Demonization of Demonetisation

I usually only write about personal finance.

However I couldn't resist framing my thoughts about the demonization ..ooops...demonetization exercise.

Look at these statistics:

Top 10 corporates in India owe PSUs around 5 lakh crores. 

Out of this amount, Rs 70,000 is owed by the Adani Group itself.

According to this article Rs 3 lakh crore has been deposited and Rs 50,000 crore has been withdrawn since demonetization came into effect.

This means a net figure of Rs 2,50,000 crore has been deposited in the banking system.

Compare these numbers side by side:

Debt owed by RICH FAT CATS: Rs 5 lakh Crore.

Amount deposited by crores of common Indians: Rs 2.5 lakh Crore.

It forces me to twist Winston Churchill's words and say: Never was so much owed by so few to so many. 

Thankfully Churchill doesn't give a Fuck. Or rather he does:

Consider the elephant in the room - Political funding.

It is estimated that the BJP themselves won the elections by spending anywhere between 700 crores (a laughably small amount) to 5000 crores (only in media spend as cited by a veteran media planner) to Rs 10,000 crores (as claimed by erstwhile Union Minister for commerce - Anand Sharma). Both BJP and Congress have refused to share sources for close to 70% of funds collected by them. What if a substantial part of these cash donations are being derived from blood money? They say that charity begins at home. Why can't they begin by taxing the amount of money which is not being declared? 

The perceived losses being incurred due to so called black money can be taken care by a considerable extent by acting on these issues.

Rather our government's actions have resulted the following incidents:

However our country's population is so gargantuan that 55 deaths don't really pinch our conscience. A Congress leader based out of Jharkand wants the ones who died in his state to be termed as martyrs. It makes me wonder whether he doesn't feel empathy for rest of the Indians who, I dare say, were killed.

To those who are passionately advocating the government's decision, I have the following questions:

a) We all are aware that rich businessmen and politicians deal with most of the black money. How many of them have been arrested or discovered?

b) Counterfeiting has been occurring for several years. Don't you think it is just a matter of time before new notes are also counterfeited? If yes, did the government have to embark on this exercise in such a haphazard manner?

One also wonders whether Raghuram Rajan real reason behind leaving the governorship was this upcoming financial emergency. 

And oh yes, we all know who will benefit the most in the UP(coming) elections:

Meet the Rahul Dravid of Mutual Funds

Ever wondered why Rahul Dravid was adored by millions of fans and also spoken highly about by the sharpest critics of the game?

How did he manage to play defensively when the ball was new in Test cricket? And later shaped up into a formidable finisher for India’s ODI team during the mid 2000s.

How did he do wicket keeping in ODIs inspite of not being a regular wicket keeper? Yet managed to retire as one of the world’s best batsmen?

How did he manage to perform consistently across all countries and in all situations for Team India?

Well, that is because he knew the importance of maintaining a balance.

If Rahul Dravid was a portfolio, he would resemble this:

Look at this interesting statistic:


Number of SIP Accounts opened from 1986 - 2015: 75 lakhs

Number of SIP Accounts opened in 2015-16: 27.1 lakhs

Which means close to 30% of SIP accounts as of today were opened in just last one year.

This would also mean that the penetration of mutual funds in India is increasing.

Earlier only the financially savy would be investing in mutual funds. But now several first time investors are also getting in through SIPs.

But what about individuals who have a lumpsum to invest? It may be an amount received as bonus for a working individual or a retirement corpus received by a government servant who just retired.

Apart from Bank FDs do they have any other choice which can help them beat the threat of inflation and the spectre of tax?

Check this out:

Most first time investors invest during the Euphoria phase, lose money at the denial phase and decide never to invest again at the panic phase.

Even during the 2008 recession, it was observed that fund inflows from domestic retail investors had increased at the peak of the stock market.

Indian mutual fund industry has several options for the financially savy investor.

However would it make sense to expect a retired college principal from Pondicherry who is investing for the first time to sit tight through the ups and downs of the stock market?

Today quite a few of us are aware about SIPs. But what do we do when it comes to investing a lumpsum amount? Mostly invest it in a Fixed Deposit.

Why not try out the 'Rahul Dravid' of mutual funds - The ICICI Prudential Balanced Advantage Fund

How does it work:

It is an all-weather fund and does well in all sorts of market conditions – The fund invests in both equity and debt. It allocates fund according to market conditions.  Interestingly it follows the Price/Book value model. It essentially means that when the Nifty’s price becomes expensive as compared to its book value the funds are allocated to debt and when the Nifty’s P/BV ratio decreases the funds are allocated to equity. This combines growth and relative freedom from risk.

Whom is it for:

Anyone who wishes to invest a lumpsum and doesn’t want to invest the amount in either stocks or Fixed Deposits.

The advantages of this fund are:

• Offers a mix of growth higher than benchmarked index and protection from risk
• Volatility is low over a longer period of time
• It offers better returns than a Fixed Deposit – Interest rates offered on Fixed deposits across banks doesn’t exceed 9%. If you take TDS into account, the number drops. In comparison, the returns offered by ICICI Balanced Advantage Fund has been 16.4% over 5 years.
• There are tax benefits – This fund is treated as an equity fund when it comes to taxation. Hence there is no tax on long term capital gains (gains accrued if you stay invested beyond an year)
• Automatic Withdrawal Plan feature – For the first time in the mutual fund industry, the Automatic Withdrawal Plan was introduced by this fund. Under this feature, one can receive regular monthly cash flows to meet monthly expenses.

So did you earn your bonus? Or received your PF amount? Or secured gratuity? Or just inherited a windfall?

Invest kar!

(Mutual Fund investments are subject to market risks, read all scheme related documents carefully)