InFINeet | Budget Issue | March 2014

InFINeet | Budget Issue | March 2014

InFINeet | Budget Issue | March 2014

Dear Friends,
Greeting from Team InFINeeti…

It has indeed being an interestng year tll now! With electon results to be declared in the later half of May, we enter the fnan
cial year with high hopes and expectatons. Our usual budgetary editon has been modifed to give special emphasis on the Interim
budget, so presented by the outgoing Finance Minister- Mr P Chidambaram. We will be discussing on how relevant an interim
budget is and its implicatons on the future proceedings. Let us have a peek into the topics we have covered in this editon.
The recent phenomenon of Bitcoins has taken the world for a surprise. Does it have the potental to change the way we deal wi th
currency or is it just another bubble, waitng for getng burst?
It has been an actve tme in the World of Mergers & Acquisitons! With the Facebook-WhatsApp deal creatng a lot of buzz, back
home, we recently saw Sun Pharma acquiring Ranbaxy- in a $4 billion deal which would make them the 5
largest drug maker in
the world!
The world has always followed the U.S economy closely. Over the years, things have drastcally changed, and we will be providing
an analysis on the American Economy from 2014’s perspectve.
Infaton has persistently been high from quite some tme now and it has eroded the savings at a much faster rate than people
thought it would. So, in order to fnd ways to protect the savings of common man we have explored the opton of infaton in
dexed bonds. We have presented an expert view on this topic.
Educaton is the burning issue in India right now. There is a visible skills gap seen on the front of primary and secondary educaton.
In this editon we have presented a comprehensive analysis of The Educaton Sector.
Also, more than fve years have gone by since the fnancial crisis. So, we have presented the analysis of its implicatons and what
are the learning’s and takeaways from the crisis- which we should keep in mind to avoid a similar situaton in the future.
We have also looked at Argentna’s economic problem from a historical perspectve as well as its current problem on the currency
front and tried to understand the Argentne economy in a holistc way.
Besides the insightul artcles, the editon also features regular columns like FIN Trivia, FIN-lingos and News Chronicles.
When we will meet for the next tme a lot would have changed. A new government would have been formed, a full budget would
have been presented and we would cover all of it in our next editon.
Till then we hope that you will enjoy reading this interim budget editon. Wishing you a very Prosperous and a Happy New FISCAL

Happy Reading!!!

InFINeet | Budget Issue | March 2014

>>> Page 8 >>> Page 26 >>> Page 35
America recovers :
A comprehensive analysis
of efects of recovery in
Five years of finan-
cial crisis:
Learning's and Takea-
Faculty speak—
inflation index
bonds in India :
Recent perspectve of
Top events of 2014:
Review of important
events of 2014
deal :
Analysis of FB-
WhatsApp deal. Whether
it is justified at
$19 billion or not


“Has it provided the right
prescription needed for the ail-
ing economy”
The bitcoin bubble:
Contains analysis of
whether bitcoin has a fu-
ture as a alternatve to
FIN Trivia
Fin lingos 12
News chronicles
Sector analysis :
education sector
An Analysis of India’s
Educaton sector

Argentine paradox :
An economic timeline
and the way forward
InFINeet | Budget Issue | March 2014

As much the economies of the world bore fruits of the increasing
globalisaton and inter-linking of the world economies, so much
have they sufered. The fnancial crisis of 2008 had a grave im
pact on the economies of the world, most of which haven’t yet
recovered fully from the efects of it. America is at the nucleus of
globalisaton. If America defaults, the world economy goes for a
toss. This has been a statstcally verifed phenomenon and eve
ryone felt the tremors post the fnancial crisis of 2008. But an
other dimension which has emerged lately out of the recent
recovery of US is that if America recovers from the cold, the
world sneezes frantcally. Let’s explore this statement and see
how the economic recovery of US of late has been afectng the
economies of other countries.
US accounted for ~13% of the world’s imports in 2012. America
also ranks second in world’s exports, accountng for 8.56% of the
world’s total exports next only to China which accounts for
11.35% of world’s imports. However, the main fgure for our
concern is US imports. US is the largest importer in the world.
Let’s take a look at some of the fgures of US imports over the
last 3 months of US recovery (Oct’13 – Dec’13). Total imports
recorded an 11.3% drop between October 2013 and December
Many factors have contributed to this reducton in imports by
US. One of the most important factors is US dependence on en
ergy resources. Shale gas resources have reduced the energy
requirements for US and hence the fund freed up from import of
crude oil and gas can now be utlised to give a thrust to the local
manufacturing industries. This is making US more of a compet
tor rather than a consumer of imported goods. The new-look
America is focused on greater demand and producton at home
and taps more of its own energy, paring the need to buy over
A 1 percentage point pickup in US GDP growth typically meant a
0.4 point spillover for the rest of the world. These statstcs
alone indicate to loss in world GDP is America’s gain.
Another major reason leading to a slowdown is the withdrawing
of monetary stmulus by the US FED on accounts of the picking
up of the US economy and as a consequence of which currency
depreciaton of other developing countries. FII investors have
started taking out money they had invested in the emerging
economies resultng into depreciaton in currency for these

Many Asian countries during this period of post FY2008 tll date
had increased their External Commercial Borrowings due to
cheaper interest rates in the developed economies especially
the United States. Hence, many Indian conglomerates found it
favourable to raise loans in US rather than domestcally. Now,
when US gets back on the track to recovery, US currency will
appreciate which could very well mean an increase in dollar de-
Oct-13 Nov-13 Dec-13
World 2118,27,33 1934,99,556 1873,02,60
India 38,42,865 29,67,370 31,36,656
China 437,35,242 417,72,404 390,81,551
Japan 121,56,430 119,37,880 115,42,915
Germany 111,40,064 105,99,657 97,17,847
US Imports from diferent countries
Source : Trademaps
InFINeet | Budget Issue | March 2014

nominated interest payments to US thus, leading to lower reali
satons in proft for Indian or Asian companies at large.
Let’s now take a look at the efect of US recovery on equity mar
kets of mainly the developing economies. Indian equity market
indexes have had a positve correlaton with the FII infows.
The given table shows the net FII infow in the past 1 year and
the graph shows the performance of BSE Sensex over the same
duraton. We can clearly see that the negatve infow during the
months of Jun-13, Jul’13 and Aug’13 clearly led to fall in BSE
Sensex whereas positve infows during the later part of the year
have raised the index. Thus, strengthening US equity markets
will lead to greater investments in US due to increase in returns
and shielding from currency exchange rate fuctuatons. This
would clearly mean a weakening equity markets of developing
However, diferent side of the coin is if America recovers, the
spending power of middle class consumers will rise due to an
increase in employment. The efect of this would be more im
ports for the American economy which would lead to a gain in
world’s GDP. For India in partcular, US is one country with
whom we have had a trade surplus in the past and contnue to
enjoy it. Increasing demand among US consumers will lead to an
increase in India’s exports thus leading to an improvement in
Current Account Defcit as well as a favourable Rupee against

The net efect can only be determined by the Growing invest
ments in US economy vis-à-vis growth in imports from other
countries. The trade rato for America if decreases, and the do
mestc demand is met by domestc producton, American econo
my will reduce its dependence on the foreign markets.
Month Net Investment(Cr)
Jan-14 714.3
Feb-14 1,404.30
Mar-14 20,077.20
Dec-13 16,085.80
Nov-13 8,116.10
Oct-13 15,706.20
Sep-13 13,057.80
Aug-13 -5,922.50
Jul-13 -6,253.30
Jun-13 -11,026.90
May-13 22,168.60
Apr-13 5,414.10
Mar-13 9,124.30
InFINeet | Budget Issue | March 2014

This will defnitely give a boost to the domestc industry and
would result in a favourable Return on total assets (RoTA).
Domestc frms rather than going for acquisitons or subsidiaries
abroad will prefer investng locally resultng in a net increase in
FDI infow as compared to previous years. A lot depends on the
policies drafed by the US government to boost the domestc
industry in the past. For example, we saw in Obama administra
ton, the tax cuts being given to frms which had their operatons
in US and increase taxes to frms outsourcing their operatons.
This led to many countries sufering due to decreased outsourc
ing by US companies.

Analysing both the scenarios, we can safely assume that the net
efect on the world economy might be detrimental but surely
would not lead to another parallel crisis. The world does not
have to worry so much about it in the near future!
InFINeet | Budget Issue | March 2014

This artcle maps the 2008 fnancial crisis in terms of its causes,
efects and recent regulatory interventons that it has entailed.
Looking at these aspects, we gain insights into fve key learnings
from the crisis that involve incentve dynamics, policy, regula
ton, risks, and globalisaton.
The events leading up to the fall of Lehman Brothers show us
how over-speculaton in fnancial markets, combined with be
havioural failings like risk-taking, greed of individuals and of be
hemoth fnancial insttutons, amplifed by confusing overlaps
and perilous gaps in regulaton, globalisaton and inter-linkages
among economies, have led to one of the greatest fnancial cri
sis of all tmes.
Almost over fve years afer the crisis, we have ample opportuni
ty to look at what can we learn from it and what should be our
takeaways for the future. However, let us frst take a broader
view into what led to the credit crisis and what were its implica
tons. This is an important step which will help us in identfying
red fags in the system, and ensuring that these are prevented in
the future.
The lul l before the storm – the uni versal principle of
cause and efect
We are aware that the 2008 fnancial crisis was exemplifed by
the fall of Lehman Brothers, housing bubble burst in the US
while many banks and fnancial insttutons went bankrupt.
However, these were just efects of causes that had been in the
making for years.

Expansionary monitory policy and capital market regulaton:
Federal bank reduced the interest rates drastcally afer dotcom
crash to boost the economy; it had come down to 1% in 2004.
This made the credit cheaper, hence, led to creaton of securi
tes based on sub-prime mortgages. These sub-prime securites
had high interest rates, higher risks and lesser supervision. Vari
ous insttutons like Fannie Mae and Freddie Mac opened up to
sell these securites. Muni and Kothari (2006) report that the
proporton of full documentaton loans declined from 81 per
cent in 2002 to 69 percent in 2005. Hence, the investments in
these securites increased and this process slowly led to this
In the regulatory environment, one of the major changes was
the replacement of Glass-Steagall Act of 1933 by the Gramm-
Leach-Biley Act of 1999, which allowed banks to ofer commer
cial , investment banking and insurance services under one intu


-By Anuradha Dhote & Usha Bhakuni
IIM, Kozhikode
InFINeet | Budget Issue | March 2014

This created complex fnancial instruments and led to greater
interdependency in the market. The American Dream Down
Payment Act of 2003 allowed $200mn to be paid annually as
assistance to low income people and increase the loan limit for
the frst tme house buyers. While these acts were meant to
make it easier for people to own homes, it led banks to extend
loans to people with less credit-worthiness. The BASEL II Stand
ards of 2004 reduced the capital adequacy rato requirements
for banks, which enhanced the risk taking behaviour. Also, the
hedge funds were made self-regulated by the Securites and
Exchange Commission (SEC) and there was no restricton on the
amount of money that these could borrow.
While government policies and regulatons created a platorm
for the crisis, the high executve compensatons and fnancial
innovatons were the individual and organizatonal incentves
that set the wheel rolling. Executve incentve schemes may
award bonuses in the short-term, which emphasize immediate
revenue-generaton and eventually, lead executves to ignore
risks that become apparent only later. The securitzaton of sub-
prime mortgages, and the “fnancial alchemy”, that was used
by Lehman Brothers and other investment banks to project
themselves to be fnancially healthy - contributed in the build-
up to the crisis. We saw increased fnancial leverage of banks,
mostly consistng of bad assets pile up and bad credit. The pan
icked depositors withdrew money in huge volumes, further
leading to a liquidity crunch in the system.

There has been signifcant discussion over causes and learning
from the crisis, and various government interventons have
been introduced, that range from bailouts that prevent a col
lapse of the fnancial system in the short term, to internatonal
conferences and regulatory interventons that aim towards
preventng such crisis in the long term.
The $700 billion troubled assets release program (TARP) that
ofered to buy mortgage backed securites (CMOs) and equity
from the banks in order to increase their lending power and
Quanttatve Easing stmulus that purchased $85 Billion of fxed
income securites per month. These measures spark a rally in
fnancial markets and higher money supply drives the growth
engine, but these are hardly sustainable in the long term.
An ongoing set of reforms aimed towards addressing regulatory
system’s weaknesses that caused the crisis include a set of new
banking standards, the so-called Basel III framework which rais
es minimum capital requirement for the banks, gives a wider
risk coverage and a counter cyclical bufer to limit excessive
credit growth. The Dodd-Frank Wall Street Reform and Con
sumer Protecton Act established government agencies like
Financial Stability Oversight Council, which monitors perfor
mance of companies in order to prevent a large scale economic
crisis, while Consumer Financial Protecton Bureau (CFPB)
InFINeet | Budget Issue | March 2014


prevents predatory mortgage lending. Each country and area
has also initated reworking of its legislatve framework for f
nancial actvites, for e.g. setng up of insttutons which moni
tor systemic risk.
Let us try to dig a level deeper and conceptualize some com
mon themes around the crisis. This will help us in identfying
the threads and unaddressed issues that that run between vari
ous causes and implicatons of the crisis.
Banks re-packaged risk from sub-prime mortgages into instru
ments called collateralized debt obligatons (CDOs), which were
marketed to investors as high yielding bond investments. The
credit ratng agencies failed to take notce and gave these in
vestments a high ratng in exchange for a fee from the banks.
The incorrect applicaton of these products led to the crisis.
While traditonally, risks are diversifed, selling these risks to
hedge funds consolidated the risk. As such, the 2008 fnancial
crisis also have valuable risk management perspectves.
Organizatons are aware that they can win business from com
petng organizatons by condoning misrepresentaton of repu
taton and documents of prospectve clients. While commis
sions to agents are paid upfront, the managers feel that they
are compromising short term revenue of the frm by not being
a party to questonable deals. This creates a chain of incentve
conficts in the fnancial and regulatory system. Such inceptve
conficts lead to greater moral hazards. Investor educaton,
transparency, and informaton asymmetry in fnancial transac
tons also have a major role to play. So, what has been our
learning from this crisis?
Lesson one: Lack of regulaton and over-regulaton need to give
way for smarter and dynamic regulaton. The fnancial crisis
makes a legitmate case for tghter norms that reduce regulato
ry arbitrage. However, fnancial regulaton also imposes costs
on the economy and may exacerbate the efects of the crisis.
Hence, we need a dynamic approach to regulaton that stands
ground, especially when markets fail.
Lesson two: Dealing with creaton of crisis management and
resoluton mechanism, especially for large banks that pose sys-
temic risk. This step is crucial to address failure of banks classi
fed as “Too Big To Fail” (TBFT). The government bails out these
banks as because of their sheet size, they pose a systemic risk
for the entre fnancial system. However, bailing out such banks
InFINeet | Budget Issue | March 2014

will only create more moral hazard as creditors and owners of
these banks will have no incentves to avoid excessive risk tak
Lesson three: Incentves trump regulaton. Interest conficts
should be resolved and incentves that support systemic stabil
ity, discourage excessive risk taking and lessen moral hazard,
should be encouraged.
Lesson four: Past does not predict the future. Why did large
fnancial insttutons bet so heavily on rising prices in the real
estate market? Treasury secretary Hank Paulson said that they
looked at data since 1945, and concluded that house prices
couldn’t go down. Traditonal, backward looking risk measures
based on returns from spreadsheet averages failed to predict
the crisis. Typically crises happen in tmes of economic boom,
coupled with regulatory oversight and with everyone willing to
jump on bandwagon, fuelling the trend and hoping to jump of
before the bubble burst.

Lesson fve: Don’t turn back on globalisaton. Financial and
trade links between global economies led to the spread of the
crisis across borders, however, it wasn’t a root cause for the
same. What is entails is global standardisaton of accountng
standards, stronger natona and sectoral regulators and inter
natonal cooperaton.

More than fve years afer the crisis, it is important that we
learn from the past and work towards beter policy implica
tons, regulatory interventons, and changes in the way a fnan
cial system operates, so that crises of such a scale could be pre
vented in the future. The 2008 fnancial crisis has given all
stakeholders, including governments, regulators, fnancial inst
tutons and investors an opportunity to rethink the idea of capi
tal markets. It is tme that we make the most of it.
InFINeet | Budget Issue | March 2014

AC-DC Opton
A derivatve that gives an inves
tor the right - but not the obliga
ton - to buy (call) or sell (put) a security at a certain
price (strike), and in which the investor makes the buy
or sell decision at a specifc tme afer the opton is in
force, rather than at the tme of purchase. The AC-DC
opton is basically an opton, which on a future date can
become a call or put opton at the buyer's discreton.

Abusive tax shelters
An investment scheme that
claims to reduce income tax with
out changing the value of the us
er's income or assets. Abusive tax
shelters serve no economic purpose other than lower
ing the federal or state tax owed when fling. Ofen,
these schemes channel funds through trusts or partner
ships to avoid taxaton.

Accountng Hall Of Fame
A prominent award in the feld of
accountng. The Accountng Hall of Fame was started by
Ohio State University in 1950. The award is highly selec
tve, and is given only to very prominent accountants
who have made "lastng contributons to the feld."

Balloon Opton
An opton contract where the
strike price increases signifcantly
afer the underlying asset's price reaches a predeter
mined threshold. A balloon opton increases the in
vestor's leverage on the underlying asset
Killer Bees
The merger and acquisiton boom of the
late 1980s forced companies to develop
strategies to thwart would-be takeovers.
Killer bees, named for the insect that ag
gressively swarms and overpowers its victms with hun
dreds of stngs, act aggressively on behalf of a frm that
is under the threat of an unfriendly or hostle takeover.
The killer bee may employ tactcs such as making the
target company less atractve or more difcult to ac

Kiwi Bond
Retail stock ofered directly to the public
and available only to New Zealand resi
dents. Applicaton forms and investment statements
are available from the new Zealand Debt Management
Ofce (NZDMO) Registry, as well as some registered
banks, NZX frms, NZX brokers, chartered accountant,
solicitors, investment advisors and investment brokers.

Pirate Bank
A type of ofshore savings account used
by a wealthy individual to hide assets,
typically to evade taxes and/or commit
illegal acts such as money laundering. A pirate bank is
diferent from a traditonal ofshore account in that it
uses advanced technology to make it more difcult to
track down the account. The account may also be un
numbered and have a chain of ownership that is dif
cult to trace.
Fin Lingo
InFINeet | Budget Issue | March 2014

Saber Currency
A proposed Brazilian currency that
would be handed out by the Min
istry of Educaton to 7-year-olds to
be redeemed only for university
tuiton. Saber currency is a complementary currency
that was proposed by Bernard Lietaer to help Brazilian
schools ofer more educatonal opportunites, regard
less of a lack of available funds. A type of educatonal
voucher, the Saber is intended to facilitate more learn
ing opportunites for a larger number of students, with
out adding any new fnancial pressures to the economy.
The planned Saber currency has three capacites:
 The Ministry of Educaton allocates Sabers to the
youngest students (for example, 7-year-olds) in
schools in economically disadvantaged areas. The
young students must choose an older student (10
years old, for instance) as a mentor, and pays the
mentor with the Sabers. The 10-year-old then does
the same, fnding an older student to mentor him
or her. Down the line, 17 year olds will have collect
ed the Sabers to be used towards university tuiton.
Redeemed Sabers are reallocated to young stu
 Children or adults who help elderly or handicapped
individuals can also earn Sabers.
 Certain laborers could elect to be paid in the stand
ard pay for the job, or at a reduced pay plus addi
tonal Sabers, an incentve for parents of children
planning on atending university

Wall of Worry
The fnancial markets' periodic tendency to surmount a
host of negatve factors and keep ascending. Wall of
worry is generally used in connecton with the stock
markets, referring to their resilience when running into
a temporary stumbling block, rather than a permanent
impediment to a market advance.

An illegal practce whereby two or more
market makers collectvely atempt to
infuence and change the price of a
stock. Ghostng is used by corrupt companies to afect
stock prices so they can proft from the price move

When investors fock to a class of securi
tes or other assets, bidding up prices to
beyond what can be justfed by valuaton
or other fundamental measures. While the
dash-to-trash efect can occur within any type of securi
ty, the phrase is typically used to describe low-quality
stocks and high-yield bonds, both of which can be sub
ject to periods of overbuying in the markets.
Fin Lingo
InFINeet | Budget Issue | March 2014

“Has it provided the right pre-
scription needed for the ailing
Indian economy?”
InFINeet | Budget Issue | March 2014

The budget of a government that is going through a transiton
period is known as natonal interim budget. Practce of inter
im budget is very common in most of the democracies, since
the fscal priorites of coming government may difer from
the existng government, the duraton of the budget is cut
shot and a new budget is created aferwards. The duraton of
interim budget may spread up to one month, one quarter or
more, depending upon the length of the transiton period
required by the new and old government, but the duraton
cannot exceed the upper cap of one year. This budget is cre
ated out of necessity, so that government can functon during
the transiton period.CD Deshmukh on February 29, 1952
presented the frst interim budget of independent India.
According to the Artcle 266 of the Indian Consttuton “to
draw money from the consolidated fund of India, govern
ment requires parliamentary approval” and artcle 144(3)
states that “withdrawal of funds from consolidated fund re
quires enactment of law and this should be done through an
appropriaton bill”. The process of presentng the budget,
discussing it, presentng the fnance bill and appropriaton bill
requires long tme. To address this, a provision has been
made in the consttuton which empowers Lok Sabha to make
grants in advance through ‘Vote on account’. In a normal year
‘Vote on account’ is taken for two months which allows the
government to spend the one sixth of the total planned ex
penditure of the fscal year. However in electon years the
duraton of the ‘Vote on account’ may increase. First VOA in
India was presented in year 1952-53. Since then there are 12
in total VOAs have been presented; six by the outgoing gov
ernment(In remaining 6 cases government decided to go for
electon immediately afer or before the end of fnancial
year) and six by the new government as they did not have
enough tme to present a full budget.
The main diferent between the Vote on account and Budget
is, VOA deals only with the expenditure side of the govern
ment, on the other hand a budget deals with both expendi
ture and revenue collecton side of the government.
VOA cannot alter the structure of direct taxes as this requires
parliamentary approval through fnance bill. The government
in its interim budget may alter indirect tax structures without
parliamentary approval, through a notfcaton. In 2004, just
before the dissoluton of Natonal Democratc alliance,

InFINeet | Budget Issue | March 2014

fnance minister Jaswant Singh announced series of indirect tax
cuts on the eve of VOA. In case of normal union budget govern
ment can alter both direct and indirect tax structure.
The technical signifcance of VOA is; current government
gets access to funds before the full budget is passed. In the
electon year it signifes that it is the prerogatve of newly elect
ed government to prioritze its earning and spending, and it
cannot be burdened by the previous government’s expendi
Many experts look Vote on account as an electon rhetoric.
The government through VOA highlights its achievements just
ahead of electons, as the voter reward the work done by gov
ernment in the frst four years.
On February 17, 2014 incumbent fnance minister
Palaniappan Chidambaram presented the interim budget for
fscal year 2014-15. It was his 9
such exercise, just one short of
the magic number of ten budgets presented by Morarji Desai.
On expected lines, Finance minister discussed about the
achievement of his government over the last two terms, and
there was no change in the direct tax structure. Apart from
countng the achievements of his government in his speech; he
also discussed (in great details) about the issues concerning the
growth of Indian economy such as infrastructure, manufactur
ing, power, foreign trade and foreign direct investment. Below
are the key highlights on the score card of the government and
interim budget.
GDP Growth likely to be less than 5 percent in 2013-14: The
fnancial year started with decadal low growth rate of 4.5 per
cent in Q1 2014.Growth rate improved in the second half of the
year with improving macroeconomic factors such as easing in
faton, increasing exports and decreasing current account def
cit. Some announcement such as curbing the gold import, re
laxed external commercial borrowing norms and increased FDI
in sectors such as Insurance, Aviaton and Retail also had some
positve impact. The major concern was lack of change in the
credit ratngs despite slew of reforms announced by the gov
ernment. The reformed announced by the government were
insufcient to bring the Indian growth story back to the 8 per
cent growth trajectory. High interest rates (despite of easing
infaton), depreciatng currency, uncertainty pertaining to the
result of the general electon have derailed the recovery of the
Indian economy.
SECTORAL GROWTH: Diferent sectors of the Indian economy
presented a mix bag of performance. Agriculture sector outper
formed the growth in Q2 2014 with record growth of 4.7 per
cent pertaining to good monsoon .Manufacturing sector growth
contracted in Q1 2014 because of very high interest rates and
low investment. Service sector maintained its growth rate of
6.6 percent in Q1 2014, while it decelerated in Q2 2014 be
cause of slow demand in social and personal services.
INDIRECT TAX PROPOSALS: On the expected lines, fnance min
ister announced some changes in the indirect tax such as excise
and customs.
EXCISE: Largely the excise dutes remained same; however
there are some changes which will beneft the common man.
 Excise duty on equipment, appliances and machineries
has been reduced from 12 per cent to 10 per cent. This
will beneft consumer durable segment such as CD, DVD,
washing machine personal computer set top box and
capital goods such as electric motors, printng devices
and generators. The concession will be available from
17th Feb 2014 to 30th June 2014
 Imported cellphones and smart phones now cost more.
According to the revised duty structure all imported
handsets will atract duty of 6 per cent. Earlier the duty
was calculated on recommended selling price (RSP). For
RSP greater than 2000, excise duty was six percent and
for RSP below 2000 it was only one percent.
Depending upon the nature and confguraton of the motor
vehicle the excise duty has been reduced, this reducton varies
InFINeet | Budget Issue | March 2014


from 3 to 6 percent. Refer the table below.
CUSTOMS AND SERVICE TAX: Service tax remained unchanged
at 12 percent. There are some minor changes in the basic cus
tom dutes (BCD).BCD on import of non-edible grade industrial
oil used in soaps manufacturing and faty alcohol and acid man
ufacturing has been reduced to 7.5 percent from existng 10 to
20 percent.
AAM AADMI AND INTERIM BUDGET: Like any other budget
announcement, common man had lots of expectaton from the
interim budget. Being electon budget expectatons were even
higher. Let us evaluate the gain and loss of the common man.
EDUCATION LOAN: Student who took educaton loans before
March 31, 2009 and owed interest on it have reasons to cheer.
Interest on their loans it tll December 31, 2013 has been waived

by the government. Government has set aside sum of $419 mil
lion for this scheme and this is going to beneft around 90000
VEHICLES: Finance minister addressed the concern of both auto
mobile sector and growing numbers of vehicle owners. Reduc
ton in the excise duty on car, scooters, trucks, motorcycles and
sport utlity vehicles is a much needed relief to the ailing auto
sector of the country. Reduced excise duty will indeed beneft
the new buyers.
CELL PHONES: The revised duty structure is a mix bag. On one
hand this will increase the cost of imported hand sets and on the
other hand it will provide much needed boost to the domestc
mobile manufacturing industry. This move will encourage large
multnatonals to think about India as potental manufacturing
InFINeet | Budget Issue | March 2014


DEFENSE PERSONNEL: Contrary to the opinions, fnance minis
ter raised the outlay by 10% percent to $36 billion. Government
addressed the much awaited “One-rank one pension” clause.
The defense personnel will now get the pension on the basis of
their ranks at the tme of retrement, regardless of tme of re
trement. The increase allocaton will be spent of modernizaton
of army and pension disbursement.
FINAL WORDS: Known for his politcal and fnancial acumen,
fnance minister Palaniappan Chidambaram presented a bal
anced interim budget. He successfully balanced the pressure of
electon budget and concerns of fscal consolidaton. Unlike
2009 budget, he avoided big soaps to voters and at the same
tme he lured the frst tme voters by educaton loan interest
waiver (as the number of frst tme voters is highest in this gen
eral electon). To address the concern of the slowing growth
rate, India needs balanced and growth promising union budgets
in coming years. The responsibility lies on the shoulders of up
coming government to contnue the path of fscal consolidaton
and promote growth prone policies.
Goods Existng Excise Duty Proposed Excise Duty
Motor vehicles of engine capacity exceeding
1500 cc, popularly known as SUVs including
utlity vehicles. 30 per cent 24 per cent
Small cars, Motor Cycle, Scooters, commer
cial vehicles, trailers 12 per cent 8 per cent
Large segment car 27 per cent 24 per cent
Mid segment car 24 per cent 20 per cent
Hybrid Motor Vehicle 12 per cent 8 per cent
Three wheeled vehicles for transport of not
more than seven persons 12 per cent 8 per cent
InFINeet | Budget Issue | March 2014


RBI has been talking about introducing Infaton Indexed Bonds
(IIBs) in India for quite some tme now. An earlier version called
Capital Indexed Bond with original maturity of 5 years with in
dexaton of capital only was issued in 1997. Since then, no fur
ther issue of infaton-protected government debt has been
made in India. However, an initatve was taken by the RBI and/
or Ministry of Finance by way of a discussion paper for re-
introducing IIBs in 2004. It was understood that the authorites
decided against such a move, and if the proof of pudding is in
eatng, the pudding was never served on the table (tll date).
Afer India witnessed a phase of unusually high infaton over
the last few years (along with slowing growth) that succeeded a
period of about fve years of unusually high growth rates (2003 –
08), the media have reported several statements of intent by
RBI ofcials to issue infaton-indexed government bond (IIGB) in
India in recent past. This is also in line with global experience of
the last sixty-odd years wherein most countries (including the
UK) have introduced IIGB for the frst tme following period(s) of
high infaton.
An IIB links the payment of either interest, or principal, or both
to a pre-determined index of infaton while determining the
nominal cash fows to the holders of such bonds. If both coupon
(interest) and principal are indexed, or if only coupon is indexed,
a real rate of return (real coupon) is announced (or determined

InFINeet | Budget Issue | March 2014

through aucton) at the tme of issue, and investors receive cou
pons calculated as the real rate plus the reported (known) infa
ton of immediate preceding period, while the principal gets
notonally increased by the rate of infaton (in case principal is
also indexed). The indexed principal is returned to the bond-
holder at the tme of maturity. It is also possible to have an IIB
with indexaton of principal only, in which case the announced
coupon determines the fxed interest payment to the holders
during the tenure of the bond, with protecton of real purchase
price (or face value).
In modern tmes, Finland introduced infaton indexed bonds for
the frst tme in 1945. High-infaton Latn American countries
introduced such bonds in the 1960s. Among the more developed
countries, UK introduced government IIBs in 1981 (though non-
tradable IIBs for retail investors were issued since 1975), with US
being the latest entrant in this arena in 1997 (see table).

Though there have been instances of IIBs issued by private play
ers in the past, most such issues had prices of specifc commodi
tes or services (like oil, metals, electricity) as the basis for index
aton (instead of an overall price index – wholesale or retail).
This is precisely because the revenue of a commodity-frm is ted
to the price of that commodity (or service), enabling it to service
a higher interest/ capital outgo when commodity prices rise.
Such a frm is obviously not in a positon to issue an IIB indexed
to an overall price index simply because it doesn’t have any con
trol over the prices of a vast range of products. Only the govern
ment (including the monetary and fscal authorites) has control
ling power over infaton. Thus the sovereign government of a
country alone is in a positon to issue IIBs with indexaton ted to
an overall price index.
UK launched its frst issue of infaton-indexed public debt in
1981, with an indexaton lag of eight months – 2 months for
reportng lag and six months for insttutonal lag. Reportng lag
refers to the tme gap between when price data are collected
from markets (say June 15) and when the same is made public
(August 15, if lag is 2 months). Structural or insttutonal lag re
fers to the lag arising out of the practcal requirement that trad
ers must know on or before an interest-payment (IP) date what
will be the exact compensaton (calculaton of accrued interest
and/or indexed principal) for any of the trading days tll the next
IP date. Since most govt. debt pays interest semi-annually, this
lag is usually six months.
Canada came out with an alternatve structure of indexaton
resultng into a shorter (3M) lag in 1991. This has since become
the standard across countries, with UK debt management ofce
(DMO) shifing to this model in July 2005. Currently, most coun
tries issuing IIGB follow this model.
Issuers of IIB will atempt to match assets with liabilites. That’s
why a private player cannot issue IIB ted to an overall price in
dex. A Sovereign Government is in a positon to issue IIGBs
Country Year of Introducton
Finland 1945
Israel 1955
Iceland 1955
Brazil 1964
Chile 1966
Colombia 1967
Argentna 1972
UK 1981
Australia 1985
Mexico 1989
Canada 1991
Sweden 1994
New Zealand 1995
US 1997
InFINeet | Budget Issue | March 2014

ted to an overall price index due to two factors. First, its tax
revenues are also ted to overall prices (through direct and indi
rect taxes). Second, the government (combinaton of fscal and
monetary authorites) has (at least some) power to control over
all infaton.
On the other hand, more investors will buy such bonds the more
the price index chosen match with infaton of the basket of
products they consume. That’s why most countries have chosen
indices of consumer or retail prices as the basis of infaton in
dexaton for the IIGBs, even when the bonds are auctoned to
insttutonal investors. Wholesale prices involve a shorter re
portng lag than retail/ consumer prices in India. However, if
wholesale prices are chosen as basis for an IIB, only supply side
will be taken care of. It is everybody’s knowledge that retail pric
es consistently diverge from wholesale prices in India.
There exist at least two benefts to a sovereign government issu
ing IIGB. First, while the yield of a nominal coupon bond is deter
mined through an aucton process, the bidders (investors) factor
in an expected infaton into the yield they demand. Investors
are also aware that actual infaton may difer from the expected
infaton, and they seek a premium for this risk. Infaton indexed
bond precisely avoid this risk premium. John Y. Campbell and
Robert J. Shiller estmated the size of this risk premium to be
about 50 basis points for the US economy (before US introduced
IIGB). Size of this risk premium is most likely to be higher in In
dia, as infaton volatlity in India is much higher than that of the
US. Thus, IIGB is likely to reduce the cost of government borrow
ing by at least 50 basis points (bips).
Second, almost all countries that issue IIGB also issue nominal
bonds. Yields on both types of bonds are determined through
aucton. A simple comparison of market-determined aucton
yields on the two types of bonds will help the government
(monetary and fscal) authorites to reliably estmate the infa
ton expectaton of economic agents, which is not possible in the
absence of any issuance of IIGB. Being able to obtain accurate
estmates of infaton expectatons of economic agents on a con
tnuous basis is a great advantage for both the monetary and
fscal authorites, sharply enhancing the efcacy of their respec
tve policy instruments.
From the point of view of investors, IIB ofers a near perfect
hedge against infaton, inducing greater fow of savings into
fnancial assets (IIBs), and thereby at least partally reducing de
mand for gold especially in tmes of high infaton, when real
rates ofered by nominal bonds (and bank FDs) turn negatve..
Taxaton of indexed interest makes post-tax yield uncertain – in
fact it re-introduces the infaton risk. For a person facing 30%
InFINeet | Budget Issue | March 2014


% tax bracket, with real return of 4% and infaton of 11%
(nominal return 15%), the post-tax yield will be 10.5%
(=0.7*15%), thereby making the total nominal yield lower by 50
basis points lower than the rate of infaton (i.e., ─0.5% real rate
of return). However, if the actual infaton turns out to be 7%
instead, the post-tax yield (30% bracket) will be 7.7% (=
0.7*11%), making realized real yield of 0.7% (rather than 4% real
coupon on the IIB in this example). Thus, not only the infaton
uncertainty is re-introduced back due to taxaton of interest in
case of IIGBs, the realized real yield can be negatve for investors
in highest tax brackets especially during tmes of high infaton.
This implies that IIGBs are likely to be more atractve to individ
ual investors in the zero or lower tax brackets, as well as insttu
tonal investors (e.g., pension funds) which enjoy special tax ex
empton on interest income from such bonds by virtue of the
nature of their business.
Most countries treat increase in principal due to infaton as tax
able income, apart from the indexed interest. This is in line with
the principle of taxing interest income of a conventonal bond
and taxing capital gains. However, to what extent the increase in
capital (face value) due to infaton indexaton should be consid
ered as capital gains for taxaton purpose is doubtul, simply be
cause such capital gains are not real.
Besides, chances of IIGBs reducing gold demand in India are ra
ther small since post-tax yield is not only uncertain, but even
may turn negatve in real terms. It is only from the nil or low-tax
bracket populaton that demand for gold may come down, un
less a tax-free investment limit specifcally for IIGBs is introduced
for individuals across income categories (beyond the Rs. 1 lakh
Secondary market liquidity of IIBs/IIGBs is very poor across coun
tries with decades of experience of this instrument. This is not
surprising. Investors who buy this instrument need infaton pro
tecton, whether on asset side or liability side. They are not in
terested in trading gains. Hence, secondary market liquidity of
IIGB will be poor in India, and that should not be construed as a
critcism against IIGB.
RBI has launched two types of IIGBs in 2013 – one for the insttu
tonal investors, and the other for the retail investors. Here the
product design of the later will be discussed.
The IIGB for the retail investors has been christened “Infaton-
Indexed Natonal Saving Securites – Cumulatve” (IINSS-C). The
interest rate on these bonds will be linked to the consumer price
infaton (CPI). The real component is fxed at 1.5%, and interest
will be computed on half-yearly basis. The bond will not pay any
annual or half-yearly interest, and the entre interest earned by
the bond during its tenure will be paid on maturity. The tenure
of the bond is 10 years, with senior citzens allowed to redeem
the bond afer one year, and others afer 3 years. In case of early
redempton, investors will be charged a penalty (equal to half of
the coupon payable for the last-half year). Such early redemp
ton is allowed only on coupon payment dates.
The bond is distributed through State Bank of India (along with
its associate banks), all Natonalized banks, three private sector
banks (HDFC Bank, Axis Bank & ICICI Bank), and Stock Holding
Corporaton of India. RBI will act as the central depository for the
bond, and the investor will be issued a certfcate of holding.
While launching the bond in December 2013 (for the retail inves
tors), RBI in consultaton with the Government of India, specifed
that the bond would remain open for subscripton between 23

December and 31
December, 2013. By the end of December,
the subscripton period was extended to 31
March 2014. It is
clear the response was far less than what was expected at the
tme of the launch of the product.
InFINeet | Budget Issue | March 2014

Not only the subscripton period, RBI has also allowed a commis
sion of 0.5% to the banks selling the bond (to the retail inves
tors) in around middle of March 2014. This is in additon to 1%
handling commission that the banks were allowed to begin with.
Finally, on 26
March 2014, RBI has increased the limit of invest
ment by individual investors (including HUF etc.) from Rs. 5 lakh
to Rs. 10 lakh.

All these modifcatons are clear indicaton of a near complete
absence of investor interest in the bond.
In the absence of readily available statstcs, one can make some
logical guess about the factors behind such poor investor re
sponse, especially during a period which has witnessed high and
persistent consumer price infaton over years together.
First, distributon is likely to be a factor. A quick search on the
websites (on March 27, 2014) of a few public sector and the
three private sector banks (which are mandated to sell the bond)
reveals an interestng facet. The private sector banks are retail
ing the bond from selected branches (e.g., HDFC bank from 1381
out of 3062 branches, Axis Bank from 219 out of 2225 branches,
ICICI Bank from 1232 out of 3100 branches), while most of the
public sector branches are selling the bond from all branches (a
notable excepton is the Corporaton Bank, which is selling the
bond from 55 out of 1707 branches). Thus, it appears that the
problem is not due to lack of geographical reach.
\However, the problem is probably due to lack of promoton. A
search into the websites of a few public sector banks reveals
that for most, the informaton about IINSS-C is very difcult to
fnd, and for others the informaton is simply not available. For
all the three private sector banks, informaton about the instru
ment is easily available (from the Investment secton).
Second, the instrument has not been widely publicized in the
media (print or broadcast) by the RBI or Government. Neither
there has been much promoton in the vernacular media. Only a
few artcles in the fnancial press is almost all that have come
through the press. The banks are unlikely to be interested in
promotng the product, in lieu of marketng their own deposit
schemes, in spite of the 1.5% commission. This is simply because
banks will earn about 3% (the net interest margin) of every ru
pee of additonal deposits. Consequently, lack of awareness
about the product among the mass along with absence of sales
pitch and efort by banks to sell IINSS-C is very likely be a major
Third, one aspect of the product design has certainly put of a
signifcant segment. The retred people without a formal pension
plan would have been the most important target group for such
an instrument from the point of view of old-age income security.
It is infaton that is the biggest enemy to retred people who are
forced to depend on a constant interest income for 15 – 20 years
afer retrement. Consequently, the purchasing power of the
post-retrement income comes down with every point of infa
ton each year. An infaton-protected bond is like a god-sent gif
to this class of citzens. But the IINSS-C plans to pay the interest
at the end of the tenure (10 years). No retred person would be
interested in this. Even very few working people will be interest
ed to lock-in the money for 10 years. In fact, a window for sec
ondary market trading could have made the situaton beter.
This leaves us with the working age populaton. This populaton
category is more interested to grow their savings corpus than
protectng the purchasing power of their savings. Regular inter
est payment might have stll evinced some interest among them,
because such a bond (with regular interest payment) would have
at least maintained the purchasing power of that porton of their
income that is spent on consumpton basket. The cumulatve
opton has knocked of the segment.

InFINeet | Budget Issue | March 2014

A more important factor for the working populaton is the re
quirement to walk into the branch of a bank to buy this bond.
Had it been available for purchase online through demat ac
counts (the way equites and corporate bonds are purchased and
sold), RBI could have stll sold more of these bonds.
Fourth, IINSS-C does not provide indexaton beneft to the princi
pal. Consequently, this porton, when received on maturity, will
have a far lower purchasing power. Similar bonds issued by the
US treasury (Treasury Infaton Protected Securites or TIPS) pay
interest on a regular (half-yearly) basis at a fxed rate, but on a
principal that is indexed to infaton. This serves the purpose of
protectng the real value of the principal. This has the additonal
possible advantage in India (if allowed by income tax rules) that
real taxable capital gain due to indexaton will be nil. This will
also broadly nullify the adverse efects (risks) arising out of taxa
bility of infaton-indexed bonds discussed earlier.
In the light of the above discussion, the recommendatons that
follow are:

 The bond should be available round the year, on-tap basis,
with annual limit on individual purchase (as is the case now)
 The bond should pay regular half-yearly (indexed) interest
to the investors
 Investor should be able to buy this bond online (RBI may
have to involve mutual fund distributors, demat account service
providers, on-line trading platorms, and so on, and design a
mechanism) so that people can buy the bond online
 RBI should allow the ability to sell the bond before maturity
to anybody other than the government; this will infuse liquidity,
and will make the bond more atractve to the investors, and a
secondary market may develop.
RBI and the Government of India may think of adoptng the US
TIPS model for indexaton of capital (along with suitable modif
caton in taxaton rules).

InFINeet | Budget Issue | March 2014


Rupee ends below 60/$ afer 8 months on 28th March, 2014
RBI extends Basel III Capital deadline to March 2019
CAD narrowed to $26.9 billion (3.1% of GDP) from $37.9 billion (4.5% of GDP) in the frst half of 2012-13
SEBI tghtens leash on Sahara Group– Subrata Roy jailed for failing to refund Rs 20,000 crore to
Facebook acquires Whatsapp for USD 19 million
Janet Yellen took over from Ben Bernanke as the new US fed chief
InFINeet | Budget Issue | March 2014

Iceland, Large Hadron Collider, Hubble Space Telescope, London
Olympics , US Ford Aircraf Carrier. What is the signifcance of
the above mentoned in the context of discussion. Think for a
All of the above are valued much lower than the Facebook
WhatsApp deal. Coco Chanel a famous French designer once
said ““The best things in life are free. The second best things
are very, very expensive.” If you look at the social media cartel,
frms like Facebook, twiter ofer their services(their USP) for
free but are the highest valued frms in the world both in mone
tary and usage terms(second best opton if you are a compet
tor). With WhatsApp jumping onto this bandwagon we have a
social media behemoth netng a fast-growing, internatonal
user base in the burgeoning global-messaging market, where it
was a marginal player untl now. No wonder Zuckerberg had the
chutzpah of acquiring someone who as tech experts say “was
eatng his lunch”.
In order to have an unbiased analysis of whether this is a pru
dent or a naïve investment we look at the major stakeholders
and view the deal from their perspectves. By doing so we get a
fair idea of how this deal will afect Facebook, WhatsApp and
more importantly the end user.
THE FACEBOOK PERSPECTIVE: For Facebook this acquisiton
makes sense for several strategic reasons, frst is opportunites;
Facebook would be able to tap fast growing emerging markets
like Asia, LATAM, Africa where WhatsApp has huge penetraton.
Through this, Facebook would be able to diversify its revenue
sources away from US and Canada which now accounts for
nearly 50%.
Secondly afer the emergence of messaging apps, especially
WhatsApp, the engagement rate of Facebook started to decline
rapidly. It currently stands at 70% for WhatsApp on a daily basis,
while it’s around 60% for Facebook. This mainly we feel is be
cause of privacy related concerns that users had. Facebook has
efectvely plugged the gap with this acquisiton.
Third would be that WhatsApp comes with a revenue model
that’s very diferent from Facebook. Facebook would not toy
around with that model, rather would experiment the same
model for its other ventures.

InFINeet | Budget Issue | March 2014

WHATSAPP PERSPECTIVE: Here we feel that WhatsApp can rap
idly move into the voice space by the technological prowess and
the amount of capital that Facebook can use. Presently,
WhatsApp’s discrete growth in connectng consumers on data
networks has not been fully scrutnized and screened by regula
tory bodies internatonally. Now with FB's staggering acquisiton,
WhatsApp could be now thrown into the spotlight and would
open a few questons on data sharing and its carriage across
INVESTOR PERSPECTIVE: While the only ever acknowledged
funding to WhatsApp was the $8 million series-A funding led by
Sequoia Capital, not many know the overall funding did add up
to $1.3 billion over the years again led by Sequoia through series
of investments. Corresponding to a stake about 20% in
WhatsApp this is worth $6.4 billion today; which corresponds to
5X return on investment in the company.
However there is a more sinister and ironical angle to this whole
episode. About 10 years back in 2004 Zuckerberg was talking to
venture capitalists about raising money for his new frm Wire
hog. When Sequoia reached out to him, Zuckerberg rejected
their investment on the advice of his friend Sean Parker who had
a bad experience with Sequoia for his startup Plaxo. Afer all this
was a mater of bad blood.
But it didn’t end there. Zuckerberg being the guy he was inten
tonally turned up late for the meetng with Sequoia in Pajamas
armed with a Powerpoint Deck ttled “The Top Ten Reasons You
Should Not Invest”. Of Course Sequoia did not invest in either
Wirehog or Facebook. How ironical would it then be to see the
same frm make a fortune on the Facebook WhatsApp deal for
its Investment?
USER PERSPECTIVE: Although it is a bit early to gauge the impact
of this acquisiton, the fact remains that WhatsApp users will
become a part of Facebook whether they like it or not. The is
sue for the 450million WhatsApp users goes well beyond adver
tsing. Privacy concerns loom at large over the sharing of their
online conversatons and multmedia with Facebook; which in
itself is not a good Samaritan of User Privacy (based on its Histo
But then this is not Facebook’s frst acquisiton. In the past it had
acquired Instagram. Similar concerns were raised at that tme
too; but Facebook, true to its promise, kept Instagram inde
pendent from Facebook. Such is the independence that the only
way to tell Instagram belongs to the social network is to visit its
help pages.
THE FINANCIAL PERSPECTIVE: IN a lot of ways Facebook has
always emulated Google’s business model, may it be in fnding
new streams for revenue generatons(e.g.: mobile) or tapping
existng resources for revenue generaton (e.g.: focused adver
tsing). However unlike Google which achieved a cumulatve
eight year CAGR of 30% afer its IPO(Facebook’s being 12.5%),
Facebook shares dropped by 43% afer its IPO in 2012 from $38
to $18. Hence in order to emulate Google’s growth model Face
book share price must increase from $38 to $302 by 2020.
InFINeet | Budget Issue | March 2014

Assuming that Facebook net proft margins remain the same
at 27%, its revenue must grow from $3.7 billion to $107 bil
lion in 8yrs period.
Regarding its acquisiton WhatsApp has about 450 million
users—paying .99 cents per app install, it’s already got $445
million in gross revenue. So Facebook paid 42x total reve
nues. That’s extremely high, but uncommon in the tech
space, where revenues can grow at a high year-over-year rate
for some tme. For instance, Facebook itself saw ad revenues
grow by 70% last quarter. A 70% CAGR growth rate sustained
over two years would mean WhatsApp will get annual reve
nues of $715 million in 2016. It would stll take Facebook
roughly 27 years for revenues to match its investment—
longer to get its money back.
Another way of looking at this is to then see if we get our
investment back sooner. WhatsApp saw an exponental
growth rate in the past year, efectvely doubling its installa
ton base from early 2013 to today. Assuming WhatsApp
grows to have 1 billion users worldwide in fve years lets as
sign a dollar value to each user. Every year Facebook in its
annual report, gives an annual revenue per user (ARPU) fg
ure which calculates how much revenue they get per user on
average. Worldwide, Facebook’s ARPU was averaging around
$8.5 in 2013 and grew 39% year over year. Pessimistcally
assuming it grows by 10% year over year, we’ll get to $13.8 in
5 years. Annualizing it by multplying it with user base we get
a revenue fgure $13.8 billion.

So given all these perspectves, is the deal stll irratonal? The
answer is no, not at all! Facebook cannot risk WhatsApp's
450m monthly and 315m daily actve users falling into the
hands of a compettor, such as Google. WhatsApp is growing
faster than Facebook, adding more than 1 million users per
day catering to wide range of customers. What makes the
deal even sweeter is the operatonal efciency of WhatsApp
and its lean structure. It employs 55 people and hasn’t spent
a penny on advertsing.
Businesses now are leveraging on WhatsApp for sales, cus
tomer service, client relatonship and internal communica
ton. Therefore, as a separate entty, WhatsApp has a lot of
proftable relevance to companies and brands. Say suppose
WhatsApp decides to open a brand channel and integrate it
with Facebook fan page, this would open up a whole new
tailored communicaton channel for brands to reach out to
fans on their mobile devices; meaning companies can market
their brands, display promos and even use it as a channel for
customer service with a click of a buton. This opens up a new
revenue channel for WhatsApp.
Concluding our view, though our forecasts may project a de
layed payback period for Facebook on their investment, the
qualitatve view presents signifcant benefts to Facebook in
the future. All of this will depend on whether Zuckerberg de
cides to keep WhatsApp a separate entty like Instagram and
conform to the inital vision of WhatsApp founders (Jan Kuom
and Brian Acton) which was so strikingly pinned onto their
workstaton. “No ads! No Games! No Gimmicks!”.
InFINeet | Budget Issue | March 2014

Argentne economy is in trouble – again. Argentne Peso fell 12%
in a day to 7.8825 per U.S. dollar on 23
January as Argentna’s
central bank withdrew eforts to support the currency. This was
the biggest decline the currency had seen since its devaluaton
in 2002. In fact, it has recently been the worst performing cur
rency in the developing world, having fallen by over 24% since
the appointment of Axel Kicillof as the Minister of Economy in
November last year. The foreign currency reserves have fallen
by more than 30% YoY to $27.85billion which is alarmingly low
for a $475billion economy. Prices have soared sharply with infa
ton rising to 28% for the month of December, according to pri
vate economists. Note that the previous ofcial index which
showed infaton to be 10.9% for the same month had already
lost its relevance since the government’s interventon in 2007
and has been replaced by a new Consumer Price Index unveiled
by the government on February 20.

Though the currency has stabilized since February’s frst week,
the investor and consumer sentments are running low. But how
did it come to this? Yes, there are external factors like US Fed’s
tapering of the monetary stmulus and fears of a slowdown in
China which have taken their toll on other emerging markets
too but what has pushed Argentna to the brink of a balance of
payment crisis is the economic mismanagement of the past cen
tury. But this looming crisis is not a rare oddity for Argentna. A
cursory glance at the economic history of Argentna reveals that
the country has probably seen more economic crises than most.
In fact, since 1975, the country has spent more years in a state
of economic turmoil than in a state of relatve prosperity. Ar-
gentna’s unique conditon as a country which achieved ad-
vanced development in the early 20th century but experienced
a reversal has been widely studied and even has a term coined
for it – “Argentne Paradox”.

-By Ashutosh Agarwal
- IIFT, Delhi
Figure 1: ARS/USD
InFINeet | Budget Issue | March 2014

Argentna, which is traditonally a commodity export driven
economy, was one of the wealthiest countries at the beginning
of 20
century with only 6 countries in the world having a high
er per capita GDP. In 1909, per capita income in Argentna was
1.5 tmes of that in Italy, 2.8 tmes of that in Japan, and almost
500% of that in neighbouring Brazil.
By the end of the century, its per capita income was about half
of that of Italy or Japan.
The frst major crisis occurred in 1890 with the collapse of Ar
gentna’s banking system. However, the economy was back on
track by 1903 and in 1906 the country re-entered the interna
tonal bond market. The crisis also served in fostering the rise of
industry. With the beginning of World War I, Argentna again
entered into recession and during the course of the war foreign
investment dried out as Great Britain amassed heavy debt which
had investments of more than 150m pounds in Argentna in
1890. Exports reduced drastcally as the Great Britain imposed
restrictons on import of frozen beef which was a major export
of Argentna. The country escaped the Great Depression rather
unscathed with unemployment remaining below 10%. This was
largely due to the abandonment of gold standard and subse
quent devaluaton of Peso which kept Argentna’s exports com
pettve. Post Great Depression, the Argentne governments
intensifed the policy of import substtuton industrializaton
which had been in efect since the beginning of the 19th centu
The Peronist era witnessed increased government interventon

and protectonism leading to stagnaton of agricultural produc
ton and trade. High levels of public spending funded by infa
tonary taxes led to infaton. The extent of interventon can be
gauged from the fact that the government went as far as setng
the prices and menu for restaurants in 1947. The 1950s saw
slight opening up of markets for internatonal trade by means of
trade agreements with Britain, Soviet Union and Chile and policy
shif from industry to agriculture to revive the compettve ad
vantage in commodites. But the growth rate remained much
lower than the rest of the world. The wage spiral pushed aver
age infaton up to 30% during early 60s. The respite came with
a coup in June 1966 which put Adalbert Kreigert Vasena in
charge of the Economy Ministry. Under him, the GDP growth
averaged 5.2% while the infaton came down to 7.6% by 1969.
Also, the protectonist trade policy saw a reversal and the cur
rency was devalued by 30% to make exports compettve. But
with removal of Kreiger in 1970, the economic conditons deteri
orated and a wage-price spiral lead to an uncontrolled rise in
The period between 1975 and 1990 was an era of hyperinfaton
in Argentna. The infaton averaged 300% per year during 1975-
1990 and the real per capita income fell by more than 20%. The
complete loss of control on wages led to the failure of all
atempts to curb infaton. The budget defcit grew to 16% of
GDP in 1989. The breakthrough of reform came in 1991 under
Economy Minister Domingo Cavallo who pegged Peso to Dollar
under a currency board mechanism. The infaton came down
and GDP rose gradually untl the contagion efect from Mexican
Peso crisis of 1994 pushed Argentna into recession yet again.
This was followed by the economic crisis of 1999-2002 caused
Figure 2: GDP per capita of Argentna (% of US)
InFINeet | Budget Issue | March 2014

by appreciaton of US dollar to which peso was pegged and de
valuaton of Brazilian Real. By the end of crisis, Argentne econo
my had shrunk by 20% and 54.3% of the populaton was living
below the poverty line.
Afer defaultng on its debt in 2001, the Argentne economy has
seen a relatve recovery since 2002 riding on the back of a boom
in commodity prices especially soybeans and soybean oil. How
ever, the debt has piled up again due to defcit fnancing and the
foreign capital is fowing out because of loss of investor conf
dence due to government policies such as price controls and
natonalizaton without compensaton. Expectaton of a slow
down in China which will afect the demand of commodites has
also added to the woes. With only $30bn of reserves and in
creasing demand for dollars even in the local market, Argentna
had no opton but to devalue the peso and some analysts are of
the view that the currency may be devalued by a further 50% by
the end of 2014. This will only worsen the infaton which is al
ready around 28%. Argentna’s dollar denominated bonds too
have plunged 8.2% this year and spread between yields on Ar
gentne bonds and US Treasuries has surged to 975 basis points.
The frst thing that the Argentne government needs to do is to
acknowledge its role in making things as they are instead of
blaming banks and “greedy capitalists” for its woes. Getng the
economy out of the turmoil caused largely by a century of misdi
rected policies calls for drastc measures. One such measure can
be to allow the Peso to foat freely. It will be a major shock ini
tally as the currency may fall as low as 14 per dollar (according
to some analysts), but it will give Argentna the independence to
pursue its own monetary policy with free fow of capital. The
black market rates of dollar are already hovering around 13 per
dollar and a foatng currency at the same rate will only add to
the government’s credibility which will result in infow of capital
apart from making the exports more compettve. An independ
ent monetary policy will also allow Argentna to boost interest
rates to stem outlows.
Curbing infaton is probably the biggest challenge of all and it
can only be done through a credible central monetary authority.
The credibility of central bank will depend on whether it’ll be
able to keep the expected infaton targets realistc and achieve
them. Having faced censure from IMF in 2013 for low quality
data, the new CPI is a positve step towards building confdence
in government reported data, though some economists stll
don’t agree that the new index shows the true picture. A strong
monetary authority will also help the country in negotatng with
its debtors beter.
Finally, the country needs to make major changes in its trade
policy and capital restrictons. Fortunately for Argentna, its en
trepreneurial sector contnues to demonstrate a great ability to
innovate and succeed. Google made Buenos Aires its Latn
American headquarters precisely because of the strength and
innovaton of Argentna’s sofware industry. This strength
should be leveraged by the government to bring in more FDI
and increasing exports. This can be done by implementng fa
vourable policies and providing incentves conducive to invest
ment in the sofware industry in the country. Also, there is a
need for disinvestment in sectors like oil and energy to pay of
the towering foreign debt just like the privatsaton of pension
industry which yielded $29b to the government in 2008.
InFINeet | Budget Issue | March 2014


From barter to banknotes to bitcoin, our medium of exchange is
taking a major shif from tangible currency to virtual one. Bitcoin
is the new kid on the currency block which started merely fve
years ago by a person under a pseudonym Satoshi Nakamoto.
Since its incepton this volatle digital currency Bitcoin has
caught the fancies of common mass. Revered by computer pro
grammers and censured by economists in equal breath, bitcoin
demands further investgaton into validity of its applicaton.

The success story of bitcoin and analysing the formaton of this
bubble is very signifcant since the 2008 fnancial crisis which
witnessed a similar scenario. Bitcoin is contnuously expanding.
Investors/Speculators are putng their money into this digital
currency which is not issued by a central bank, but is rather
made up of cryptographic sofware and supported by a peer to
peer network similarly in nature to BitTorrent and Skype.

BY– Anirudh Harsinghaney
& Gaurav Vivek Arora
InFINeet | Budget Issue | March 2014

The wild fuctuatons in the price of the bitcoin have made it a
favourite among the economists who think it as another bubble
– that is a special kind of mania which the people are investng in
expectaton of immediate appreciaton. The following graph
shows the wild gyratons in the prices of bitcoins in a two year
span from 2012 to 2014.
According to Jean – Paul – Rodrigue, a Ph.D. professor at Hofstra
University, following graph defnes the stages of an investment
bubble. Now compare this graph with the data from Splitcoin a
leading bit coin exchange.
From the comparison of the above two graphs, it seems we have
come up to “new paradigm” stage and that investment in many
bitcoin companies like Coinbase, Splitcoin is a testament to that
fact. Similarly, we can see a “return to normal peak” as well. But,
so far all we have seen is capitulaton and despair stages of Ro
drigues model a mountain from the fear caused due to Mt. Gox’s
Bitcoin has always been prone to fuctuaton in its price through
out its brief history. From being priced less than $15 in January
2013, it zoomed to $1000 in November 2013 and then plummet
ed to $260 afer the Mt. Gox meltdown (popular bitcoin ex
change in Japan).
Nobel Prize winning economist and New York Times writer Paul
Krugman has termed the bitcoin as “evil”. According to him for a
currency to be successful, it must both be a medium of exchange
and should have a store of value. He thinks that bitcoin cannot
be used as a medium of currency but it’s the second aspect, the
store of value, where proponents of bitcoin difer from econo
mist around the world. Krugman asserts that for value to be
atached to a currency there should be some central authority
backing it up just like the Federal Reserve does for the Dollars or
in case of gold something which can be converted into some
other form say jewellery and stll be valuable. Bitcoin neither has
a central authority nor an intrinsic value associated with it and
hence Krugman predicts that bitcoin is at death’s door. On the
other, the supporters of bitcoin argue that since computer pro
grammers can change the price of materials and value associated
with them, bitcoin does not need to have a stable value associat
ed with it. But the risk of using bitcons for the purpose of busi
ness is huge because of the volatlity inherent to the bitcoins. For
a commodity trader a huge depreciaton in the value of a bitcoin
can make him virtually penniless and vice versa, a huge apprecia
ton can make him as rich as Croesus.
The Mt. Gox debacle is not the frst issue of thef of bitcoins. It is
just one event in a series of safety issues that has plagued the
bitcoins ever since its incepton.
InFINeet | Budget Issue | March 2014

bitcoins ever since its incepton.Mt Gox ,the now erstwhile larg
est bitcoin exchange lost 8,50,000 due to hacking out of which
7,50,000 were of users. This has been followed by Flexcoin,
which announced itself as the “frst bitcoin bank” when launched
in 2011.Flexcoin closed down in early March when it found out
the thef of 896 bitcoins worth close to $6, 00,000. Silk Road 2.0 ,
a black market drug trading site reported the stealing of 4744
bitcoins worth $2.4 million. The thefs are mostly due to a phe
nomenon called ‘transacton malleability’ wherein a hacker can
repeatedly withdraw coins from the system untl it becomes
completely empty. This faw in bitcoin protocol enables the hack
er to hide the transacton ID .These stolen bitcoins are then
transferred to an escrow account where they are safely stored.
So what do we do now? Do we just think of bitcoin of being in its
infancy and forget about these thefs? Well, according to Micky
Malka, board member of the Bitcoin Foundaton, no one should
be investng an amount that they cannot aford to lose.

It can be dangerously easy to dismiss the bitcoin phenomenon as
another bubble waitng to burst. With everyone from Nobel Lau
reates to traders washing their hands away from this virtual cur
rency, it becomes very easy to overlook it. A virtual currency
invented in 2008 , that sees its total value multply fvefold to
reach 10 billion simply begs for the word ‘bubble”. Many people
compare bitcoin to the “tulipmania” of the 17
century to estab
lish the fact that it is indeed a bubble. But most of these argu
ments seem to be a part of the hyperbole surrounding bitcoin.
What we tend to forget is that bitcoin is only 5 years into its in
cepton. It is bound to take tme to stabilize and establish its cre
dentals as an alternate form of currency. What is does is – it
allows for individuals and organizatons to do business without
the interference of the state. The sudden increase in the price of
bitcoin to $1000 in November, 2013 did raise lot of eyebrows
and makes the bitcoin overvalued.
Also initally , there used to be quite a phenomenal concentra
ton of bitcoins in hands of a few, but this scenario is rapidly
changing. Within 3 months in January, 0.5 million more coins
have moved down in to the general circulaton. This deconsolida
ton of ownership goes against Robert J. Shiller’s “Central Prob
lem Thesis” which said that bitcoin is nothing but a speculatve
bubble without any utlity.
We should think of it as an equivalent to Netscape browser. In
1998 the browser space was dominated by Netscape and now
anyone knows about it. Nevertheless , browsers are stll in use.
Likewise even if Bitcoin Bubble burns out, it will defnitely ce
ment the concept of crypto currency in the world. Don’t know
how Adam Smith would have reacted to this new concept? May
be another book would have sufced.
Bitcoin has become a fascinatng free market experiment and
could rival the traditonal currencies all around the globe. If that
happens, there will be more informed and constructve discus
sions on volatlity. But for now, the talks on volatlity are just a
cliché which is being overused in the realms of crypto-currency.
Bitcoin may be at the present a fash in the virtual pan but it
holds great signifcance symbolically. Castgatng it is very easy
but dealing with it and resolving the issues that is hard, and nec
InFINeet | Budget Issue | March 2014

In 2012, with a recorded populaton of 1.22 billion, more than
50% of India’s populaton was below the age of 25. Of this popu
laton about 30% is in the age bracket of 0-14 years, which is the
size of the segment that will be seeking higher educaton in the
next decade. India in the past decade has positoned itself in the
world as a knowledge-based economy, churning out bright and
educated professionals. Hence it is no wonder that the Educa
ton Sector has grown in leaps and bounds over the last decade.
However, there are gaping pitalls in the Indian Educaton sys
According to a report by Deloite, the Indian Higher Educaton
Sector can be broadly divided into 4 segments:-
Indian Higher Educaton Sector is the third largest in the world
in terms of enrollments afer China and US. Factors leading to
the growth of the sector are:-
 Growing Indian middle class
 Increasing Disposable Income
 Services Sector’s increasing contributon to the GDP re
quires educated manpower
 Reforms to the Educaton Bill is giving a push to the sec
 12
Five Year Plan targets an expenditure of INR 1107
billion on higher educaton
 100% FDI allowed through automatc route

ACCESS – In the past years there has been signifcant pro
gress in the primary educaton segment in India. How
ever, the number of students who remain in the educa
ton system tll higher educaton is alarmingly low. The
Gross Enrollment Rato (GER) in India is about 15%
which is far behind the fgures in developed natons.
Disparity is GER across states and communites are as

-By Abhinav Gupta & Debleena Banerjee
IIFT, Kolkata
InFINeet | Budget Issue | March 2014

 State Disparity — 47.9% in Delhi vs 9% in Assam
 Urban vs Rural Disparity — 30% in urban areas vs 11.1%
in rural areas
 Community Disparity —14.8% for OBCs, 11.6% for SCs,
7.7% for STs and 9.6% for Muslims
 Gender Disparity — 15.2% for females vs19% for males
With increasing output from the primary educaton, the demand
for higher educaton is on the rise. The supply for the same falls
short miserably and the government resource allocaton is in
sufcient to meet its own targets, thereby creatng a huge scope
for private partcipaton.
 QUALITY – Educaton is a holistc process and hence the
quality aspect of it encompasses everything from content
to infrastructure. This is one of the foremost challenges
faced by the sector as very few insttutes of higher edu
caton in India are at par with global excellence. Critcized
on grounds of outdated course curriculum, lack of tech
nology-enabled delivery of content, poor infrastructural
facilites, faculty shortages, lack of industry interacton,
low employability quotent and negligence towards re
search, the sector has a lot to improve on quality.
India presently has 11 million students in the higher educaton
system. This fgure is a mere 11% of the 17-23 year old popula
ton. The government’s target of 21% by 2017 is stll short of
world average. Indian society bestows a premium on knowledge
and its acquisiton. Consequently, spending on educaton is the
largest expense for an average middle class household afer
food and groceries. However, there is a glaring defcit in the
supply of quality educaton. Only 1 in 150 applicants gets into an
elite insttuton such as an IIM. On the other hand, it has been
reported that 450,000 Indian students spend about 13 billion
USD, annually, in acquiring educaton overseas.
The Government’s resource allocaton to bridge this gap is stll
inadequate despite raising the allocaton in the Eleventh fve
year plan (2007-2012) almost nine fold to $18.8 billion from
$2.1 billion in the Tenth fve year plan. This leaves ample scope
for partcipaton by private players. The government has also
allowed 100% FDI in this sector to promote foreign investments
in this sector. The major botleneck to foreign partcipaton so
far has been the “not-for-proft principle”. However, this is only
a hindrance in setng up educatonal insttutons in the regulat
ed sector where insttutons have to be registered with bodies
such as UGC, AICTE etc. as the case may be. The unregulated
sector is a very diferent story. Insttutons in this sector can be
registered as private/public companies that can legitmately
distribute dividends. This sector includes insttutes which pro
vide innovatve services to educatonal insttutes like schools,
colleges etc. These services may include language training, tuto-

Formal Educaton Technical &
Professional Educaton
Skill Development Vocatonal Training
Compositon Universites
Engineering colleges
Law, Medical, Pharmacy
Private Skill Develop
ment Centers
Finishing schools
English training
Air hostess
Key Regulators UGC
State Govt.
Bar Council of India
Medical Council of India
Unregulated for oth
No regulator
InFINeet | Budget Issue | March 2014


rials, content provision, corporate trainings etc. As long as these
insttutons do not award degrees, they can be incorporated as
companies. We have seen the emergence of players like Edu
comp solutons in this sector. Besides the unregulated sector,
there are also opportunites for foreign players in the regulated
sector as they may te-up with Indian universites, technical in
sttutes and colleges and provide course content or even a for
eign degree (with afliaton to a local university).

the rato of government schools to total number of schools in
the country as corporates are showing a growing interest in the
primary and secondary educaton sector. “Not for Proft”, quo
tas on student intake and complex regulatory frameworks is
internal weaknesses that the sector is grappling with. However,
the huge demand and potental present in the sector will surely
atract private capital, which shall take Indian Educaton at par
with its global counterparts.
The government is actvely considering partcipaton of the pri
vate & foreign sector via the PPP model. The various models
possible under this scheme are summarized here:
India has unsaturated demand for quality educaton and this is
not limited to the higher educaton sector. There is a decline in
Model à Basic Infrastructure Outsourcing Equity/Hybrid Reverse Outsourcing
Infrastructure In-
Private sector Private sector Private + Govern
Operatons and
Government - makes
annualized payment
to private investor
Private sector – re
ceived payments from
the government for
specifc services
Private sector Private sector
InFINeet | Budget Issue | March 2014


The Lok Sabha electons euphoria grips the Indian stock market
and seems to have spread to the mid-cap space. While the pack
was lagging the blue-chip Sensex since mid-February, hopes
that the BJP-led Natonal Democratc Alliance is likely to steer
the poll tally have pushed the mid-cap index to match the BSE
Sensex returns.

According to Deutsche Bank, mid-cap stocks tend to rally sharp
ly when economic growth is expected to be at an infecton
point.The brokerage says that while the jury is stll out on the
pace of economic recovery, the mid-cap rally is likely to extend
further, given that growth has botomed out, currency has sta
bilised and the twin defcits have shown a marked improve
Afer RBI extended the deadline for meetng the Basel III norms
by a year to March 31, 2019, shares of PSU banks rallied on the
According to experts, its harder for PSU banks trying to raise
capital to meet the Basel III norms. "The key issue with SOE
(PSU) banks over the next 2-3 years is likely to be lack of capital.
The startng point of ter 1 ratos is well below our view of
steady state ter 1 for SOE banks under Basel 3 (above 10%),"
Morgan Stanley said in a report.

State Bank of India (2.96%), United Bank of India (3.41%), Pun-
jab Natonal Bank (4.14%), Bank of Baroda (2.33%) were trad
ing higher on the BSE at 1.15 pm IST.
Risk of Switzerland being labelled a tax-non-cooperatng juris
dicton and of subjectng all payments from India to that coun
try to a 30% withholding tax . Worried over Switzerland's un
willingness to share tax informaton, fnance minister P Chidam
baram has threatened acton against the European naton un
der Indian law.

InFINeet | Budget Issue | March 2014

“In the event of contnued denial of access to vital informaton
under the Double Tax Avoidance Conventon, India may be con
strained to actvely consider the optons available under our
domestc laws,” Chidambaram said in the leter.
Visa Inc. was sued by Wal-Mart Stores Inc this week for $5 bil
lion, for charging excessively high card swipe fees, several
months afer the retailer opted out of a class acton setlement
between merchants and Visa and MasterCard Inc.

While Mult Screen Media, the host broadcaster for Indian
Premier League (IPL), could turn out to be the biggest loser if
IPL7 is scrapped since it was hoping to earn close to Rs 1,000
crore in advertsing revenues, the Board of Control for Cricket
in India (BCCI) stands to lose Rs 150 crore as do sponsors. The
fate of the tournament hangs in balance with the Supreme
Court proposing on Thursday that Chennai Super Kings (CSK)
and Rajasthan Royals(RR) be suspended; without Mahendra
Singh Dhoni, the tournament will lose much of its appeal
RE HIT 59.94/$
The rupee breached its crucial resistance level of 60 per dollar
for the frst tme in eight months on the back of strong dollar
infows on 28th March, 2013 .

The Indian unit touched an eighth-month high of 59.94 in trade.
However, the upside in the rupee may be capped due to month
-end demand from importers.
The Reserve Bank of India (RBI) is likely to keep interest rate
unchanged in the upcoming annual monetary policy on April 1
as the retail infaton is yet to show defnite signs of modera
In its third quarter review of monetary policy, the Reserve Bank
of India (RBI) in January raised the key repo rate by 0.25 per
cent to 8 per cent in a bid to curb infaton.
Although infaton has eased both in terms of consumer price
index and food, the RBI would look at other factors including
the exchange rate, HSBC country head Naina Lal Kidwai said.
InFINeet | Budget Issue | March 2014

 Bill Gates told his Harvard University professors that
he would be a millionaire by age 30. He became a bil
lionaire at age 31 .
 Three of the world's 50 largest economies don’t have a
dedicated exchange-traded fund (ETF) listed on a U.S.
exchange: Iran, Saudi Arabia and Pakistan.

 The average credit card holder has 3.5 credit cards, ac
cording to the Federal Reserve. Credit cards were not
always made of plastc. There have been credit tokens
made from metal coins, metal plates, and celluloid, met
al, fber, and paper cards.

 Bread,” the slang word for money, comes from an old
Cockney rhyme, “Give me your money. Give me your
bread and honey.”

 The frst Indian commercial bank which was wholly
owned and managed by Indians
-Central Bank of India

InFINeet | Budget Issue | March 2014

 At the end of 2011, three companies had total
debt loads of more than $500 billion: JPMorgan
Chase ($684 billion), Bank of America Corp. ($622
billion) and Citgroup ($560 billion).
 The frst Indian bank to have been started solely
with Indian capital-Punjab Natonal Bank
 Legendary investor Warren Bufet bought a 40-
acre farm at age 14 with $1,200 in savings from
delivering newspapers
 In 1984, MasterCard
was the frst to use a holo
gram on its cards to deter fraud
 If each currency note printed in the U.S. were laid
end to end, the bills would stretch around the
earth’s equator 24 tmes
 The frst bank to be managed entrely by women?
First Woman’s Bank of Tennessee, founded in
1919. Unfortunately, its founder, Brenda Vineyard
Runyon, was unable to secure a successor afer
her health began to fail and it was eventually ab
sorbed by First Trust and Savings Bank of Clarks
ville in 1926
 Manmohan Singh is the only Prime Minister of
India to have held the post of governor of RBI

InFINeet | Budget Issue | March 2014

Ankit Tiwari
Ashutosh Deshpande
Sanket Tandon
Sobhit Agarwal


Published by students of
Indian Insttute of For-
eign Trade
New Delhi | Kolkata

ANKIT TIWARI is a sofware engineer and comes with
a prior work experience in Infosys Limited . He in
tends to specialize in Finance & Marketng. He
wants to pursue his career in Banking industry. Addi
tonally, he is an avid reader, likes writng in his spare
tme , loves reading newspaper and also loves play
ing and watching Cricket .
ASHUTOSH DESHPANDE has completed his graduaton
in Computer Engineering from Mumbai University,
post which he has worked with Mahindra Holidays.
The author has inclinatons towards Finance and
Strategy. The author, an avid writer, has writen for
various blogs, football sites and magazines on topics
ranging from Politcs, Current Afairs to European
SANKET TANDON is a sofware engineer and has
prior work experience with Infosys Limited. He in
tends to specialize in Finance and wants to pursue
his career in the same domain. He is an ardent Man
chester United fan. Apart from following football he
likes to read and travel in his spare tme
SOBHIT AGARWAL has completed his in Elec
tronics and Communicaton engineering from NIT
Surat in year 2012. Before joining IIFT ,he worked as
Marketng Manager at Endeavor Careers Pvt. Ltd.
for 12 months. Moreover , he has a keen interest in
fnance and wants to pursue a career in the same
InFINeet | Budget Issue | March 2014

Contact Team InFINeeti: |
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