The financial implications that I am going to speak are my
assumptions and findings. It is mainly about general confusions and some
expected implication of certain events. I feel everyone can benefit from this, so
take some time and go through the same. Do comment in the end for me to improve
on my future post like these.
1 Stock market
The final quarter of 2016-17 the market will not have the
expected growth which many dealers will hope for; things will change due to the
early budget. There are certain stocks that are still performing well even
after demonetisation but more stocks will pick up after the budget.
Certainly there will be better performance of majority of
the stock post implementation of GST but there is a down side towards this move
also (which is spoken a bit more in detail the next point).
This is a very dicey exception but I am presuming that
Trump’s win will have positive impact in the market once he starts his active duties.
A lot of people will not agree to me on this but I have a strong feeling
towards this. The only result would be would be either I am wrong or right but
I am banking on the latter.
2 GST
A lot of things are expected to come from this enactment.
The sad truth is that it will not get started in the said time and there will
be a lot of hiccups with regards to the filing, registration, payment, etc. Fear
not because the Department will give a sizable window to amend things and make
payment of differences without penalty and maybe without interest also. The
major hiccups in enactment of GST is expected to get resolved with a maximum
period of one year, during this period there will be a lot of confusion with
the department and the public.
GST is looked up by everyone both locally and
internationally. The truth is the most beneficial person is will be wholesalers
and retailers as they can take input credit of other than VAT items also, this
will impact the price of the most product (other than tobacco and alcohol).
This will in turn benefit the customers.
The down side the Act will not impact the stock market as it is
introduced/enacted/implemented, the fruits of the Act will bear with time and
reflect in the stock market but there will a slight increase/decrease in the
stock market on the date of implementation of the Act and therefore, trade with
precaution during that time.
3 Two thousand Rupee notes
There is a lot of confusion with regards to this; I will
speak of those few problems that I feel are to be explained and clarified.
Initially a lot of people were angry due to the release of a
higher currency, the major concern with regards to this were as follows.
Firstly getting change for the same will be next to impossible. Secondly such
high currency could be printed and fake currency will come back to circulation.
Thirdly the two thousand notes will b scarped within this year. Let me explain
the above in detail.
Firstly, there were problems getting change for a 2000/- Rs
note in the beginning of the move but as 500/- Rs notes were not introduced, I
did not find it really difficult to get change other than at a few place where
people were insisting that I shop for the whole value. The better part of not
getting change has helped Indian’s to move to banking channels and other
private payment portals to make and receive payments. This will help the Income
Tax department to catch many defaulters in the future with current year and
pervious year. People expected India to be completely cashless and this is not
possible but even attaining 20% to 50% in India will have a major impact on the
economy on the long run.
Secondly, it is true that to print a large currency note
would work out in favour of the fake currency racket but due to the sudden change.
The racket has taken a major hit and by the time they recover to print the new
currency, fake currency machines detection (or money counting machines) will
already be out and major people will be scared to take them with a fear of
another demonetisation in the future or just scared to carry too much as there
will be an insertion in the Income Tax Act 1968 for the amount that came be
held by different assesses at a given point of view. The new notes have 17
security features and it isn’t easy to print a fake one. There are a few people
that have taken colour Xerox of the new notes and tried to circulate but have
been caught within days and are currently being punished for the same. I have
been disappointed that the Government did not use the patented currency that
Australia has, it would have been a better investment.
Thirdly, too people are in fear that the new 2000/- Rs notes
that they have will be scarped by the end of this year. This is not true at
all. The Government has already spent huge on printing, distributing, security,
etc; it would be a foolish move if the notes are scarped this early. I am not
expecting another demonetisation but eventually over a period of 5 years or
more the banks may stop issuing 2000/- Rs notes but will only accept them.
4 Banking including RBI
Due to the large deposit that has taken in the banking
system, there will be a lot of changes that will benefit the public as well as
burn a hole in their pockets.
The major benefit is RBI will be able to write off the
currency that was not reintroduced. This will enable RBI to sell the gold
deposit either to pay the World Bank or utilize the surplus for growth of the
nation. I am looking forward to the reduction in the base points which will in
turn enable the banks to issue loans on a lower rate of interest for both
personal and corporate. The major remark with banks will be the audits that
will conducted by the RBI employees and Chartered Accountants, there will be a
lot of mangers that will be caught who were involved in exchanging currency and
helping Income Tax defaulters deposit money into accounts through various ways
and I personally wish that more Chartered Accountants are assigned with bank
audits this year as well as strict additional areas are made to report.
Set backs would mainly include the additional charges that
will be levied on cash withdrawals and transfers. As the bank runs with a
motive of profit, they would reduce the savings interest rate and increase bank
charges to ensure that they don’t incur loss and this would be a major
disadvantage but I hope RBI would regulate such charges, to ensure that the
public are not over charged.
One more problem that I want to point of is with corporative
banks, which do not per se come under direct regulation with RBI and knowing
this there has been a lot of mismanagement that has taken place, I sincerely
hope those involved in the mismanagement will be caught and things will be set
right.
5 Mr. Narendra Modi
I personally do not like making statements or speaking with
regards to politics but this time I have made two exemptions and stating two
politicians. I am not speaking for any party nor stating that any party is bad,
so please take this and make it a personal agenda.
This is a very unusual point or rather a person that will
surely have impact on the financial of the country. I just wanted to save the
best point for last because a lot people really feel that demonetisation was
Mr. Modi’s trump card but it isn’t.
Yes, demonetisation isn’t his trump card. I really do not
know the other changes that he is going to bring this year but I have a strong
feeling that he will consult with the respective ministry in charge and will
make more changes.
Looking at the way he is performing his duties, I m sure
that we as a nation will move ahead with a better growth. I wish I knew what
will be his next move but I happy in a way that I don’t and most culprits will
caught due to the new changes that he will bring.
