What Is Expected From The Budget Of 2021?

What Is Expected From The Budget Of 2021?

Union Budget, also known as Annual Financial Statement would be presented on 1st February 2021 at 11 AM. With the big day nearing, industry representatives have started voicing their concerns and expectations from this year’s budget. Will these expectations be heeded? Well, only time will tell that. Until then, let’s look at what industries are expecting from Budget 2021.

Crux of the Matter

Present Day Need
Let’s start by taking a look at the present-day needs.

Expectations Of Individuals

  • Raising the basic tax exemption limit.
  • Reduction in the non-corporate income tax rate.
  • Increase in ‘Standard Deduction‘ amount (at present stays at ₹50,000).
  • Introduce separate limit for deduction of principal repayment of housing loan.
  • To focus on employment for reviving the economy.

Real Estate

  • To increase the affordability of housing by expanding the Income Tax reduction benefits to first-time buyers.
  • Removing or easing taxes on notional rental income.
  • Streamlining the insolvency process for Real Estates for quick adoption of resolution plans.
  • To increase last-mile funding for the completion of mid-income housing projects, to spur its demand.

Insurance

  • Reducing GST rates on Insurance Premium (most products lie in 18% tax rate).
  • Tax Exemption on Home Insurance.
  • To increase the penetration of Insurance amongst Tier I and Tier II cities with higher tax fee slabs in Section 80C. (Currently exemption up to a limit of ₹1,50,000).

Read more about GST here.

Tourism & Hospitality

  • The Federation of Association in Indian Tourism and Hospitality (FAITH) has proposed the creation of National Tourism Council of Chief Ministers headed by the Prime Minister along with Tourism Minister.
  • To make export earnings tax free
  • Income Tax exemption on travelling within India or Income Tax credits for up to ₹1.5 lakh in order to boost domestic tourism.

Automobiles

  • Luxury carmakers expect a reduction in GST rate (at present stands at 28% GST and additional Cess up to 22%).
  • Measures to promote investment in Electric Vehicles and its ancillaries.
  • The reintroduction of the 15% additional deduction for capital expenditure on plant and machinery under Income Tax Laws.

Aviation

  • Bring aviation turbine fuel under the GST regime.
  • Restricting GST on the travel industry to 5%.
  • Lowering Income Tax rates for travel companies.
  • To increase the baggage allowance from ₹50,000 to ₹1 lakh, subjected to duty-free shops.

Print Media

  • To remove custom duty on newsprint imports, which at present stays at 5%.
  • To increase the advertisement rates paid by the government by 50%.

Food Service

  • To reduce GST on home delivery food from 18% at present to 5%.
  • This recommendation comes with an intention to bring parity on rates between dining in (which is at 5%) and food delivery (18%).

Read about the budget of 2020 here.

Curiopedia
  • The first Union budget of independent India was presented by R. K. Shanmukham Chetty on 26 November 1947. Morarji Desai has presented 10 budgets which is the highest count followed by P Chidambaram’s 9 and Pranab Mukherjee’s 8.
  • Until the year 1999, the Union Budget was announced at 5:00 pm on the last working day of the month of February. All that budgets seemed to do was to raise taxes, a presentation in the evening gave producers and the tax collecting agencies the night to work out the change in prices. It was Mr Yashwant Sinha, the then Finance Minister of India who changed the ritual by announcing the 1999 Union Budget at 11 am.
  • In 2016, departing from the colonial-era tradition of presenting the Union Budget on the last working day of February, Minister of Finance (India) Arun Jaitley announced that it will now be presented on 1 February. Additionally Rail Budget, presented separately for 92 years, merged with the union budget.

As Shady Practices In Digital Lending Rise, RBI Forms Committee For Regulation

As Shady Practices In Digital Lending Rise, RBI Forms Committee For Regulation

With pandemic hitting in 2020, and subsequently the economic crisis hitting individuals, the scheme of micro-lending was assumed to be a resort. Well as seamless as it seems, the consequences end up to be frightening. Let us understand the nuisance around the unregulated area of digital lending, and how RBI’s working committee can take the step of regulating this sector.

Crux of the Matter

RBI Committee
On 13th January 2021, RBI announced the forming of a working committee chaired by Jayant Kumar Dash, Executive Director of RBI,  to regulate digital lending through loan applications. 

Amidst the public outcry and growing concern for unethical and illegal loan practices executed by loan app users, RBI is forming the group to study the digital lending activities of both regulated and unregulated players of  financial sector.

What Is Digital Lending?
Prominent as PayDay Loans or Fringe Banking, Digital Banking is the practice of lending money through digital channels, web platforms, or phone applications & employing technology for authentication & credit information. It is only a 4-year old industry in India.

Digital Landing Overview In India

  • ₹800-1200 crores of loans disbursed every month.
  • Loan Book of around ₹5500 crores.
  • 60%+ loans are offered to citizens residing in Tier I cities.
  • The age group of borrowers: 20-35 years.
  • Loan tenure lies between 3-6 months.
  • Majority of borrowers fall in the income bracket of ₹1 – 5 lakhs.

Illegitimate Lending

Type 1: Shadow Operations

  • Lendersregister under the Companies Act, develop a mobile application, and start commercial lending.
  • Peddle 7-30 days loans. Interest rates are 200-500% (annualised) or 0.5-1.5% per day.
  • Reportedly, these apps have Chinese servers with Indian names.

Type 2: Through NBFCs

  • Tie up with inactive NBFCs, that lend their name in return for a commission of 1-3% of the disbursed loan.
  • The sponsors of such loans are nationals from China, Hong Kong, Singapore, and Malaysia.

The Lending Flow

  • Step 1: Users download the app from Google Store.
  • Step 2: On loan application, users need to upload a scanned copy of Aadhar card and/or PAN card.
  • Step 3: Unlike the formal processes, no e-signature or OTP authentication is required.
  • Step 4: Users submit a selfie to authenticate themselves. Some ask for signing on a white paper and uploading the same.
  • Step 5: Loan is approved instantly and money is disbursed.

Dubious Doings

  • Loans not backed by one’s own NBFC.
  • Seeks access to borrower’s phone, gallery, contacts, and emails.
  • No official documentation of repayment schedule.
  • Up to ₹100 is the processing fee for a loan of ₹1000.
  • 15-30% of recoverable dues go to a collection agent.

Instances Of Social Shaming
Collection Agents harass through:

  • Endless calls to borrowers & their relatives – contacts accessed from the phone book of the borrower.
  • Threat texts on Whatsapp followed by abusive phone calls.
  • Sexual harassment and verbal abuse to women borrowers.
Curiopedia
  • A debt spiral refers to a situation where a country (or firm or individual) sees ever-increasing levels of debt. These increasing levels of debt and debt interest become unsustainable, eventually leading to debt default.
  • Peer-to-peer lending, also abbreviated as P2P lending, is the practice of lending money to individuals or businesses through online services that match lenders with borrowers. Peer-to-peer lending companies often offer their services online and attempt to operate with lower overhead and provide their services more cheaply than traditional financial institutions.
  • Bad debt occasionally called ‘Uncollectible accounts expense’ is a monetary amount owed to a creditor that is unlikely to be paid and for which the creditor is not willing to take action to collect for various reasons, often due to the debtor not having the money to pay, for example, due to a company going into liquidation or insolvency. There are various technical definitions of what constitutes a bad debt, depending on accounting conventions, regulatory treatment and the institution provisioning.

A New Chapter To Byju’s Tale Of Acquisitions

A New Chapter To Byju's Tale Of Acquisitions

A prime example of the prospering EdTech sector in India, Byju’s is now back in news with its latest acquisition of Aakash Institutes for ₹7300 crores. Wondering whether its hiring spree would come to an end or not? We certainly have no clue. In the meantime, let us look at some of its previous acquisitions.

Crux of the Matter

About Byju’s

  • Bangalore headquartered Byju’s is India’s second most valuable startup.
  • Backed by Chan Zuckerberg Initiative, Tiger Management & Bond capital, Byju’s has raised over $800 million in the past 2 years.
  • Byju’s was founded by Byju Raveendran in 2011, it has more than 70 million users logged in – of which 4.5 million are paid users.

Byju’s Acquires Aakash Institute
January 2021

  • As per Bloomberg’s Report, $12 billion worth Byju’s is set to acquire Black Stone-backed Aakash Educational Services Ltd. (AESL) for $1 billion.
  • AESL runs over 200 physical classroom centres all over India with a student count of about 2,50,000
  • It specializes in preparing for the entrance exam to TIER I Engineering and Medical Schools.
  • The deal which is thought to be one of the largest in the ed-tech field globally is expected to be closed in the coming two-three months.
  • In the deal, the Chaudhary family (founder of AESL) will exit completely and Black Stone would swap its position for a 37.5% stake in the new entity.

Byju’s Acquired LabIn App
September 2020

  • Acquired Unitus Ventures-backed LabInApp for an undisclosed amount. 
  • LabInApp offers science lab-like simulation on mobile devices, curating interactive and immersive learning experience for students and teachers.

Byju’s Acquired White Hat Jr.
August 2020

  • Acquired Mumbai headquartered White Hat Jr. for the cost of $300 million
  • Founded by Karan Bajaj in 2018, White Hat Jr teaches online coding to students through live lessons and interactive classes. 

Recently, White Hat Jr. was in the news for its unrealistic marketing gimmicks and data breach of personal information of minors from their servers. Read about it in detail here.

Byju’s Acquired Osmo
January 2019

  • They acquired US-based Osmo for $120 million. Osmo is famous for its blended learning educational games crafted for children aged 3-8 years
  • They have been pivotal in creating ‘play-based learning’ for young children. This acquisition has been at the core of Byju’s’ offering of Disney-Byju’s Early Learn.

Byju’s Acquired Math Adventures
July 2018

Math Adventures helps children learn through a combination of short videos and an activity-based approach that uses workbooks and tablets.

Byju’s Acquired TutorVista & Edurite
July 2017

Acquired TutorVista, Edurite from Pearson. It is one of the largest online tutoring brands catering to school and college students situated majorly out of the US.

Byju’s X Vidyartha
January  2017

  • Vidyartha offers a customized data-driven full-fledged assessment platform that goes beyond the report card of a student and assesses their interests, personality traits, aptitudes.
  • Forms a personalized learning plan (PLP) for students with the goal of maximizing their performance and scores.

Curiopedia
  • Kota is a city located in the southeast of the northern Indian state of Rajasthan. Kota is a major coaching hub of the country for competitive examination preparations and has a number of engineering and medical coaching institutes.
  • Byju Raveendran is currently in the list of top 100 billionaires of India. He was named to Fortune Magazine’s 2020 ’40 Under 40′ list under the technology category.
  • K–12 from kindergarten to 12th grade, is an expression that indicates the range of years of publicly supported primary and secondary education. The first K–12 public school systems appeared in the early 19th century.

How Do Hackers Manipulate Cyber Security And Earn Money?

How Do Hackers Manipulate Cyber Security And Earn Money?

In an era, where data is the engine, any manipulation or breach of its privacy leads to huge havoc. On the other side, we have security hackers who earn from such breaches. The pertinent question for experts is whether exploiting cybersecurity for short selling be deemed as a serious threat or crime? Let’s deep dive and find out.

Crux of the Matter

What Is Shorting?
Also known as short selling, it happens when an investor borrows security (does not own) and sells it in the market at the ongoing rate, with a plan to buy it back later when the price is low. Short sellers speculate & earn profit from a drop in security’s price.

How Security Fails Affect Stock Price?
With increased checks and scrutiny around data privacy and usage by the regulators, a cyber breach would have a definite negative impact on the stock price of the company.

Study On Data Breach Impact In Figures
As per Comparitech Research Firm 2019 report that studied breaches of 1 million records consisting of big names:

  • The stock price fell 7.27% after a data breach hitting a low point almost three weeks later.
  • Breach of Credit Card Data and Social Security Numbers lead to higher drops.

As per CGI & Oxford Economics, 2017:

  • Share price falls about 1.8% on a permanent basis.
  • Financial services are the most impacted and highly targeted industry.

So How Does It Happen?

  • Hackers would take a short position in the targeted firm. Essentially, they are believing that the company’s stock price would fall.
  • Execute the crime of breaching the company’s data and security.
  • The news of a firm under a cyber-attack gets public, resulting in a huge plunge in the share price.
  • Hackers would then exit their position at the low price by buying the stock back, yielding huge profits by a price dip.

Even Company Individuals Yield Gains?

  • An individual from the victim company itself can bet against the stock price before any breach announcement is made.
  • Such a case turns out to be a one of insider trading which is punishable by most security regulators but a lot of such cases go missing amidst the volatility of markets.

In News
Former CIO of Equifax, Jun Ying was imprisoned in June 2019 for an alleged case of insider trading wherein he sold his stock options prior to the announcement that the company had faced a massive data breach of over 150 million of its clients in 2017. He avoided a loss of $117,000 in selling stocks rather than holding them after the prices would have plunged. 

Curiopedia
  • Some economists, such as Henry Manne, have argued that insider trading should be allowed and could, in fact, benefit markets. There has long been “considerable academic debate” among business and legal scholars over whether or not insider trading should be illegal.
  • Market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market and create artificial, false or misleading appearances with respect to the price of, or market for, a product, security, commodity or currency. Market manipulation is one of the 2 major aspects of Market abuse, the other being Insider trading.
  • A bear market is a general decline in the stock market over a period of time. It includes a transition from high investor optimism to widespread investor fear and pessimism. In early 2020, as a result of the COVID-19 pandemic, multiple stock market crashes have led to bear markets across the world, many of which are still ongoing.

Masters Union School Of Business – A New Premier B-School In India

Masters Union School Of Business - A New Premier B-School In India

Masters Union School of Business was quite a huge story when corporate leaders announced the establishment of this unique business school with a capital of ₹300 crores. The following section contains niches that make it stand apart from its contemporaries.

Crux of the Matter

Background

  • Based out of Gurugram city, the Masters Union School of Business received funding of ₹300 crores in April 2020.
  • First batch launched on September 22, 2020, with 60 students.
  • The School is founded and led by global business leaders, top academicians & chief bureaucrats.

Unique Offerings

  • New age-technology focussed
  • Offers an Industry Immersive Graduation Programme.
  • Courses are led by MDs and CXOs of MNCs.

Selection Process

  • Step 1: Application Form.
  • Step 2: Entrance Exam MU – BAAT.
  • Step 3: Personal Interview driven by corporate methodology.

Selection rate is only 11.4%.

Curriculum Highlights

  • The curriculum is designed dynamically with insights from industry experts & government leaders.
  • Masters Union Investment Fund is a ₹5 crore student-run corpus fund that invests in markets and real estate under the guidance of a master with an aim of giving students a hands-on experience.
  • CXO Shadow Programme is where students assist corporate leaders and understand what daily life of CXOs looks like.
  • Centre for researching and exploring the application of sophisticated technologies to create business opportunities & models
  • Also has an in-house start-up school for facilitating new venture ideas all the way up to fundraising.

Breakthrough Enough?
Situated in the Cybercity of Gurugram, this business school with its novel teaching methodologies, unique industry intervention, and high-tech focus has all the potential to level up with pedigree business schools of India. 

Curiopedia
  • IIM Ahmedabad was established on 11 December 1961 with the active support of the Government of India, the Government of Gujarat, Harvard Business School, and prominent members of Indian industry. The physicist Vikram Sarabhai and businessman Kasturbhai Lalbhai, both natives of Ahmedabad, played pivotal roles in setting up the institute.
  • The Ivy League is an American collegiate athletic conference comprising eight private research universities in the Northeastern United States. The term Ivy League is typically used beyond the sports context to refer to the eight schools as a group of elite colleges with connotations of academic excellence, selectivity in admissions, and social elitism.
  • Harvard Business Review (HBR) is a general management magazine published by Harvard Business Publishing, a wholly-owned subsidiary of Harvard University. HBR’ covers a wide range of topics that are relevant to various industries, management functions, and geographic locations. These include leadership, negotiation, strategy, operations, marketing, and finance. Several management concepts and business terms were first given prominence in HBR.