarter, and monthly passenger vehicle sales in June fell by the biggest margin in 18 years.
The slump has prompted automakers to cut production and automakers and parts makers to cut jobs.
The drop in production "has led to a crisis like situation in the auto component sector," Ram Venkataramani, president of the Automotive Component Manufacturers Association of India (ACMA), said in a statement late on July 24. "If the trend continues, an estimated 1 million people could be laid-off."
The slump in the auto sector, which accounts for nearly half of India's manufacturing output, has been a major factor behind the slide in economic growth to a five-year low earlier this year.
Venkataramani said investments in the auto sector have been frozen due to a lack of government clarity on its electric vehicles (EVs) policy. He said a government plan to speed up the rollout of EVs would raise India's import bill and damage prospects for auto components manufacturers.
Venkataramani also called for a cut in the goods and services tax for the vehicles and auto component sector.
India's auto parts makers warn of 1 million job cuts if slowdown continues
Is India as fiscally fit as it is shown to be?
In 1995, when the US’ growth dipped from the previous year’s supercharged 4% to 2.7%, one of the finest macroeconomists of our time was the vice-chairman of the board of governors of the Federal Reserve. He had earlier advised President Bill Clinton as a member of the Council of Economic Advisers.
In 1995, when Clinton asked for his opinion, Alan Blinder replied, “Well, a little inflation can’t do any harm.” Immediately, Blinder found himself cornered by the Boston Brahmins of the conservative establishment, led by their boss, Alan Greenspan. These folks had notions about economics that would make John Maynard Keynes’ ideas look like a Naxal conspiracy.
Blinder’s recipe was to boost growth by pushing public spending on good things like healthcare, education & infrastructure, and if this meant a slight slippage from deficit targets and slightly higher prices, well, that was aprice well paid for boosting growth and jobs.
Inflate and Use
Now, this was a time when Greenspan and his cronies were focused on hiking interest rates to choke off inflation, and to hell with what it did to jobs and growth. Greenspan & Co were not outliers. All politicians, bureaucrats and sarkari folk hanker for a system that’s Goldilocks-perfect: not too hot, not too cold, just right.
So, inflation, which is a tax on the poor, has to be modest. To achieve that, interest rates, the cost of borrowing, has to be kept low. This should boost growth and jobs. But once growth picks up, prices are likely to rise, which needs interest rates to be bumped up to divert cash from consumption to savings, which hikes the costs of borrowing for the government and everyone else.…
In this sort of system with many moving parts, most of which impact the others, it’s impossible to device a unique, platonic, Policy of Everything. Economists develop insomnia doing the algebra to constantly calibrate all sorts of stuff, just so everything doesn’t blow up as a consequence of a midnight tweet from Donald Trump.
Politicians have sweet dreams of low inflation, jobs for all, the poor getting rich (and the rich, richer), government pouring an endless stream of money for good works. And the fiscal deficit, a two-word phrase bandied around by global busybodies and banks, is a neon-lit 3% of GDP.
Yet, once in a while, the mosquito of reality bites, politicians and babus realise that valves are bursting at the seams, engines are stalling, momentum is lost and the economy might be crashing. Never mind, it says, tell the people everything’s fine: food is cheap, jobs will come, electricity is free, so buy electric cars and save fuel costs. Love your toilets and 3% fiscal deficit.
Thus it was for the Narendra Modi regime. All of a sudden, people started asking how, when every individual sector was sputtering, their sumtotal, the economy, was racing ahead? Surely 2+2 couldn’t be anything greater than 4?
Then the government refused to release a report by India’s top official statistical office, which leaked to media showed joblessness in India at a 45-year high. Mumbai-based Centre for Monitoring Indian Economy (CMIE) showed through its own samples that in 2006-07, nearly 8% of all implemented projects were completed each year. This number fell to 5.4% last fiscal.
Rechecked, Reconfirmed
But now it looks like statistical Armageddon is upon us. On Thursday, Dinesh Narayanan reported in ET (bit.do/e2VQ4) that the venerable Comptroller and Auditor General (CAG) of India, charged with checking the books of every sarkari department, ministry and State-owned company, says official fiscal deficit number, around 3.5% of GDP in 2017-18, was, well, a gross understatement of the actuals.
CAG says what many had suspected over the last few years: GoI was removing large chunks of its spending from its own accounts, and dumping them on State-owned insurers, financial institutions and public sector companies.
Sometimes, it simply forgot to note its arrears to other departments. So, chunks of unpaid food and fertiliser sops haven’t been noted in the Budget. Cooking gas subsidies have been paid by State-owned oil companies like Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL). There’s much more: liabilities of Power Finance Corporation, Indian Railways, the highway authority and so on have been brushed under the charpoy.
CAG reckons if all these ‘off-Budget’ deals were accounted for, India’s fiscal deficit would be 5.85% of GDP, not a comforting 3.5%. In rupee terms, GoI’s actual deficit is nearly Rs 4.1 lakh crore, 61% higher than the reported number.
In Lewis Carroll’s Through the Looking-Glass, after Alice tells the White Queen, “One can’t believe impossible things,” the Queen retorts, “I daresay you haven’t had much practice.… Why, sometimes I’ve believed as many as six impossible things before breakfast.” New Delhi has proved it can beat the Queen before she finishes muttering ‘fiscal deficit’.
View: Is India as fiscally fit as it is shown to be?
In 1995, when the US’ growth dipped from the previous year’s supercharged 4% to 2.7%, one of the finest macroeconomists of our time was the vice-chairman of the board of governors of the Federal Reserve. He had earlier advised President Bill Clinton as a member of the Council of Economic Advisers.
In 1995, when Clinton asked for his opinion, Alan Blinder replied, “Well, a little inflation can’t do any harm.” Immediately, Blinder found himself cornered by the Boston Brahmins of the conservative establishment, led by their boss, Alan Greenspan. These folks had notions about economics that would make John Maynard Keynes’ ideas look like a Naxal conspiracy.
Blinder’s recipe was to boost growth by pushing public spending on good things like healthcare, education & infrastructure, and if this meant a slight slippage from deficit targets and slightly higher prices, well, that was aprice well paid for boosting growth and jobs.
Inflate and Use
Now, this was a time when Greenspan and his cronies were focused on hiking interest rates to choke off inflation, and to hell with what it did to jobs and growth. Greenspan & Co were not outliers. All politicians, bureaucrats and sarkari folk hanker for a system that’s Goldilocks-perfect: not too hot, not too cold, just right.
So, inflation, which is a tax on the poor, has to be modest. To achieve that, interest rates, the cost of borrowing, has to be kept low. This should boost growth and jobs. But once growth picks up, prices are likely to rise, which needs interest rates to be bumped up to divert cash from consumption to savings, which hikes the costs of borrowing for the government and everyone else.…
In this sort of system with many moving parts, most of which impact the others, it’s impossible to device a unique, platonic, Policy of Everything. Economists develop insomnia doing the algebra to constantly calibrate all sorts of stuff, just so everything doesn’t blow up as a consequence of a midnight tweet from Donald Trump.
Politicians have sweet dreams of low inflation, jobs for all, the poor getting rich (and the rich, richer), government pouring an endless stream of money for good works. And the fiscal deficit, a two-word phrase bandied around by global busybodies and banks, is a neon-lit 3% of GDP.
Yet, once in a while, the mosquito of reality bites, politicians and babus realise that valves are bursting at the seams, engines are stalling, momentum is lost and the economy might be crashing. Never mind, it says, tell the people everything’s fine: food is cheap, jobs will come, electricity is free, so buy electric cars and save fuel costs. Love your toilets and 3% fiscal deficit.
Thus it was for the Narendra Modi regime. All of a sudden, people started asking how, when every individual sector was sputtering, their sumtotal, the economy, was racing ahead? Surely 2+2 couldn’t be anything greater than 4?
Then the government refused to release a report by India’s top official statistical office, which leaked to media showed joblessness in India at a 45-year high. Mumbai-based Centre for Monitoring Indian Economy (CMIE) showed through its own samples that in 2006-07, nearly 8% of all implemented projects were completed each year. This number fell to 5.4% last fiscal.
Rechecked, Reconfirmed
But now it looks like statistical Armageddon is upon us. On Thursday, Dinesh Narayanan reported in ET (bit.do/e2VQ4) that the venerable Comptroller and Auditor General (CAG) of India, charged with checking the books of every sarkari department, ministry and State-owned company, says official fiscal deficit number, around 3.5% of GDP in 2017-18, was, well, a gross understatement of the actuals.
CAG says what many had suspected over the last few years: GoI was removing large chunks of its spending from its own accounts, and dumping them on State-owned insurers, financial institutions and public sector companies.
Sometimes, it simply forgot to note its arrears to other departments. So, chunks of unpaid food and fertiliser sops haven’t been noted in the Budget. Cooking gas subsidies have been paid by State-owned oil companies like Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL). There’s much more: liabilities of Power Finance Corporation, Indian Railways, the highway authority and so on have been brushed under the charpoy.
CAG reckons if all these ‘off-Budget’ deals were accounted for, India’s fiscal deficit would be 5.85% of GDP, not a comforting 3.5%. In rupee terms, GoI’s actual deficit is nearly Rs 4.1 lakh crore, 61% higher than the reported number.
In Lewis Carroll’s Through the Looking-Glass, after Alice tells the White Queen, “One can’t believe impossible things,” the Queen retorts, “I daresay you haven’t had much practice.… Why, sometimes I’ve believed as many as six impossible things before breakfast.” New Delhi has proved it can beat the Queen before she finishes muttering ‘fiscal deficit’.
View: Is India as fiscally fit as it is shown to be?
Strange that only Indian media uses dollars. But not British or any other non US media uses dollars . It seems even with 1.3 billion people India media cares too much about global audience with copy paste articles.
We are talking because media is putting things into our mind. When was last time you see a Chinese or BBC using dollars for local economy .
Chinese do it all over the place:
China to spend over $65 bln on VR/AR by 2023: report
Their whole spiel (at least internet trolls) after all is USD nominal GDP is be-all end-all.
Pound sterling, Yen, Euro (through DM) are heritage currencies in world economy one could argue, so their respective domestic media uses them side by side with USD.
But Chinese dont use English like us. Its foreign propaganda channels. But these are our domestic channel with target audience being Indians .
>Pound sterling, Yen, Euro (through DM) are heritage currencies in world economy one could argue, so their respective domestic media uses them side by side with USD.
Bullshit .NRI/PIO are just lazy even to use rupee . India cannot become great nation if people don't know how behave like one . If all those currency are. Heritage currency then so be rupee too. If ourselves dont promote Indian things foreigners dont promote it for us.
People read for quality of news,. If Indians can read foreign news with non rupee currency for quality news , then so can others read indan things . wedont need to spoon feed others , rest of the world is not dumb .
PS : I am not talking about nominal GDP. But recent trend of using everything im usd instead of rupees .
Slow down man first know about world economic system then insert nationalism into it.
There are 6 major pair of foreign currencies that are traded in forex -
These currencies are pretty strong and stable unlike INR which is 70Rs per USD. Recently Chinese currency is also gaining momentum, it's kind of stable from sometime but still not used as a reference point.
As far as argument of English media in China using USD term goes, you can read Hindi news they mostly use Hazar Crore, Lakh Crore Rupees in economy related articles.
Nationalism is good but decoupled from rationality it looks very stupid.