…. 5 Key takeaways to bring the change!!!

1. Quality of life depends majorly on Quality of Habits. Your habit becomes the part of your identity.
2. Every small step brings the difference. Repeat and Practice till it becomes your habit, then look for another change.
3. B=f(P,E); B: Behavior, P: People & E: Environment. Behavior is influenced by People and Environment around us.
4. Never interrupt the habit and behavior. Professionals stick to schedule and Amateur get life into the way.  
5. Reflection and review are key, don’t forget to review things.

Forming a good habit seems difficult, opt for the small change and repeat till the time it is ingrained in you. One small change led to other, and series of changes help to form the habit. Look for the invisible bad habits however good habits is obvious.

Rewards and easy success help to motivate, always keep yourself motivated with someway or other. However, prefer reward over punishment. Reward is repeated and what is punished is avoided.

In summary, follow the four laws: Make it Obvious, Attractive, easy and satisfying.

Last but not least, “Review yourself regularly”.

Good read and capturing many other ways and factors to ingrain the habit. Any change in life begins from you only.

The world is divided into 24 time zones, as Earth rotates on its axis & it moves about 15 degrees every 60 minutes. After 24 hours, it has completed a full rotation of 360 degrees. The course of one day is broken down to the seconds and calculated to define the correct time of a particular place. The Co-ordinated Universal Time (UTC) is used to regulate time and date around the world.

Time zone enables world to work in accordance with sun rise/set and human body clock. Additionally, time zone may not only vary for the countries but also with in the countries there are different time zone such as US has 6 time zones, Australia has 3 time zone and Russia being largest country has 11 time zone, however India being 7^th largest country is exception.

Debate on whether India should be divided basis the time zone, changing the long-driven notion of one nation (where every citizen wakes up together, work together and sleeps together). However, in this coordinated country we lose out time, efficiencies, better working rhythm and most importantly energies. Highlighting the few pointers in support of multiple time zones for country:

1. India stretches 3,000km (1,864 miles) from east to west, spanning roughly 30 degrees longitude. This corresponds with a two-hour difference in mean solar times – the passage of time based on the position of the sun in the sky.

• India is geographically the second-largest country not to have multiple time-zones India stretches from 97 degree 25 minute East in Arunachal to 68 degree 7 minute East in Gujarat — almost 30 degrees of longitude which is more than enough to have two time-zones.

• The rising and setting of the sun impacts our body clocks or circadian rhythm. As it gets darker in the evening, the body starts to produce the sleep hormone melatonin – which helps people nod off.

• North Eastern states on extreme east get the sunlight two hours before the west. Still, they start there day and offices basis the India Standard time, leading to following consequences

• Wasting 2 hours of sunlight & offering distorted sleep as personally they tend to start day very early however professionally there is lag.
  • Sun sets early but working hour does not, leading to higher electricity consumption and human productivity.
  • People losing out early morning sun and benefits of same, impacting human productivity and health.
  • The school/offices start at more or less the same time everywhere in India but children go to bed later and have reduced sleep in areas where the sun sets later. An hour’s delay in sunset time reduces children’s sleep by 30 minutes.

Loss of Sleep -> Lack of Physical and Mental Well Being -> Lower Productivity à Differential Wages -> Wastage of Natural Resources.

All of the above things get worst in Winters, as days are shorter & natural light squeezed.

• Country not only become efficient but we will also have working class for longer duration distributed with in the country. Making country globally more competitive and having elongated man-hours spread across the country.

• India is country of poor and rich people; with most people fall under working class population. Hence, it is important to match the human biological clock with working hours enabling the mental and physical wellbeing.

India earlier use to have 3 different time zone, divided between Kolkata, Mumbai and Chennai though in 1905 British opted one time zone for India basis the meridian in east of Allahabad. However, they continue to follow Calcutta and Bombay time zone till 1948 and 1955 resp.  Also, in Assam people follow Chaibagan time zone basis the sun rises and sets enabling higher productivity.  

Any change will be challenged by multiple changes like accustom the systems operating in country like freight, banking systems, school/colleges etc, businesses to adapt & work in accordance with new time zones, changing the working rhythm, getting into more complexities like daylight saving etc. Also, changing the one nation theory, cropping the issue of dividing country on TIME & giving birth to political agenda, which is ironical.

Though, any change requires certain amount of investment and planning, basis research multiple time zone can increment GDP by 0.2% (which is substantial of USD 3 Trn) or adding human capital by $4.2 Bn (Research Name: Poor Sleep: sunset time & Human Capital Production). Additionally,             the researchers estimate an annual energy savings of 20 million kWh if two time zones are implemented. Enhanced human productivity and energy saving together has substantial contribution, which will have commutative impact.

India journey from developing to developed may requires few structural changes in order to maximize.

….. Invest in SDLs

SDLs offering high credit equivalent to Govt. of India, with slight alpha for the the moderate maturity. Brief snapshot capturing Know-how on SDL.

What is SDL?

1. SDLs are bonds that are issued by the state government to manage their state finances and fund their fiscal deficit.
2. Each state is allowed to issue securities up to a certain limit defined for the year.
3. SDLs are issued in the primary market through normal auctions conducted by the RBI and traded in the secondary market
4. Interest is serviced at half-yearly intervals and the principal is repaid on the maturity date.

How SDL is issued and managed?

1. RBI manages the issuance of SDL along with monitoring periodical payment interest and principal at maturity.  Auctions the SDLs through E-Kuber.
2. SDL is serviced by RBI through Consolidated Sinking Fund and Guarantee Redemption Fund that state maintains with RBI.
3. RBI can also make payment from the budget/Tax  allocation to State from centre in case required. RBI Auctions SDLs through E-Kuber, hence pricing is determines by Yields, market cycle, auction amount and most importantly demand. Auction is held once in fortnight, however issuance calendar is not fixed. 
4. Financial Benchmark India Pvt. Ltd. make available prices for the valuation of SDLs.

Credit Worthiness

1. SDLs are considered equivalent to Govt of India bonds, they do not fall under CRAR Guidelines (Capital to Risk Weighted Guidelines) i.e. risk weight of SDL is zero under CRAR norm.  Banks need not keep any capital for investing in SDLs. 
2. The SDL securities issued by states are credible collateral for meeting the SLR requirements of banks as well as a collateral for availing liquidity under the RBI’s LAF including the repo. Hence, these fall under the credible collateral for the bank.
3. SDL securities are considered as superior to loans mobilized or bonds issued by state government entities.
4. SDLs are considered equivalent to G Sec, however in hierarchy it will be following the G Sec in credit stack.

Ways to invest in SDL :

1. The trading of SDLs is done through electronic mode on the RBI managed NDS-OM(Negotiated Dealing System-Order Matching) and is tradeable in the voice market (NDS).
2. Participate through Target Maturity funds (Mutual Funds and ETFs) i.e. Buy & hold strategy where fund manager will hold scripts till maturity.

Advantages: Generating alpha with sovereign credit.

Disadvantages: Fund may have MTM impact with interest rate movement, however invest with view of hold till maturity.

SDL Index (General Points):

1. These are majorly Fixed tenor index with maturity 2026, 2027, 2031 etc.
2. Basis the outstanding top 12, 15, 20 issuance is taken in construction of Index and investment is made in equal weights or weights defined. Along with over all issuance in many cases minimum outstanding is taken into account.
3. Index forms basis the liquidity score e.g. 80% weight to aggregate trading value, 10% weight to number of days traded and 10% weight to number of trades of the bond during the twelve months period
4. Index is rebalanced on Quarter ending basis the mismatch in holding criteria. Index has defined minimum and maximum number securities. Post exclusion if number of securities fall below minimum number than new security is added , else value got distributed among the existing.

Investment Recommendation (Current market scenario) :

Invest in  SDL funds with view of hold till the maturity (generating accrual income), offering alpha over theGSec and security equivalent to GSec. There will be an interest rate risk , however same fades away near to maturity. Funds with no active management & low expense offering returns in the range of 7-8% basis current market yields .

GIFT CITY will be changing the landscape of Indian Wealth Management ……… knocking opportunities & opening new avenues . It is a step towards:

1. Enhanced integration of Global and Indian Markets.
2. Easy access to International Market and bringing global market at doorsteps for Indian Investors.
3. Easy and cheaper access of Indian Markets for Global Investors.
4. Making India future global hub for Financial Markets

Capturing the case for GIFT city for Wealth Management in India…. enhancing investment avenues for the Indian and Foreign Investors

135 Bn eyes were set to watch budget on 1 Feb, keeping high hopes from the same. Government managed to do fairly well on most of accounts, seeks to lay a footprint and blue-print to drive economy over Amrit Kaal…. journey of India from 75 to 100 years. It is a realistic budget and government has not chased the vote bank.  High focus on growth, higher capex, generating employment etc but missed the class of commoners and businesses. We would also like to see the budget from the lens of 100 Bn. Newspapers filled with pleasing articles but subtle otherwise.

However, it is a prudent Budget, keeping check on expenses and realistic conservative revenue estimation, aimed to restrict the fiscal deficit. Detailing key parameters of the budget:

1. Revenue expenditure (Neutral- as important to see impact of reduced subsidies)
   • Flat growth of 1%, believing in theory of money saved is money earned.   
   • Managing the subsidies is key (Food, Petroleum & Fertiliser).
   • Reduction in subsidies may impact the over all chain and may further induce inflation. Also, impacting the consumption majorly in rural areas.

• Capex (Big HIT of the Budget):
  • 35% increase in capex, is the welcome step. Enhancing employment, inducing demand, higher wages etc.
  • Domino effect on sectors like cement, industrials etc.
  • But, will be supported by high borrowing, impacting bond yields negatively may further impact gross margins. This may have ripple effect on overall scheme of things.
• Revenue number looks achievable (Hit- Realistic projections)
  • Government has substantially reduced the disinvestment target, taking a cue from past.
  • Revenue numbers will be supported by higher GST, Taxes and Income, Corporate taxes and Customs. While fall in Union Excise duty, driven by increased global prices & step towards supporting the inhouse manufacturing. Still there is underestimation in tax revenues.
  • Estimation on RBI dividend has been reduced, which looks more realistic in years to come. Also, can be buffer for government to meet the targets.  
  • However, underestimation of tax for rest of FY 22 and FY 23, may bring breather on fiscal and also on borrowing front in future.
• Fiscal Deficit (Difficult to Achieve): 6.9% in FY 22 and 6.4% in FY23, important to see if government able to restrict the deficit, provided higher inflation & increased oil prices etc. Also, fiscal deficit is contained by higher borrowing of 11.18 Trn against 7.76 Trn in FY22 to meet expenditure, while gross borrowing of 14.9 Trn as against of 12 Trn.

Note: 67% of deficit will be financed by borrowing in FY 23 against 49% in FY 22.

Word of Caution: Impacting bond yield because of the higher borrowing, may impact other parts of budget.

• Taxes (Something in storehouse for HNIs only)
  • Neither increase or decrease on tax front, some times no action is also a good action.
  • Reduction in surcharge by capping it to 15% on unlisted space, benefitting our new born unicorns, employees with ESOPs & HNIs. Majorly, benefitting people falling above 2 Cr and 5 Cr income.
  • Taxing Crypto is sane decision, as any form of gains will be taxed at 30%. Government has done homework and restricting all avenues of gain.
  • Tax breather of Co-ops , MAT for corporative societies reduced to 15% from 18.5%.
• Supporting Local Business Men (Addressing very limited section, Missed)
  • Custom duty on Imitation Jewelry has increased, discouraging imports.
  • Custom duty on unpolished Diamond reduced to 5% (majorally benefitting our Guju Bhai’s).
  • Duty concessions on parts of phone chargers, transformers etc. supporting domestic manufacturing.
  • Unable to address the large section of business man and sectors effected badly by COVID and otherwise in last 2-3 years.
  • Extension of Emergency Credit Line Gaurantee Scheme for MSME till 31 March 2022

…… and many more such measures.

• Enhancing green energy
  • Introduction of policy EV Battery swapping, encouraging shift to electric vehicles.
  • Additional allocation of Rs. 19500 Crs for PLI specially to sectors like drone, green energy etc. , step towards Atmnirbhar Bharat also generating 60 lakh jobs.
  • 5-10% of Biomass pellet cofired with thermal plant, addressing stubble burning to extent.

…… few more in list.

Budget Missed… Again & Again:

Government has missed the section, which has been unnoticed from long time i.e. our common men, small business man and few of COVID hit sectors. These are the sections, which are bleeding to an extent and always have high hopes from budget.

1. No good news for the few of sectors impacted badly by covid. Sectors with job loss & witnessed consolidation.
2. Lack of relief for income slabs, the class where 81% of households start living on credit from mid of the month. There salaries are not sufficient enough and inflation will further worsen the situation.  
3. No steps to induce rural and urban demand, which is key for the private capex. Will further enhance the employment, wages etc.

Budget managed to support long term growth, satisfying big corporates, Start-ups, HNIs (investing heavily in unlisted space), making few of luxury items cheaper, financial inclusion through digital assets  etc etc…..cheering the stock market.  But no direct measures to induce the demand in rural and urban sector.

Still, few populist measures are expected and needed in order to support the revival post covid. Nothing much to cheer for common class…… A BIG MISS. However, common men & small businesses plays a critical pillar to lay a stepping stone for Amrit Kaal.

May be we have one before Lok Sabha Election…. & have SABKA SAATH SABKA VIKAS.