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January 2022

Jan 19
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new labor codes in india

Changes in New Labor Codes in India

By Labour & Employment No Comments

Understanding Labor Laws & New Labor Codes in India

A labor-intensive country like India has revisited its new labor codes in India and its labor laws. In 2019, the Ministry of Labor and Employment had effectively introduced four Bills to strategically amalgamate 29 central laws.

It is to be noted that these 29 central laws were related to labor laws which were consequently simplified and modernized. Thus, the revision of the laws led to the much-needed revisal and simplification of the labor regulations in a labor-intensive country, like India.

To get a gist of what was strategically regulated in the laws, it is to be noted that wages, social security, and Industrial Relations were thoroughly scrutinized and regulated. On the other hand, attempts were also made to regulate the laws pertaining to health, Occupational Safety, and Working Conditions.

new labor codes

All such aforementioned provisions were codified and enacted effectively as the Code on Wages, 2019; the Occupational Safety, Health and Working Conditions Code, 2020; The Industrial Relations Code, 2020 and the Code on Social Security, 2020

Given the aforementioned acts, what actually were the changes on the ground level that were made by the government? In the labor laws, it was established that the Central Government will be emphatically the ‘appropriate government’. The central government will act as an “appropriate government” for the public sector undertakings.

Here, it is worthy of mentioning that the government will act in such capacity even if the central government’s holding in the entity is less than 50%. Certain industries that have qualified where the central government will act as the appropriate government are the specific industries banking, mines, telecom, and railways.

Talking about the occupational safety and health of the workers, an ‘Inspectnew changes in labour laws in indiaors-cum-Facilitators’ shall be established. This shall be effectively established as the new authority under the Code on Social Security, 2020, the Occupational Safety, Health and Working Conditions Code, 2020, and The Industrial Relations Code, 2020.

The duty of an inspector-cum-facilitator will emphatically be to provide information and reports to industry employees. Thus, the newer labor codes take into consideration the well-being and the interests of the laborers in the economy.

Given that India is a labor-intensive country, with a high contribution of the manufacturing sector in the economy, the address of core issues of the laborers will help in addressing the deep-seated problems and discrepancies that might threaten the efficiency of the labor.

labour law codes

Talking about the social security code, 2020, the code was emphatically introduced to provide social security benefits to the labor class, which are the most deprived social class. This has been strategically done by extending the goals of social security goals to employers and employees.

The code has also worked to emphatically simplify the labor laws by effectively amalgamating various enactments. such as:

The code positively states that the central government will be responsible to frame the social security schemes. This will be done by giving utmost importance to providing benefits under Employees‘ State Insurance Corporation (ESIC) for platform workers, gig workers, and unorganized workers.

In fact, the code also strongly empowers the central government to extend its social security benefit schemes to self-employed persons in the economy. Thus, given that the reins are in the hands of the government, one can maintain that welfare will be positively delivered as the state’s main motive is to deliver justice and protect the welfare of the society.

Thus, given the aforementioned changes and alterations in the new labor codes in India, one can emphatically state that it will lead to redressal of widespread hostilities and discrepancies in the labor system which has been haunting the efficiency and welfare of the labor class.

Given that the government will be gaining reins in the matters of labor laws, one can expect significant improvement in the conditions of the labor class in India, which is thoroughly deprived of justice and rightful means of survival and sustainability.

The act garners all the more important due to the fact that the labor class has suffered inexplicably due to the pandemic that has exacerbated the woes of the labor class. Thus, the new labor code emphatically introduces various special provisions for accommodating better regulations for industries.

This is being done by establishing flexible norms and allowing the industries to be flexible to foster efficiency and commitment to the work. Further, one can state that the ambiguity surrounding certain provisions has been cleared with clear codification and consolidation of the laws.

In fact, it can be positively stated that the codification and consolidation of such laws have positively led to the expansion of the ambit and effective applicability of the laws. Thus this has increasingly helped with ease of compliance and removal of an unnecessary multiplicity of definitions.

Thus, consequently, the reluctance that had seeped into the system due to inefficient and uncodified roles of the overlapping of authorities has been thoroughly removed.

What is more one can positively state about the newer labor code is that the new set of rules will definitely and positively empower the relationship between the employee, the employer, and the government, which will lead to faster resolution of the issue that plague the labor class.

impact of new labour codes in india

This will also be bn=beneficial for the employees if the labor class is appreciative of the system and thus, ultimately their employer. Thus, in totality, the newer laws will definitely lead to a positive long-term impact on the labor industry and will strengthen further contribute towards the idea of ease of doing business in the economy.

Given that the economy is still in the nascent stage of its recovery and is under threat from the newer variant namely omicron, a little breather for the employees and the employers will contribute highly to the industry’s revival.

 

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Jan 19
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Bankruptcy Spells Death For Too Many Business

By Banking No Comments

Does Bankruptcy Spell Death for Business?

Bankruptcy on business, an odious phenomenon seems to be getting a grip on many banking sectors and businesses around the world. When bankruptcy materializes, it seems imperative that bankruptcy protection laws allow companies to effectively shed their debt.

This allows the banks to start anew and reinvent themselves. Among various invested facets of the banks, most ideally, it is found that creditors recover most of what they’re owed. This is due to the fact that as a restructured firm’s ability to garner profits that help in turning a profit in the organization, the banks give priority to the creditors of the business.

Yet, given the enticing mechanism of restructuring, we encounter liquidation in more and more companies. This emphatically violates the second chance at the success of reinvention that the banking law aims to encourage in the system. In fact, it is to be noted that in the cumbersome process of liquidation, these effectively and ultimately shortchange creditors by billions of dollars a year.

“Chapter 11 allows for reorganization, which sounds like such a great thing. People get to keep their jobs, the creditors get paid equity, and the customers don’t lose this business that they loved.

It should be emphatically noted here that at a serious time when the COVID-19 pandemic has been rampant and incessant, the chances or the propensity of bankruptcy hitting many companies hard has increased. This is merely due to supply chain constraints, incessant lockdowns to contain the spread and various macroeconomic factors that contribute to the debacle of a business.

Thus, where the law might highly encourage reconstruction, reorganization in the organization, where jobs are sustained and creditors get paid equity, such a scenario can be best described as a euphoric dream that remains miles from being achieved.

But what really contributes to the process of liquidation that is the most sought-after mechanism for bankruptcy? The trend has been recently seen with senior managers going for liquidation instead of reorganizing. The scenario that usually plays out in court is that of a manager usually trying to persuade the judge to approve a speedy asset sale.

bankruptcy on business

This is due to the fact that managers usually prefer and priorities a fast resolution over a more long-drawn beneficial reorganization of the company. It is to be noted that such a hasty resolution often leads managers to steer firms into liquidations that perpetually harm the employees, junior creditors, and customers.

In fact, in the case of US bankruptcy laws is to be scrutinized, it can be known that under Section 363, judges can emphatically and powerfully grant the request of the managers without the consent of the creditors if a legitimate “business justification” for the aforementioned move has been provided.

This emphatically implies the fact that managers call major shots for the future of the company. The rationale behind the fast or warp speed sale is the fact that assets in the firm usually lose their value at a high speed if not sold in a definite small-time frame. Thus, in order to curb the losses in the firm, we encounter faster sales by the managers before little value is left of the firm.

But is this process or mechanism an effective way of dealing with the crisis? Many might believe that effectively rushing the process of liquidation may be short-sighted for many creditors and the companies and creditors. This is due to the huge costs that will be incurred by both parties in the long run.

A prime example of the same is Sears, which witnessed the most expensive retail bankruptcy in the history of retail. In this particular case, it was encountered that the firm had lost its value through its short-sighted, hasty asset sales in the market.

bankruptcy law in indiaIn fact, according to various analysts and researchers, it has been found that reconstruction of the company is a better way out of the bankruptcy debacle. According to the reports, creditors can effectively gain a potential 52 cents on each dollar owed when a company is strategically restructured.

Another study puts forward the fact that at least 60 percent of the liquidations cost the creditors more than a simulated reorganization would effectively or subsequently have. Talking about liquidation, more losses were recorded when some bankrupt company was effectively acquired. This is also true for the reorganization of the company, where creditors haven’t lost as much as in the liquidation criteria.

But why does a reorganized company offer better profits or returns for the creditors than liquidation? Firstly, hasty sales of the assets might lead to a lower valuation of the firm’s assets leading to losses. Secondly, the companies emerging from bankruptcy may perform quite well when reorganized.

This might serve as a boon for the firm if the idea or the mechanism is implemented. Here, again the managers play a huge role. If their charming personality, at least in the business, can convince all the creditors to agree to lower the specific debt load and to effectively accept a write-down, then the equity in that company has a great potential to become really valuable.

company bankruptciesReconstruction, on the other hand, is quite beneficial for the creditors themselves. This is due to the pertinent fact that the creditors can significantly negotiate equity stakes in the new firm. This negotiation can be carried out in the form of payment for outstanding debt.

Thus, in totality, for a firm that is going through bankruptcy, the best way out is negotiation and ideation. Before effectively heading for the court, the managers that are considering bankruptcy should strategically meet with key creditors. This can lead to the hammering of innovative ideation and stall risky warp speed sale of the assets.

Meanwhile, though managers should be cautious, the creditors too should be open to working more intently and closely with management. The discussion should be centered around the plan for reorganization before heading into court.

This should be done while keeping in mind that the firm is experiencing only temporary setbacks as a result of the pandemic that has made the conduction of business arduous. thus, in totality, communication between the management and the creditors is the key, which might not value, but is the most beneficial.

 

Terms related to the article:

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Jan 19
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pca framework for nbfc

A Shot for NBFC Health: Given the Public Money at Stake, Revised PCA Framework for NBFCs is welcome

By Other No Comments

A Shot for NBFC Health: The Revised PCA Framework for NBFCs

After years of ignorance, the NBFC sector might be getting the attention it deserves. Having been termed as the non-prominent finance sector, the NBFC sector has been going against all the odds to prove its mettle in the finance world

what is pca frameworkThe Reserve Bank of India, in a recent turn of events, has proposed the rollout of the Prompt Corrective Action (PCA) Framework for the NBFC sector. It is to be noted that such prompt corrective action was undertaken last for the Scheduled Commercial Banks in the financial year 2002.

Given the humongous years that have lapsed by what has suddenly motivated the RBI to roll out yet another prompt corrective action? It is to be noted that the scheme has been launched with the prime objective of the PCA framework that will emphatically and effectively enable supervisory intervention at the appropriate time for the sector.

This will lead the authorities to effectively and timely initiate and implement remedial measures for the sector which might be showing signs of weakening or inefficiency. Thus, one can clearly witness RBI’s timely intervention that is aimed at improving the financial health of a potential sector.

It is to be noted here that the prompt corrective action will be effective as it will be also used to act as a tool for effective market discipline. In the form of market discipline, we can expect reviewed checks on the quality of governance.

This will significantly and positively include the board and senior management decisions that might be having a significant detrimental impact on the financial health of the corporation.

The banking sector, for years, has been considered the prime source of finance in the economy. But in recent years, NBFCs, have significantly grown their share in credit and savings intermediation. This has led the sector to emphatically acquire and capture a humungous role in the economy.

Thus, given such an increased share in the finance market, their financial health imposes a high systemic risk for the economy. Given, that India is still in its nascent stage of recovery, which is expected to fall due to the arrival of the newer variant, such corrective actions are needed. This, primarily, leads to the acceptance of the fact that such NBFC corrective norms are welcome.

It is to be noted here that the RBI has introduced the extent of applicable supervisory interventions and regulations specifically based on the size of operations of an NBFC. Though such a characteristic was quite vague and ambiguous, in December clarity in the form of the extent of intervention, and compliance on the part of NBFCs was introduced as well.

This was effectively introduced to reduce the surprises of NBFC failures by keenly and diligently observing the financial health of the NBFCs.

But on what grounds is the apex bank articulating or regulating the NBFCs in the sector? It is to be noted that capital, profitability, quality of assets, leverage ratios, and net worth and leverage ratios will form the facets of evaluation. In addition to the aforementioned criteria, risk thresholds too will be used to critically evaluate and determine the financial health of an NBFC.

The risk threshold criteria for evaluation

Having mentioned that risk thresholds will be used for the critical evaluation of the NBFCs, what does it effectively mean? It is to be noted that different thresholds have been defined for an NBFC once it crosses the basic health line. Starting from threshold 1, the suggested framework will impose corrective actions.

Such actions that will be suggested will be of discretionary and mandatory nature. After such supervisory norms are put in place, if an NBFC emphatically improves its financial health and manages to come out of threshold 1, the corrective actions will be effectively and immediately withdrawn.

Thus, one can state that the RBI, in no sense, is trying to unfairly scrutinize or meddle in the affairs of the NBVFCs that are technically financially wealthy.

Having stated the euphoric scenario, what holds for an NBFC if its financial health deteriorates? Or what is in store for the entity which is in threshold 2 or 3? Here, it is to be noted that in such a case, in addition to the first threshold’s corrective actions, NBFC will witness further actions that will be put in place to further monitor the entity.

revised pca framework for nbfcBut will such corrective actions be beneficial in the long run? It is to be noted that through a critical evaluation of the banking system, it has been seen that out of the total number of banks that were effectively placed under the PCA framework, about 11 banks have already come out.

This has been achieved through the positive and substantial strengthening of the financial parameters of the banks, which has proved quite beneficial for the banks. Thus, in totality, it can be stated that the introduction of the PCA in the NBFC sector is a welcomed step given its huge success with the commercial banks in 2002.

 

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Jan 10
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cbdc cross border payments india

Will CBDCs Help Ease Cross Border Payments?

By Economy No Comments

CBDC Cross Border Payments

It is no news that the onset of the pandemic has helped cryptocurrency gain traction around the world. To state that it has wrapped investors around its fingers would be an understatement. This is due to the fact that various countries, who initially had been seen opposing the idea of digital currency, have been now seen changing their stance. In fact, El Salvador went ahead to grant the digital currency the title of fiat currency.

cbdc central bank digital currency

This has emphatically led various countries in recent months, to invest in the flurry of initiatives to announce CBDCs. CBDC will effectively be the digital form of a fiat currency which will be effectively regulated and issued by the monetary authorities of the country. But what makes us think that the development and adoption of digital currency around the world are positive? Such a claim has been corroborated by the reports by Bank for International Settlements’ 2021 that had emphatically reported that 85% of central banks are already in the process of developing a CBDC (Central Bank Digital Currency).

In fact, the claims are strong enough to suggest that the stage of speculation has been passed and various countries are in the process of developing their digital currency. But this gives rise to a pertinent question that the digital currency schemes will help simplify cross-border payments ambiguities and difficulties?
The utilities

It is to be noted that the application of digital currency in the economy can unleash various unlocked benefits pertaining to cross-border transactions and national transactions as well. With the introduction of the newer payment system which is digitalized, support and harmony can be provided to a resilient payments landscape.

This will also help in effectively countering some detestable attributes like the risks of new forms of private money creation leading to storing of wealth amongst a few. In fact, various reports suggest that with the introduction of CBDC, support to efficiency will be provided by fostering greater competition and innovation in payments.

Some other more obvious advantages of the same are that it will help counter the problem of decline in cash that is usually faced by the public, especially during arduous times. Thus, it can be rightfully be stated that the introduction of CBDC will lead to the rectifying of the future payment needs in a digital economy.

Thus, with the rectification of such attributes of the credit economy in the country, it can be stated that it will help provide a more secure and efficient building block for improved, faster, and more secure cross-border payments.

But will such rectification and introduction of CBDC be implemented anytime soon? It is to be noted that the answer is quite ambiguous. This is due to the fact that though various countries are in the development stage of CBDC, the process is being carried out in terms of retail CBDCs. Subsequently, with a larger inclination towards the retail side, even the wholesale side has garnered little attention from the authorities.

Thus, with the unformed connection between the economy itself, cross-border transactions can look like a farfetched idea.

central bank digital currency rbiThe other trend on which the future of CBDC depends is the building network of countries across continents. This shows the brighter side of the story as on 14 July the European Central Bank had confirmed the launch of its digital euro.

Also, various collaborations in the EU to are erupting to develop a wider cross-border payment system. With newer initiatives, innovations, and tests, it has been found that the blockchain-based digital euro could effectively in theory, support unlimited numbers of payments. This is a positive attribute as such payments can be processed simultaneously with a very large money supply.

The cross-border payment structure can also be carried out by rectifying and conforming with one definition of CBDC that is adhered to. Given the various kinds of CBDC like token-based and account-based, discrepancies in cross-border payments can arise.

what is cbdc in india Another classification is wholesale and retail CBDC. It is to be noted that wholesale CBDCs work by putting existing central bank reserve accounts effectively onto a blockchain. Thus, by the process of tokenizing the central bank money, one can emphatically improve the efficiency of cross-border payments.

this will be due to the fact that there would be an effective removal of intermediaries and reconciliation processes. Thus inefficiencies and lack of immediate action will be done away with which will highly improve the cross-border payment structure.

This will in fact also help in the promotion of business transactions without the effect of the intermediaries affecting business transitions and smooth business dealings. Thus, CBDC holds a lot for the development of an effective cross-border transaction scheme, but with various discrepancies and ambiguities, it is quite unclear at the moment that will such an ambitious scheme materialize anytime soon.

What actually is needed is a series of steps for the central bank to decide that whether it should expand its CBDC’s horizon to retail CBDC that would include all. Thus, the question that central banks face is that whether they should make central bank reserves exclusively for the banks to own or to make them more accessible to non-banks.

This is crucial due to the fact that once everybody has access to an account with the central bank, the central bank will need to decide whether CBDC will be available on an account or as a digital token. But given the character of both, a retail CBDC would effectively offer the added benefit of making cross-border payments more smooth and much more efficient. Thus, the future of CBDC depends on the decisions of the central banks and we hope it will be a sagacious one.

 

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Jan 10
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tech startups in india

Why Tech Startups Should Worry as India Strengthens Its Competition Law

By Others No Comments

Tech Startups in India & Its Competition Law

It is quite undeniable to state that an individual’s life revolves around new tech especially given the odious times of the pandemic. with its increased usage in our daily lives, companies like Facebook and Google seem to be omnipresent.

Thus the influence they present on anybody’s life is tremendous and sometimes unwarranted. This especially presents a problem for the individual if such an undeniably tremendous power goes unchecked and unregulated.

Given the burgeoning influence it has on society and the catastrophic circumstances it might have in the future given the spread of fake information, the Government has taken matters into its own hand.

This has led to the initiation of newer regulations and rules with regard to competition. These laws are more geared to deal with the burgeoning, unchecked power of big tech firms. It can, in fact, be stated that such laws are being passed to curtail the growing influence and power of the big techs.

tech startupshistorical development of the MRTP act

the monopolies and restrictive trade practices law was passed in 1962 to regulate and curtail the monopolistic trade in the Indian economy. It is here to be noted that initially it was initially had a socialistic character and did not apply to the public sectors.

It was due to this attribute of non-regulation of the public-owned entities like the banks, corporations, etc. that led to the passage of the Competition Act in 2002. Its main objective was to emphatically deal with anti-competitive agreements. In compliance, it also wanted to end the abuse of a dominant position and the acquisitions in the economy.

But what actually led to the debacle of the MRTP act? It was mainly due to the inefficiency that had crept in the system due to bias that had seeped in the system. It had led to the bias against the private sector which wasn’t quite accommodating.

On the other hand, the liberalization in 1991 had shaken the foundation of the robust MRTP structure in the Indian economy. It was also perhaps due to a lack of clarity on a variety of definitions that made it quite ambiguous.

Thus with liberalization in trade, robust competition law was effectively needed as trade and competition are effectively intertwined. But this also meant that Competition laws had effectively monitored the cutthroat competition that was presented by the foreign corporations to promote healthy competition and protect consumer interest.

It is to be noted that with increasing Competition law regulation, the system has become reductant and crippling. It with its regulatory authority has started to emphatically affect the tech companies in big ways in order to regulate their size and market dominance. In fact, internationally, the authority of Google and Microsoft have been challenged.

Coupled with it the Indian authorities have also invariably placed allegations against Flipkart and Amazon for their increasing discount sales in the economy. On the other hand, allegations have been filed against Facebook for renewing its investment with Reliance Jio.

best tech startups

Though the government in India is emphatically trying to control the competition and monopoly in India, its measures are increasingly becoming reluctant. It is to be noted that free trade is itself a competition regulator where the inefficient move out of the market.

With extra ostentatious and complex competition laws for a developing country, these are usually crippling. Competition laws are a luxury for the developed country that developing countries like India can ill afford.

On the other hand, the government’s new attitude towards regulating the big tech firms has been strongly reflected in the new amendment bill of 2020. This emphatically molds and changes the regulatory structure of the CCI in restructuring procedures for effectively regulating the guidelines.

The new bill also increasingly seeks to expand the Act to invariably and quite detestably include the digital markets. A recent example of the same is the heavy regulations that have been proposed for the arrangement and buyers cartel. With various reductant measures to regulate the digital world with the chief compliance officer and a series of measures, inefficiency is bound to seep in.

technology startups in indiaWith the increasing popularity of the tech companies and corporations, it has been seen how the tech world is increasingly dealing with the cases such as the ola uber pricing issue and the other google antitrust allegations.

Talking about the mergers laws and the applicability of the competition laws, it is to be noted that the current merger control framework is traditional and hence reductant as CCI approval is needed if the two companies involved in the merger cross a certain limit of assets and turnover thresholds.

But given the nature of the tech firms, these are very asset-light and might actually not earn revenue for many years. This is due to the fact that the company’s more immediate goal is to expand and gain a consumer base in the market. Thus, this might lead to overlooking high-value transactions that might escape scrutiny.

In fact, the regulation of the digital framework regulation by just CCI will not help. This is due to the fact that it might also require the help of a data protection bill and more importantly of the broadcast company of India. Thus, the increasing number of regulations is not the need of the hour but the accommodation of the same is.

 

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Jan 10
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retail sector in india

Why India Needs a National Policy for Its Retail Sector?

By Economy No Comments

National Policy on Retail Sector in India

To state the matter quite plainly, a holistic retail policy is the need of the hour. This is a suggestion that needs to be implemented for the effective working of the sector and for moving up the ladder of the ease of doing business.

The battle against corona is not over yet. The economy may be recuperating but one thing one cannot expect is complacency. With various sectors that were crippled by the covid pandemic, the retail sector was one of them.

Secondly, given the ongoing battle against the virulent virus, one cannot deny the crucial role of the retail supply chains that are facilitating essential movements and delivery in the economy. Though, it is to be noted that the first wave was quite crippling for the retail sector due to the blanket lockdown but the second wave was quite lenient given its nature of being partial.

retail tradeOne fact that is worthy of being mentioned is that the retail sector has much to offer the economy but this comes only after prerequisite incentives and policy support can be provided for the same.

Certain reports have shown that the retail sector in India has great potential for employment. One quite comprehensive report that was published was a report by CII and Kearney. This report emphatically sheds light on the potential of the retail sector given a comprehensive National Retail Policy is implemented.

It states that the retail sector has an immense potential to effectively facilitate the creation of three million jobs by the financial year 2024. Also, given the unemployment woes of India, one can rightly state that the retail sector will be a boon for reviving the economy.

It is to be noted that since the trade effectively has upstream and downstream linkages, investments in the retail sector will beneficially generate an appreciable cascading effect.

This will help produce value for the stakeholders via employment generation, value chain modernization, upskilling of employees and consumer experience, etc. this will in turn also lead to increased investment in the sector due to its increasing lucrativeness.

retail industry in indiaIn addition to creating utilities and employment in the retail sector, one will also witness the increase in employment generation in allied sectors. Talking about the gender disparity in India, retail sector up-gradation will also lead to more employment of women as the retail industry is one of India’s largest employers of women.

Thus, with its upgradation, it will also lead to the closing value of gender disparity in India. This will also help generate women-centric policy reforms which will also help the government gain political capital.

But why is the support of the government so necessary and crucial? It is mainly due to the fact that 5-7 lakh retailers were emphatically forced to close down due to various policy changes. It is to be noted that due to unpredictable policy stance and environment in India, many companies and especially the retail sector have to bear the brunt.

Thus, a stable policy mechanism is the need of the hour. Another utility that can be created out of such policy implementation is the fact that enabling such stable policies actually helps in facilitating their return to business. This can consecutively lead to the generation of employment in the economy and will help contribute to the GDP of the country.
But how does the policy framework of such policy implementation be designed? It is to be noted that according to the CII National Committee on Retail stresses such a National Retail Policy emphatically should bring all categories of retail under a single rule.

Furthermore, what is most required for the strong efficiency of such a policy program is the fact that attention needs to be paid to technological development, ease of doing business, and ease of access to capital. Consecutively, the sector also requires up-skilling of workers for the usage of technological advancement in the sector.

indian retailThe government’s response too for such a sector has been accommodating. This has been seen due to the approval that was garnered by the government for its revelation of its accommodating policies in the financial budget 2022. However, various aspects of the same remain untouched.

The retail sector’s association has expressed its concern over the effective and emphatic withdrawal of import duty exemptions that own some of the products of interest.

This is mainly due to the fact that many retail sector owners rely on imports. Given that some government policies target the same, it has garnered some disapproval from the government.

Thus given the present situation at hand, many retailers and businesses may have to emphatically and crucially depend on domestic suppliers to safeguard their margins. Thus, a robust policy that does not offer such immediate shocks is needed for the betterment of the sector.

On the other hand, it is worthy of mentioning here that the government’s ambitious plan for effectively reviewing 400-plus customs duty exemptions that will come into effect from October 1 could heavily result in a revised duty structure. This could definitely eliminate major distortions at play.

Thus, one can state that when such ambiguities have been removed earnestly, traders that are importing goods can benefit immensely and joyously.

On that note, another major announcement that has been enthusiastically welcomed by the traders is the government’s thrust on EoDB.

This will effectively help and push women’s participation in the sector as it will permit women to work in all categories without any restrictions. Thus, is the situation being to be scrutinized, much work can be done to increase the gender diversity in the sector which will emphatically help in the betterment of the sector. But how long will a robust, efficient system take to materialize in the economy is still a mystery?

 

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retail trade, the retail industry in India, the retail market in India, consumer retail sector, indian retail, consumer and retail sector, supply chain in retail sector, technology in retail sector, about retail sector, retail sector information
retail sector in India, national policy on retail sector.

Jan 03
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lehman brothers moment

Why Evergrande’s Debacle Can be China’s Lehman Brothers Moment?

By Other No Comments

Evergrande China’s Lehman Brothers Moment

The 2008 Lehman brother’s debacle may be on play in China. With the high possibility of default, Evergrande brings back the stories of the 2008 financial crisis.

This emphatically tells us that leading firms can be quite crucial for the fate of the economy as a whole. This is due to the very pertinent fact that they can ruin a nation and pull a nation together.

But can Evergrande be the Lehman brothers’ moment for China? This calls for speculation and inspection. According to reports, Evergrande is cash strapped and has emphatically missed its payments that were due on Monday.

Given the trend that is playing out at the real estate giant, it can be stated that further payments of interest and principal amounts too cannot be expected of it.

evergrande lehman brothers

Additionally, if the nature of the debt is to be scrutinized owns a total of $300 billion debts to two crucial, large banks of China. With the nonpayment of dues, an economic fallout for such banks can be likely.

But will the fallout be limited to the banks in the Chinese economy? The answer is an emphatic no. Various experts and analysts are worried that the debt default can have repercussions not only for the Chinese economy but also for the world economy.

This is due to various basic reasons like globalization and how integrated the Chinese economy is with the world market. In fact, China is the biggest importer and exporter of goods in the world market.

Thus with a slump in its economy due to huge fallout, one can expect lower demands and thus losses to various sectors and companies in the global market.

lehman brothers crisisBut it is to be noted that China isn’t exactly like the US in the financial year 2008. These have various reasons, firstly, the reach and impact of the USA were far much more than China, at least in terms of currency.

Secondly, the fed was quite reluctant in bailing out Lehman’s brother and had not anticipated the huge worldwide repercussions.

But given the character of the Chinese government, where everything is controlled by the government, it is quite unlikely that the government will allow such social upheaval, that it values the most.

Thus the impact and the extent of the debacle will depend on the government’s willingness to contain the social and financial upheaval a messy Evergrande collapse could cause.

Evergrande- a story of another debacle

If the reports are to be believed, it is to be noted that Evergrande has been conferred with the title of the most dubious title of the world’s most indebted real estate developer.

It has a wide network of real estate projects in the Chinese economy with 1,300 real estate projects around 280 cities. This shows the extent of spread and reach of the real estate sector.

Talking about the liabilities of the firm, as aforementioned, it stands at a humungous at $300 billion. With the striking numbers, the leaders have mentioned that they do not have the prerequisite funds to fund the debt. This has got the investors inside and outside China worried about a potential contagion effect.

lehman brothers collapseThe contagion effect means that turmoil or crisis in one large corporation can easily spread to others. these fears have resurfaced due to the nightmares of the Lehman Brothers crisis that had had the worst contagion effect on the other major financial institutions too. These financial intuitions were strategically its trading partners.

Secondly, the impact of the same can be huge given the current slowing economic conditions of the second-largest economy. With demand and investment in the economy already plummeting, another debacle that can affect the banking sector, whose crucial role is to lend, and the public, who are demand drivers in the economy, the impact of the same can be colossal.

Similarly, the very fact that China is the world’s second-largest economy is important. This in itself sends a message that whatever happens in China’s Evergrande, has an immense potential to affect financial institutions and nations around the world.

But are there any signs of the ripple effect yet? Yes, closer to home example is the Hong Kong stock exchange market. According to reports, Hong Kong’s Hang Seng Index fell significantly by 3.3 percent after the news of the Evergrande debacle hit the market. On the other hand, its properties index fell by a whopping and was significant 6.69 percent. It is to be noted that this was the lowest in 52-week.

Similarly, at the far end, US stocks too showed their uneasiness. According to reports, US stocks too showed their biggest drop since May. This was emphatically fueled by the Evergrande anxieties. Though certain mention about Fed anxiety is to be also made that has kept the investors on edge.

Not only has the stock market started showing the effects of the Evergrande debacle, but certain traces of it can also be found in the commodities markets. This is due to the fact that it had helped send the copper prices in the economy plummeting.

This was in fact nearly a one-month low. This is mainly due to the fact that the demand for the metal is plummeting which is emphatically used in the construction business.

Thus the only question that needs answering now is whether the Chinese government will step in to bail out the real estate corporation or will it stand by and let the market showcase its worst scenario of social and financial upheaval.

 

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Jan 03
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videocon insolvency

Videocon Insolvency News and Updates

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Videocon Insolvency Latest Updates

In yet another insolvency case, that is Videocon insolvency. Videocon finds itself at the altar of bankruptcy. In the recent turn of odious events, Videocon was effectively acquired by the Billionaire Anil Agarwal. The resolution was passed by the National Company Law Tribunal which facilitated this takeover by Twin-Star Technologies.

If the details of the deal are to be scrutinized, Twin Star Technologies had effectively offered Rs 2,962 crore. This humungous amount was offered for Videocon’s 13 group firms. According to reports, these groups consisted
of Millennium Appliances India, Videocon Industries, Applicomp India Limited.

Videocon Telecom etc.

Though many might argue that the case was put to rest in an amicable and efficient way and that the Indian insolvency structure had successfully concluded the high-profile insolvency case.

However, it is to be noted that according to various analysts, the valuation of the company was severely devalued. This argument was surfaced due to the fact that the offer of Rs 2,962 crore was finalized against the admitted claims of Rs 64,838 crore.

Thus, it can be effectively stated that the amount under consideration was quite meager and lenders would effectively have to take a haircut of over at least 95 percent.

But even given the discrepancy in valuation, it is worthy of mentioning here that the dissent was presented by the smaller lenders. These lenders were namely like Bank of Maharashtra, Morgan Securities, IFCI, SIDBI, etc. to the contrary, in fact, top lenders voted enthusiastically in favor.

videocon insolvency newsBut has the insolvency takeover led to any significant suppression of descent? Perhaps not. many individuals, especially the Videocon promoter has come to the forefront to fight the NCLAT’s order to approve the bid by Twin-Star Technologies. This is mainly due to the fact that the Videocon promoter had earlier enthusiastically offered to pay up for the withdrawal of insolvency proceedings.

The contentions

It is to be noted that various contentions rise, given the fact that it is being perceived that the assets owned by Videocon Group, particularly assets in gas and oil assets were not effectively included in the information memorandum. Thus, subsequently, this has led to no valuation which has been considered.

Thus, one can effectively say that the insolvency case has not to be concluded by the administration and rather is ongoing. Dhoot’s appeal to NCLAT is a glaring example of that. Dhoot’s appeal includes a request for a fresh resolution plan for the oil and consumer durable assets that should be considered.

IBC

videocon bankruptcyIt is no news that IBC was effectively passed and implemented for the successful resolution of the insolvency cases in the economy and to effectively present time-bound resolution of the same.

But, given the series of happenings that have played out for the Videocon resolution, it is worthy of mentioning that it has become a classic instance and example of even when the case has settled, the creditors are still recovering just a meager portion of their dues.

In fact, according to various legal experts, it is to be noted that the Videocon resolution offer is actually low and needs to be relooked at. Thus Videocon’s insolvency case presents a snippet inside the IBC structure of the Indian economy and how it has been failing for years.

If the offer of a fair bid is to be scrutinized, according to valuation agencies, the fair value of Videocon stands at around Rs 4,000 crore. Additionally, the effects are aversive as the banks are acutely facing a 95 percent haircut if the deal with Twin Star for acquiring Videocon per the NCLT order is taken forward.

Though nonaccommodative and critical comments like the successful resolution applicant are paying almost nothing by the NCLT have been made, the reality of the IBC and insolvency sector in India remains the same: grim.
Now with reassessment queries, it can be seen that certain contentions have been raised over the confidentiality law.

This is mainly due to the fact that the resolution applicant had valued that had valued the 13 segments was too little but even then, the bid was selected and was given a go-ahead.

Another argument that has been raised is that why wasn’t Dhoot’s offer overlooked even though it could have been improved? Such contentious arguments made by the bidders and analysts have risen questions about the confidentiality issue which according to many needs thorough examining.

videocon bankruptcy news and updates
With Videocon’s insolvency and resolution, it can be effectively seen that the insolvency laws in the country are not competitive or efficient. This is especially visible in the fact that Videocon attracted such lower bids that were approved in the clear scenario of better bidders. This is in fact the reality of the banking sector and insolvency issues in the economy.

Even though the provision of appealing against the NCLT order is there through NCALT, it is quite ambiguous whether it will rule against the NCLT verdict. needs to be seen.

Thus, what turn will this nightmare for Videocon take is something that depends on NCALT’s sagacious decision-making instincts

 

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Jan 03
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universal credit

Towards Universal Credit Inclusion

By Economy, Banking No Comments

Universal Credit Inclusion

It is no news that digital lending has taken a great leap into the life of the customers since its inception in recent years. Given the immense potential that digital lending has to offer in the market, it is quite viable that rapid growth in technology takes place.

But with the rapid growth that is happening in the sector, is putting immense pressure on the seams. It is to be noted that some of these harmful effects of the ever-growing fast growth of digital lending had expressed themselves last year through lack of compliance with customer protection norms.

This had emphatically led the RBI to constitute a working committee to effectively recommend certain guidelines that can strategically allow digital lending to grow. This was done to grow the digital lending sector in a more coherent and orderly fashion to protect the interest and welfare of the users or customers.

what is universal creditThus, it can be argued that the issue of improving the digital lending sector should be viewed with the primary lens of consumer protection.

It is due to this reason, it is important that it is viewed in terms of stringent re-emphasizing of some of the existing guidelines, namely Fair Practices Code and Outsourced Service Provider Guidelines amongst others. it is well known that for the successful initiation of the process, a governing or regulatory authority is needed for chaperoning the ill aspects of the industry.

Thus, as recommended by the RBI committee, the proposal to effectively set up a self-regulating organization, that can a perfect sense provide in-depth analysis, oversight, and guidance. It is to be noted that the establishment of an industry-led SRO will emphatically help ensure that guidelines can keep pace with the rapid evolution of the industry.

Given that regulation plays a key role in making the industry abide by the regulations, thus it is important to ensure that unregulated lending activities are curbed as largely as possible to preserve consumer confidence and welfare.

This is also needed as last year it was discovered that unregulated lenders were emphatically the prime source for many of the aberrations that were observed in the market. On the top, such an issue garners extra importance due to the fact that such lending activities bypass various guidelines and supervision for responsible lending.

credit

Responsible lending, if not regulated will heavily cost the customers who are largely unaware of the consequences. Some of the recent unregulated lendings that have cropped in the recent years go by the name as buy-now-pay-later.

Quite similarly to the unregulated BNPL sector, the need for curbing the authority of the loan sharks which function through fraudulent apps and technology-based measures is also needed. This can be highly achieved through app marketplace gatekeepers like apple and Google. This will strategically help curtail the immense spread of unscrupulous lending that at the moment is plaguing the market.

But what happens when the system is overburdened with regulation? The answer demands deeper introspection, especially in relation to additional regulations, such as National Financial Consumer Protection Regulation, Agency Financial Service Regulation, etc., it is to be noted that multiplicity of regulations can effectively hamper the growth of the nascent digital lending sector, as this can foster reluctance, inefficiency, and non-competitiveness.

This will be especially true for the recent startups in the digital lending sectors that are currently driven by younger startups. This is true as younger innovative startups increasingly have limited ability to invest in compliance overheads.

Another area of importance is the role of embedded finance. Embedded finance can play a crucial role in reducing information asymmetry that exists in the market and leads to inefficiency. It is no news that information asymmetry is a fundamental problem in extending credit in the market. This issue is systematically resolved through embedded finance as it provides strong end-user control and repayment mechanisms.

universal credit complaintsTalking about business lending, there are key building blocks of lending and are extensively used in supply chain financing. Given the nature of the business, it is to be noted that largely finances flow to the supplier accounts which are paid back through an intermediary account.

Thus it can be argued that the odious risk is often shared with an anchor corporate that has better operational risk management capability for transactions. Thus, disallowing such intermediary accounts will emphatically and increasingly restrict the ability of risk to flow where, as a matter of fact, it can be operationally managed the best.

Thus, in totality given the changing digital landscape in India and the massive growth potential that the sector has to offer, India needs to inculcate a sense of regulated transaction habits.

On the other hand, the authorities also need to keep in mind that the robust financial system does not need to be overregulated to foster inefficiency in the bussing ecosystem.

The need of the hour is to roll perfectly regulated public financial infrastructure, that facilitates transactions, encourages innovation, and protects the interests of the consumers.

universal credit overpayment Given the already existing framework, India today stands tall to offer its citizens and businesses the benefits of universal credit access.

At last, it needs to be concluded that digital lending is the need of the hour with increasing relevance every day, and with the right regulatory architecture, it has an immense potential to serve as a pertinent key driver to the growth in the country.

 

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Jan 03
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The Rise of The Indian NFT Market

By Other, Others No Comments

The Indian NFT Market

It is no news that the digital economy is on the rise. The era of the digital economy was effectively ushered by the pandemic. The digital transformation took place rapidly which was mainly due to the compulsion faced by many individuals to work in their remote surroundings.

Not only cryptocurrency but the rise of the broader digital asset industry was also witnessed. Thus, with the rise of cryptocurrency, the rise the popularity of non-fungible tokens has also been seen. It is to be noted that according to various reports a total of more than $208 million of NFT artwork had been sold.

indian nft marketGiven its recent nature, it is quite extraordinary that it has recorded such a humungous growth. This also corroborates the fact that NFT is on the rise and is just in its nascent stage of development, mustering all the growing popularity in the global market.

Since the onset of the pandemic some $250 million worth of total NFT volume has been traded. This data was collected for just one year i.e.2020. This effectively shows that even with economic uncertainty and financial crippling of many, NFT trade is on the rise.

The NFT model has been immensely helping various sectors that are looking for alternatives to monetize their businesses. In addition, creative artists are effectively utilizing NFTs to significantly generate revenues for their creative works.

It is to be noted that concerts and music festivals were not held due to the onset of the pandemic, but many artists around the world have enthusiastically used the novel methods of monetizing their creative work by selling in the form of NFTs.

A very appropriate example for the same is the music brand, Kings of Leon, releasing its new album as a limited edition NFT. The sale of just six NFTs has provided lifetime tickets to front-row seats for the band’s shows in the future.

nft market in indiaIt is to be noted that NFTs that are digital creative works are actually premised on blockchains which work quite similarly to crypto. Blockchain technology which is quite permanent and has unchangeable digital ledgers provides the user the security of recorded transactions that reveal history.

It is to be noted that this has led to growing confidence in the industry which secures transactions for future issues and gives effective ownership of NFTs to the rightful owners.

It is to be noted that before the invention or emphatic use of the NFTs the creators were facing limitations for their revenue. But now with the rise of the NFTs, an infinite number of copies can be made of their digital creative works and can be distributed throughout the internet to generate humongous revenue.

This gives rise to the question that how does NFTs make it possible for creators to genera

nft market place

te and distribute their artwork that cannot be plagiarized? It is to be noted that the finite tokenized versions of these digital creative works ensure their uniqueness and make the attempt to counterfeit scarce. this helps the artists to preserve the uniqueness of their work.

Additionally, the NFTs cannot be replicated which insures the creators of his or her work. Thus, given the robust base of the establishment of the NFTs, it can be rightfully stated that excitement relating to NFTs is growing exponentially in the global market.nft marketplace bsc

But given all the favorable attributes of the NFTs, their legal treatment and regulation are somewhat unsettled. As aforementioned that the royalties and uniqueness of the work are preserved through NFT trading, it is to be noted that this might not always be true.

Smart contracts are written into the code of NFTs. This invariably allows for the distribution of funds in the form of royalties that the creator receives each time his or her work is resold. However, this is applicable and works only when the NFT resale is done through the same platform.

To add to the arduous attribute of the NFT, US law does not effectively recognize resale rights. These resale rights are unrecognized and are in relation to the creative works. Thus, this nonrecognition of the resale attribute of the NFT means that no law provides recourse for unpaid resale royalties.

Given the exuberant rise of the NFT market, people from all walks of life are participating in the NFT market. But given various legal restrictions, many are unaware of the same. This usually leads to odious infringement liability.

Thus, lastly, it can be stated that the introduction of NFTs has great potential to emphatically influence and usher the digital revolution in the economy. Its usage has led many artists to earn their due during the failing pandemic period and can be used in the future too making the transition to the digital world more prominent.

Additionally, not the conventional arts being monetized but also the creators can also monetize against other unconventional physical properties and can gain proof, scarcity and uniqueness, ownership to digital assets.
However, it is to be noted that the NFT market is still in its nascent stage of development.

 

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