Why we are obsessed with money

What a way to exist!

For most of us, practically the whole day all we are thinking is about money and more specifically how to have more money!

As if money was the only thing in life. Unfortunately for most of us, circumstances just do not permit any other thought!

We are running behind money most of the time which is almost akin to have become obsessed with money. Everything that we are doing in life is centred around money.

Unfortunately, this is because we need money for anything and everything that we do. There’s nothing wrong and what are you doing, however the problem is that over time, it becomes a compulsive habit to keep earning more.

That’s where the danger is. The problem is that there is a point where from we chase money as an addiction, we chase money because we like to do so. If we did not chase money we would not know what to chase now because we get out identity from money and the amount of money we have.

Another thing is that right from childhood we are always taught and our minds are conditioned that everything that we are doing is going to be for the sake of earning money.

There is no one who told you that money is just a means, and then there is something greater in life to achieve. Some examples are legacy; building something, charity; to giving something / helping someone, passion; pursuing something and living; simply to enjoy life and your money

We have got addicted to this and how!

There are three reasons for this:

First, we are what we do. It is the human behaviour. I know I should exercise and I don’t. I know I should eat healthy and I don’t. I know I should spend time with my kids and I don’t. I know that, yes, money isn’t going to make me happy and I still keep trying to make money.

We live by the laws of inertia, in a pattern which is hard to break. But we have to break it. For ourselves and for the sake of people and reasons for which we are chasing money.

Secondly, we need signals of progress. Money is a measure of how far you have progressed in life. The more the money you have the more you can make sure your progress. It’s simply the logic of evolution. People need validation of their success. Bigger house, bigger car, branded goods and list goes on.

Thirdly, it’s the easy way out. It’s only human to avoid difficult things. Important things are very difficult to measure.  Have I been a good father or husband? Have I groomed my child well?  Such things take years to measure and we still don’t have answers.

So, should we not be focused on creating money for ourselves?

I’m not saying that. Definitely create. Take care of yourself for sure!! Use it to the maximum to make yourself happy!!! You need a certain amount and beyond that is extra.

The definition of their certain amount is naturally different from one person to another. If that extra is going to happen easily, without stress and without your involvement, then its fine. Basically don’t kill yourself for that extra. Be Smart.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a certified financial planner, wealth manager and financial freedom coach.

How the RBI actually helps you


Most of us in Mumbai, see this huge structure called the Reserve Bank of India and wonder what it really does. It’s also a tourist attraction!! It has so many other offices and again one wonders why they need to have so many offices. I’m going to try and highlight a very interesting part of RBI’s work and how it helps us directly on a day-to-day basis.

The RBI does a review of the monetary policy of the country at frequent intervals during the year. So how does the monetary policy help us investors to take smart decisions?

Monetary policy is a tool by which the RBI decides to raise interest rates or reduce interest rates or keep them steady.

In our country, as we’re an oil importing nation, this decision is very closely linked to Oil. Oil to a large extent contributes to inflation. We all know what happens when inflation keeps rising. We in India unfortunately do not see too much of inflation falling and things becoming cheaper.

Oil is Not Well

So when oil prices rise i.e. we see a rise in crude oil prices almost instantly we can expect rising food prices. This is because there is going to be a rising cost pressure for manufacturing & services. This rise obviously gets passed onto the retail consumers.

When this happens RBI adopts a hawkish stance, tries to pull money out of the system by raising interest rates. Now when interest rates rise no one seems to be interested in borrowing. This immediately puts a brakes on money circulation.  Less money chasing goods decreases the demand for money. This way it controls inflation.

There is yet another tool that the RBI has and that is known as the CRR or the cash reserve ratio.  This ratio in simple words means the amount of cash that the bank must maintain with the RBI as the percentage of the total assets. So when this increases banks are forced to park more with the RBI and this is also a way to control inflation.

On the other hand when things look dull, when there is a recession of sorts, the RBI comes to the rescue and gets into action to kickstart growth in the country. It does this by lowering the interest rates. This we all will understand quite easily because we see a direct benefit of this happening. We see a fall of interest outgo in our EMI’s for the home loan that we are carrying. New loans become cheaper.

Individuals are motivated to go out and make purchases, whether it is for a washing machine or a piece of real estate. Businesses are motivated to go out and borrow to buy more machinery, to expand capacity, to hire more staff and manpower and basically do everything that will add to the growth of business.

Economic growth results as a result of all this. It is also during this time that stock market rises, we see a rally in stock prices and mutual fund NAV’s jumping higher and higher each day. There is prosperity all around.

Critical Role

As you can see that the central bank of the country has a very very important role to play.  If it makes a mistake, things can go really wrong.  Imagine like the USA or Japan if our interest rates were very low; everyone would run to borrow, they would borrow more than they require because it would be cheap and easy to borrow. And that is very individuals would run into what is known as the debt trap, because someday you’ll have to pay back.

Each day the central bank attempts to make sure that everything in our country remains stable and financially there’s nothing that goes wrong dramatically.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

The year of the bond, once again!

We are not talking of James Bond, we are talking of investment bonds.

We are in a situation where the fixed deposit rates are at a general low and there is a lot of discontent among depositors of fixed deposits.

Whenever we see a situation like this, one way or the other, the bond markets come to the rescue. It comes to the rescue of smart depositors, who are agile to move their money from fixed deposits to bond funds.

Let’s understand what is happening and why.

What Exactly is Happening in the Bond Markets?

It is likely that in this year, investors of bond funds will make handsome gains. Bond prices may rise and there may be capital gains. Investors of bond funds not only earn the rate of interest, but also earn capital gains. So that way, they make more than the return they would make on fixed deposits. The returns could be a high single digit or sometimes as high as double digits.

Over three years, this will become practically tax free or the tax would be a very small amount. So, basically, I am thinking that a rally will happen in the bond market. There are three main reasons for this — reduction in government borrowing (which is favourable), recovery of trading losses (which is favourable) and no change in monetary policy (which is neutral).

A word of caution, however, that such bond market investments are also subject to bond-market volatility and should be considered ideally with the help of a financial expert.

Before proceeding further, let us, therefore, quickly explain a bond, bond fund and bond market. We need to do this because few people understand the bond markets and even fewer invest in the bond markets.

Bond is nothing, but a commercial transaction where the borrower is issuing a bond to the lender and the lender will earn a certain rate of interest. When interest rates fall, everyone becomes interested in owning that bond.

As a result, the demand for the bond increases, the price of the bond increases and the bondholder makes capital gains.

A bond fund is a fund where ordinary investors pool in their money and a fund manager buys them a portfolio of bonds.

Moving onto the Reasons For a Rally in Bond Funds…

Now, the fundamental reason for a rally is reduction in interest rates as it stimulates economy and growth.

Firstly, the government is a massive borrower of funds. So a reduction in government borrowing reduces the demand for money in the economy. As a result, prices of bonds rise and this contributes to capital gains for bond holders.

Secondly, the Reserve Bank of India (RBI) recently announced that the commercial banks and RBI, which are the largest lenders to the government, will have another year to offset losses they have incurred on account of buying government bonds in the past. This action will lead to a rise in the price of bonds and this contributes to capital gains for bond holders.

Lastly, on one side due to the rise in oil prices, there is more inflation and thus more money is needed for circulation in the economy. On the other side, many government bonds are maturing, which will provide money supply. So, it is likely that we see a neutralising effect and thus RBI will take no action. This inaction here will support capital gains as explained above. Hence, this year might be a year of good gains for the bond investors.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

Five new financial goals for you this summer

I am going to try and explain to you why the summer holidays of April and May are great months to get a lot of things started, financially speaking.

This time period in a way resets the financial clock. You also have the option to hit the reset button on everything you have done so far; financially speaking of course and hope to do better things better than you did last year.

Let’s look at some of the new and unusual things to do in April.

  • Make a learning budget

Learn something about money or anything you like. The best way to make money is to learn something about money. Just like if you wanted to learn cooking you will get into the cooking class. If you wanted to learn swimming you would enrol in the swimming class. If you find learning about money is too daunting task than learn something which is close at to your heart or related to your work. If you learn something new, there’s a possibility that you will use your new ideas to generate new income and in turn that will generate new wealth for you.  So make a budget, enrol somewhere and spend that budget. How about a % of your annual income? Spend it for sure!

  • Plan a unique holiday 

When you’re by yourself and without your mobile phone you will have the opportunity to think! When you have time to think, suddenly good ideas will come to your mind.  You may think this is silly but you can be sure that you will be amazed if your drivers experiment just once. So it might be a good idea to go for a holiday just by yourself. If you find that too intimidating, join a group of strangers. You can combine that with the adventures experience if you like.  Be extra careful if you’re going with your special buddies. Do this only if they are going to be in a position to help you discuss your idea and make it bigger. They must play the role of complimenting your thoughts. So make a schedule to do this holiday and obviously make a budget to make it happen. Think & create new ways of making wealth.

  • Make a prediction and make it happen

Be brave. Let’s aim to grow and multiply net worth by 50% by the time you come to the end of this financial year. This is not a joke and it is easier than you can imagine.  I’m speaking about NETWORTH and I’m not talking about return on investment. If your networth is Rs. 100 today, all I’m saying is that let’s aim to make this a 150 by the end of this year. This networth comprises of all your savings till date. This can be achieved by simply saving aggressively every month for the next twelve months. Just put this into a recurring deposit or liquid fund so you don’t spend it.  We just have to prove to ourselves that this is possible. Where and how we will invest this money will think about that later.

  • Eliminate a negative belief 

I want to give you an exercise here. Write down all your negative beliefs you have about money and wealth. Most people are not able to achieve the desired level of wealth because they think about wealth negatively. So even if you are earning a good amount of income you will never see yourself becoming wealthy. Examples are money causes problems, money causes a fight, managing money is complicated etc. Then for each negative thought, you have written down the positives i.e. the opposite for a few months. Soon negatively biased feelings will evaporate.

  • Make a new investment; something you have not done before

Again here you do not have to be a financial expert. The idea is to learn something new. There are hundreds of investment options. Our objective here is to learn something new. Talk to your advisor and seek his or her guidance. Just a word of caution here; don’t do anything which is speculative or is something that you just can’t understand. Do what do find easy you understand and do that then.

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager & Financial Freedom Coach.

Seeking financial freedom? The time is NOW!

John Lewis famously remarked, “If not now, then when? If not us, then who?” This is so appropriate in the current financial world that we live in.

That statement will leave to rest every other argument that is conservative and against the idea of wealth creation. We are often faced with the situation where there is no option but to create wealth. Read on to know why!

Interest rates are painfully low. For all those diehard fans of guaranteed investment returns, there’s hardly any place to go to. Thinking of fixed deposits? Feeling happy with 7%? And fully taxable? That period is over. Period.

That doctrine of investing into pure fixed deposits and similar instruments is unfortunately standing challenged. There is no option but to sprinkle it with a combination of a little something that will add to the returns earned from fixed income type of securities. In fact this category of investors are in a way, best placed in terms of the current tax laws.

They can earn about 9-10% with minimal or near zero tax over about five years and more. Starting to generate rate of return above the inflation level of 7% is starting to create wealth. So there it is; there is no option but to move in the direction of creating wealth.

For more evolved investors, who invest in equities and who and still sitting on the sidelines tend to run out of patience every now and then. They are sometimes waiting for the right time, sometimes waiting for correction, sometimes waiting for valuation and sometimes waiting for just nothing. Sometimes, just too busy to take action!

I totally understand not wanting to lose hard-earned money. But if the money does not move it will stagnate. That’s the problem with money.

Hit the Ground Running

Inaction and inactivity kills it. Makes it costly to hold. Makes us lose opportunities, sometimes small and sometimes significant. I know of many people including my dad, who just kept investing into equities and holding forever. No doubt they were hugely (big HUGELY) better off then the people in the same time zone. I think they could have done far better with some smart lessons on asset allocation. This is because if they compare the growth rate of their holding over a period of 20 or maybe 30 years the compounded rate of return earned is often not impressive.

It is just marginally better or a few percentage points above the fixed deposit rate. Hence the need for asset allocation, which simply put is not to have all eggs in one basket at any given point in time. These sections of investors anyways create wealth, and, asset allocation is the tool that ensures that the process of wealth creation continues uninterrupted. So again there it is; even for this section there is not option but to start enhancing their wealth creation activities, else returns will continue to remain forever mediocre.

Then there are skeptics and there is nothing much for skeptics of everything, except that they need a serious dose of financial education. Perhaps what if needed is a proof of concept and for that, which better country to live in other than India where financial transparency in investments is so high that I sometimes feel, it comes from another planet.

 Your Money Needs Action

Today, there is a whole lot of variety to choose from and we have never been more spoilt for choice. But the most important thing in all this is to understand that your money needs action. It needs activity and for that the time is now!

And furthermore, if you asked me this question 10 years ago; I would have said that, the Time is NOW. If you ask this question 10 years hence, I will still say the Time is NOW. Any time is the right time to start the process of creating wealth. All that is important is that you take your first step; then continue it all the way with zeal and determination… till you have the level of wealth that you desire. And if you accumulate more than you need, still do it and share it with the world.

If you want your financial freedom; then the Time is NOW!

Kartik Jhaveri is an expert at planning money, life and aspirations. He is a Certified Financial Planner, Wealth Manager and Financial Freedom Coach.

Young Turks: Here’s the success story of venture fund Aspada

Venture fund Aspada was co-founded by Kartik Srivatsa and Thomas Hyland in 2012 and has made 17 investments so far across Fin-tech, agriculture, health and edu-tech startups.

Young Turks takes a look at their investment thesis, their differentiated VC model and meet three of their portfolio companies – Capital Float that underwrites unsecured loans to startups and SMEs; Dunzo, a hyper local concierge and delivery player that is also Google’s first direct startup investment in India; WayCool, a Chennai-based agriculture-tech startup.

Sensex, Nifty hold gains led by PSU banks, auto, realty

The Bombay Stock Exchange (BSE) logo is seen under a bull statue at the entrance of their building in Mumbai

Indian benchmark indices BSE Sensex and NSE’s Nifty 50 held gains on Friday, boosted by Narendra Modi-led BJP’s landslide win in the 2019 Lok Sabha elections. At 12.05 PM, the Sensex was up 332.59 points or 0.86 percent, at 39,143.98,  while Nifty50 was up 93.85 points or 0.81 percent at 11,750.90.

The Nifty PSU Bank continued to remain the best-performing sector followed by Nifty Realty and Nifty Auto along with others. The only losing sector in the red is Nifty IT.

Bharti Airtel, L&T, M&M, Eicher Motors and Zee Entertainment were among the major gainers on the Nifty50, whereas ONGC, Tech Mahindra, HCL Technologies, Adani Ports and Hindustan Unilever led losses.

Prime Minister swept to a massive triumph in the general elections 2019 on Thursday, stunning opponents and upsetting predictions of a fractured mandate, giving his National Democratic Alliance (NDA) an unassailable lead of 341 seats — well above the halfway mark in Lok Sabha —  and on course to increase his majority in 2014.

Shares of Jet Airways fell over 8 percent intraday after media reports that Hinduja Group and Etihad Airways failed to strike a deal to buy a stake in the cash-strapped airlines.

Meanwhile, Asian stocks declined on Friday, as investors remain worried about the ongoing trade tensions between the United States and China.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.18 in the morning.

Catch all the latest and live market updates here on CNBC TV18 Market Live Blog.

Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

After strong Q4 earnings, Thermax expects single-digit revenue growth in FY20

Thermax Ltd posted a 67 percent on year jump in its consolidated net profit at Rs 126.90 crore for the quarter ended March 2019, mainly on account of higher revenues. The company’s consolidated net profit was at Rs 75.69 crore for the quarter ended on March 31, 2018, it said in a BSE filing. Total income rose to Rs 2,125.62 crore in the March quarter from Rs 1,187.96 crore in the year-ago period. The company’s consolidated net profit for 2018-19 rose to Rs 325.43 crore from Rs 231.16 crore in 2017-18. Total income in the last fiscal also rose to Rs 6,123.05 crore from Rs 4,602.03 crore.

In an interview to CNBC-TV18, MS Unnikrishnan, MD at Thermax said the margin reduction was due to two challenging orders in the EPC segment.

“The margin reduction for the year or for the quarter are attributable to two specific instances. In the EPC (engineering, procurement and construction) business of the company, we have had two challenging orders, a good part of which got over in the current year and partly gets spilled over to the next year. Similarly, our European subsidiary, Danstoker had a challenging year in the current year,” he said.

“If I were to keep these two aside, there had been an improvement in the overall margins in the environment business. It has gone up from 4.2 percent to 6.7 percent. Most of the product business in the domestic and in the other international markets have done better. However, these negatives have had an impact on the overall margins,” Unnikrishnan added.

On the revenue growth, he said, “Current quarter certainly had an impact on account of some of the larger project orders where we could be having the revenue recognition done,” he said.

“We are opening the current year with a lower order carry forward than the previous year. However, there are short cycle orders going to happen because the order intake in the last four months had been not so good in the domestic market owing to political uncertainty prevailing. But we are expecting an acceleration in order intake after the election outcome. So we are capable of executing short-cycle orders. Depending upon how it happens in the first, second, and third quarter we may not grow as much as we have grown in the current year, but maybe in single digits in the next year is what I should be expecting,” Unnikrishnan said.

See two rate cuts by RBI going ahead, says Deutsche Bank


Sameer Goel, head of Asia macro strategy at Deutsche Bank, shared his views and outlook on the money market.

“Obviously, in the near-term, I suspect the focus – post what has been a result which has exceeded expectations for the market – would be very much on cabinet formation, on the Reserve Bank of India (RBI), early part of next month and of course what happens with the budget and whether the deficit numbers themselves are revised higher. I think it is the medium-term picture which is probably a lot more significant and I would argue to my mind the scale and quantum of this mandate do point to two things which I would argue is the big swing factors for India over the next three-six months. One is the liquidity function and two is the outlook for foreign direct investment which can certainly change the math as far as India function is concerned. So, on the liquidity front, the fact that we have been running a net deficit of rupee liquidity of about USD 7-8 billion equivalent in the last six months, will that necessarily be shifted up to possibly neutral maybe even a surplus of USD 2-4 billion and how that is built towards supporting NBFCs and in general to improve policy transmission could be very significant for fixed income markets,” Goel said on Friday.

“In the near-term – given the history of how the rupee has behaved post elections – I would argue that there are still headwinds for much bigger gains for INR immediately. I think a better macro outlook is not necessary better as far as the currency is concerned. However, medium-term there are still more significant changes to be looked at,” he added.

“I think there are a fair bit of headwinds at the moment to global markets everywhere, in particular emerging markets. It is a combination of several things for sure. There are being concerns about the growth cycle shifting lower pretty much everywhere. There are certainly concerns which have got exaggerated because of all the developments around the trade dispute between US and China, certainly fears that this could become much worse from here and of course some idiosyncratic issues happening in some parts of EMs. So yes, flows overall have certainly slowed down. For India, it is an interesting combination because on the one hand it certainly has the beta to the global story and on the other hand an opportunity to be able to outperform on a relative basis versus what is looking like a poorer outlook for markets more generally,” said Goel.


Buy Mahindra & Mahindra, says Krish Subramanyam of Altamount Capital

BSE NSE Sensex Stock movement

Mitessh Thakkar of mitesshthakkar.com, Prakash Gaba of prakashgaba.com, and Krish Subramanyam of Altamount Capital discusses with Prashant Nair and Ekta Batra their readings and outlook on market technical and F&O side of the market as well as specific stocks and sectors.

They also spoke at length on Manappuram Finance, NIIT Technologies, Axis Bank, Larsen & Toubro (L&T)

Mitessh Thakkar stock picks are, “Manappuram Finance is a buy with a stop at Rs 127 and Rs 138-140 could be the target range. While NIIT Technologies and the entire IT pack with rupee kind of appreciating has given negative signals so NIIT Technologies look like a sell keep a stop at Rs 1,280 look for targets of Rs 1,240.”

Prakash Gaba stock ideas are, “I will go long on Axis Bank, it is showing some tractions possibly Axis Bank can climb up to around Rs 800 zones stop below Rs 780 should be fine. L&T I like the basic structure of L&T, it can climb to around Rs 1,550 zones stop below Rs 1,490.”

Krish Subramanyam stock recommendations are, “I have a plain vanilla Call in Mahindra & Mahindra (M&M). M&M is where Rs 646 would be very strong support level and we could see some good short covering rally coming about in the coming week. I am buying 650 Strike Call that is quoting at around Rs 13 keep a target of Rs 30 and maybe one could keep a stop loss of Rs 5. A covered Call strategy in HPCL, buy the futures & sell a 300 Call that is quoting at around Rs 9 keeping a modest target of Rs 315 and maybe one could keep a stop loss of Rs 290.”

Follow stock recommendations by Mitessh Thakkar here: https://www.cnbctv18.com/author/mitessh-mthakkar-111/

Follow stock recommendations by Prakash Gaba here: https://www.cnbctv18.com/author/prakash-gaba-117/

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

A pollution crackdown compounds slowdown woes in China’s heartland

For years, China’s industrial heartland has been cloaked in smog, its waterways choked with pollution pumped from enormous clusters of factories churning out the mountains of cement and steel needed to build the Chinese economy. REUTERS/Thomas Peter
Aiming to tackle what has become a huge public health problem, the authorities have cracked down on polluting industries, targeting provinces like Henan, which has a population of 10 crore people and hundreds of factory towns. REUTERS/Thomas Peter
According to interviews with factory and business owners, and consumers and workers across Henan, that crackdown – conducted with often heavy-handed local enforcement – is crippling the economies of towns and cities that depend on polluting industries. REUTERS/Thomas Peter
Manufacturers across Henan have been particularly hard hit by the new environmental regulations, compounding the pressures the province faces from China’s slowing economy and a grinding trade war with the United States. REUTERS/Thomas Peter
It also highlights the trade-off China faces between providing a healthier environment for its citizens and maintaining economic growth in a province whose climb from poverty has lagged that of coastal regions. REUTERS/Thomas Peter

5 ideas that should be on the aviation agenda of Modi 2.0

I’m writing this column sitting at Mumbai Airport’s Terminal 2. This airport is reflective of India’s fast-paced growth in aviation, recognised as one of the best airport terminals for passenger experience, but today a shadow of its former self. Just a couple of days ago, the traffic data for April 2019 were released, and it showed that domestic traffic declined 2 percent year-on-year for the first time since June 2013, when Kingfisher Airlines went away. Now, it was Jet Airways. Also, one of every two passengers in India, now flies IndiGo.

So before the Modi government kicks off its second term, it would be a good idea to reflect on the breakneck growth of the past five years before starting with the policymaking for the next term. Here are some thoughts on what should definitely be on their list of things to do.

1. Offer Indian passengers a quality international travel experience: The grounding of Jet Airways has taken away a large amount of quality air traffic capacity out of India. From amongst the Indian carriers, Jet Airways was the only one which could hold its own. Air India, which was given the Star Alliance membership on a platter, failed to capitalise on the potential, and has hardly been able to link up with other members to gain formidable codeshare alliances to source traffic. The no-frill carriers only have planes good enough to fly regionally. 

In light of these, it is very important to choose which airlines get the bilateral rights of Jet Airways. Essentially, there needs to be a transparent policy for equitable slot allocation of these bilateral capacities, rather than arbitrary rules such as how much capacity was added in the past five years. Those policies will only ensure the big get bigger and the smaller get left behind. And while the government might still be hurting from the fact that Emirates has a disproportionate share of Indian traffic, given that domestic airlines won’t be able to fly us further than the Middle East and South East Asia anytime soon, it would become essential for them to rights to international airlines to make sure Indian passengers get a quality travel experience at a reasonable cost.

2. Focus on sustainable growth domestically: India is expected to be the third largest aviation market globally in the next decade or so. However, more planes mean more resources need to be put at the disposal of airlines as well. This would mean a large scale requirement of pilots, engineers and other resources. The focus should not just be on adding more planes and hence more flights. The focus should be on quality this time around, for everyone in the ecosystem. To start with, in the interest of safety, the government should convene a comprehensive review of the duty timelines to ensure pilots and crew are not fatigued.

The government’s war cry for aviation last time was Hawai Chappal to Hawai Jahaaz. But the actions were not in line with the statements fully. The government would like fares to be kept low for more people to fly. And the competitiveness amongst airlines has made sure this be the case for the past few years. However, when it comes to the part of the government keeping its share of the aviation ecosystem’s contributions, it continues to keep aviation fuel highly taxed, indicating that it thinks of aviation as a luxury rather than a necessity. Owing to high airfares, people switch back to trains, and if we have to move from a developing to a developed economy, our population deserves the tools of air commute to be able to best use their time at work rather than commuting on trains. After all, time is money.

Sustainable growth also means relooking at the empty airstrips around the country. They don’t need fancy airport terminals. They just need functional ones. A model that works well for many tier two airports globally, as well as in India. On the other hand, major gateway airports in India, such as Mumbai, Delhi need better infrastructure which should come online quicker rather than later.

3. Sell Air India, the white elephant: While Air India serves a unique purpose of being the nation’s carrier and chips in every time there is an emergency, that is no reason to keep it on the balance sheet of the nation. Air India needs to be privatised, and a lot of hard calls would need to be taken before it would be restored to its former glory. To do this means the Government needs to sell the airline at viable terms for the interested bidders, not at viable terms for themselves. That might mean they want to keep some equity for themselves, but that definitely means they will need to give up complete control of the airline to whosoever takes over the airline.

4. Focus on resolving the airspace closure with Pakistan: It is no secret that aviation is hurting in the country because of the airspace closure over Pakistan. Flights to Delhi are the most affected, and a lot of international carriers, and even Air India, are having to cancel flights to Delhi due to the long circuitous route to circumvent Pakistan which makes it unviable to fly these routes. Owing to this, capacity is constrained and airfares are soaring.

5. Bring a full-fledged aviation authority: The current regulator, the DGCA, was always supposed to be a safety regulator for Indian aviation. Infact, its vision on the DGCA website is stated to be, “Endeavour to promote safe and efficient Air Transportation through regulation and proactive safety oversight system.” A full-fledged aviation authority with oversight on all functions, modelled on the lines of the Federal Aviation Authority of the USA, was supposed to be brought up, called the CAA. This has not happened over the years, and is a major sticking point with the international oversight body for aviation. Time the government recruited top-shelf aviation talent and bring the CAA to life.

Needless to say, a lot needs to be done to make sure more Indians can fly, and fly to more places at the same time. But, doing this would be a good start to getting there.


Ajay Awtaney is a business travel & aviation journalist based in Mumbai, and the founder of the Indian frequent-traveller website Live From A Lounge (www.livefromalounge.com.) Ajay flies over 200,000 miles every year, and tweets about The Business of Travel at @LiveFromALounge.

Lok Sabha Election results: BofAML expects 100 bps rate cut by RBI in 2019, recapitalisation of PSU Banks

With Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) set to form government at the centre, Bank of America Merill Lynch (BofAML) said it expects a cut in lending rates, increasing liquidity stimulus, and expansion in GDP (gross domestic product).

Cheering the massive mandate given to Prime Minister Narendra Modi, the Sensex hit 40,000, while the Nifty crossed 12,000-mark intra-day deals on Thursday. However, moving ahead the markets are expected to shift its focus from the poll outcome to macro issues.

“While markets reacted to polls, we see the Indian cycle largely driven by the global cycle than who sits in Delhi,” BofAML said in a report.

The investment bank estimated a 35 basis points (bps) cut in repo rate on June 6 by the Reserve Bank of India (RBI) monetary policy committee (MPC) to support recovery, pull down yields and provide room for further rate cuts in 2019. “A 100 bps cut in 2019 with May inflation tracking a low 3.3 percent,” it said.

One basis point is a hundredth of a percentage point.

“The BJP manifesto has itself committed to stepping up investment by reducing the cost of capital. It presents a roadmap to expand GDP to $5 trillion by 2025 through a step up in infrastructure investment (to 10 percent of GDP from about 4 percent now) by cutting down the cost of capital,” BofAML said in its report.

Along with rate cut, the RBI should continue to inject $2-3 billion of durable liquidity a month to surplus liquidity and the ministry of finance should recapitalise PSU banks with excess RBI capital released by the Jalan report, it added.

A high-level panel led by former RBI governor Bimal Jalan, set up to decide the appropriate capital reserves that the central bank should maintain, is likely to submit its report by June.

The investment bank said it expects the July Budget to observe the 3.4 percent of GDP fiscal deficit target set by interim finance minister Piyush Goyal in February and continue to point out that fiscal deficit cuts have not led to lending rate cuts.

“The Modi government has reiterated its commitment to fiscal prudence by not following the Congress’ universal basic income – NYAY – proposal of a steep 1.9 percent of GDP even in the heat of polls,” it added.

Also, track all live market action on CNBC-TV18 market live

India likely to be hit as US considers duties on countries that undervalue currency

The US Commerce Department said on Thursday it was proposing a new rule to impose anti-subsidy duties on products from countries that undervalue their currencies against the dollar, another move that could slap higher tariffs on Chinese products.

The new rule also could put goods from other countries at risk of higher tariffs, including Japan, South Korea, India, Germany and Switzerland.

Those countries, along with China, were all listed on the Treasury Department’s semi-annual currency report’s “monitoring list”, which tracks currency market interventions, high global current account surpluses and high bilateral trade surpluses.

The department said its proposed rule would amend the normal countervailing duty process to include new criteria for currency undervaluation.

Trump administration officials have long viewed China’s yuan as undervalued against the dollar, despite the US-China trade war, which foreign currency experts say has hurt the yuan’s value.”

This change puts foreign exporters on notice that the Department of Commerce can countervail currency subsidies that harm US industries,” Commerce Secretary Wilbur Ross said in a statement.

“Foreign nations would no longer be able to use currency policies to the disadvantage of American workers and businesses,” he said.

It was a step toward making good on a campaign promise by US President Donald Trump to address unfair currency practices, Ross said.

The department did not identify the specific criteria that it would use to evaluate whether US pricing of a product was artificially low because of currency undervaluation.

Why NDA win could spell gains for public sector banks

India Elections

Narendra Modi-led Bharatiya Janata Party (BJP) has won the 2019 Lok Sabha elections comfortably and is now set for another five-year term. The biggest positive factor is continuity of focus with regard to public sector banks. After a big clean-up of books and necessary recapitalization, they could see a strong improvement in profitability over the next two-four years, especially on a revival in the capex cycle.

What has so far been done over the last five years?

Over the past five years, the government has initiated various initiatives aimed at cleaning up PSU banks’ balance sheets through the resolution of assets, re-capitalisation and focusing on enhancing the provision coverage ratios. This has led to the creation of a strong foundation for growth, quite in contrast to the low loan growth, a decline in market share and a rise in NPAs seen for state-owned banks over the past few years.


> Bringing the unbanked people to the banks

The Pradhan Mantri Jan Dhan Yojana, which was aimed at bringing the unbanked section of the society into the banking system, was a success with deposit mobilization of Rs 95,382 crore from 35.16 crore people.

> Introduction of Insolvency & Bankruptcy Code

What was, perhaps, the most significant initiative was the introduction of the Insolvency and Bankruptcy Code (IBC) to resolve stressed assets of banks, never mind the recent hiccups on the Feb 12 circular. Over Rs 3.5 lakh crore of assets has been referred by the Reserve Bank of India to the National Company Law Tribunal (NCLT) under this programme.

> Capitalisation and consolidation of PSU Banks

Another measure to nurse PSU banks to health was the government’s plan to infuse Rs 2.6 lakh crore into the struggling state-run entities. The government has also pushed consolidation in the banking sector, with Dena Bank and Vijaya Bank being amalgamated with Bank of Baroda, and Life Insurance Corporation bailing out IDBI Bank. Now, there are talks of a further push for consolidation amongst the PSU banks as media reports suggested that the government intends to get the likes of Oriental Bank of Commerce (OBC) and Allahabad Bank merged into Punjab National Bank.


> Business growth has been on the lower side

Loan growth between the fiscal year 2014-15 and 2018-19 averaged 10.4 percent in the NDA government compared to 17.4 percent in the previous five years of the UPA government.

Deposit growth for banks slowed to 9.5 percent during the BJP-led government, compared to 14.2 percent in the second term of the Congress-led UPA government.

> Rise in NPAs due to clean up act under asset quality review, February 12, 2018, circular by RBI

The gross NPA ratio rose to 11.8 percent in the FY18 from 4.2 percent in FY14. The IBC helped reduce the gross NPA ratio in the third quarter of FY19 to 10.4 percent.

> Losing market share

While PSU banks were focused on cleaning and strengthening their balance sheet; they paid a heavy price in terms of losing market share. They lost 900bps of market share between Q3FY16 to Q3FY19 i.e. in thirteen quarters. However, they still form a major part of the banking sector.


The PSU banks have strengthened their balance sheet thanks to capitalization from govt. They have also strengthened their balance sheet in terms of provision coverage ratio. Below is the core provision coverage ratio of PSU banks which has improved massively in the last 13-14 quarters. Core provision coverage ratio doesn’t include technical provisions, which is at 15-20% for various banks. What we have seen is that further in Q4FY19, PSU banks have strengthened their provision coverage ratio to well above 80-85% amongst the NCLT cases (Few banks have reached PCR as high as 100% in their NCLT cases) filed by them (RBI’s List 1 & list 2)

The incremental losses amongst PSU banks have been on a declining trend over the last 3-4 quarters. With most of the pain recognized as NPA and largely the issue of higher credit cost (provisions for NPA by advances ratio) peaking out, we may see a turnaround in the profitability of PSU banks over the next couple of quarters, which can lead to an improvement in their return ratios. A few PSU banks could record ROE in double digits for FY20 itself.

With an anticipated turnaround in the investment cycle over the next few quarters, PSU banks stand to benefit the most given that they still hold a majority of the market share and continue to enjoy a higher share in the consortium lending.


Largely, excluding SBI, PSU banks are trading between P/BV of 0.5-0.74x on FY20E. Historically, stronger and larger PSU banks have traded at higher multiples, and with the earnings trajectory likely to trend up over the next few years, there is a strong case for a re-rating going forward.

British PM Theresa May expected to announce date of her departure

British Prime Minister Theresa May is expected on Friday to announce the date of her departure, triggering a contest that will bring a new leader to power who is likely to push for a more decisive Brexit divorce deal.

After a crisis-riven premiership of almost three years, May is due to meet the chairman of the powerful Conservative 1922 Committee, which can make or break prime ministers.

May will remain in the office during a Conservative Party leadership election lasting about six weeks. The contest is likely to start on June 10 after U.S. President Donald Trump’s state visit to Britain, The Times reported.