Finance

Executive Summary:

This report provides an overview of the Indian economy from 2014 to 2023, analyzing key economic indicators, policies, and events that shaped the nation’s growth trajectory. Despite facing numerous challenges, including demonetization, a global pandemic, and structural reforms, India has emerged as a major global player, experiencing significant economic growth and development.

1. Introduction:
India, the world’s largest democracy, has experienced rapid economic growth over the past decade, transforming itself into a key player in the global economy. This report delves into the economic progress made by India from 2014 to 2023, highlighting the policies and events that influenced its trajectory.

2. Key Economic Indicators:

2.1 Gross Domestic Product (GDP):
India’s GDP has grown considerably from 2014 to 2023. In 2014, the GDP stood at $2.04 trillion, and by 2023, it has reached an estimated $3.42 trillion. The average GDP growth rate during this period was around 6.5%, with a notable dip in 2020 due to the COVID-19 pandemic.

2.2 Inflation:
Inflation remained relatively stable throughout the decade, averaging around 4.5%. In the initial years, inflation was primarily driven by supply-side factors, but it gradually stabilized due to effective monetary policies and structural reforms.

2.3 Unemployment:
The unemployment rate in India has been a persistent issue, with an average of 6% during the period under review. The COVID-19 pandemic exacerbated the situation in 2020, but gradual recovery and government initiatives have helped curb the unemployment rate to around 5.5% by 2023.

2.4 Foreign Direct Investment (FDI):
India has attracted significant FDI over the past decade, increasing from $34.4 billion in 2014 to an estimated $64.3 billion in 2023. Key sectors that attracted FDI include services, telecommunications, automobile, and technology.

3. Major Policies and Reforms:

3.1 Goods and Services Tax (GST):
Implemented in 2017, GST unified multiple indirect taxes into a single tax system, reducing the tax burden on businesses and promoting economic efficiency.

3.2 Demonetization:
In November 2016, the Indian government demonetized the INR 500 and INR 1000 notes in an effort to curb black money and corruption. The move initially slowed down economic growth but eventually led to an increase in digital transactions and formalization of the economy.

3.3 Insolvency and Bankruptcy Code (IBC):
Introduced in 2016, the IBC aimed to streamline the insolvency resolution process and improve ease of doing business in India. The code has helped resolve several high-profile insolvency cases and improved India’s credit culture.

3.4 Make in India:
Launched in 2014, this initiative  was aimed to boost domestic manufacturing and create jobs , But the program could not attract significant FDI and has been a failure in contributing to the growth of the manufacturing sector.

4. The Impact of COVID-19:
The COVID-19 pandemic significantly disrupted the Indian economy, causing a contraction of 7.3% in GDP in 2020. The government implemented various relief measures to support the economy, including fiscal stimulus packages and liquidity support. By 2023, the economy has largely recovered, with growth rebounding to pre-pandemic levels.

5. Conclusion:
India has experienced substantial economic growth and development from 2014 to 2023, overcoming numerous challenges along the way. The country’s resilience and adaptability, coupled with effective policies and reforms, have been pivotal in its emergence as a major global player.

• By Shobhit Bhardwaj
• May 12, 2023

• By Shobhit Bhardwaj
• May 9, 2023

SILICON VALLEY BANK COLLAPSE AND ITS IMPACT ON DEPOSITORS, LENDERS, AND BOND HOLDERS

Before the collapse

SVB was on the radar of central bank of America (commonly referred as federal bank The fed) for more than a year. So what went wrong and why the sudden downfall couldn’t be avoided. The downfall of the bank was so swift but the demise on 10th of march 2023 can be understood . We can say it started with inflation coupled with several bad steps taken by the senior management at SVB .

Silicon Valley bank had around 17 branches across the USA with its headquarters in Santa Clara which is small city in The state of california. 

Supervisors from federal reserve bank of san Francisco issues 6 citation  which comes under “ matters requiring attention” and “matters requiring immediate attention,”   SVB had liquidity issues so in an event of emergency . By July 2022 SVB was under full supervision and was declared as not sufficient for governance and controls .

TRIGGER POINTS

SVB Tried many ways to raise capital although what triggered panic and chaos was SVB’sale of its Treasury portfolio at a significant loss net loss of 2.2 billions of dollars due to significant rise in interest rate by The FED and its failed attempts to raise capital to allow for continued withdrawals to stabilise its balance sheet. Following the aftermath of sale of Treasury portfolio, Another attempt to sell convertible equity to raise additional Capital  was unsuccessful and even after resorting to sell the company did not materialise leading to a mammoth 60 percent decline in SVB’share price.

SCALE OF DISASTER

SVB had approximately $209 billion in total assets, with about $175.4 billion in Assets under management(deposits in this case).  SVB mostly served technology-focused companies based in Silicon Valley. The FDIC stated  on Friday that all insured depositors would have full access to their deposits no later than Monday morning.

It did not address the uninsured deposits in its initial statement which makes up more than 80% of total deposits, creating panic about their fate and the impact on the country’s  mostly tech led start-ups and in general USA’s financing ecosystem

• By Shobhit Bhardwaj
• March 28, 2023

FTX founder SAM BANKMAN FRIED got arrested in Bahamas and is expected to extradited to UNTIED STATES .  SAM BANKMAN FRIED  has admitted to fraud and using their customer’s money illegally . FTX founder secretly transferred upto 10 billions of dollars which lead to crash in crypto market upto 150 billion dollars in market valuation. Just a few months prior to the inevitable downfall of FTX, FTX looked liked a stable brokerage firm but behind the scenes it was drowning in debt . Close to 2 billions of dollars of customer’s money have vanished. So how all this saga went down 

ALAMEDA RESARCH

Alameda Research which was also co-founded by SBF . SBF moved around 10 billion dollars to Alameda research which is also a crypto brokerage firm. Alameda research suffered huge losses due to absolute reckless trading .  Alameda research put up FTX tokens as collateral for the loans but it was very problematic simply because FTX tokens were not heavily traded beyond the ecosystem of FTX Environment and were hugely dependent on success or failure of FTX itself

SO HOW DID SBF PULLED OFF THIS HUGE FRAUD

As we know close to 2 billions dollars have vanished . ALLEGEDLY SBF DEVELOPED A CUSTOM-MADE ACCOUNTING SYSTEM TO HIDE ALL OF THE MISSING MONEY . HOWEVER MANY SKEPTICS OF FTX were ringing the alarm bell well before the collapse of FTX.

MARC COHODES WHO IS A VETERAN SHORT SELLER STRAIGHT OUT CALLED  FTX AS A SCAM ON 11TH OF OCTOBER AMONG MANY OTHER SKEPTICS . FTX WAS NOT TREATING CLIENT’S ASSETS SEPARATELY FROM MARGIN TRADING. TREATING  CLIENT’S ASSETS SEPARATELY FOR LEVERAGING FOR  MARGIN TRADING KEEPS  CLIENT’S MONEY SAFE IN CASE OF A CRASH. THATS HOW LEGITIMATE EQUITY BROKERAGE FIRM OR OTHER CRYTO BROKERAGE FIRM WORKS IT ALL COULD HAVE BEEN AVOIDED IF CRYPTO MARKET WAS REGULATED LIKE OTHER  FINANCE RELATED INDUSTRIES 

• By Shobhit Bhardwaj
• December 19, 2022

To understand the correlation between USD and Gold prices. first, we have to understand what drives the value of the US dollar 

Factors that Impact currency value 

1.  Falling crude prices

2.  Positive reports on job numbers

3.  Rise in Real state prices 

These are the major factors that determine the strength of dollar value. All the factors mentioned above have a proportional relation with the dollar value’s strength. There are other factors too but we only mentioned the one with the most impact on a currency mainly the USD

Although there is a direct correlation between gold prices and the value of a currency such as the US Dollar, it is not always an inverse relationship as assumed by the general public. Gold as a commodity can act as a substitute for fiat currencies Hedge funds often use gold to tackle inflation.

The real question is why gold prices are falling despite very high volatility in the equity market. As we witnessed when the pandemic hit in the year 2020 we witnessed a rise in the gold price even crossing over 2000 dollars per ounce so why did this time gold mcx fell almost by 8%in last 30 days, dwindling to 1811$. 

THIS CHART  BELOW DEMONSTRATES HOW AFTER THE RUSSIAN INVASION OF A SOVEREIGN COUNTRY UKRAINE HAS CAUSED A DECLINE IN INTERNATIONAL GOLD PRICE  

(image-courtesy of goldprice.org)

It is evident in the chart that after Russia’s war on Ukraine coupled with the strengthening of the US dollar, and high inflation rate, The dollar index as of the 13th of may edge higher to 104.47, making gold less attractive

COVID 4TH WAVE?

Global equity markets and commodities like oil and gas were under pressure at the peak of China’s  Covid outbreak when daily cases topped around 33 thousand in a week contributing to fear of a bigger slowdown in the world’s second-largest economy. Recently there has been a sharp decline in the infection rate as the 7-day average infection rate has come down to 9000 covid cases.  As Shanghai comes closer to the end of the lockdown for a very short period of one week as an experiment to see how it plays out. China has a zero-tolerance policy for covid cases and a history of using draconian laws since the outbreak of covid 19

Conclusion

Russia’s illegal invasion of Ukraine has Inflated oil and gas prices At the moment there seems to be no solutIon to this conflict. It will impact inflation even worse as some European countries specifically Germany is looking for an alternative oil supplier, as Germany should have realised by now that depending on the Russian regime for energy import to the extent of 60% was an extremely bad policy. There are several factors affecting the equity market. There are talks that the fed is considering an additional hike in interest rate. It’s a risky move as The fed has to keep interest rate in balance. Fed has already increased interest rate thrice. The future of the economy is very uncertain as it depends upon domestic and international outcomes

• By Shobhit Bhardwaj
• May 14, 2022

Recent development ,3rd of may 2.15 pm IST

Elon Musk Lately has been in news, magazine, articles, and newspaper. You name it. Musk decision to buy all the shares of  Twitter. According to Musk, he has been witnessing the suppression of free speech, something on social networks a new phenomenon called cancer culture.it has poisoned the Internet,

Elon Musk has said Twitter may charge a “slight” fee for commercial and government users

“Twitter will always be free for casual users, but maybe a slight cost for commercial/government users,” Musk said in a tweet. In another tweet, he added: “Some revenue is better than none!”

 

 

 

RECENT DEVELOPMENT-30th of April

Elon musk has been advocating for free speech on social media platforms. In a filing to the security exchange board (SEC), Musk wrote, “I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” further adding to his filing to SEC, “Twitter has extraordinary potential. I will unlock it.”

In a press statement posted by Musk on his Twitter account, Musk tweeted “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated. I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spambots, and authenticating all humans. Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it,”

After weeks of hustle between Twitter’s board of directors, Elon musk finally bought Twitter for a whopping 44 Billion USD. Elon Musk has previously indicated that he wants to take Twitter private. Reportedly there have been conflicting feelings among Twitter employees.

Tesla CEO in his latest public statement said “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated ”. Musk assured the giant social media platform’s users to add new features and bring leniency to content moderation for the Platform users.

PARTISAN BETWEEN REPUBLICANS AND DEMOCRATS OVER TWITTER BUYOUT

Republican lawmakers who have criticized the company over Its content moderation policy lauded  Elon Musk’s buyout of Twitter, while many Democrats shared their concern over the acquisition of Twitter.

 

Senator  Marsha Blackburn (Re: Tennessee.). tweeted “This is a great day to be conservative on Twitter,”. While on the other spectrum, Elizabeth Warren who has been a long time critique billionaire over taxes paid by the billionaires tweeted “it is a danger to democracy”.

• By Shobhit Bhardwaj
• April 30, 2022

ELON MUSK’S ANOTHER UNPRECEDENTED MOVE

Update- Friday ,22 April

 

In a new filing with the SEC, Musk said he has procured USD 46 billion to endow his offer of $54.20 a share.

Morgan Stanley, Bank of America, and several other banks have promised to lend Musk an additional $25.5 billion, against in part by some of Musk’s Tesla shares, according to the filing to SEC.

Musk averred in his filing that Twitter has not yet officially responded to his gratuitous offer. He “is seeking to negotiate a definitive agreement for the acquisition of Twitter,” stated in the filing, “and is prepared to begin such negotiations immediately.”

Elon musk CEO of Tesla Motors,  Chief of space x and the boring company  recently announced that he has bought a 9.2 per cent stake in Twitter, making him the 2nd  largest shareholder in the Company. Paras Aggarwal CEO of Twitter offered musk a seat on the board of directors but musk declined the offer. Elon musk according to his recent statements want to buy 100% of the outstanding shares of the company.

Elon musk’s take over of the company is not sitting well with the board of directors. Musk has offered to acquire Twitter for roughly 43 billion dollars which amounts to 54.20 USD per share .currently Twitter share is trading at around  45 USD. This bid has prompted Twitter to adopt

‘poison pill’ (officially known as shareholders rights plan) to prevent “hostile bid” from musk. A poison pill means when a company issues new additional stock to dilute the ownership of shareholders. Musk may also be willing to pledge his current stake if necessary, a move that could raise several billion additional dollars, according to the New York Post report. The announcement of the poison pill has been approved by the board last Friday while the stock market was closed, Twitter on Monday provided more details in a regulatory filing that no doubt it’s trying to fend off Musk’s $43 billion takeover bid.

When a poison pill is approved by the board of directors Any investor that builds up a stake up to 15 per cent without the board’s approval. If Musk were to increase his stake to the 15% threshold, then The board can grant shareholders as of April 25 the right to buy one-thousandth of a share of preferred stock for each common share they own, for $210, which will make it virtually impossible to acquire total outstanding no of shares of Twitter. Adoption of the poison pill often results in lawsuits against companies accusing that the board is acting against the interest of shareholders to keep their position.

Other private-equity firms have also expressed their interest in participating in a deal for Twitter, people familiar with the matter told Reuters on Monday without naming the firm.

Goldman Sachs, the prestigious investment bank has advised twitter to not approve the musk’s offer. The board has retained Goldman Sachs to advise in its tussle with Musk.  Musk has retained Morgan Stanley, a rival of Goldman Sachs, as his advisory bank.

Musk tweeted “If the current Twitter board takes actions contrary to shareholder interests, they would be breaching their fiduciary duty,” the billionaire reacted to the press articles on Twitter. “The liability they would thereby assume would be titanic in scale.”

In a recent interview with Ted talks musk stated that twitter’s algorithm must be open source as it allows transparency between the Platform and the users. He also stated in the same interview that free speech must be allowed on Twitter but hate speeches and other forms of provoking tweets that might result in violence must be moderated the real question is can we rely on AI to determine the nature of tweets.

Lately, musk seems to be very angry at the board of directors, adding to his previous statements “It would be utterly indefensible not to put this offer to a shareholder vote. They own the company, not the board of directors”

SO WHAT ELON MUSK’S NEXT MOVE WOULD BE?

This all now has become a game of high stakes between the world’s richest man and Twitter, with this upcoming week might be an eventful one as we expect to formally hear from both the parties on their next move, With the poison pill making it harder for musk’s takeover of Twitter. It will be challenging for Musk, he may decide to withdraw his bid or make changes to his bid and exercise the still-significant influence he would have on the company as one.

ELON MUASK

 

• By Shobhit Bhardwaj
• April 21, 2022