BBA-MBA Integrated

Semester V

Individual Assignment

Analyses of News Articles

Submitted To

Prof. Dhyani Mehta

On

(05/10/2017)

Submitted By

Roll No. Name

157206 Anuj Sharma

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ARTICLE - 1
Defence, aerospace PSUs rapidly turning into super integrators
Updated: October 2, 2017 22:38 IST | V Rishi Kumar
Large public sector undertakings in the aerospace and defence sector are transforming
themselves into super integrators with the private sector providing critical inputs in the
changed business environment, according to G Sateesh Reddy, Director General of Missiles
and Strategic Systems.
Reddy, who serves as Scientific Advisor to the Defence Minister, mentioned how Bharat
Dynamics Ltd, a manufacturer of missiles and missile systems, has become one such super
integrator. It is currently executing orders of over 24,000 crore for various missile systems
and of this, nearly 80 per cent is being provided by the private sector players.
Transformation
This shows how the country has transformed over the years from purely being dependent on
imports into a manufacturer and integrator of systems indigenously. However, we still depend
a lot on imports and the focus has been to reduce the dependency, he said while addressing
the students at the convocation of the University of Hyderabad.
Referring to HAL, he said, India has managed to indigenously develop the light combat
aircraft, and joins a select group of countries to do so.
While some of the developed nations might have taken lesser time (about 15-16 years) to
achieve this, we have managed to achieve this feat in about 20 years. Now HAL is in the
process of executing an order for over 100 light combat aircraft. It is poised to become a
super PSU with inputs from private sector, he said.
30,000 MW addition
Outlining the countrys progress in various strategic sectors under the Department of Atomic
Energy, Department of Space and Research in the Defence Sector, Reddy said that over the
next decade all these would play a very significant role, including the addition of about
30,000 MW from Atomic Energy Division.
The industry needs to upgrade from merely developing products to specifications to
innovating and developing them for domestic requirements and to cater to markets globally.
As a part of this drive, the government is looking for innovation and innovative ideas and
laying stress on start-ups. Universities can play a strategic role towards the countrys
indigenisation, he said.
Referring to the Advanced Centre for Research in High Energy Materials established in the
University of Hyderabad, he said it is playing an important role in high propulsion systems
for missiles.
On the immense capabilities that the country has, he highlighted how the Brahmos project,
developed through Indo-Russian joint venture, has gone on to become the only supersonic
missile system that the world currently has.

http://m.thehindubusinessline.com/economy/defence-aerospace-psus-rapidly-turning-into-
super-integrators/article9883956.ece

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Analysis of the Article

India spends around Rs. 2.75 Lakh crores on Defence sector and hence it plays a crucial role
in the development of the Indian Economy. India develops many kinds of defence missile
systems and hence has allotted Bharat Dynamics the opportunity to develop the missiles for
India. Though the defence sector is not privatized but then also the private investors fund the
defence sector because thats where they can find the most profitable use of their money.
The Indian Air force has been lacking the adequate amount of Fighter Aircrafts needed for
handling all adversaries. It has been surviving on the services of its existing aircrafts of which
half of them are of the Soviet Era MIG aircrafts. Indias indigenous firms like DRDO and
HAL in collaboration have also failed to make a domestic fighter aircraft since the past three
decades. India is already developing many strategic aircrafts for the Indian Air Force but then
also somehow Indian exports have not gone up to a very great extent. India is still depending
primarily on Imports from other countries and over 70% of the arms and ammunition are
imported from Russia and defence sector is still depending on the imports provided by them.
Public Sector Undertakings have been included in development of light combat aircrafts and
this has boosted the spirit of Make in India strategy of the Modi Government. The inclusion
of the Atomic Energy Division will definitely help India as it is one of the most profitable
segment of the defence sector and would prove to be a success globally. This has also led to
the entry of various start-ups which are going to provide innovative and strategically efficient
ideas for the development of the Indian Defence Sector.

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ARTICLE - 2
Is Petroleum the new battleground for GST ?- Ritika Chauhan
The discussion and debate on the spiraling petrol and diesel prices are at its peak now, in light
of which the Minister of Petroleum and Natural Gas has come up with the one solution that
attracts, even more, debates and opposition.
Governments plan to tax on petrol
Last week, the Oil Minister has put forward a request to the Ministry of Finance to include
petrol and diesel within the ambit of GST. He contends that this appeal to the Finance
Ministry and the individual states is primarily in the interests of the consumers, to relieve
them of tax burden currently prevailing. While addressing questions on recent price hike, the
Minister explained that due to the hurricane that hit the US, 13% of their refineries were
inoperative and consequently, the global crude prices hiked. He further used this opportunity
to propose the inclusion of petrol and diesel under GST as the only way to rationalize fuel
prices. Currently, there are five petroleum products that are out of the GST slabs viz. petrol,
diesel, crude oil, natural gas, aviation turbine fuel. These products are subject to three kinds
of taxes namely excise duty, VAT and dealers commissions varying from state to state. As
per data released by Indian Oil Corporation, the price paid by dealers in Delhi is roughly Rs.
30.70 per litre. With an addition of excise duty of Rs. 21.48, a VAT of Rs. 14.96 and dealers
commission of Rs. 3.24 the price paid by consumer amounts to near Rs.70.38.
Experts believe that if petrol and diesel are brought under GST, they will not be placed under
a slab less than 12% tax. Assuming that petrol and diesel are put under the highest tax slab of
28%, it is estimated that GST will still be 22% cheaper than the current tax rate. Further, even
if the SUV compensation cess is applied, a difference in favour of GST still exists. The two
primary reasons behind the Oil Ministry supporting this inclusion are (i) to bring a uniform
tax mechanism and (ii) to allow the centre to benefit from the sale of petrol and diesel more
than the states. Application of GST subsumes application of excise, VAT and dealers
commissions. The Ministry believes that the Centre requires funds for several infrastructural
and development products and is, therefore, entitled to the tax collected from the sale of
petrol and diesel. It is also insisted by them that imposition of GST does not leave the states
high and dry. The proceeds from GST would be shared between the Centre and the states and
in case of any loss, the Centre would provide adequate compensation for the same.
Why the states in conflict over GST on petroleum?
The reason that this proposal by the Oil Minister has become a matter of debates is that the
individual states feel that there will be an adverse impact on their revenues and no amount of
compensation would be able to indemnify the same. The state finance ministries believe that in
the past three years, there has been a 50% increase in their revenues because of taxes from the
sale of petrol and diesel. The way they look at the math is that they currently enjoy approximately
Rs. 23 per litre sale of petrol. If GST is imposed, they will be entitled to 14% of the collections as
SGST, that amounts to only Rs. 4.29 per litre. A loss of Rs. 19 per litre is estimated. Petroleum is
that saving grace that individual states use to compensate any shortfall in their revenues. Officials
from opposition-led states, as well as officials from BJP led states, are unanimously opposing the
inclusion of petrol and diesel under GST. The GST Council and the Ministry of Finance are yet

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to respond to this. Mr Pradhan believes that the prices of petrol and diesel will decrease by
next month. It is then the Finance Ministry will face the real questions Whether petrol and
diesel should be subject to GST? If yes, what should be the amount of compensation to the
individual states and whether some extra cess should be applied to appease the states?

https://qrius.com/oil-petroleum-new-battleground-gst/

Analysis of the Article

In 2015, India had estimated crude oil reserves of 763.48 million tonnes and natural gas
reserves of 1488.49 billion cubic meters (BCM). India is highly dependent on crude oil
imports and with just one refinery in the whole country, i.e. in Mumbai it cannot cater to the
oil demands from the whole country. The government currently measured the amount of oil
charges and the rate of petrol turned out to be Rs70.38 per litre. This means that we are
paying A lot of excess taxes to get the petrol which should be rightfully taxed and under the
norms of the government imposed Goods and Services Tax the rate of petrol and diesel
should go down in all the states by almost Rs 18-19. This means the same petrol which is
now Rs 70 can be acquired by the consumers in a minimum amount of Rs 50. The same
situation can be seen very adversely as the oil and gas industry would have to comply with
both the current tax regime as well as the GST regime leading to double compliance cost
because five petroleum products viz crude oil, natural gas, motor spirit, high-speed diesel and
aviation turbine fuel have been excluded from the GST, while other products such as LPG,
naphtha, kerosene, fuel oil etc are included. So overall the tax burden on the consumers may
decline but the state government revenues will go down because of such a decision. Besides,
it will result in non-creditable tax costs where an oil and gas company will pay the GST on
procurement of plant, machinery and services, and will be unable to get credit on sale of the
finished products (which are out of the purview of GST) as the input GST would not be
credible against the excise duty and value added tax levied on these fuels.

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ARTICLE - 3
Digital drive gaining steam: Currency circulation declines during festive season,
says RBI data
By Gayatri Nayak, ET Bureau | Oct 02, 2017, 12.31 AM IST
MUMBAI: The government's demonetisation-led digital push may be bearing fruit. For the
first time in more than a decade, the amount of currency in the hands of people has shown a
contraction during the festive season, according to Reserve Bank of India (RBI) data.
Currency in circulation has dipped in three weeks out of the five to September 22. In absolute
terms, it rose just Rs 9,738 crore between August 18 and September 22.
The declines in those three weeks were the first time such a contraction took place since
December 30 last year, which was the last date for surrendering old currency notes.
Ever since the government effected note recall in November, electronic transactions through
various retail channels have risen 37 per cent. Currency in circulation is still at 88 per cent of
the pre-note ban level (November 4, 2016).
The monthly sequential trend in electronic transactions through various channels such as
cards, mobile banking and e-wallets indicate a mixed trend. "It's a combination of both
permanent factors pickup in digital transactions and structural factors gradual recovery
of cash demand in the economy," said SK Ghosh, group chief economic adviser, State Bank
of India.
"But going by the trend in growth in digital transactions, permanent factors seem to be
outweighing structural factors." The banks have stepped up investment in building the
relevant infrastructure to push digital transactions such as point of sale (PoS) terminals and
also tie-ups with e-commerce firms to facilitate digital payments.
The number of PoS terminals for instance has risen by 78 per cent since November to
284,000 in July. In the same period, the value of card transactions has risen by over 60 per
cent.
The government push to link bank accounts to Aadhaar and the Pradhan Mantri Jan Dhan
Yojana has fostered financial inclusion and helped in the move to a "digitised" India,
according to a recent Morgan Stanley report.
To be sure, some economists have attributed the slump in currency circulation to a slowdown
in demand as indicated by the deceleration in private consumption expenditure to 6.7 per cent
in the June quarter from 8.4 per cent a year ago.

http://googleweblight.com/i?u=http://m.economictimes.com/news/economy/finance/digital-
drive-gaining-steam-currency-circulation-declines-during-festive-season-says-rbi-
data/articleshow/60905717.cms&hl=en-IN

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Analysis of the Article

The demonetization strategy that was done 10 months back has proved to be one of the best
strategies that were applied by the Modi Government to decelerate the growth of corruption
and induce the digitization of economic transactions. The festive seasons are the most
profitable quarters for the Indian Economy as the consumers have to increase the amount of
their expenditure to another level and there is no going back to this. The digital track records
of the people have increased during these festive times and the economy can now safely
presume that the amount of unaccounted or black money has surely gone down and the
people are now using more and more of electronic payment services rather than cash
transactions which has given a boost to the Indian policy makers to indulge in a more
efficient and result oriented way of getting the corruption and black money out of the Indian
Economy. Within a couple of weeks after the demonetization, the narrative of the goals of the
demonetization dramatically shifted from the black money and fake currency to the virtues of
digital economy. Moreover the use of e-payment methods like NEFT, RTGS and card
transactions have also increased which have not only been profitable for the government but
also fort the private and public sector banks which are operating in this sphere of the
economy. So, summing up the decision of demonetization has been a profitable zone for the
Indian Economy, because it brings into account stopping the funds that were transferred by
terrorists, put an end to the circulation of fake currency notes, wiping off the corruption of
black money, bring up the Indian economy for a better tomorrow including real-estate and
gold where most black money were grounded and digitalization being the forte.

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ARTICLE - 4

'French firms keen to invest in defence, infra, green energy'

PTI|
Updated: Sep 28, 2017, 09.25 PM IST

http://economictimes.indiatimes.com/news/economy/foreign-trade/french-firms-keen-to-
invest-in-defence-infra-green-energy/articleshow/60873668.cms

Analysis of the Article

India is nowadays a cherry on top of a pastry for any foreign investor. The defence,
infrastructure and green energy sectors have been the most fruit bearing investments in India.
Hence, French companies are exploring investment opportunities in India in areas of defence,
infrastructure, renewable energy, and waste & water management & recycling. France is the
ninth largest foreign investor in the country with a cumulative investment of USD 5.15
billion between April 2000 and May 2016 which represents 1.75 per cent of the total FDI
inflow into the country. Investment in these sectors from a country like France will definitely
boost Indias development and would also result in reduction of trade deficits of India. To
take advantage of the booming Indian market, many French companies are keen to enter
India. The reforms underway to simplify the business will bring in trust, which is very
important. The new tax regime GST will help industries. The French investors have been one
of the major investors in the Indian Economy and plan to invest $10 billion in the industrial
development sector. France and India, have a common goal of following the trajectory of
economic growth and fighting terrorism and making an overall progress.

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ARTICLE 5
So, how down and out is Indian economy at the moment?
ET CONTRIBUTORS|
Updated: Oct 03, 2017, 10.18 AM IST
It will be some time before we again see 7-7.5 per cent growth. That requires 'animal spirits'.

By Omkar Goswami

On September 27, Yashwant Sinha, ex-finance minister and an old BJP stalwart, fired a salvo
against the managerial capability of the current finance minister in an article in The Indian
Express, I Need to Speak Up Now. In a strongly worded yet disjointed and factually wanting
piece, Sinha claimed that India's economy is on a downward spiral and that a hard landing
appeared inevitable.
For a brief while, hell broke loose. P Chidambaram got the opening to say, "I've been telling
you so, haven't I?" Kapil Sibal pitched against Narendra Modi's rule. Rajeev Chandrasekhar
lustily batted for the government. And at a recent book release, Arun Jaitley hit back with
wicked wit and vengeance.
Not quite apocalypse yet
(Contributors, 2017)In the silly season, when nothing much happens except fasting, feasting,
piety and revelry, the fourth estate had a field day. However, neither camp coherently
marshalled sufficient facts to demonstrate whether the economy is sinking or not.
What are the facts? Let's start with GDP growth. The facts are clear. Barring two blips, the
first seven quarters of Modi's rule led to higher GDP growth, peaking in January-March
2016. Since then, we have had five successive quarters of declining growth, dipping to 5.7
per cent for April-June 2017. It hasn't been a bed of roses for Asia.
Though our fall has been more precipitous than China's we were cruising above the
'Middle Kingdom' for seven successive quarters only to drop below in the last two the fact
is that China, too, is stalling at under 7 per cent, something that few would have predicted
earlier. And the third major Asian developing nation, Indonesia, has been pottering at around
5 per cent.
Growth has slowed down across emerging markets. Ours, however, has shown a sharp
decline since April-June 2016. Why?
In June 2014, when Modi assumed office, the Opec crude oil basket was at over $110 a
barrel. By January 2015, it had fallen to just over $41; and a year later, it was down to $22.48
the lowest since 2003. This oil price windfall allowed Jaitley to significantly bump up GoI
expenditure without hurting the fiscal deficit, which, in turn, led to higher quarterly growth
right up to the end of 2015-16. Despite higher government spends, some deep-rooted
problems facing the economy remained. And then the oil price bonanza disappeared.

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Private 'Limited' Investment
The most important problem is a concerted lack of private sector investments, which began
around the last year of the UPA 2 government and continues till today. To consistently
achieve a GDP growth of 7.5 per cent a year in India, gross fixed capital must annually
account for around a third of GDP. Over the last four years, this has steadily fallen.

For 2016-17, it stood at a relatively paltry 27 per cent of GDP which includes both
government and private investments. With government outlays constrained in the absence of
oil windfalls, and no private investments worth the name, there was no juice for higher
growth.

Matters worsened with the growing strain of bad loans among banks, funds that were joyfully
lent when 9 per cent-plus GDP growth was considered our birthright. Today, gross NPAs
account for 13.8 per cent of the loan book of the PSBs, and 9.3 per cent across the entire
banking system.

When anywhere between 9 per cent and 14 per cent of the loan book goes sour and needs
increasingly larger doses of provisioning, banks stop lending. That's what has happened in the
last two years. Credit growth has sharply slowed down and tens of thousands of medium to
small enterprises the engines of growth and employment have been starved of
necessary finance. Thus, lower growth.

Then came demonetisation and GST. Regarding the former, the negative effects have now
worn off. Yet, few can deny the frictional costs imposed on manufacturing and trade for two
successive quarters. That largely explains the dip in GDP growth in October-December 2016,
and more so in January-March 2017 and April-June 2017.

GST is undoubtedly a good reform. But give a simple task to bureaucrats in tax
administration, and they will create a monster. That's what has happened. India has five rates
of GST 0 per cent, 5 per cent, 12 per cent, 18 per cent and 28 per cent, plus cesses
versus one or two rates in most other nations. The implementation is horrendous.

There are at least four design disasters: e-way bills; three GST returns amonth now made into
one but could easily go back to three; matching of invoices, a pain and never done in any
civilised tax administration; and exports, a sector now crippled under silly GST rules.

The 'sand in the petrol tank' effects of a poorly structured GST is yet to show up in the GDP
data. But for a quarter or two, it should contract growth by 25-50 basis points.

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Minor Bumps on the Tarmac
Therefore, is Yashwant Sinha right? Yes, he is, insofar as growth has slowed down, and may
continue doing so over the next two quarters. He is wrong about an inexorable decline and a
hard landing.
Most economists agree about an upturn by January-March 2018, if not the following quarter.
It won't be spectacular uptick, but should signal the end of the down-cycle. However, it will
be some time before we again see 7-7.5 per cent growth. That requires 'animal spirits'. For all
the hosannas industrialists sing before the prime minister, there isn't much of that around. Not
yet anyway.

(The writer is chairman, CERG Advisory)

Analysis of the Article

India is the third largest economy in the world and growing at a rate which will surpass the
growth rate of China in the coming decade. No doubt in this, that India faced a lot of
economic slowdowns in the past decade and as per the GDP growth rate India as a country is
not very efficient. India has achieved a lot of development and this can be seen through some
of the data as follows:
According to IMF World Economic Outlook Update (January 2017), Indian economy
is expected to grow at 7.2 per cent during FY 2016-17 and further accelerate to 7.7
per cent during FY 2017-18.
India has retained its position as the third largest startup base in the world with over
4,750 technology startups, with about 1,400 new start-ups being founded in 2016,
according to a report by NASSCOM.
India's labour force is expected to touch 160-170 million by 2020, based on rate of
population growth, increased labour force participation, and higher education
enrolment, among other factors, according to a study by ASSOCHAM.
India's foreign exchange reserves stood at US$ 366.781 billion as on March 17, 2017
as compared to US$ 360 billion by end of March 2016, according to data from the
RBI.
The main reason for the opec to face a sharp decline in growth was because of the decline in
prices of oil barrels which fell down to half of the original prices. This in turn forced the
government to increase its expenditure since they are saving up through the crude oil prices.
So, the chances of a fiscal deficit arising also went down. To continue the financial

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investments to go up the gross fixed capital must annually account for around a third of GDP.
Banks should stop lending out loans at a lower rate because this will affect the economy
adversely in the long run. Implementation of both the Demonetization strategy and GST, one
after another although had slowed down the economy and saw a dip in the growth rates;
coming to less than 7% till date. However, this can be treated as a short term pain for a long
term gain. It is although very clear that there are businesses and people who might still have
escaped such reforms, but it makes one thing very clear that this inflicted fear amongst those
who were in the unorganised sector and bought many businesses into the tax bracket and a
majority of the Economys money was now made accountable.

According to The World Bank, the Indian economy will likely grow at 7 per cent in 2016-17,
followed by further acceleration to 7.6 per cent in 2017-18 and 7.8 per cent in 2018-19. India
is expected to be the third largest consumer economy as its consumption may triple to US$ 4
trillion by 2025, owing to shift in consumer behaviour and expenditure pattern, according to a
Boston Consulting Group (BCG) report; and is estimated to surpass USA to become the
second largest economy in terms of purchasing power parity (PPP) by the year 2040

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Refrences
Chauhan, R. (2017, September). Is Petroleum the new battleground for GST? Qrius, The Indian
Economist .

Contributors, E. (2017, 10 03). So, how down and out is Indian Economy at the moment? . Economic
Times .

French firms keen to invest in defence, infra, green energy. (2017, 09 28). Economic Times .

ibef. (2017, 04). ABOUT INDIAN ECONOMY GROWTH RATE & STATISTICS. Retrieved 10 05, 2017,
from www.ibef.org: https://www.ibef.org/economy/indian-economy-overview

Kumar, V. R. (2017, 10 2). Defence, aerospace PSUs rapidly turning into super integrators'. Business
Line, The Hindu .

Nayak, G. (2017, 10 02). Digital Drive gaining steam: Currency circulation declines during festive
season, says RBI data. Economic Times .

Roy, J. (2016, 09 08). The Telegraph. Retrieved from

https://www.telegraphindia.com/1160908/jsp/opinion/story_106825.jsp

Wang, A. K. (2009, 12 29). The Economic Times. Retrieved from

http://economictimes.indiatimes.com/five-myths-about-india/articleshow/5387992.cms

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