Trivia Thursday: Indian Navy Day

Trivia Thursday: Indian Navy Day

Did you know that 4th December is celebrated as ‘Indian Navy Day’? What’s more exciting is the story behind it. Hello and welcome folks to another exciting edition of Trivia Thursday where we will have a look at the background of why Navy Day is celebrated on 4th December and some really interesting trivia about Indian Navy.

Crux of the Matter

Why Is Navy Day Celebrated On 4th December?
Indo-Pakistani War
of 1971 was a military confrontation between India and Pakistan. It occurred during the Bangladesh Liberation War from 3 December to 16 December 1971.The war began with preemptive aerial strikes on 11 Indian air stations.

It led to the commencement of hostilities with Pakistan and Indian entry into the War of Independence in East Pakistan (now Bangladesh) on the side of Bengali nationalist forces. Lasting just 13 days, it is one of the shortest wars in history.

Operation Trident was an offensive operation launched by the Indian Navy on Pakistan’s port city of Karachi during the Indo-Pakistani War. Operation Trident saw the first use of anti-ship missiles in combat in the region. While India suffered no losses, Pakistan lost a minesweeper, a destroyer, a cargo vessel carrying ammunition, and fuel storage tanks in Karachi.

India celebrates its Navy Day annually on 4 December to mark this operation.

Interesting Facts
From 15 August 2001, the then ensign of the Indian navy was replaced with a white ensign bearing the Indian Navy crest, as the previous ensign was thought to reflect India’s colonial past. However, complaints arose that the new ensign was indistinguishable as the blue of the naval crest easily merged with the sky and the ocean. Hence, in 2004, the ensign was changed back to the previous with the addition of the emblem of India.

  • Ezhimala Naval Academy in Kerala is the largest naval academy in Asia.
  • Indian navy holds the distinction of one of the only two naval aerobatic teams in the world. The name of the aerobatic demonstration team is Sagar Pawan.
  • Mauritius is part of India’s security grid including the Coastal Surveillance Radar (CSR) station of the Indian Navy’s National Command Control Communication Intelligence network. The Heads of the Mauritius Navy and the Mauritian National Security Advisor are Indian officers.
  • One of the most distinguished and efficient special forces in the world, MARCOS or Marine Commandos are the special operations unit of the Indian navy. MARCOS is acknowledged as ‘Dadhiwala Fauj’ (Bearded Army) by the various terrorist groups, due to their bearded disguises in civil areas.
  • Chhatrapati Shivaji, the Maratha emperor, is considered the ‘Father of the Indian Navy’.
  • INS Arihant is the first ballistic missile submarine to have been built by a country other than the five permanent members of the UNSC.

To read our previous week’s Trivia Thursday around Indian cinema at some of the world’s biggest stages, click here.

What Do Latest GDP Numbers For India Say?

Gross Domestic Product (GDP) numbers for the July-September 2020 quarter for India were recently published by the RBI. As economies of world nations tumble due to Covid-19, India’s latest GDP numbers suggest that India made the best comeback among major economies from its worst-affected quarter. Let’s see what economic indicators are suggesting about India’s growth.

Crux of the Matter

GDP of India in the July-September 2020 quarter shrank by 7.5% (year-on-year) compared to a contraction of ~24% (year-on-year) in the April-June 2020 period.

However, when compared with previous quarters (qoq), India’s Jul-Sep GDP grew by ~23%. Let’s see how India performed compared to other nations.

Apr-Jun 2020 is considered China’s bounceback quarter after its worst-affected quarter (due to Covid-19) of Jan-Mar 2020 – China’s quarter-on-quarter growth in Apr-Jul 2020 was 21.1%. Among major economies, the July-Sept 2020 quarter is considered a bounceback quarter after the worst-affected quarter (due to Covid-19) of Apr-Jun 2020.

India’s bounceback quarter recorded higher growth than major economies at 23.24% (quarter-on-quarter).

Technically, 2 back to back quarters of Year-on-Year GDP slump indicates recession. The Quarter-on-Quarter trend of actual GDP numbers gives hope for a V shaped recovery in India.

India In Technical Recession
For the first time in history, India has entered into a ‘technical recession’. A country enters into a technical recession when it reports ‘two consecutive quarters of negative GDP growth’. India reported negative GDP growth in the Apr-Jun 2020 quarter with -24%, and in the Jul-Sep 2020 quarter with -7.5%. Note that these quarterly figures are compared with the same quarterly figures in the preceding year.

What Are Other Indicators Suggesting?
Gross Value Added (GVA) was -7% (year-on-year) in Jul-Sep quarter as compared to -22.8% (year-on-year) in the Apr-Jun quarter. GVA is simply the result of GDP minus Net Product Taxes. Although India is ‘technically’ in a recession, other indicators suggest an uptick in economic activity. Have a look at the infographic below:

Other indicators that are potential green shoots for the economy are:
Monthly GST collections are in level or exceeding year-on-year figures
Purchasing Managers’ Index was at 58.9 – decade high – in October 2020
Toll collection was up in September 2020 – higher than pre-Covid levels
Exports increased by 5.99% in September 2020 after declining for 6 months.

Do you think India’s economy is set for a V-shaped recovery? Do write us your views on namaskar@summachar.in.

Curiopedia
  • Energy intensity is a measure of the energy inefficiency of an economy. It is calculated as units of energy per unit of GDP. High energy intensity means high industrial output as a portion of GDP. Countries with low energy intensity signifies a labor intensive economy.
  • A final good or consumer good is a commodity that is used by the consumer to satisfy current wants or needs, rather than to produce another good. GDP is a monetary measure of the market value of all the final goods and services produced in a specific time period.
  • Purchasing power parity is an economic term for measuring prices at different locations. It is based on the law of one price, which says that, if there are no transaction costs nor trade barriers for a particular good, then the price for that good should be the same at every location. Ideally, a computer in New York and in Hong Kong should have the same price. If its price is 500 US dollars in New York and the same computer costs 2000 HK dollars in Hong Kong, PPP theory says the exchange rate should be 4 HK dollars for every 1 US dollar.

What Is Negative Equity?

What Is Negative Equity?

Companies have to prepare financial statements that indicate the sources of income and expenses and company’s financial position at a given point in time. The latter information is captured in the Balance Sheet, which has three main components – Assets (what the company owns), Liabilities (what the company owes), and Equity (Assets – Liabilities). Amongst all this, then what does negative equity mean?

Crux of the Matter

What Is Equity?
Equity is the amount shareholders would receive if a company sold all its assets and repaid all its liabilities. A business prepares a financial statement called the Balance Sheet, which has three main components: Assets, Liabilities, and Equity.

Mathematically, Liabilities + Equity = Assets. Thus, Equity = Assets (what a company owns) – Liabilities (what a company owes).

What Is Negative Equity?
When liabilities exceed assets in a business at any point in time, then the shareholders’ equity would be negative. Mathematically, Assets – Liabilities < 0.

Reasons

1. Accumulated Losses
The profit or loss in a given period is added to the Equity portion of the Balance Sheet. Negative shareholders’ equity occurs when the losses exceed the equity amount, that includes previous earnings, amount received from new stock issue, etc.

2. Large Dividend Payments
Large dividend payments that exhaust the retained earnings and exceed the shareholders’ equity can result in negative equity. Dividend payments announced when losses have accumulated (as seen in the previous slide) also result in the same.

3. Borrowing More Money
To cover accumulated losses, a company can:
a) Issue more stocks – this results in positive equity.
b) Raise money through debt – there is cash inflow, but the equity remains negative.

4. Amortization
Amortization is the depreciation of intangible assets. It is recorded under Equity. If amortization expenses exceed the retained earnings and shareholders’ equity, then it will result in negative shareholder equity.

Implications
For all stakeholders of the business, negative shareholders’ equity is a sight of caution that the business isn’t performing well, with some countries even requiring companies to mandatorily raise additional equity in such a case.

However, the share price of a company is determined by the market forces and is always positive or zero.

Curiopedia
  • In many countries, assets with negative equity are often referred to as being “underwater“. While loans and borrowers with negative equity are said to be “upside down“.
  • A credit crunch is a sudden reduction in the general availability of loans (or credit) or a sudden tightening of the conditions required to obtain a loan from banks. A credit crunch generally involves a reduction in the availability of credit independent of a rise in official interest rates.
  • McDonald’s owns the majority of land on which its restaurants are situated, which is valued at an estimated $16 to $18 billion. The company earns a significant portion of its revenue from rental payments from franchisees. In recent times, there have been calls to spin off the company’s U.S. holdings into a potential real estate investment trust, but the company announced at its investor conference on November 10, 2015, that this would not happen.