Money

“An investment in knowledge pays the best interest.”- Benjamin Franklin

“I made a killing in the stock market; my broker lost all my money, so I killed him.” –Jim Loy

First quote holds the forte of truth everywhere and more so in financial investment and wealth management, probably with greater importance.

Second quote, though on a lighter note is another aspect of the stock market; if you don’t invest in educating yourself about fundamentals, probabilities, permutation and combination, you will lose whatever you have earned and much more.

Internet has made all the information available to us on our fingertips, but unless and until the information is vetted by a person of authority, they are meaningless. That’s why; we decided to cut the clutter and take you away from routine and bring you the wisdom of someone who has been in this industry for close to two decades.

Mr. Sameer Kapoor, CEO of Elite Wealth Advisors Ltd. has close to two decades of experience in the Financial Market. He has worked as Senior Vice President with Religare Ltd, VP – Online Business with HSBC InvestDirect (India) Ltd., ILFS, Mansukh Securities and Mefcom. For majority of the time he was building up and growing the Online Business on pan India basis.

His LinkedIn Bio reads,”Blogger by choice, Finance Enthusiast, Speaker”, and believe us, he excels in everything that he has written. But what he modestly didn’t mention in his profile is that he is an astute and avid inbound marker, helping the information to spread and businesses to grow. His two blogs www.simplypaisa.com and www.mysharebazar.com provides great insight of the financial market and handholds the end users in the process of intelligent investing. He is a Chartered Financial Analyst (CFA) from ICFAI, Masters of Financial Management from Pondicherry University and B.Com from Delhi University.

Let’s learn together from his knowledge and experience….

Review Board: Journey of investment sentiment in India starts from greed and reaches indifference travelling via fear and despair. Is it the scenario only in India or also in the rest of the world? Has intelligent investing ever been a pattern or will it ever be the pattern in future and if yes, then what does it look like?

Sameer Kapoor: Any investment that makes decent returns can be considered as intelligent investing and if I guess it right, Indians have always made decent money whether it is in Stock Markets or with Real Estate. The only difference of opinion comes when you actually wish to evaluate your decision.

The invested capital in couple of days may be giving different returns in terms of IRR as compared to that of couple of years. So it is important for investors to define the tenure of investment before investing.

Upcoming breed of Wealth Management businesses are very well articulating these things and will surely redefine the perception.

Review Board: What advice would you give to small investors for intelligent investing?

Sameer Kapoor: A small investor looking to invest should clearly define and most importantly correlate Risk, Return expectation and Tenure. Any uneven proposition giving very high returns may not be recurring or may not be true also.

I haven’t seen Super Heroes in my entire career so only capabilities seemingly true for a human should be trusted upon.

Review Board: Mess in the Indian financial system and the mistrust of common man in the people running this market is largely of their own doing. Their greed has definitely done a huge damage. What are the short and long term steps that need to be taken to restore the faith of common man and strengthen the structure of financial system once again?

Sameer Kapoor: Greed of little better returns brings everyone to these markets so nothing bad in this. Difficult part is that very few people with limited capital exposure and practically no discipline in their investing approach tries to represent the very large mass of small and big investors. Increasing market capitalization with more and more IPOs/Public issues getting over subscribed reflects confidence of people only. Historically, we have seen returns of people invested in businesses through stock markets have outperformed that of any other financial asset class like FDs or Gold.

SEBI always keeps bringing measures to bring more and more confidence of investors and is doing a great job.

Review Board: Whatever happened in 2007-08 due to US Subprime crisis is nothing when we compare to something like China, US and Global debt scenario. Chinese total debt crossed $33 Trillion few years ago, which is three times more than their GDP. Global debt stands at more than $217 Billion against the Global GDP of around $65 Trillion. What is your opinion on that? How long will this bubble sustain? What is your advice to common man to safeguard himself from any such eventuality?

Sameer Kapoor: I guess Global debt figures are in Trillions and I think it stood at $237Tn for Q3 2017. See, high debt figures are always alarming and creates a risk of afloat.

A major component of this debt comes from Governments who borrow money to fund social schemes. Here you will find few which will have extremely high debt and few with very manageable debt.

As an investor, I would like to be in a place which are producing growth and using debt to manage that growth. Others which are using debt just to fund their facilities are bound to see a bad day in future times. This may be very high depreciation in currency or extreme inflation or total economic fiasco. However, few hard workers will sustain their growth and come with some amazing numbers.

I would certainly be on the side of these hard working borrowers rather than crying on few lethargic borrowers. Similar to this, investing in such companies always yield good returns as their management understand how to sail through difficult times and grow business.

Review Board: Under the current Market scenario when SEBI has been proactively tightening the rules and regulations for Market Operators reducing the maneuverability, how do you see it impacting the Brokers?

Sameer Kapoor: Definitely, it is going to impact the complete broking business. I feel broking business is going through a big change.

It is getting primarily divided among investors and traders. While Traders are getting more focuses on derivatives and automated trading. Investors are trying to outsource their direct interaction with markets to Portfolio Managers and Investment advisors. Both sides are witnessing a big growth and newer technological advancement.

A traditional way of calling and servicing clients is slowly getting outdated and speedily getting replaced with self service or completely outsourced approach.

Review Board: In this digital era, customers are educated and informed. It has made customer acquisition easy and tough, both at the same time. Easy, because sales team is not required to spend good amount of time on educating the customer about the product or services and tough, because customer is already informed and has multiple choices. So, what would be your advice to anyone looking to acquire new customer?

Sameer Kapoor: Business never gets tough with customer education rather one needs to find a way to service this educated customer in a most cost efficient way and reduce cost associated to such customer education.

Online has come up as a most preferred way for individual investors as it brings convenience to access and operate, freedom to choose own investing method and cost efficiency with reduced pricing models. It is now a proven fact that Online is not only better than in Brick and Mortar model in Acquisition but also in Servicing.

Businesses now see a lot of competition on online space also but the smarter one still find their niche and create acquisition spree. Within Online, now there are multiple ways to generate opportunities but cost efficiency is the name of the game.

Online Marketing is not like what it used to be 10 years back but has changed shape. My three key advices would be

• Never hire any person for Online marketing who do not understand the Industry.
• Maintain your online reputation as the recourse from bad reputation in online space is very difficult.
• Never rely on business model which depends on customer ignorance as awareness spreads very fast online and will eventually destroy your business.

We had great time talking to Mr. Kapoor and few things which came out prominently from our discussion were:

• Educate yourself about the battle you are getting into.
• Whoever you are; evaluate the risk, reward and time frame.
• Stick to the normal, expect what is humanly possible. -
• Little bit greed is good, because that’s what brings you to the market, but overstretching is not only bad for you but the market as well.
• Online marketing has changed what it used to be ten years back.
• Keep a close eye on your online reputation. A small mistake and lethargy can cost you the reputation built over years of hard work.
• Never rely on the business model which depends on consumer ignorance because awareness increases faster in online domain and anything wrong can destroy your business.

As we enjoyed our discussion and learnt from his experience, we are also sure that you will find it informative and valuable.

Note: To read more insights from professionals working in different field, keep visiting www.reviewboard.in . You can ask us about our services at mukul.bhartiya@reviewboard.in and sales@teamrecruiters.in. 

Politics can’t be without economics but economics can be without politics; if we choose to practice so. Political economics focus solely on getting elected and re-elected by the political parties. Though economics is the second word of political economics but when it comes to objective, economics becomes third or distant last in the priority list.

Fidel Castro, famous ruler of Cuba (Prime Minister from 1959 to 1976 and President from 1976 to 2008) and noted communist famously said, “I became a communist by studying capitalist political economy, and when I had understanding of that problem, it actually seemed to me so absurd, so irrational, so inhuman, that I simply began to elaborate on my own formulas for production and distribution”.

What he did not tell all of us that every individual action depends on psychological functions which further depends on numerous biases and heuristics created by demographical, social-economical, educational etc. nudges and interventions applied by different forces every moment, which further fires many chemicals known neurotransmitters laying down new memories, creating new biases and heuristics or strengthening the earlier one. Hasn’t this become a heady cocktail of jargons and words, very difficult to understand? That’s what political economics is; very difficult to understand.

India as a country is as diverse as the word ‘diverse’itself can be and it is as multidimensional as‘multidimensional’the word can be. Indian economy is complete reflection of the country, giving scope to every party to claim what they want to claim and most of the time each one of them may be completely true or true to some extent or completely wrong.Since economy is what matters to everyone the most, it becomes imperative to make this cocktail light, if not nectar, for everyone to consume, I talked to Mr. Suraj Sharma, who is an authority in this field.

Mr. Suraj Sharma is Chevening Financial Services Fellow, hosted by Kings College, London and IIM-Kolkata alumni. He also holds PGDM from Centre of Management Education, VAMNICOM, Pune. Presently, he is Chief Executive Officer of Punarvasu Financial Services Pvt. Ltd and also one of its board members. I had couple of straight questions to him and he cleared the haze overstate of Indian economy. Here we go with our discussion…..

Mukul Bhartiya: What is your opinion on current economic situation of the country? Would you call it “slowdown” or “crisis” and what are the factors which led to it?

Suraj Sharma: Current economic situation has the symptoms of “slowdown”, which if ignored, can develop into “crisis”.

Now, issues constituting second part of your question are crucial, poignant and present a paradoxical picture at the same time; issues which impacted or is impacting the economy needs to be divided into two parts; short term and long term. Short term issues are the policy decisions and long term issues are collateral effect of some other major domestic and transnational events.

You will agree with me that Indian economy, despite demonetization in 2016 is still largely a cash economy.Since ages, few individual who knew or probably still know how to leverage their connections with higher echelons of decision making bodies pockets the benefits meant for all. Incumbent government took certain policy decisions to streamline and make business activity transparent. Some of the decisions can be debated for its necessity or effectiveness, but rather than getting into details of the decisions, let’s understand what happened after that. It will help us to speed up our discussion.

Let’s begin with short term issues.

On 8th November 2016, Government of India took a humongous decision of calling back all currency of Rs.500 and Rs.1000 from the market. Whether objectives set by the government were met or not can be debated separately, but it led to massive cash crunch for SME and MSME sector which we agree or not, but were largely running on cash economy. This impacted the overall economy because money from the market were getting sucked in, demand of everything except necessary food items slowed down and job were cut on massive scale.

Before economy could recover from the impact of demonetisation, Goods and Service Tax became operational from 1st July 2017. GST Act is an excellent step by government of India to boost the ease of doing business in the country and bring in more transparency in the Indirect Tax regime. It was needed not only to remove friction in business operational activity but bring more and more business transactions under tax net.

But shift from one policy structure to another of such a humongous nature needs at least few business years to settle down and is implemented when economy is growing, not when it has slowed down. Here, government introduced not one or two but three policy changes of big impact in quick succession.

During this period itself, on 10th March 2016, Upper House of the government passed Real Estate Regulation and Development Act (RERA), which became effective from 1st May 2016. By this time, out of 92 sections, 56 were notified. By 1st May 2017, all the sections were operational. Real estate sector before bringing this act was unorganized, which was not only leading to exploitation of home buyers but restricting investment in this sector preventing credible and rated developers from sourcing money from the market.

Unregulated market was allowing many developers to manipulate the home buyers by channelling fund from one project to another without completing the earlier one, working on multiple projects without availability of required fund and many things more. Since there were many such developers and many such projects, this sector proved to be one of the leading employment providers, which it actually is, along with textile industry and after agriculture sector.

After implementation of RERA Act, many real estate projects were shelved and many developers defaulted.

Demonetization had maximum impact on SME, MSME and real estate sector the most because it dealt in cash the most. Implementation of GST forced them to put their business in a structure to be system compliant. Again I would say that it was good step but it delayed the sales activity. Since this sector makes a huge contribution towards employment generation as well, not only it had clear slowdown impact on economy but growth in unemployment as well.

All these policy decisions have not only stretched the business environment straight in the country but has also brought banking sector under lot of stress, which anyways is under lot of stress due to NPAs and toxic assets under control of banking sector.

That’s why I told you in the beginning itself that issues which led to slowdown are crucial, poignant and paradoxical at the same time. While decisions taken by Government of India are on solid merit points but Indian economy has never been in such a shape to absorb body shot shocks in such a quick succession.Though these decisions were right but the timings were questionable.

If we expand this discussion a bit more and go ten-eleven years back, then we see that world economy suffered a body blow due to US sub-prime crisis. Though it did not impact the Indian economy much but how can it remain unharmed because it is not insulated from the world economy. Efforts were made to boost the purchasing power and economy was on revival path, but many scandals tumbling out of government’s closet led to massive anti-corruption movement in the country. This movement brought in a kind of policy paralysis, where decision makers became afraid of taking decisions.

Mukul Bhartiya: Here I would like add something; there are many estimates of total business and employment losses due to US sub-prime crisis. I have read somewhere that business losses stood around USD 15 Trillion and employment losses around 80 Million. Further, in my opinion, Supreme Court gave the body blow to whatever was left after the impact of this financial crisis and policy paralysis, by cancelling 122 licenses of 2G telecom spectrum in February 2013. Foreign investors had shown their faith in Indian economy and telecom scam was the internal matter of the country. Without providing adequate relief to the investors or even thinking about them, Supreme Court gave harshest blow to the economy.

Suraj Sharma: There is no denying fact that impact of US sub-prime crisis was huge, but I would refrain from giving specific numbers in the want of accuracy or lack of it. What you said about the impact of Supreme Court’s decision on cancellation of license of 2G telecom spectrum and coal license cancellation may be right.

Though India was not influenced much by US financial crisis, but credit easing did happen here as well during that period. Most of the power, infrastructure, steel and other big projects were financed during that period itself. And because most of these decisions got entangled in court cases, projects either failed to start or got delayed putting humongous stress on the banking sector. Most of NPAs of Rs.14 Lakh Crore which is being talked about were financed during this period only. On top of it, this IL&FS crisis has adversely affected the business sentiment. In 2018, 40% of the incremental consumer financing was done by NBFCs and not the banks. Since mutual funds used to buy NBFC papers and give them money. A good share of NBFC money was coming from mutual funds, but IL&FS scandal turned the applecart upside down.

Look, every other business sector’s health depends on the health of financial sector. Though NPA problem has been resolved to certain extent but challenges are still there, NBFC crisis arising out of IL&FS scandal, freeze on payments to the account holders due to scam in PMC Cooperative bank, low capital ratios at Yes Bank and how it went unnoticed for so long, continuous defaults by real estate and infrastructure sector etc. have put banking and financial sector as a whole under huge stress. Government needs to see that how quickly it brings the economy out of this rut.

But we are seeing growth quarter-to-quarter basis, though slowed down andthat’s why we can’t call present situation an economic crisis.

Mukul Bhartiya: What should government do to reverse the situation and increase the opportunities of employment?

Suraj Sharma: Government has taken many steps to revive the situation but if things don’t start improving in next eighteen month or so, then as I mentioned earlier, it will trigger bigger crisis.

Infrastructure/real estate/industries/power etc. projects should not be financed by commercial banks. Instead, they should be financed by long term investors through debentures .You tell me which bank accepts fixed deposits for 20-30 years and which infrastructure project becomes cash positive in 5-6 years? Even residential projects of real estate sector take more time to complete than that.

Apart from bringing in RERA for removing the frictions of real estate sector and pave the way for more legitimate funding, Government has created the necessary rules and policy structure to encourage REIG(Real Estate Investment Group) investing to clean up the real estate investment, bring more transparency and make real estate projects more viable. Recently announced Rs.25,000 Crore Priority Debt Fund to revive stalled real estate projects is a critically important decision. It will give relief to much aggrieved home buyers. All the steps taken by government will bring synergy between investors, developers and sellers and foster growth. Now, only thing is to be seen is how quickly all these steps fructify result.

Barring 4-5 banks, all nationalized banks have come out of NPA mess. To make liquidity available in the market, government is aggressive on repo and other fiscal rates.

Boldest of all the step is corporate tax to be levied on new manufacturing set up to come up after 1st October 2019, which is 15%. If you add cess and all, then it will not be more than 17% and it is lowest in the world. Government might have done so keeping US-China trade war in mind, expecting companies flying out of China may land up in India for setting up their infrastructure. I can’t comment right now about its impact on fiscal discipline.

Helping banks to clean up NPA mess, recapitalization of banks, aggressive interest rates, aggressive corporate tax, reduction in base corporate tax, creation of fund for interest subvention scheme for GST registered MSMEs, holding hands of real estate sector through RERA, REIG etc., government is doing many right things.

Though government has taken many steps in the right direction, but all of it has to bear the result very quickly. A lot of time has already lapsed and things can’t be delayed anymore. Liquidity crunch has prolonged for too long and media sentiment has been depressed for too long. Remember that negative business sentiments have domino effect on overall business scenario and one fall triggers others to fall. Liquidity crunch does not happen just because of unavailability of funds in the market, it also happens because of unavailability of intent and courage among the investors. If it continues, then SMEs and MSMEs will start defaulting and since most of government’s lending are to this sector, it will create the challenge which no one has ever imagined.

Further, government shall bear in mind that Indian economy has never been in the stage where policy decisions of such a humongous nature can’t be implemented in such a quick succession. Implementation of GST will take at least three to four business years for everyone to see which direction it will move. Business community will get adapted to its implementation and government will be able to plug the holes and explain it clearly to them. Similarly, real estate sector will take time to work on the lines of guidelines set by RERA.

Government and RBI shall see that credibility and reputation financial sector is restored and that also on priority basis. They must see that without any delay depositors’ interest is protected and they again repose their faith in country’s banking sector. Business decisions can fail but business decisions quite adverse to very common business sense shall not be acceptable. Promoters shall not be allowed to have executive position in private banks and no executive should be allowed to hold the top position for more than 10-15years or so. Government and RBI shall see that executives holding highest position in banking industry must get enough time to execute their decisions but must not get time to be synonym with the organization itself. Government shall also see that individual account holders shall have insurance cover of at least Rs.10 Lakh or even more for the deposited money with a bank; right now it is Rs.1 Lakh and it is very less. Government and RBI shall work towards rebuilding trust of depositors towards banking and financial system of the country. If it doesn’t happen, then nothing will happen.

I reached out to Mr. Sanjay Kumar Thakur, Chief Data Officer and Head-Treasury Product Control, Balance Sheet Analytics, Fund Transfer Pricing of Saudi Investment Bank to know his expectations this Union Budget 2020. Mr. Thakur is Ph.D in Portfolio Risk Hedging and Management from Shailesh J. Mehta Institute of Business Management, Indian Institute of Technology, Bombay, Chartered Financial Analyst from ICFAI, Hyderabad, Post Graduate Diploma in Banking, Banking & Treasury Operations, Credit Analysis & Comm. Lending, Banking Laws and Accounting Practices from University of Pune and MBA(Finance) from Center of Management Education, VAMNICOM, Pune.

Sanjay Thakur: This budget should be clearly targeting few themes: (a) Employment (b) Consumption (c) Reforms for growth revival  

A. Employment: I think govt will and should do anything and everything on employment front. I expect huge focus on MSME and Agriculture sector as 93% labour is still depend on these sectors and this time even rural economy is hit. Next would need clear focus be Infrastructure (there is enough political and economic reason that, construction may get infrastructure tag) and Textile. There must be a mechanism to revive NBFC model with more prudent regulation around it and I expect bold announcement on building a bank-nbfc-developer mechanism for guaranteed housing project completion. Textile needs immediate care and gems and jewellery as well as leather sector needs clear support as export is down by 3.27% and not great silver lining in near future thanks to Coronavirus now.  

B. As corporate tax cut was already given late last year, some thrust on corporate lending should help build environment for capital investment rate which has halved by now. Govt capital expenditure will have to lead the way though as it has been lesser than expected. To boost consumption, I expect some relief on individual income tax like increase in slab for zero or lesser tax rate. I also expect higher investment limit than Rs. 1.5 lac under 80c. The same goes for medical insurance and investment in NPS to get (e-e-e) status. After so many pay-commissions, I also seek a need for some kind of parity between tax treatment of benefits to govt and private sectors employees. I expect LTCG to get removed as it was almost nonsensical decision. These initiatives either encourage saving and investment or increase consumption immediately. I expect some relief to Auto and Telecom sector as well. 

C. Reforms for growth revival is something I expect to see. Thrust would be on Land reforms, selectively on labour reforms and legal side of ease of business. Inflation particularly food inflation has started appearing due to wrongly RBI focusing more on growth than inflation which is actually govt primary domain. I expect some clear thrust on SEZ type work-around, startups to support make in India and digital India initiatives. What are the do's and dont's you are suggesting to Mrs. Sitharaman? =) I hope she will loosen the fiscal deficits targeting at least by 25bps. She shouldn't worry too much for it right now. She must also not continue the LTCG at any cost and taxation on dividend income should be eased as well. As there is chance of reduction income tax slab for common man, there is a possibility to re-instate Estate tax to tax wealthy people which is not good idea. It may bring less in value but may send negative vibes to the wealth creators.

The way I see random people, who probably may fail to spell word ‘economics’, throwing the words like slowdown in GDP, economic crisis etc. I remember the quote by famous statistician, risk and probability expert and author of Fooled by Randomness, The Black Swan, The Skin in The Game and many more Mr. Nassim Nicholas Taleb.  

He says, “It has been more profitable for us to bind together in the wrong direction than be alone in the right one. Those who have followed the assertive idiot rather than introspective wise person have passed us some of their genes. This is apparent from a social pathology: psychopaths rally followers”. 

A friend of mine suggested to read the business journey of an Indian business giant involved in consumer electronics to DTH to petroleum and energy business. To my surprise, this company acquired 15 companies in 20 years time and changed the structure of organization 30 times without showing sustainability and positive cash flow without manipulating the operations in any of the business. It financed the business by borrowing funds from commercial banks and invested in the business of energy and natural resources which are highly capital intensive and requires investment for decades. For their consumer electronics items, if news from leading newspapers is to be believed, then it suggests that credit tap for distribution channel partners never dried up. When this business house filed bankruptcy, shamelessly its owners blamed the demonetization. A clear cut case of crony capitalism cried victim when asked to straighten up. And this is not the isolated case.  

I talked to Mr. Sumit Agarwal, Equity and Derivative Strategy expert and Founder of Cap Matra Wealth Consultants Pvt. Ltd. New Delhi, who, for last fifteen years has been having his finger on the pulse of Stock Exchanges in general and Indian stock and commodity exchanges in particular. 

Though my focus was to know his demand from Finance Minister in this upcoming budget, but I stretched the scope a bit tried to have his opinion on what is going right or wrong with the economy and what are his expectations from the budget. 

Sumit Agarwal: Let us retrace few of the many steps taken by present government in the recent past.

Government has been raging battle to bring in transparency to clear this NPA mess created mostly between 2008-13. Now at least it is clear that which bank is carrying how much toxic and non-performing asset in their balance sheet and efforts are being made at feverish speed to clean that up. Close to Rs.90,000 Crore NPA was cleaned between 2018-19. Though it is still standing at around Rs.8 Lakh Crore, but government’s effort is visible on ground. Even small borrowers are being asked to pay up their long due loans. I can’t tell you the formula of payment being recovered from them, but I assume that they are being asked to pay up the actual loan plus some cost, but they are being asked to pay. 

Second action which is commendable is streamlining NBFC finance. It was faulty from the beginning itself. NBFCs used to raise finance from commercial banks and mutual funds using short term loans or selling short term commercial papers for a period of six months and then giving home and car loans to consumers for period ranging between five to twenty years was not making commercial or legal sense, it required continuous refill of money and it made absolutely no business or legal sense. Since it was bringing in growth in retail consumption of consumer durables and other sectors, everyone was riding along. But this bubble had to burst and it did burst with IL&FS. Now NBFCs are finding it tough to raise money and it is reflecting in consumer market behaviour. 

Along with RERA, another decision which is proving be great in “Insolvency and Bankruptcy Act”, which is forcing crony capitalists pay up. As far as RERA is concerned, it is definitely a much needed step by the government. We can’t forget implementation of GST here which was again need of the hour to bring uniformity in taxation and increase the ease of doing business.  

Though above mention steps have slowed down the economy due to implementation woes, but you will agree with me that you can’t live with cancer for too long and when it is operated, it will slow down your speed drastically till you fully recover.

So, coming back to second part of your question about what should be done to bring economy back on the high growth trajectory, which is required to make India a $ 5 Trillion economy by 2025, I think government needs to take many steps but I will list out my preferences here. 

First and foremost, government must do everything what it takes to increase private investment in SME and MSME sector. This sector is under tremendous stress. It was unorganized, mostly driven by cash economy; GST and demonetization proved too much for it. Where the line of good or bad gets blurred is the fact that SME and MSME sector drives India’s growth story and provides maximum employment. So, while GST and demonetisation were much needed step, they brought in the separate set of challenges. India’s import from China is somewhere around $ 60 Billion and most of them replace items being manufactured by these SMEs and MSMEs. For a country like India and the nature of economy it has, it can’t continue to have this huge import bill and nature of import from any country. 

Not only that, government must take the responsibility of technology and marketing communication of products manufactured by this sector. Not many of them can pick up the art of communicating features and benefits of their products. Government needs to do it in domestic as well as international market. Government must go out and tell everyone that why products manufactured by our own SMEs needs to be purchased. We all know how Chinese business operates. We need to pump up our business if not protect them.

Next step which government needs to take is ensuring smooth coordination between the center and states. I am very well aware that India is federation of states and state has autonomy in certain aspects of their existence and may have interest different than the nation, but government will have to ensure that.  

You know that market few years back was unstructured, but with the entry of big technology and online retail companies, price discovery of each and every item has become much easier than it ever was. With smart phones in every hand, it is reaching in every nook and corner. Technology is making the market structured and with this, market is losing the incentive unstructured, unorganized market offers, because consumers are at ill to know what could be the actual or standard price. So, if lack of coordination between center and state government will only complicate the matter for the business. While consumers will know at what price they should buy the product, friction between state and central government will increase the cost for manufactures, making entry of foreign players easy and thus circumventing the growth or even existential prospects of domestic companies. Individual small players can’t keep running and coordinating between state and central government. 

GST, despite all its benefits has become a big challenge for micro and small business units. What we have seen is this government is very poor at communication of acts passed in the parliament and schemes launched in the budget or otherwise. There are enough people who are supposed to help these micro and small business units to understand and help with taxations indulge them more into scaremongering. What I expect from the government is continuous training and information dissemination till this entire GST thing is streamlined and drilled down in every possible and prospective businessperson’s mind. Tax filing should be made as simple as possible. 

Stock market is the indicator of economy; health of economy reflects here. From January 2018, Small Cap Index is down 40% and Mid Cap index is down 22% and clearly indicates that Indian economy is under slowdown. My expectation from the government is increase the slab of no income tax from Rs.2.5 Lakh to at least Rs.5 Lakh. It will put more money in the hand of consumers and help boosting the consumption. 

Second point is government should rethink its position on Long Term Capital Gain Tax and Dividend Tax. Dividend tax is clear cut case of double taxation, though may be unintended but is negative element of tax legislation. Long term capital gain tax is holding back individuals from staying invested in capital assets like real asset or holding stocks for longer period. This way, government is stopping companies from raising long term fund and if companies find raising long term capital unattractive or difficult or costly, then how will they fund their capital expenditure. 

Last but not the least, I want government to check what it is the outcome of its expenditure on agriculture. I know agriculture is tricky subject to touch but at least there should be some calculation on how much is being spent on agriculture, starting from the input to irrigation to output to infrastructure building to food processing and what is the productivity of this spending. I don’t think government can in anyway reduce spending on agriculture, but it can definitely know the outcome of spending. Further, I would also request government to make all possible effort to stop the leakages in different welfare schemes and subsidies doled out to the people of this country. 

You may also like to read Mr Sanjay Kumar Thakur Chief Data Officer Saudi Investment Bank of his expectation from Union Budget

First time I read any book on behavioural economics was “Thinking Fast and Slow” by Nobel award winning Psychologist Daniel Kanheman around six years back and I got blown over by it. Having spent better part of my life in food retail, understanding human behaviour through historical data collected through weekly or monthly sales was quite a task, because the element of biases, heuristics, noise etc. are something I had just assumptions but no authoritarial backing. Many a times, standing on the floor of the store, I could sense the consumer behaviour but could not call it a behavioural pattern of financial decision making due to not being exposed to psychology part of human decision making. Nature of the job was to achieve the sales numbers, so academic aspect of conclusions coming from data never became a topic of discussion among peers and colleagues.

As my curiosity increased in this subject, I pursued many online courses available across different platforms and read many books on it along with neuroeconomics, neuromarketing and neuro-consumer Science. In this pursuit, I recently found a book “Misbehaving: The Making of Behavioural Economics”, written by Richard H. Thaler and published in 2015. Mr. Thaler is known as father of Behavioural Economics and won Nobel Prize for Economics in 2017.

This books describes his journey of exploring, experimenting, understanding, consolidating and presenting the role of different human behaviour behind economic decision making more famously known as “biases and heuristics”, the names given by famous Daniel Kanheman and Amos Tversky.

Written in eight blocks (Beginnings, Mental Accounting, Self-Control, Interlude, Working with Danny, Engaging with the Economics Profession, Finance, Welcome to Chicago, Helping Out) divided in thirty three chapters, this book is a revealation of a completely new dynamics of human financial decision making and revelation to read for anyone who is even not conversant with the idea of either psychology or economics.

From Endowment Effect to The List to Value Theory to The Gauntlet to Bargains and Rip-Offs to Sunk Cost to Buckets and Budgets to The Willpower to The Planner and The Doer to Misbehaving in the Real World to What Seems Fair to Fairness games to end with Save Money Tomorrow, Going Public and Nudging in U.K, this book is the journey of Behavioural Economics with the father of very concept himself.

I simply love the concept of “Endowment Effect”. We overvalue what we have regardless to what is its market value. If we are asked to pay surcharge to facilitate credit card transaction cost, we frown over that, but if that surcharge is included in the product cost, we don’t mind because that’s not obvious to us. While two are one and the same thing, but not getting discount is just a lost opportunity cost for the consumers while paying extra for credit card transaction looks like direct cost. This is not only true for the economic decisions but for ideological view points as well. People value their opinion more over others and they go out in public just to confirm their opinion. “Endowment Effect” coupled with “confirmation bias” becomes “myside bias”, the reason behind big ideological divides.

Mental accounting is another topic which I find fascinating. Recently I bought a laptop for Rs.39.450/- for multitasking of a little lesser known brand. I got a Rs.1500/- instant discount due the tie-up between my credit card issuing bank and seller. Few days later, another Rs.1250/- cash back was credited to my wallet. Along with the features, company offered two years service warranty as against of one year given by other known brands and I got one year Microsoft 365 subscription free as well. I had done good two weeks research before buying the laptop and had seen umpteen videos and read thousands of reviews of different brands before making this decision. Laptop of known brands with similar features and warranty were at more than Rs.65,000/-. So when I made this decision, got this product, set up my device and Microsoft account, I found it very smooth in operation. It proved to be great bargain for me. After that whomsoever I told about the purchase, I not only explained the discount and cash back, but also the cost of one year Microsoft 365 Subscription, cost of 1 TB storage on cloud, and cost of one extra years’ warranty. Before that, I was against the idea of having cloud storage space, because I not only found it costly but leaving the responsibility of my data on someone else. Hard Drive Storage meant complete control over my data to me. But after getting it along with Few days back, I had almost made the decision to buy a laptop for Rs.61,000/- with the same features but somehow I ended up not buying it. So, my satisfaction level from making the purchase decision which I made is like absolute bargain.

This book is full of real life experiments and examples and is a must read for everyone who wants to know the science behind financial decision making.

You can buy the book following this link Misbehaving: The Making of Behavioural Economics