TIPS TO ACE THE PI PROCESS
The Personal Interview Process of the IIMs and other business schools checks whether the
candidate will fit into the B – School culture. The essential tip anyone can give you regarding the
interview process is to be true to yourself. Only then can you answer the questions as
confidently as possible. IIM Udaipur puts a 15% weightage on the candidate's Appearance. The
points for this criteria are given on the candidate's general attentiveness, responsiveness, and
confidence. In such a case, it becomes imperative that the candidate answer the questions
thoughtfully. Below are some of the critical questions that you must keep in mind:
“Tell me about yourself” - This is the question you can use to set the interview's tone. Try to
be as concise and straightforward as possible. It is an accepted norm that the answer to
this question is between 1 – 2 minutes. For preparing this question, list down all the
relevant points about yourself. You can include your educational background, work
experience, hobbies, etc. Once these points have been identified, try to think of ways these
have shaped you and prepared you for the MBA life. For example, it is not enough to say
that you love playing basketball. You must also tell how the sport has affected you or made
you a better person.
Have a hobby - If you mention a hobby, be thorough and know the latest happenings in that
particular field of interest. Saying something and not knowing about it creates a terrible
impression.
Strengths/Weaknesses - List down three strengths and three weaknesses of yours. It
should reflect how deeply you understand yourself and talk about what you are doing to
overcome your weaknesses while mentioning them to the interviewer.
Take the interviewer through your journey - Every interview is a journey through your life.
So try to tell your trip as if it were a story. Write down your answers and then practice
them several times with pauses and expressions.
Why MBA/Why this college - Link your MBA aspirations to something which happened in
your past or to something in the future (which you want to achieve). A personal touch to
this question must be there. Otherwise, it looks very generic, straightaway copied from the
internet. Also, do thorough research on the college before applying and identify its
uniqueness, then try to link it with some of your life experience while answering the “Why
this college” question.
For freshers - Ensure you are thorough with the important subjects you studied in your
graduation. A basic understanding of essential terms with their practical applications in
everyday life would be enough.
For work-ex people - Try to understand your designation/role's impact on the
organization's overall functioning. People tend to have a narrow view of their job in the
company, but a macro perspective is required. Also, mention the achievements you made
while being in that post.
Zoom Interviews - The pandemic has shifted the interview process over to zoom. This
becomes a bit of a hassle for all those people who aren’t in the habit of conversing over
video calls. Ensure that you are comfortable in the clothes that you are wearing. Find a
quiet room to attend to the process. Ensure good internet connectivity so that the process
is hassle-free. For most college interviews, the candidates are given time to log in to the
zoom meeting. Ensure that you are joining the discussion at the given time. There might be
the case that you are put in a waiting room. Please do not leave the computer and wait for
your turn to be let into the room.
Interview Etiquettes - Make sure your screen covers the upper chest area, wherein the
light is focusing on your face (coming from the opposite direction), and the rand e is a
simple background behind you with no visual distractions.
Filler words - Try to minimize the use of filler words such as ah, hmm, you know, such as….,
a person using these filler words/sounds doesn’t notice it when speaking. Every person has
their own filler words, so try to do a self-reflection and identify it. You can video record
yourself while preparing for answers and ask your friends/family members to ask
unprepared questions based on your introduction; this will give a good understanding of the
filler word being used.
Know when to stop - Speak only about what you know and try not to fake an answer. The
professors are knowledgeable enough to understand that you are affecting an answer. So
try to be honest. If you don’t know something, it is no harm to say that you don’t know it.
Guesstimate-type questions - You may often be asked a question that doesn’t have a
straight answer. For example, you might be asked how to increase the productivity of a
factory given certain constraints. Questions like these are just there to check whether you
can think on your feet. While there might be no correct answer to such questions, do try
your best to show the interviewer your thought process for approaching the questions.
Do you have any questions for us - This is crucial to show that you are genuinely interested
in the program. Read up about the college and form 2-3 questions regarding the college.
Smile: Many B – School interviews move towards the grilling side because the interviewers
want to see if you can handle the pressure. You must keep a calm composure and smile as
much as possible while answering the questions.
Operations Management
Operations management is the administration of business practices to create the highest
efficiency possible within an organization. It is concerned with converting materials and labor into
goods and services as efficiently as possible. Operations management professionals balance
costs with revenue to maximize net operating profit.
Supply Chain Management
Supply chain management can be described as managing the flow of products and services,
beginning from the products' origin and ending at the product's consumption. It also involves
transporting and storing raw materials in advancing research, production, and fully furnished
items.
Advantages
The critical advantages of Supply Chain Management are:
1. Develops improved customer relations and service by meeting customer demands.
2. Improves efficiency and organizational functions.
3. Minimizes storage and distribution costs.
4. Assists in getting goods shipped to the right place at the right time.
5. Improves inventory management and supports the successful implementation of just-in-time
stock models.
6. Assists businesses in waste minimization, cost reduction, and efficiency throughout the supply
chain process.
Supply Chain Strategies
1. Push Strategy:
Push strategy relies on modeling, customer demand forecasts, and pushing as many goods onto
the market as possible. The companies foresee the demand long before it arrives and plan
production and inventory to meet their needs. For example, winter clothing reaches retailers at
the end of summer so that as soon as winters arrive.
2. Pull Strategy:
Pull Policy is based on customer orders. It helps the company generate the number of required
items. In business, production and distribution depend on demand. An example of a pull strategy
is McDonald's, where they prepare burgers after receiving an order.
Scheduling
It involves making decisions regarding allocating available capacity or resources (equipment,
labor, and space) to jobs, activities, tasks, or customers over time.
Different types of scheduling strategy
Chase Strategy: Companies that use the chase strategy, or demand matching strategy,
produce only enough goods to meet the demand for goods or exactly match that demand.
Make-to-Stock: Instead of setting a production level and attempting to sell goods, a company
using make-to-stock would estimate how many orders its products could generate and
supply enough stock to meet those orders.
Make-to-Order: Companies using a make-to-order strategy produce goods after the
customer has placed an order. Most often, a company produces one-of-a-kind goods using
the make-to-order strategy.
Assemble-to-order: Assemble-to-order (ATO) is a strategy where customers order products
that are produced quickly and customizable to a certain extent.
Inventory Management
What is Inventory?
Inventory is an idle stock of physical goods that contain economic value and are held in various
forms by an organization in its custody, awaiting packing, processing, transformation, use, or sale
at a future time.
Types of Inventory by Function
Why do manufacturers/organizations hold inventory?
1. Meet variation in production demand
2. Cater to cyclical and seasonal demand
3. Economies of scale in procurement
4. They are taking advantage of a price increases and quantity discounts
5. Reduce transit cost and transit time, which will reduce the overall lead time.
Some more terminologies
Throughput Time/ Flow rate – Measures the number of flow units moving through the process in
the given unit of time.
In the above example, the maximum quantity of concrete can be produced is one cubic meter in a
single iteration.
The processing time for each activity is shown. So, the throughput time is the total time it takes
to manufacture one cubic meter of concrete.
Cycle Time – There are two types of cycle time- one which can be calculated for each process
involved in the production and the other which can be calculated for the entire concrete
production. Both the cycle time depend on the processing capacity (how many units can be
produced in an hour. In this case, the team will be one cubic meter).
The cycle time of each station is the average amount of time it will take to produce one cubic
meter of concrete as output. Assuming each station can carry out one process at a time, is the
processing time divided by the number of workstations? For example, mixing takes 120 secs per 1
cubic meter of concrete produced. But since there are two stations available, one cubic meter of
concrete can be made in 60 secs of cycle time.
Bottleneck – The bottleneck is the slowest cycle time (longest cycle time) in the process and
determines the rate at which the entire system can produce concrete.
In other words, the bottleneck determines the capacity for the whole manufacturing. The mixing
process is the bottleneck in the above example of concrete manufacturing.
Just-in-time
The just-in-time (JIT) inventory system is a management strategy that aligns raw-material orders
from suppliers directly with production schedules. Companies employ this inventory strategy to
increase efficiency and decrease waste by receiving goods only as needed for production,
reducing inventory costs. This method requires producers to forecast demand accurately.
For example - Some retailers now use the JIT method to streamline the delivery process. For
example, a company that markets office furniture but does not manufacture it may order the
table from the manufacturer only when a customer makes a purchase. The manufacturer
delivers it directly to the customer. The retailer has saved the cost of storing inventory.
Six Sigma
Six Sigma is a disciplined, statistical-based, data-driven approach and continuous improvement
methodology for eliminating defects in a product, process, or service.
The table below demonstrates the number of defects per million at different sigma levels.
Sigma represents the population standard deviation, a measure of the variation in a data set
collected about the process. Suppose a defect is defined by specification limits separating good
from bad outcomes of a circle. In that case, a six-sigma process has a process mean (average) of
six standard deviations from the nearest specification limit. This provides enough buffer between
the natural process variation and the specification limits.
Trending topics in Supply Chain
ONDC – How will E-commerce be affected and Logistics (Including Reverse Logistics)?
National Logistics Policy – What is it, its advantages, why is it being implemented, and will it be
successful?
How is Russia Ukraine War affecting the supply chain?
How are basic amenities being arranged in the war zone?
What is sustainable sourcing, and how is it affecting the overall supply chain for different
industries (E-Commerce, Automobile, etc.)?
There is a lot of dependency on imports (especially China) for the pharma and chemical
companies, so how can we reduce it?
General Awareness
1.Women's Empowerment And Gender Justice In India
As per a report by World Economic Forum, the world economy loses $12 trillion every year due
to gender inequality and the violence women face. The resources and energy spent on
preventing violence against could be utilized in making a more sustainable civilization if violence
against women did not exist.
https://www.smilefoundationindia.org/blog/women-empowerment-and-gender-justice-inindia/
2. Women in the Workplace 2022
Many women experience bias not only because of their gender but also because of their race,
sexual orientation, disability, or other aspects of their identity—and the compounded
discrimination can be much greater than the sum of its parts. As a result, these groups of
women often experience more microaggressions and face more barriers to advancement.
Notably, women of color are more ambitious despite getting less support: 41 percent of women
of color want to be top executives, compared with 27 percent of White women. Companies and
coworkers must be aware of these dynamics to promote equity and inclusion for all women
more effectively.
https://www.mckinsey.com/featured-insights/diversity-and-inclusion/women-in-theworkplace
3. Innovation vs. Invention: Make the Leap and Reap the Rewards
Was the iPhone a great invention? We can dissect the iPhone into individual stories and
evolutionary consolidations of other gadget functions and features. From a technical
perspective, there are no ground-breaking inventions in the first (or second, or third)
generation of iPhones. What about the iPad? It is merely a giant iPhone with a few updated
features. Touch screens, mobile communications for voice and data, “smartphone” applications
and user interfaces, the “home” button, and tablet computing devices all existed (as ideas and
as products) many years before the iPhone. As proof, all you have to do is watch some Star
Trek re-runs on TV or watch a Stanley Kubrick movie.
https://www.wired.com/insights/2015/01/innovation-vsinvention/#:~:text=People%20often%20use%20the%20words,of%20an%20idea%20or%20
method
4.Global Crises the world can't ignore in 2022
Hundreds of millions of children are caught in the epicenter of intersecting crises damaging
the health and hopes of a global generation of girls and boys. Decades of progress are going
into reverse, and insecurity, unrest, and uncertainty are rising nationwide.
https://www.wvi.org/fragile-context/5-crises-the-world-cant-ignore-in-2022
5. Rishi Sunak: World leaders welcome next UK prime minister
What the leadership is saying: "As you become UK PM, I look forward to working closely
together on global issues and implementing Roadmap 2030," Prime Minister Narendra Modi
tweeted, referring to a framework agreement struck between the two countries. "Special
Diwali wishes to the 'living bridge' of UK Indians as we transform our historic ties into a
modern partnership."
What the press is saying: Mr. Sunak's appointment has been big news in India, with Indian news
channels breaking into rolling coverage. "Indian son rises over the Empire, history comes full
circle in Britain," one channel put it.
The background: It is no surprise that there is a lot of interest in Mr. Sunak's rise in India. His
grandparents come from Punjab, while his father-in-law is Narayana Murthy, the founder of
Infosys and one of India's best-known businessmen. Sunak is also a Hindu who took his oath as
MP on the Hindu holy book, the Bhagavad Gita. India and the UK have been trying to strike a free
trade deal but talks reportedly stalled over fears among Sunak's party it could lead to more
immigration.
https://www.bbc.com/news/uk-63378673
6. Britain to send battle tanks to Ukraine, Dnipro death toll rises to 18
The death toll from Russia’s missile attack on the Ukrainian city of Dnipro has climbed to 18,
officials said on Sunday, while Britain said overnight it would soon send a squadron of its main
battle tanks to help Ukraine’s defense.
Seventy-three people were injured, 40 in hospital and four in intensive care. Valentyn
Reznichenko, governor of the Dnipropetrovsk region in central eastern Ukraine, wrote at 7:25
a.m. local time (0525 GMT) on the Telegram messaging app.
https://www.cnbc.com/2023/01/15/britain-to-send-battle-tanks-to-ukraine-dnipro-death-tollrises-to-18.html
7. Russia's war in Ukraine threatens students daily.
Teachers around the world developed remote-teaching skills during the COVID-19 pandemic.
Now that war had driven their classes apart again, Ukrainian teachers adapted those skills to
teach students across Europe and the world.
Some private online schools like Optima made their materials available free of charge. This step
allowed Ukrainian students to study at home if they could not otherwise access schooling
because of the war. It also provided a way for Ukrainian refugee children to retain access to
school materials in their native language. Still, new obstacles emerged.
https://www.dailypioneer.com/2023/world/russia-s-war-in-ukraine-threatens-studentsdaily.html
8. Iran executes British-Iranian accused of spying.
The execution of Alireza Akbari looks set to pile more pressure on Iran's long-strained ties with
the West, which have deteriorated further since nuclear talks hit a deadlock and as Tehran
cracked down on protesters.
https://www.reuters.com/world/middle-east/
9. HDFC Bank, India's biggest private lender, says net profit jumps 18.5%
Credit offtake in India has picked up recently due to sustained demand for loans, causing a
scramble for deposits among lenders. Loans at Indian banks rose 17.4% in the two weeks to
Dec. 16 from a year earlier, while deposits rose 9.36%, the latest data from the Reserve Bank
of India showed last month.
HDFC Bank's asset quality was stable from the previous three months, with its gross nonperforming assets (NPA) ratio unchanged at 1.23% and net NPA ratio unchanged at 0.33%.
https://www.reuters.com/business/finance/hdfc-bank-indias-biggest-private-lender-says-netprofit-jumps-185-2023-01-14/
10. Why aren’t women working in cybersecurity?
Big banks have little to fear from a recession in 2023. They’re in better shape than a decade
ago, with big buffers against delinquent debtors and numerous watchdogs keeping them
honest. Nonetheless, the coming year will see large U.S. lenders’ profits relentlessly gnawed by
rising expenses from many different directions. It’s less a bear attack and more an ant
invasion.
https://www.reuters.com/breakingviews/banks-profit-picnic-will-attract-ant-invasion-2023-01-12/
Moonlighting - What is it?
To analyze whether moonlighting is ethical, it is essential to understand its fundamental
concept. Moonlighting entails taking on an assignment or a second job outside one's primary
job, and it could be anything related or unrelated to the first job. The work-from-home culture,
combined with the launch of several job portals that offer part-time or project-based jobs,
such as FIVERR, UPWORK, TOPTAL, FLEXJOBS, JOOBLE, and SIMPLYHIRED, has made it simple for
people to moonlight. The next step in delving deeply into this concept is understanding why
people do it. Why do they moonlight? To maximize their talent, maximize their potential, pursue
their hobbies, and give their creativity a chance for passion, financial security, and to
supplement their income. There could be numerous reasons for this. There are writing jobs,
translating jobs, graphic design jobs, consulting jobs, animation jobs, social media marketing
jobs, and many more! A survey of 400 IT employees in India found that 65% knew someone was
moonlighting. According to experts, this could be because Indian tech workers are generally
underpaid. In 2015, approximately 7.5 million Americans (5% of the American workforce)
worked multiple jobs.
Some other topics
Women’s Empowerment and Gender Justice
Women in Workplace
Leader or Follower
Innovation vs. Invention: What’s Important?
Is work-life balance just a myth
Good things come from good thinking
There is no right way to do the wrong thing
Borderless world: Is it a myth or brooding reality?
Steps to revive the Indian economy
Do deadlines negatively impact creativity?
Work From Home – Advantages and Disadvantages
Is Artificial Intelligence replacing human requirements?
Difference Between Democracy and Dictatorship
Cryptocurrency
Digital India
Mental Health in India
Cashless Economy – A Success or Failure?
Lack of Work and Life Balance in the Present Times
PI Questions
Tell me something about yourself in brief.
Tell me about your background.
What are your strengths and weaknesses?
How did Covid-19 impact your life?
How did you utilize your time during a lockdown?
Advantages & Disadvantages of lockdown due to COVID-19?
There is a trend of people going for 2 MBAs. What is your view about it?
You have already changed jobs/jumped ship too many times; why so?
What is your greatest fear?
If I call up your current or previous reporting manager now, what will be their opinion
about you?
What was your worst argument? How did you resolve it?
Did you ever conflict with your current/previous boss or professor?
What did you do in the last year to improve your knowledge?
Explain the difference between group and team. Are you a team player?
Have you ever had to fire anyone? How did you feel about that?
What is the most challenging thing that you’ve ever accomplished?
What is the difference between hard work and innovative work?
Where do you see yourself three years from now? Where do you see yourself in 5 years?
On a scale of 1 to 10, how would you rate yourself as a leader?
What makes you angry?
Are you open to taking risks? Do you like experimenting?
What are your future goals? Tell me about your short-term and long-term goals.
What motivates you?
What are your hobbies? What are you passionate about?
What are your most significant achievements to date?
What has been your greatest failure?
What do you always regret? Do you have any regrets?
How do you respond to change?
Are you an organized person?
Can you describe your time management skills?
Are you reliable? Can you be trusted with responsibilities?
What are the three things that are most important for you in life?
What was the most challenging decision you ever had to make?
What would you do with the money if you won an Rs.10-crore lottery?
Give me an example of your creativity.
What makes you happy?
How do you work under pressure? Can you handle the pressure?
What do you know about us?
Why do you want to join us? Who will you pick between us and college X?
Why should we select you over your equally talented peers?
Do you have a good work ethic?
How do you deal with feedback and criticism?
Give an example of a situation when you had to respond to an unhappy manager/
customer/ colleague/ professor/ friend.
How quickly do you adapt to new technology?
Your interview ends when the interviewer asks you, “Do you have any questions for me?”
Topics - Analytics
Explain the digitization of the economy
Digitization of the economy refers to the increasing use of digital technologies in various
economic activities, including production, distribution, and consumption of goods and services.
The rise of the internet and mobile devices has greatly facilitated this process, allowing for
greater connectivity and access to information. The digitization of the economy has led to the
creation of new business models, such as e-commerce and online marketplaces, and has also
led to the growth of the gig economy, which includes on-demand and freelance workers.
One of the major benefits of digitization is that it has enabled businesses to reach a global
market and has also made it easier for consumers to access goods and services from
anywhere in the world. Additionally, the digitization of the economy has also led to increased
efficiency and automation in various industries, such as manufacturing and logistics, which has
led to cost savings and increased productivity.
However, digitization has also brought about new challenges, including concerns about data
privacy and security, and the potential for increased inequality as jobs are automated.
Additionally, there are also concerns about the impact of digitization on small businesses and
local economies, as well as the potential for monopolies to form in digital markets.
Overall, the digitization of the economy has brought about many benefits and has greatly
impacted the way we live and work today. It is important to continue to monitor its effects and
address any challenges that may arise. https://searchcio.techtarget.com/definition/digitaleconomy
Why are tech companies turning into Unicorns? Why do tech companies have a high
valuation compared to revenue?
Unicorn status is given to a firm based on a valuation of $1 billion or above. The valuation of a
start-up is a function of the number of funding rounds and the perceived potential of that firm
to generate revenues and bring in cash flows in the future.
A start-up can generate negative profits but gain a very high valuation. These firms are judged
based on the market impact post the customer acquisition phase, a different methodology
adopted for tech companies compared to traditional manufacturing firms.
The Work from Home (WFH) approach and a raging pandemic in 2020 fuelled the digitization of
various sectors of the Indian economy. Rising internet penetration and a thriving digital
payments system acted as a catalyst, and tech companies in India were perceived to be the
primary beneficiaries of this tectonic shift which immensely drove investor sentiments
towards the positive side resulting in high valuations. Fintech, eCommerce, SAAS, and
marketplace
players
are
the
dominant
players
in
this
category.
https://www.investindia.gov.in/indian-unicorn-landscape
Digital Transformation of Business: Choice or Mandate?
Digital transformation of businesses is a mandate and has long been described as another
industrial revolution in the making. Shifting to a digital or omnichannel setup before the
pandemic was a choice, but the lockdown and a rapidly changing society and government
protocols have made Indian businesses rethink their online strategies. In the midst of all this
change, organisations must not just create a web presence and roll out the software but
design the entire value proposition to deliver exceptional experiences to all stakeholders
involved. The automotive, hospitality, travel, and logistics have been the most vulnerable during
the pandemic-induced lockdowns and have been forced to adapt digitally accordingly.
Businesses can optimize operations and gain maximum out of their existing product mix with
digital channels.
https://www.thehindu.com/sci-tech/technology/internet/digital-transformationexperts-onhow-indian-companies-and-businesses-are-adapting-to-automation-andai-during-thecoronavirus-pandemic/article31982466.ece
AI/ ML/ Deep Learning: Similarities and Differences
AI (Artificial Intelligence) is a broad field that encompasses many different techniques and
approaches for creating intelligent systems. It can be divided into two categories: weak AI,
which is designed to perform a specific task and strong AI, which is designed to perform any
intellectual task that a human being can. The goal of AI is to create machines that can think,
learn, and adapt like humans.
ML (Machine Learning) is a subset of AI that involves using algorithms to train models on data,
so that they can make predictions or decisions without being explicitly programmed. Machine
learning is mainly used to improve the performance of a system by learning from the data. The
main goal of machine learning is to create models that can generalize well to new data.
Deep Learning is a specific technique within ML that involves training multi -layered neural
networks (often called "deep networks") on large sets of data. These neural networks are
inspired by the structure and function of the human brain and are particularly useful for tasks
such as image and speech recognition. Deep learning models are able to learn features from
the data on their own, without the need for manual feature engineering.
In summary, AI is a broad field that encompasses many different techniques, ML is a subset of
AI, focused on using algorithms to train models to make predictions or decisions, and Deep
Learning is a technique within ML, which uses multi-layered neural networks to learn features
from large sets of data.
Significance of Government Generated and Controlled Big Data
Here are four ways governments worldwide use data analytics to improve citizens’ lives:
1. Improving neighborhood healthcare services - As populations around the world age,
governments must think about making healthcare services more accessible. Governments
can start with demographic mapping to look at the population density of a neighborhood,
the number of people who have bought health insurance, and the number of residents
with a particular health condition, like diabetes. Officials can even do a route analysis to
see which hospital’s patients access and calculate the drive time to reach them.
2. Keeping crime rates low - If data can capture a serial killer, what else can it do for the
police? The officers at the Avon and Somerset Constabulary in the UK are using data
analytics to look out for the top 20 most risky offenders every day so they can deploy
early intervention measures if necessary. This has helped them make more accurate
arrests – police officers managed to make 40 accurate arrests between January and
February 2018.
3. Sustainability - Big issues call for big data solutions. C40 Cities, a global city network
dedicated to fighting climate change, is making the data it collects on water quality, air
quality, and vehicle emissions publicly available on the C40 Knowledge Hub. Policymakers,
public servants, and citizens alike can quickly determine their city’s impact on the
environment. The available data explorer dashboards, which are already available, show a
variety of interesting insights. For instance, users can determine which cities in Asia have
the worst air quality and which countries worldwide manage waste relatively well.
4. Identifying domestic violence early - Big data can also help identify cases where children
are at risk of domestic violence. Bristol, a city in the UK, combines datasets across
agencies to look out for muted cries for help through its Office of Data Analytics (ODA).
Software exports from India and challenges posed by automation.
Software exports include exporting software services, including services delivered by foreign
affiliates of Indian organizations. Computer services account for 65% of such exports. These
exports have formed a significant share of the Total Exports from India, and their
contributions have increased with time and reached $178 billion in the fiscal year 2021-22. The
United States continues to be a significant trading partner in the software space, with the US
dollar being the principal invoicing denomination for such transactions
.The challenges to the two- decade-old software exports segment come in the face of
automation and the cloud. Indian companies traditionally offered development and
maintenance services through periodic contracts delivered onshore and offshore. The jobs
related to these activities are being automated. The other significant change is the move to
cloud services. Earlier, organizations used to host their hardware packages. There has been
an accelerated move of hardware to servers through the internet. IT functions like data
warehousing to applications have moved to servers, neither owned nor operated by the
parent company. Significant cost savings through the rent instead of its own model have
accelerated this change. Indian IT firms can help automate routine and SOP-based activities
of their clients with automation platforms.
https://telecom.economictimes.indiatimes.com/news/exports-of-software-servicesup-2-1-to148-3-bn-in-2020-21-rbi-survey/86386267
https://opendocs.ids.ac.uk/opendocs/handle/20.500.12413/3031
Layoffs in Tech Companies
The last few months have seen mass layoffs in Tech firms across the globe and giants like
Apple, Meta, Amazon, Snap and Meta have laid off thousands of employees. The two prominent
reasons that most companies who have given a public statement following the announcement
of mass layoffs are that they hired many employees during the pandemic when people spent
most of their time online, as opposed to now when the boom is starting to fade as they get
back to their daily lives.
Several reports have attributed the “boom” that the big tech witnessed during the pandemic
to the lockdowns which had forced people indoors, essentially bringing their daily lives to a
grinding halt. Amid the pandemic-induced lockdowns, people spent more time on online
shopping, social media, and streaming content, which led to an overall increase in demand.
However, as the lockdowns were lifted across the world and people went back outside, the
demand was reportedly slower in comparison.
Secondly, soaring inflation in the US has led digital advertisers to cut back on spending on ads
which nearly all tech companies rely on for revenue. These two reasons have caused a
downturn in the companies which has forced them to resort to the mass layoffs.
PERSONAL INTERVIEW QUESTIONS
Explain the following:
Blockchain
A blockchain is a distributed database shared among the nodes of a computer network. As a
database, a blockchain stores information electronically in digital format. Blockchains are
best known for their crucial role in cryptocurrency systems, such as Bitcoin, for maintaining
a secure and decentralized record of transactions. The innovation with a blockchain
guarantees the fidelity and security of a record of data and generates trust without the need
for a trusted third party.
https://www.youtube.com/watch?v=SSo_EIwHSd4
https://www.youtube.com/watch?v=rYQgy8QDEBI&ab_channel=Mrwhosetheboss
Blockchain, explained | MIT Sloan
https://mitsloan.mit.edu/ideas-made-to-matter/blockchain-explained
Cloud
Cloud computing delivers computing services—including servers, storage, databases,
networking, software, analytics, and intelligence—over the Internet (“the cloud”) to offer
faster innovation, flexible resources, and economies of scale. You typically pay only for cloud
services you use, helping lower your operating costs, run your infrastructure more
efficiently and scale as your business needs change.
Types of cloud computing services:
Infrastructure as a Service (IaaS) - It is the most basic category of cloud computing
services. With IaaS, you rent IT infrastructure, servers and virtual machines (VMs),
storage, networks, operating systems from a cloud provider on a pay-as-you-go basis.
Platform as a Service (PaaS) - Platform refers to cloud computing services that
supply an on-demand environment for developing, testing, delivering, and managing
software applications. PaaS is designed to make it easier for developers to quickly create
web or mobile apps without worrying about setting up or managing the underlying
infrastructure of servers, storage, network, and databases needed for development.
Software as a service (SaaS) - Software as a service is a method for delivering
software applications over the Internet, on-demand, typically on a subscription
basis. With SaaS, cloud providers host and manage the software application and underlying
infrastructure and handle any maintenance, like software upgrades and security patching.
Users connect to the application over the Internet, usually with a web browser on their
phone, tablet, or PC.
Adding to this, there are three cloud services deployment options:
Public Cloud – The most common type of cloud computing deployment, wherein the
cloud resources are handled and delivered to the users/organizations via the internet, by
a third-party provider. All the hardware and software capabilities are provided to the end
users by the third-party.
o Advantages – Cost effectiveness, No separate maintenance charges, high reliability
Private Cloud – The cloud instance that is used specifically by an organization, that can
be hosted on a third-party service provider, but the services can be accessed via the
private network and the hardware and software services are exclusive to the
organization. This type of cloud deployment is undertaken by Governments, financial
establishments etc.
Hybrid Cloud - A hybrid cloud platform offers organizations many benefits such as
increased flexibility, various deployment options, enhanced security and compliance, and
the ability to maximize the value of their existing infrastructure. With hybrid cloud
computing, businesses can easily adjust their on-premises infrastructure to the public
cloud during times of fluctuating demand without having to share all their data with
third-party data centers. This allows for the combination of public cloud innovation and
the ability to keep sensitive data on their own datacenter for meeting client needs or
regulatory requirements. Additionally, this approach eliminates the need for large capital
expenditures for short-term demand spikes or freeing up local resources for more
critical data or applications, as companies only pay for the resources they temporarily
use, instead of investing in extra resources and equipment that may go unused for long
periods of time. https://www.youtube.com/watch?v=M988_fsOSWo
Digital Marketing
At a high level, digital marketing refers to advertising delivered through digital channels such
as search engines, websites, social media, email, and mobile apps. Using these online media
channels, digital marketing is how companies endorse goods, services, and brands.
Consumers heavily rely on digital means to research products. While modern-day digital
marketing is an enormous system of channels to which marketers simply must onboard their
brands, advertising online is much more complex than the channels alone. To achieve the true
potential of digital marketing, marketers have to dig deep into today’s vast and intricate cross channel world to discover strategies that make an impact through engagement marketing.
Engagement marketing is the method of forming meaningful interactions with potential and
returning customers based on the data you collect over time. Engaging customers in a digital
landscape builds brand awareness, sets yourself as an industry thought leader, and places
your business at the forefront when the customer is ready to buy. The various channels
available with the marketers of the modern workplace are Search which includes SEO (Search
Engine Optimization, an organic way to grow the brand) , SEM (Search Engine Marketing, an
inorganic method to bump the results of the brand in the search results), social media,
YouTube, Email marketing, mobile marketing, which provides for on-device and off the device,
SMS, blog posts, content marketing, and Inbound.
https://www.youtube.com/watch?v=bixR-KIJKYM
Cryptocurrency
Cryptocurrencies are digital or virtual currencies underpinned by cryptographic systems.
They enable secure online payments without the use of third-party intermediaries. "Crypto"
refers to the various encryption algorithms and cryptographic techniques that safeguard
these entries, such as elliptical curve encryption, public private key pairs and hashing
functions.
Cryptocurrencies can be mined or purchased from crypto exchanges. Not all e-commerce
sites allow purchases using cryptocurrencies. In fact, cryptocurrencies, even popular ones like
Bitcoin, are hardly used for retail transactions. However, the skyrocketing value of
cryptocurrencies has made them popular as trading instruments. To a limited extent, they are
also used for cross-border transfers.
Predictive Modelling
Predictive modelling is a statistical technique to predict future behavior or missing values.
Predictive modelling solutions are a form of data-mining technology that works by analyzing
historical and currently available data, generating a model to help predict the future outcome,
and applying the available values of the missing dataset to predict the target variable.
In predictive modeling, data is collected, a statistical model is formulated, predictions are
made, and the model is validated (or revised) as additional data becomes available. Predictive
models analyze past performance to assess how likely a customer is to exhibit a specific
behavior in the future. This category also encompasses models that seek out subtle data
patterns to answer questions about customer performance, such as fraud detection and
default behavior models used by Banks. Predictive models often perform calculations during
live transactions - for example, to evaluate the risk or opportunity of a given customer or
transaction to guide a decision. https://en.wikipedia.org/wiki/Predictive_modelling
Dashboard
The dashboard is a user interface to provide a user-friendly at-a-glance overview of Key
Performance Indicators (KPI), Leading and Lagging Indicators, and organizational metrics.
Dashboards help predict or display the current trend of KPIs, thus helping organizations take
future corrective actions. Dashboards may be manual data entry driven, i.e., updated upon
feeding data manually to the system. Automated dashboards provide real-time trends by
pulling data from another system without manually entering data. The most commonly used
dashboard tools are Power BI and Tableau. https://www.smartsheet.com/how-createdashboard-excel
Datafication
Datafication is the process of converting information into data. It is the process of taking
information that is not in the form of data and turning it into data. This is done by collecting
data from various sources, transforming it into a digital format, analyzing it, and then making
decisions based on the results. Datafication is an important concept in big data, as it allows for
the analysis and interpretation of large amounts of data. It is also used to help businesses
better understand their customers and make more informed decisions. Datafication can also
be used to create better products and services, improve customer experiences, and discover
new insights.
Process automation
Process automation uses technology to automate complex business processes. It has three
functions: automating processes, centralizing information, and reducing the requirement for
input from people. It is designed to remove bottlenecks and reduce errors and loss of data
while increasing transparency, communication across departments, and processing speed. The
automated car wash is the perfect example of automating a series of human-input-driven
processes and using software, sensors, and an integrated payment process to eliminate
human inputs. This increases the efficiency of the entire process by removing bottlenecks.
https://kissflow.com/workflow/bpm/business-process-automation/reasons-whyyouautomate- your-business-process/
Data Centers
A data center is a physical facility where organizations house critical applications and data. A
data center design is based on a network of computing and storage resources that enable the
delivery of shared applications and data. The critical components of a data center design
includes routers, switches, firewalls, storage systems, servers, and application delivery
controllers. Data centers were highly controlled physical infrastructures in the past, but the
public cloud has since changed that model. Modern data center infrastructure has evolved
from on-premises physical servers to virtualized infrastructure supporting applications and
workloads across multi-cloud environments.
One of the characteristics of data centers is the optimum temperature required for cooling,
especially in countries like India, which has a high ambient temperature. Modern data centers
are increasingly being constructed in cooler regions, while a few have also come up
submerged in water to benefit from the cooling characteristics of the ocean.
https://www.checkpoint.com/cyber-hub/cyber-security/what-is-data-center/
What are Data Centers? - India | IBM
What is Data Analytics? What are its different types and applications?
Data analytics is a broad term that encompasses many diverse types of data analysis.
Any information can be subjected to data analytics techniques to get insight that can improve
things. Data analytics techniques can reveal trends and metrics that would otherwise be lost
in the mass of information. This information can then be used to optimize processes to
increase the overall efficiency of a business or system.
For example, Manufacturing companies often record the runtime, downtime, and work queue
for various machines and then analyze the data to better plan the workloads so the machines
operate closer to peak capacity.
Data analytics can do much more than point out bottlenecks in production. Gaming companies
use data analytics to set reward schedules for players that keep most players active in the
game. Content companies use many data analytics to keep you clicking, watching, or reorganizing content to get another view or another click.
Types of Data Analytics
Data analytics is broken down into four basic types.
1.Descriptive analytics: This describes what has happened over a given period. Have the
number of views gone up? Are sales stronger this month than last?
2. Diagnostic analytics: This focuses more on why something happened. This involves more
diverse data inputs and a bit of hypothesizing. Did the weather affect beer sales? Did that
latest marketing campaign impact sales?
3. Predictive analytics: This moves to what will likely happen in the near term. What happened
to sales the last time we had a hot summer? How many weather models predict a hot summer
this year?
4. Prescriptive analytics: This suggests a course of action. If the likelihood of a hot summer
is measured as an average of these five weather models is above 58%, we should add an
evening shift to the brewery and rent an additional tank to increase output.
Data Analysis Steps
The process involved in data analysis involves several different steps:
1. The first step is to determine the data requirements or grouped data. Data may be
separated by age, demographic, income, or gender. Data values may be numerical or be
divided by category.
2. The second step in data analytics is the process of collecting it. This can be done through
various sources such as computers, online sources, cameras, environmental sources, or
personnel.
3. Once the data is collected, it must be organized to be analyzed. This may occur on a
spreadsheet or other software that can take statistical information.
4. The data is then cleaned up before analysis. This means it is scrubbed and checked to
ensure no duplication or error and that it is not incomplete. This step helps correct any
errors before it goes on to a data analyst to be analyzed.
2022 tech trends
Applied AI
AI is one of the biggest tech trends. We are still only in the early days of the development of AI.
As the technology becomes more sophisticated, it will be applied to develop further tech based tools, such as training machines to recognize patterns, then act upon what it has
detected. By 2024, AI-generated speech will be behind more than 50% of people’s interactions
with computers. Companies are still searching for ways to use AI effectively.
Extended Reality
Given the massive push towards AR and VR by tech organizations like Meta and Alphabet, we
can, soon, see a case where we move away from traditionally heavy and cumbersome VR/AR
headsets and move to a headset that would be like the glasses we see on a daily basis.
Techstack
The expanded physical tech stack has the potential to change how companies create and
deliver value dramatically. Their business models may evolve because of the capabilities to
drive revenue from industrial insights and human- machine interactions. For example, a
company might sell monitoring and maintenance of devices as a service as an add-on to device
deployment, develop a shared asset model in which customers sell extra capacity back into
the market; leverage sensors to develop a program for automatic reordering of consumables
such as printer cartridges; expand from a reseller model to direct-to-consumer model; or
monetize their device data, to name only a few.
5G/6G
Every generation of wireless connectivity is faster than its predecessor in terms of speed. 5G
is an upgrade and is currently being tested in selective cities across the planet. Critical
requirements for accessing 5G connectivity are 5G devices with 5G radios and 5G network
(5G E excluding). 5G is built on millimeter waves in the range of 20 Gig Hz
to 90 Giga Hz. As with any wave, higher frequency leads to a reduced range. 5G may work on
direct line-of-sight and physical impediments like trees and walls will block 5G waves from
reaching the device. A carrier provides the 5G network through a 5G node. Key
characteristics are high speeds- of the order of 1000 MBps, low latency- high reaction times
and dense connections- connecting with up to ten times the number of devices as 4G. 6G has
been scheduled for 2025-2030, and organizations are already working on the technology. The
recently launched 6G has theoretical speeds up to 11 Gbps.
Quantum Computing
As the data we generate on a daily basis is growing exponentially, the classical computer, that
works using ‘0’ or ‘1’ bits to represent data and process information based on the commands
given, may not have the necessary hardware requirements to store and process the data.
There would be a need for more transistors to process the data. Therefore, quantum
computing, which takes from the philosophy of quantum physics where a particle can exist in
more than one state at a time, is predicted to solve the complexity involved in storing and
handling big data, while being efficient in comparison to traditional computing. With this,
however, two things are key to note. Firstly, quantum computers are not going to be a
replacement to traditional computers, but it would be a different tool to handle a different
set of problems altogether, that are beyond the realm of a classical computer. Secondly,
given the complexity involved in quantum computing, it may be a while before we see large
scale implementation of the same.
What is Quantum Computing? | IBM
Telematics
Telematics is the continuous capturing of data of the various processes of an equipment or
machine and uploading the same in the cloud. The process of data capturing is real-time and
only limited by the network connectivity of the location of the equipment. The equipment
control unit (ECU) generating and logging the data is connected to the Telematics unit, whose
primary responsibility is to upload the captured data into the registered cloud. Data from the
cloud can be analyzed, real-time or later, to provide feedback on the working condition. It has
significantly helped predict breakdowns of mining equipment and detect fuel consumption.
Content Creation
AI content creation refers to the use of artificial intelligence algorithms and techniques to
generate written or spoken content, such as text, images, or videos. This can include
tasks such as summarizing articles, generating news stories, composing music, or creating
visual art. AI content creation can be used for a variety of purposes, such as content
generation for websites, social media, or advertising, or as a tool for artists and writers. The
best example for this is ChatGPT, which was used to write this piece of article.
Edge Computing
Edge computing is a distributed computing paradigm that brings computation and data
storage closer to the location where it is needed, to improve response times and save
bandwidth. It involves placing resources such as computers, servers, or storage devices at
or near the edge of a network, such as within an individual home or office, close to the users
or devices that will use them. It can also refer to the delivery of services to the edge of the
network, such as cloud computing services. What Is Edge Computing | IBM
Web3.0
Web3 refers to a future model for the internet that decentralizes authority and redistributes
it to users, giving them increased control over how their personal data are monetized and
stronger ownership of digital assets. In addition, it provides a range of commercial
opportunities: new business models governed by decentralized autonomous organizations
(DAOs) and enabled by eliminating intermediaries through secure (smart contract)
automation, and new services involving digital programmable assets. Although Web3 has
drawn significant general interest, it has gained only limited traction with incumbent
companies due to a variety of factors. Accordingly, Web3 has attracted large pools of capital
and engineering talent, but viable business models are still being tested and scaled. Early
adopters face several challenges, including unclear and evolving regulation and immature
and emerging technology platforms, often with a poorer user experience than existing Web2
utilities.
Potential of Web3 | McKinsey
Trust architectures and digital identity
Digital-trust technologies enable organizations to manage technology and data risks,
accelerate innovation, and protect assets. What’s more, building trust into data and
technology governance can enhance organizational performance and improve customer
relationships. The underlying technologies include zero-trust architectures (ZTAs), digitalidentity systems, and privacy engineering. Other technologies help build trust by ensuring
that AI models are secure, free from bias, and explainable. However, the
adoption of digital-trust technologies has been hindered by a range of factors, including
integration challenges, organizational silos, and a lack of talent. Building a comprehensive
trust-first risk mindset and capabilities requires top-down leadership and deliberate changes
to multiple spheres of activity, from strategy and technology to user adoption.
Digital trust: Why it matters for businesses | McKinsey
Potential interview questions
Q1. What are the key features of the Digital Personal Data Protection Bill (2022)?
Q2. What do you understand about Responsible AI and Explainable AI?
Q3. What are the pros and cons of the rising use of AI?
Q4. Can you recall any recent incident of cyber attack on any government institution?
Q5. What is the scope for the analytics industry in India?
Hint: Analytics India Industry Study 2022 (analyticsindiamag.com)
Q6. What are the various types of machine learning algorithms?
Q7. What is Hypothesis Testing? What is Type-I and Type-II error?
Q8. What is the normal distribution? Give an example.
Q9. What are the most popular tools for building machine learning models?
Q10. What are the various tools available for visualizing data?
Q11. What is the lifecycle of a machine learning model? (Hint: Problem Definition to
Deployment)
Q12. What is big data?
Q13. What are tools available for processing big data?
Q14. What are the different types of datasets? (Hint: structured, unstructured)
Digital Personal Data Protection Bill
The new draft of the bill was introduced three months after the withdrawal of the Personal
Data Protection Bill, 2019. The Bill seeks to address critical problems in the previous bill, which
was too “compliance-intensive” and required localized data storage.
Key Features
Data Principal and Data Fiduciary – As per the provisions, the Data Principal is the individual
whose data is being collected. At the same time, the Data Fiduciary is the entity (individual,
company, firm, state, etc.) that decides the “purpose and means of the processing of an
individual’s data.” Significant Data Fiduciaries deal with a high volume of personal data. The
Central government will define who is designated under this category based on several
factors. Such entities must appoint a ‘Data protection officer’ and an independent Data
Auditor.
Rights of Individuals – Individuals should be able to access the essential information in the
languages specified in the Eighth Schedule. They would have to consent before their data is
processed, and they have the right to withdraw such consent. The individuals also have the
right to erase and correct the data collected.
Data Protection Board – The Bill proposes to set up a Data Protection Board to ensure
compliance with the provisions of the Bill.
Cross Border Data Transfer - The Bill allows for cross-border storage and transfer of data
to “certain notified countries and territories” provided they have a suitable data security
landscape, and the Government can access data of Indians from there.
Financial Penalties – The bill proposes financial penalties on businesses that undergo data
breaches or fail to notify users about them. It also has provisions for imposing penalties on
users who submit false documents while signing up for an online service.
Exemptions – The Central Government can declare certain businesses exempt from the
provisions, like start-ups with insufficient infrastructure. The Central Government has also
exempted security agencies from the requirements of this Bill.
Carbon Credits Trading
The Parliament passed the Energy Conservation (Amendment) Bill in December. It empowered
the Government to establish carbon markets in India to create a carbon credits trading
scheme. Under the Bill, the central government or an authorized agency will issue carbon
credit certificates to companies or even individuals registered and compliant with the plan.
These carbon credit certificates will be tradeable. Other persons would be able to buy carbon
credit certificates voluntarily.
Background
This policy is in line with the GoI’s goal of ensuring that India achieves net carbon zero by 2070
as per its nationally determined contribution under the provisions of the 2015 Paris
Agreement. This comes after similar schemes have been implemented by the USA, the UK, and
the EU to incentivize companies to achieve net zero.
What are Carbon Markets?
Carbon markets are essentially a tool for putting a price on carbon emissions— they establish
trading systems where carbon credits or allowances can be bought and sold. A carbon credit
is a tradable permit that, per United Nations standards, equals one tonne of carbon dioxide
removed, reduced, or sequestered from the atmosphere. There are two types of markets voluntary and compliance.
Challenges
Governments’ primary challenge is the need for a reliable method to generate carbon credits.
This would also result in greenwashing, where companies simply buy carbon credits instead of
making any effort to reduce carbon emissions.
The Bill also needs to clarify if there is a cap-and-trade or voluntary trading scheme and who
would regulate the market. Since there are two similar schemes already in operation – the
Renewable Energy Certificate and Energy Savings Certificates, it is feared that it could dilute
the impact of the present scheme.
India net zero emission bill 2022
The Net Zero Emissions Bill 2022 was introduced in Rajya Sabha on December 09, 2022. The
bill to provide a framework for achieving net zero emissions by the year 2070 as per India's
nationally determined contributions under the United Nations Framework Convention on
Climate Change and to provide relief for vulnerable persons and communities from extreme
climate events in the form of maintaining a vulnerable population registry at the State and the
district levels and for matters connected in addition to that or incidental to it.
Importance: Once passed in both the parliament & signed by the president, it would become a
law and then would be enforceable. This would ensure strict implementation of measures to
reduce emissions following India’s national commitment and target of net zero by 2070.
Obstacle: An estimated funding of approximately $10 Trillion would be required to achieve this
during the time, which is a vast, and government and other private players have to play an
essential role in this
Global Minimum Tax
EU Members and 136 countries have agreed to implement a global minimum tax (GMT) rate of
15% on MNCs with annual revenue of 750 Million or more.
Objective: The framework of GMT aims to dissuade nations from tax competition through
lower tax rates that result in corporate profit shifting and tax base erosion.
What is it?
This will help governments across the globe to shore up their revenue and fund their rising
spending budgets as a “race to the bottom” ends with a global minimum tax ceiling of 15%.
Income from intangible sources such as drug patents, software, and royalties on intellectual
properties has migrated to tax havens, allowing companies to avoid paying in their home
countries. This will further help developing economies like; India attract more foreign
investment due to other advantages of cheap labor, more significant markets, etc.
A minimum tax proposal is particularly relevant at a time when the fiscal state of
governments across the world has deteriorated, as seen in the worsening of public debt
metrics.
Govt. to Allow foreign University to set up their campus in India
What are the Draft Norms Announced by the UGC?
Set criteria: A foreign university with a rank among the top 500 global rankings or a foreign
educational institution of repute in its home jurisdiction can apply to the UGC to set up a
campus in India.
Application Process: The application will be considered by a standing committee appointed by
the UGC, which will submit its recommendations within 45 days after examining the
institution’s credibility, programs offered, and potential. Subsequently, within 45 days, the
UGC may grant in-principle approval to the foreign institution to set up campuses in India
within two years. The initial authorization will be for ten years, which can be extended.
Mode of Teaching: It will also have the autonomy to recruit faculty and staff from India and
abroad. The courses offered cannot be online and open and in distance learning mode. The
qualifications awarded to the students in the Indian campus should have equivalence with
those awarded by the institutions in their country of origin. Such universities and colleges
cannot offer any such program of study which jeopardizes the national interest of India or
the standards of higher education in India.
Fund Management: Foreign universities can repatriate funds to parent campuses. Crossborder movement of funds and maintenance of Foreign Currency Accounts, mode of
payments, remittance, repatriation, and sale of proceeds, if any, will be as per the Foreign
Exchange Management Act (FEMA) 1999 and its Rules. It will also have the autonomy to decide
its fee structure and face no caps imposed on Indian institutions. The fee should be
“reasonable and transparent.”
What is the Significance of the Move?
According to the Ministry of External Affairs data, nearly 13 lakh students will study abroad in
2022. As per the RBI, Rs 5 billion was lost in foreign exchange due to students going
overseas in FY 2021-2022. Allowing foreign universities to set up campuses in India will also
ensure that all our students — there are around 40 million pursuing higher education — have
access to quality global education. The idea of setting up foreign university campuses in India
is also mentioned in the National Education Policy (NEP) 2020. The NEP says that the top 100
universities in the world will be facilitated to operate in India through a legislative framework.
In a way, the draft regulations only seek to institutionalize the NEP’s vision. This move will
pave the way for India to become a global destination for education. It will not only help
prevent brain drain and loss of forex due to Indian students studying overseas but also help
to attract overseas students to India. It will encourage competition among various country
players and allow faculty-to-faculty research collaboration among multiple universities. After
Chinese students, Indians are the largest category of international students in countries like
the U.S., the U.K., and Australia.
What are the Concerns?
It is believed that social justice concerns have been ignored, which is very important in our
context where higher education is a very effective means for social change. Draft regulations
have no provisions for caste-based/economic-based/minority-based/armed forcesbased/Divyang-based/Kashmiri migrants/representation-based/women reservation in
student admissions. Section of educational practitioners has expressed reservations about
allowing international universities to operate in India as it would raise the cost of education,
rendering it out of reach for a large part of the population. Repatriation of funds to the
parent institution abroad, which was prohibited previously, has also been allowed. There’s
also no requirement for foreign education providers to maintain a corpus fund to operate in
India.
Mode of Teaching: It will also have the autonomy to recruit faculty and staff from India and
abroad. The courses offered cannot be online and open and in distance learning mode. The
qualifications awarded to the students in the Indian campus should have equivalence with
those awarded by the institutions in their country of origin. Such universities and colleges
cannot offer any such program of study which jeopardizes the national interest of India or
the standards of higher education in India.
Fund Management: Foreign universities can repatriate funds to parent campuses. Crossborder movement of funds and maintenance of Foreign Currency Accounts, mode of
payments, remittance, repatriation, and sale of proceeds, if any, will be as per the Foreign
Exchange Management Act (FEMA) 1999 and its Rules. It will also have the autonomy to decide
its fee structure and face no caps imposed on Indian institutions. The fee should be
“reasonable and transparent.”
What is the Significance of the Move?
According to the Ministry of External Affairs data, nearly 13 lakh students will study abroad in
2022. As per the RBI, Rs 5 billion was lost in foreign exchange due to students going
overseas in FY 2021-2022. Allowing foreign universities to set up campuses in India will also
ensure that all our students — there are around 40 million pursuing higher education — have
access to quality global education. The idea of setting up foreign university campuses in India
is also mentioned in the National Education Policy (NEP) 2020. The NEP says that the top 100
universities in the world will be facilitated to operate in India through a legislative framework.
In a way, the draft regulations only seek to institutionalize the NEP’s vision. This move will
pave the way for India to become a global destination for education. It will not only help
prevent brain drain and loss of forex due to Indian students studying overseas but also help
to attract overseas students to India. It will encourage competition among various country
players and allow faculty-to-faculty research collaboration among multiple universities. After
Chinese students, Indians are the largest category of international students in countries like
the U.S., the U.K., and Australia.
What are the Concerns?
It is believed that social justice concerns have been ignored, which is very important in our
context where higher education is a very effective means for social change. Draft regulations
have no provisions for caste-based/economic-based/minority-based/armed forcesbased/Divyang-based/Kashmiri migrants/representation-based/women reservation in
student admissions. Section of educational practitioners has expressed reservations about
allowing international universities to operate in India as it would raise the cost of education,
rendering it out of reach for a large part of the population. Repatriation of funds to the
parent institution abroad, which was prohibited previously, has also been allowed. There’s
also no requirement for foreign education providers to maintain a corpus fund to operate in
India.
Way Forward: If the Indian higher education sector truly opens up, it will be one step forward
in India’s aspiration to become a knowledge society again, if not a Vishwa-guru.Not
protectionism and shuttering our intellectual borders, but competition and collaboration with
the best will help usher in an authentic Indian renaissance.
Brazilian Unrest
2022 Elections
Elections were held in Brazil on 2nd October 2022 to elect the president, vice-president,
National congress, governors, and legislative assemblies of various states. Incumbent farright president Jair Bolsonaro was seeking a second term. Former president Luiz Inacio Lula
de Silva of the left-wing Workers’ Party was his main competitor. No presidential candidate
won more than half of the valid votes in the first round of voting; hence a second round was
held on 30 October. Luiz Inacio Lula de Silva received the majority in the 2nd round and
became president-elect of Brazil.
Supporters of outgoing president Jair Bolsonaro started blockades around the country on
October 30 after the election results were announced. Truckers were also involved in the
protests and blocked significant highways across Brazil. The roads were cleared by 9
November, but by 18th November, the blockades returned. Attacks against police were also
reported during the protests. During a rally in Santa Catarina, the protestors made gestures
similar to the Nazi salute. A bombing was also attempted near the Brasilia International
Airport.
Storming of Brazilian Congress
Bolsonaro supporters claimed that the elections suffered widespread fraud. The military
helped oversee the elections and found no copy. The protesters have thus gathered in the
areas around many military installations. The protesters gathered in front of the Army
headquarters and demanded that the military perform a coup. Things turned for the worst
when the new administration was sworn in. On 8th January, the protesters, armed with
sticks, marched from the Army headquarters and stormed the presidential palace, Congress,
and the Supreme Court. The rioters smashed windows and furniture in the National Congress
and Supreme Court buildings. The attack came just a week after the new administration was
inaugurated. Security forces retook the buildings within 3 hours of the attack. Responding to
the invasion, President Lula declared a federal security intervention in Brasilia that would
remain in place until the end of the month.
The attack was similar to the one in January 2021 in the US after the US election of Joe Biden
as president. The attack was condemned around the world as an attack on democracy itself.
This attack highlights the importance of a peaceful transfer of power in a democracy and the
importance of institutions’ independence.
G-20 and India’s Presidency
In a historic moment, India formally assumed the G20 Presidency, from Indonesia, on
December 1, 2022. The G20, or Group of Twenty, is an intergovernmental forum of the
world’s 20 major developed and developing economies, making it the premier forum for
international economic cooperation.
On occasion, the Prime Minister penned an article outlining India’s vision for the G20
Presidency. Publications across the world carried this out. In his report, the Prime Minister
said that India looks forward to a Presidency of healing, harmony, and hope.
A key element of India’s G20 Presidency will be taking the G20 closer to the public and
making it truly a ‘People’s G20’. To realize this, Citizen engagement and large-scale public
participation through various Jan Bhagidari activities are planned throughout the year.
Numerous activities were planned to mark the first day of India’s Presidency. Earlier in the
day, a unique University Connect event was organized, virtually bringing students from 75
universities across the country. External Affairs Minister Dr. S. Jaishankar and Principal
Secretary to Prime Minister Shri P.K. Mishra were distinguished speakers at the event. The
University Connect event is aimed at engaging the youth in G20 activities. School students
were also involved through special G20 sessions in various schools.
Taking people’s participation further, The Hornbill Festival in Kohima today featured a
particular focus on G20. One hundred monuments, including some UNESCO world heritage
sites, are being specially illuminated today, and citizens have been invited to join a selfie
campaign on MyGov around these illuminated monuments. Sand artist Shri Sudarshan
Pattnaik created sand art of India’s G20 logo on Puri beach in Odisha.
The G20 website recently launched by the PM seamlessly migrated to the G20.org domain
today. India took over the official social media handles, including the Twitter handle @g20org,
from the previous Presidency.
Drawing inspiration from its G20 Presidency theme of ‘Vasudhaiva Kutumbakam’ - ‘One Earth
One Family One Future,’ India will host over 200 meetings in over 50 cities across 32
different workstreams. It will have the opportunity to offer G20 delegates and guests a
glimpse of India’s rich cultural heritage and provide them with a unique Indian experience.
Future of the Russia-Ukraine
geopolitics/economy
war
and
its
impact
on
Indian/global
The impact of Russia’s invasion of Ukraine on the day-to-day lives of Indians has been
inconsequential, primarily because of the vast geographical distance to Ukraine and
unfamiliarity with the people and their culture. But some potential issues and impacts have
people worried. Perhaps the most visible effect more than a month into the conflict has been
rising fuel prices, causing public discontentment. This price hike comes when inflation in the
country is rampant, and the cost of essentials has exponentially increased.
India, because of the size of its economy and close economic and military ties with Russia
(India is the world’s largest buyer of Russian weapons), is poised to potentially play a pivotal
role in the outcome of the current crisis and the construct of the global economic and
political order that follows. Suppose India provides, along with China, an economic and
political lifeline for Russia. In that case, it can determine the success or failure of economic
sanctions and hence the outcome of the current crisis. So far, India has firmly and
repeatedly abstained from voting against the Ukraine war in recent UN resolutions.
Most of India’s pro-government media appears to echo the Russian narrative of events.
The public in India primarily has a pro-Russia stance, consistent with the description put
forth by the current national government and mainstream local media that supports it.
Many citizens support the government’s position in the global crisis and believe that Russia
was “wronged” and provoked by NATO and pushed to the brink, thus leaving it no choice but
to go to war.
It is important to remember that Russia has long offered support to India at critical times
in its political and military history. India and Russia also have solid and longstanding ties in
many fields, including defense and education, especially in politics, security, civil nuclear
energy, anti-terrorism cooperation, and space exploration. It cooperated with India to build
20 atomic reactors for civil power.
The war’s impact on business and the economy
India’s GDP declined precipitously in Q2 of 2020 during the first phase of the pandemic and
again in Q2 of 2021 when the delta variant broke out. Each time, the rebound was equally
strong, so by the end of 2021, GDP was already 6 percent above pre-pandemic levels. After
growing by 8.2 percent for the calendar year 2021, The Conference Board had initially
forecasted an equally strong 8.9 percent for 2022. When the war in Ukraine started, we
downgraded the forecast for 2022 to 8.6 percent.
Future of the Russia-Ukraine
geopolitics/economy
war
and
its
impact
on
Indian/global
The impact of Russia’s invasion of Ukraine on the day-to-day lives of Indians has been
inconsequential, primarily because of the vast geographical distance to Ukraine and
unfamiliarity with the people and their culture. But some potential issues and impacts have
people worried. Perhaps the most visible effect more than a month into the conflict has been
rising fuel prices, causing public discontentment. This price hike comes when inflation in the
country is rampant, and the cost of essentials has exponentially increased.
India, because of the size of its economy and close economic and military ties with Russia
(India is the world’s largest buyer of Russian weapons), is poised to potentially play a pivotal
role in the outcome of the current crisis and the construct of the global economic and
political order that follows. Suppose India provides, along with China, an economic and
political lifeline for Russia. In that case, it can determine the success or failure of economic
sanctions and hence the outcome of the current crisis. So far, India has firmly and
repeatedly abstained from voting against the Ukraine war in recent UN resolutions.
Most of India’s pro-government media appears to echo the Russian narrative of events.
The public in India primarily has a pro-Russia stance, consistent with the description put
forth by the current national government and mainstream local media that supports it.
Many citizens support the government’s position in the global crisis and believe that Russia
was “wronged” and provoked by NATO and pushed to the brink, thus leaving it no choice but
to go to war.
It is important to remember that Russia has long offered support to India at critical times
in its political and military history. India and Russia also have solid and longstanding ties in
many fields, including defense and education, especially in politics, security, civil nuclear
energy, anti-terrorism cooperation, and space exploration. It cooperated with India to build
20 atomic reactors for civil power.
The war’s impact on business and the economy
India’s GDP declined precipitously in Q2 of 2020 during the first phase of the pandemic and
again in Q2 of 2021 when the delta variant broke out. Each time, the rebound was equally
strong, so by the end of 2021, GDP was already 6 percent above pre-pandemic levels. After
growing by 8.2 percent for the calendar year 2021, The Conference Board had initially
forecasted an equally strong 8.9 percent for 2022. When the war in Ukraine started, we
downgraded the forecast for 2022 to 8.6 percent.
The inflation impact of the war is much more pronounced. This makes India particularly
vulnerable to spikes in global food prices, which were already elevated but had risen
further in response to the conflict.
Perhaps the greatest threat to India’s economy is the possibility of the US and other
conforming nations imposing secondary sanctions on countries doing business with
Russia. India currently does not support the sanctions regime. Still, if India accelerates
its economic support for Russia, pressure could build within the US, its allies, and
partners to strengthen the sanctions regime.
On a firm level, there is growing concern about cyber risk and vulnerabilities among US
and EU multinational corporations doing business in India, and in some India-based
firms, there has been polarization among employees around political views, and the
imposition of a “cancel culture” of those who are pro-Ukraine.
Just how long India will be able to maintain its current “neutral” position is an open and
often debated question in India. What may follow is a source of worry and concern
among Indians everywhere.
The Electricity (Amendment) Bill, 2022
The Electricity (Amendment) Bill 2022 was introduced by the Union Power Ministry on 8
August 2022 in the Lok Sabha and later sent to the standing committee for further
deliberations. The bill seeks to present an array of legislative steps to end distribution
monopolies and establish a framework that provides a transparent, fair, and competitive
bidding process for electricity procurement.
Overall, the bill aims to improve the ease of doing business in the power sector and to
promote the use of clean energy in India.
Key features of the bill
Bill aims to create competition in the retail distribution of power which is turning into a
monopoly, by allowing new suppliers to use the existing infrastructure of electric suppliers
to supply power.
The application will be deemed approved if regulators do not grant a distribution license
within the specified time frame (90 days).
Power regulators will set electricity tariffs yearly, bringing dynamic prices based on
emerging situations.
The inflation impact of the war is much more pronounced. This makes India particularly
vulnerable to spikes in global food prices, which were already elevated but had risen
further in response to the conflict.
Perhaps the greatest threat to India’s economy is the possibility of the US and other
conforming nations imposing secondary sanctions on countries doing business with
Russia. India currently does not support the sanctions regime. Still, if India accelerates
its economic support for Russia, pressure could build within the US, its allies, and
partners to strengthen the sanctions regime.
On a firm level, there is growing concern about cyber risk and vulnerabilities among US
and EU multinational corporations doing business in India, and in some India-based
firms, there has been polarization among employees around political views, and the
imposition of a “cancel culture” of those who are pro-Ukraine.
Just how long India will be able to maintain its current “neutral” position is an open and
often debated question in India. What may follow is a source of worry and concern
among Indians everywhere.
The Electricity (Amendment) Bill, 2022
The Electricity (Amendment) Bill 2022 was introduced by the Union Power Ministry on 8
August 2022 in the Lok Sabha and later sent to the standing committee for further
deliberations. The bill seeks to present an array of legislative steps to end distribution
monopolies and establish a framework that provides a transparent, fair, and competitive
bidding process for electricity procurement.
Overall, the bill aims to improve the ease of doing business in the power sector and to
promote the use of clean energy in India.
Key features of the bill
Bill aims to create competition in the retail distribution of power which is turning into a
monopoly, by allowing new suppliers to use the existing infrastructure of electric suppliers
to supply power.
The application will be deemed approved if regulators do not grant a distribution license
within the specified time frame (90 days).
Power regulators will set electricity tariffs yearly, bringing dynamic prices based on
emerging situations.
Concerns regarding the bill
All discoms must share existing PPAs in a given area. Since Power procurement
accounts for 70%-80% of total costs, and in many states, the majority of existing
demand is tied to long-term PPAs. As a result, the potential for cost-cutting and
competition may be limited initially.
The bill Allows State Commissions to determine PPA sharing, which may override
private parties' ability to negotiate the terms and conditions of a contractual
arrangement for procuring power.
World’s recession and its Impact on India
The Centre for Economics and Business Research (CEBR) predicts that a global
recession will begin in 2023. Other agencies indicate a global slowdown as well to start
in 2023. The CEBR organization warned in October 2022 that more than a third of the
world's economies will collapse and that there is a 25% chance that global GDP will
expand by less than 2% in 2023, indicating a global recession. Rising interest rates in
developed economies such as the United States and Europe will also attract
investment capital from poorer countries, depriving them of critical domestic
investment, according to the World Bank report. At the same time, high-interest rates,
according to the report, will slow growth in developed countries.
Impact on India: According to the report, India's economy will reach $10 trillion by 2035
and rank third globally by 2032. Because the United States is one of the world's great
powers, a mild or severe recession will have global ramifications. Given that Indian
firms had significant outsourcing agreements with US clients, a slowdown in the US
economy will unquestionably be bad news for India. India's exports to the United States
have increased over time. However, India was impacted and managed to survive the
severe financial crisis of September 2008. According to the World Bank, the Indian
economy will grow 6.6 percent in the fiscal year 2023-24. India is expected to be the
fastest-growing among the seven largest EMDEs economies (emerging market and
developing economies).
Sri Lanka’s Economic crisis and World’s response
Sri Lanka's economic crisis has been building for a long time, with successive governments
creating and maintaining a twin deficit - a budget shortfall alongside a current account
deficit. Still, the current crisis has been accelerated by deep tax cuts promised by
Rajapaksa during a 2019 election campaign and enacted months before the COVID-19
pandemic, which wiped out parts of the Sri Lankan economy. When the pandemic
decimated the country's lucrative tourism industry and remittances from foreign workers, it
only added fuel to the fire. The Rajapaksa administration's decision to ban all chemical
fertilizers in 2021, later reversed, also harmed the country's farm sector and caused a drop
in the critical rice crop. All of this resulted in a decline in tourism revenue from $4 billion to
$0.5 billion, foreign exchange shortage reserves and a $3.96 billion BOP shortage, the Sri
Lankan rupee depreciating more than 70%, imports of essentials such as rice increasing
food inflation due to a poor transition mechanism from fertilizer use to organic farming.
Response: The IMF agreed to pay $2.9 billion over the next four years. These funds will go
toward restoring macroeconomic stability and debt sustainability. In addition, the IMF has
urged the country to accelerate structural reforms to address corruption vulnerabilities. The
World Bank agreed to pay $240 million to meet people's basic needs, such as cash
transfers, medicines, and petroleum. China remains the most significant bilateral creditor,
having loaned $6.5 billion and agreed to pay an additional $74 million to address the
humanitarian crisis. However, it is still hesitant to approve the $4 billion loan requested by
Sri Lanka. India has committed more than $3 billion to Sri Lanka and has been highly
proactive in crisis response. It is in India's interest to strengthen relations with Sri Lanka to
limit China's expansion in South Asia.
Learnings: Globalization is not always the solution; consulting all experts and stakeholders
before implementing any policy is a must, and the country should beware of Debt Trap
Diplomacy like China’s.
The Weapons of Mass Destruction and their Delivery Systems (Prohibition of
Unlawful Activities) Amendment Bill, 2022
Weapons of Mass Destruction are weapons that can inflict death and destruction on such a
massive scale and so indiscriminately that their very presence in the hands of a hostile
power can be considered a grievous threat. Modern weapons of mass destruction are
either nuclear, biological, or chemical weapons—frequently referred to collectively as NBC
weapons.
This bill is an amendment to the Weapons of Mass Destruction and their Delivery Systems
(Prohibition of Unlawful Activities) Act, 2005. The amendment to this bill, the Weapons of
Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities)
Amendment Bill, 2022, piloted by External Affairs Minister S Jaishankar, was passed on
01/08/2022. The 2005 Act was enacted to prohibit unlawful activities about weapons of
mass destruction and their delivery systems. This Act covers illegal activities relating to
biological, chemical, and nuclear weapons and their delivery systems. It also provides for
integrated legal measures to exercise controls over the export of materials, equipment, and
technologies about weapons of mass destruction and their delivery systems and to prevent
their transfers to non-State actors or terrorists.
The original act did not cover the financial aspects of such delivery systems and only
covered the trading of Weapons of Mass Destruction. The main objectives of this bill are to
prohibit financing of activities linked to Weapons of Mass Destruction, Empower the Centre
to freeze, seize or attach funds, financial assets, or economic resources for preventing
such financing, Prohibit making available funds, financial assets, or economic resources for
any prohibited activity about weapons of mass destruction and their delivery systems.
UNIFORM CIVIL CODE (UCC)
Why in the news?
Recently a Private Member Bill titled Uniform Civil Code in India Bill, 2020 was introduced
in Rajya Sabha.
More on News
The bill seeks to provide for a panel to prepare a UCC to be implemented across the
country. • UCC refers to the same civil laws applicable to all citizens of India in their
matters, such as marriage, divorce, custody, adoption, and inheritance
The provisions for the Uniform Civil Code come under Article 44 (Directive Principles
of State Policy) of the Constitution. o It says that the state shall endeavor to secure a
UCC for the citizens throughout the territory of India. o Thus, UCC comes under the
nonjusticiable part of the constitution. o Also, “Personal laws” comes under the
Concurrent List. Current Status of Personal Laws in India
Different religious communities are currently governed by a system of personal laws, which
have been codified over the years through various pieces of legislation. o For example,
Hindu personal law is codified in four bills: the Hindu Marriage Act, Hindu Succession Act,
Hindu Minority and Guardianship Act, and Hindu Adoptions and Maintenance Act. The term
‘Hindu’ also includes Sikh, Jains, and Buddhists for these laws. o Certain aspects of
Muslim personal law are expressly recognized in India in acts such as the Shariat
Application Act and Dissolution of Muslim Marriages Act. o Christian marriages and
divorces are governed by the Indian Christian Marriages Act and the Indian Divorce Act,
while Zoroastrians are subject to the Parsi Marriage and Divorce Act
There are some secular laws as well. For example, the Special Marriage Act, under which
Inter-religion marriages occur, and the Guardians and Wards Act, which establishes the
rights and duties of guardians
Goa is currently the only state in India with a UCC. The Portuguese Civil Code of 1867,
which continues to be implemented after India annexed the territory in 1961, applies to all
Goans, irrespective of their religious or ethnic community. However, the Portuguese Code
is not entirely a UCC. It makes specific provisions on a religious basis. For example, Hindu
men are allowed bigamy if the wife fails to deliver a child by 25 or a male child by 30.
Need of UCC
Gender equality: Personal laws, because they derive from tradition and custom, also tend
to give undue advantage to men. Law Commission (2018) observes that various aspects of
prevailing personal laws disprivilege women. For instance, Muslim men are allowed to
marry multiple wives, but women are forbidden from having multiple husbands. o Despite
the 2005 amendment to the Hindu Succession Act, women are still considered part of their
husband's families after marriage. So, in case a Hindu widow dies without any heirs or will,
her property will automatically go to her husband's family. Men (fathers) are also treated as
‘natural guardians’ and are given preference under the Hindu Minority and Guardianship
Act
To address inconsistency in personal laws: There is no consistency in how issues like
marriage, succession, etc., are treated for people belonging to different communities.
Reforms to personal laws have also been inconsistent. For example, multiple amendments
have been brought to Hindu personal laws, while Muslim law has seen fewer changes. A
secular republic aspires to common law for all citizens rather than differentiated rules
based on religious practices
Simplification of laws: When enacted, the code will simplify the complex rules around
marriage ceremonies, inheritance, succession, and adoptions, making them one for all.
The same civil law will apply to all citizens irrespective of their faith. o It will also reduce
the burden on the judiciary due to the standardization of personal rules and enable the
speedy delivery of justice
Protection of Vulnerable Section of Society: The UCC aims to protect vulnerable
sections, as envisaged by DR. B R Ambedkar, including women and religious
minorities. o Many practices governed by religious tradition are at odds with the
fundamental rights guaranteed in the Constitution. Arguments against the
implementation of UCC
Diversity within secular civil laws: While India does have uniformity in most criminal and
civil matters (like Criminal Procedure Code, Civil Procedure Code, etc.), States have
made several amendments to civil laws. For example, the law of anticipatory bail differs
from one State to another. Experts cite plurality in codified civil and criminal ordinances
while arguing against UCC. Looking at the codified personal laws of various
communities in India - all Hindus are not governed by a homogenous personal law
even after the enactment of the four acts
Communal Politics: Large section of society sees it as majoritarian reform. In several
verdicts, like in S.R. Bommai, Supreme Court has warned against “mixing politics with
religion.”The court had worried whether a secular state should bring a code that can be
perceived as a threat to personal laws based on religious beliefs
Against diversity: A unified nation does not necessarily need “uniformity.” ''Efforts must
be made to reconcile our diversity with universal and indisputable arguments on human
rights. The term “secularism” has meaning only if it assures the expression of any form
of difference. This diversity, both religious and regional, should not get subsumed
under the louder voice of the majority
Can erode minorities’ rights: Though UCC reinforces equality before the law, it also
clashes with the right to freedom of religion (Article 25 of the Constitution). The UCC
could become a tool to erode this right, suppress minorities, and homogenize culture
Not supported by the Law Commission: In 2018, Law Commission, in a consultation
paper, held that UCC is neither necessary nor desirable at this stage
Collaborative Approach: There is a need to build a consensus among all stakeholders
and educate the individuals regarding the true nature and positive effects of UCC
• Brick by Brick Approach: Rather than an omnibus approach, the government could bring
different aspects, such as marriage, adoption, succession, and maintenance, into a UCC
in stages. The goal of a UCC should ideally be reached piecemeal, like the recent
amendment on the age of marriage. A just code is far more critical than a uniform code
• Law commission recommendations: In the absence of consensus on UCC, the
Commission felt that the best way forward might be to preserve the diversity of personal
laws while ensuring that they do not contradict fundamental rights. To achieve this, it is
desirable that all personal laws relating to matters of the family must first be codified to the
greatest extent possible. It will limit the ambiguity in interpreting and applying these
personal laws. The commission has suggested various amendments to existing family law
to address multiple inequalities. o The legislature should first consider guaranteeing
equality within communities between men and women rather than equality between
communities. This way, meaningful differences within personal laws can be preserved,
and inequality can be weeded without absolute uniformity
India-China Relations
India’s Trade Deficit with China exceeds $100 billion
As per Chinese customs data, India’s trade with China reached a record $135.98 bn in
2022. However, India’s imports to China rose by 21% to $118.5 bn, while exports
decreased to $17.48 bn from $28.1 bn. Thus, India’s trade deficit stands at $101.02 bn, a
45% increase compared to last year.
Trade has increased with China despite frosty bilateral relations between the two
countries, spurred by the availability of cheap Chinese goods. The widening trade deficit
with China is because of the dwindling exports since India cannot access Chinese markets
in agricultural products, IT, and pharma, where India holds a competitive edge.
India: Peace and tranquility along the border are essential for developing ties with
China
India asserted that peace and tranquility along the Line of Actual Control (LAC) are
essential for the overall development of its bilateral relationships with China. The
comments by External Affairs Ministry Spokesperson, “Arindam Bagchi came at a media
briefing when asked about new Chinese Foreign Minister Qin Gang's remarks that both
sides are willing to ease the situation in the context of the border standoff along the Line of
Actual Control (LAC).
India and China have been locked in a lingering border standoff in eastern Ladakh for over
31 months. The bilateral relationship came under severe strain following the deadly clash
in Galway Valley in Eastern Ladakh in June 2020. India has maintained that the
connection cannot be expected unless there is peace in the border area.
Further, discussions were underway between India and China through military and
diplomatic channels. These are the mechanisms through which India’s concerns about
Chinese activities are conveyed. In addition, both sides also focus on returning to a degree
of normalcy, de-escalation, and disengagement at the border. However, there has been a
fresh spike in tensions between India and China after troops from the two sides were
engaged in a clash along the LAC at Yangtse in the Tawang sector of Arunachal Pradesh
on December 9.
India cleared Pralay tactical ballistic missiles for armed forces to be deployed along
China’s border.
In a significant decision, the Defence Ministry has cleared the procurement of around 120
Pralay ballistic missiles for the Indian armed forces that will deploy them along the borders
with China and Pakistan. The Pralay ballistic missiles can take out targets from 150 to 500
km and are extremely difficult to intercept for the enemy through interceptor missiles.
The acquisition of these ballistic missiles is seen as a significant development for the
country, which now has a policy allowing the use of ballistic missiles in tactical roles. Both
China and Pakistan have ballistic missiles, which are for tactical positions. The missile
developed by the Defence Research and Development Organisation is being further
developed, and its range can be extended significantly if the forces want it.
The missile system started getting developed around 2015, and the development of such a
capability was given a push by the late Gen Bipin Rawat as Chief of Army Staff. It was
successfully tested twice on consecutive days last year on December 21 and December
22.
Defense watchers say such a missile system can take out long-range enemy air defense
systems, high-value installations, and weaponry.
The proposal to induct these missiles has been cleared at a time when the defense forces
are working towards creating a dedicated rocket force that can take out enemy targets from
long range. The Chinese military already has a true rocket force.
China-Taiwan Relations
China Says It Carried Out Military Drills Around Taiwan Again
China's military said it had carried out combat drills around Taiwan on 8 January 2023, the
second such exercise in less than a month. The People’s Liberation Army’s Eastern
Theatre Command said that its forces had organized “joint combat readiness patrols and
actual combat drills” in the sea and airspace around Taiwan, which Beijing claims as its
own. The exercises aimed to test joint combat capabilities and “resolutely counter the
provocative actions of external forces and Taiwan independence separatist forces.”
Taiwan’s presidential office said China was making “groundless accusations” and strongly
condemned the drills, saying the peace and stability of the Taiwan Strait and the region
were the joint responsibility of both Taiwan and China. Taiwan’s position is clear: it will
neither escalate conflicts nor provoke disputes but will firmly defend its sovereignty and
security.
57 Chinese military aircraft and four navy ships operating around the island were detected
over 24 hours. Some 28 of the plane flew into the air defense identification zone (ADIZ) off
the southwest of Taiwan, with some crossing the Taiwan Strait median line, an unofficial
buffer between the two sides. In addition, two nuclear-capable H-6 bombers flew to the
south of Taiwan.
China conducted similar exercises late last month after the United States passed a defense
spending bill that included support for Taiwan. Taipei reported that 43 Chinese aircraft
crossed the median line. The same week, Taipei announced it would extend compulsory
military service from its current four months to one year starting in 2024. The US has no
formal diplomatic ties with Taiwan but is bound by law to provide the island with the means
to defend itself.
China, which has not ruled out the use of force to bring the island under its control, has
stepped up its military activities in the waters and airspace near Taiwan since Tsai Ing-wen
was first elected president in 2016. According to data from the Taiwan government, the
Chinese military sent 1,727 planes into Taiwan’s ADIZ in 2022. That compares with about
960 incursions in 2021 and 380 in 2020.
Taiwan’s government says only Taiwanese people can decide the island’s future and has
pledged to defend itself if attacked by China.
Amid China Threat, Taiwan Calls On Germany To Maintain "Regional Order"
Taiwan President Tsai Ing-wen called on Germany on 10 January 2023 to help maintain
"regional order" during a meeting with senior German lawmakers visiting the island on a trip
Beijing condemned. Taiwan, which China claims as its territory, has been heartened by
support from Western democratic allies in the face of stepped-up Chinese military threats,
including war games staged by China near the island in August.
Meeting the lawmakers at the presidential office, Tsai said that in the face of "authoritarian
expansionism,” democracies must stand together. Starting next year, Taiwan's mandatory
military service will be extended to one year. This will bolster their defense capabilities and
demonstrate a determination to defend their homeland and safeguard democracy.
While Germany, like most countries, has no formal diplomatic ties with Taiwan, Berlin is
working on a new strategy taking a more sober look at its relations with China and aiming
to reduce its dependence on Asia's economic superpower.
Marie-Agnes Strack-Zimmermann, the head of Germany's parliamentary defense
committee and a member of Chancellor Olaf Scholz's junior coalition partner Free
Democrats (FDP), told Tsai that Germany and Taiwan are friends. Strack-Zimmermann
said Russia’s invasion of Ukraine was a wake-up call for the world. "That's why we come to
your country, to your wonderful island, to say to the world that we stand close together as
democratic states," she added.
China has expressed anger at the trip, with its foreign ministry alluding to Germany’s World
War Two past. "We want to point out that the root cause of the Taiwan issue stems
precisely from the law of the jungle, hegemony, colonialism, and militarism that were once
rampant in the world. That deeply impacted China. Germany has a profound and tragic
historical lesson in that," Foreign Ministry spokesman Wang Wenbin said.
What is Finance?
Finance is a broad term describing the study and system of money, investments, and other
financial instruments. Bonds, Stocks, Derivatives, Mutual Funds are some examples of financial
instruments.
Finance is classified into Public Finance - This includes tax systems, government expenditures, budget procedures.
It is the government overseeing the allocation of resources, distribution of income, and
stabilization of the economy.
Corporate Finance - To put it simply, Corporate Finance is managing the assets and debts
for a business. Calculating whether a project would give considerable returns on a given
investment comes under Corporate Finance.
Personal Finance - It is the proper management of an individual's income and expenses.
Retirement planning is one example of this.
Behavioral Finance - It seeks to understand the emotional, social, and psychological
reasons behind the financial decisions being made. An example would be - Studying the
reaction of investors to a lawsuit brought against a company.
What is Accounting?
Accounting could be understood as recording, classifying, summarizing, and reporting of the
business transactions and economic activity from business operations over a period of time to
the stakeholders such as shareholders, employees, the general public, or to the regulators.
Remember this equation:
Assets = Liabilities + Equity
Example: You take a loan of 1 crore; 1 crore gets added to the assets side as cash, which you
received from the lender(s). And one crore gets added to the liabilities side as a loan you took
from the bank. The same goes for all transactions. The equation is always balanced.
Check the annual reports of a company to get an idea about the Balance sheet, Income
Statement, and Statement of Cash Flows. We just discussed how transactions get recorded in
the balance sheet. The income statement is simply a statement of income and expenses. Cash
flow statements describe where the cash is coming from and where it is going.
Domains of Finance
Banking
The banking industry handles money, credit, and other monetary exchanges. Banks offer
investment accounts, authentications of stores, and financial records. Banks utilize these
stores to make credits. These advances incorporate home loans, business credits, and vehicle
advances. Business banks offer types of assistance to private people and organizations. Retail
banking gives credit, store, and cash to executives, to people, and families.
Web banking offers these types of assistance by means of the internet. The area is additionally
called E-banking, Internet banking, and Net banking. Most banks presently offer online
administrations. Since they have no branches, they can pass the cost reserve funds onto the
buyer.
Venture banking discovers financing for companies through starting public stock
contributions or bonds. They additionally encourage consolidations and acquisitions. The
biggest U.S. speculation banks incorporate Bank of America, Citigroup, Goldman Sachs, J.P.
Morgan Chase, and Morgan Stanley.
Insurance
The insurance sector comprises companies that offer risk management in terms of insurance
contracts. The insurer will guarantee payment for a certain future event, and in return, they
will charge a premium from the insured or the policyholder. The insurance industry is
considered a slow-growing and safe sector for investors.
Life insurance is a sector with tremendous growth potential – that is how the life insurance
sector is often touted as, due to the low insurance penetration and density in the country
among its comparable peers.
Portfolio Management
Portfolio management can be understood as a process of managing an individual's
investments so that they can maximize their earnings in a certain time interval. Furthermore,
efficient portfolio management ensures that the risk of the capital invested is reduced to
counter financial or economic risks. Portfolio managers optimize the investment risk, ensure
investment mix, and diversify the portfolio to achieve financial goals.
Principally, portfolio management can be visualized as a SWOT analysis of various industries
and sectors and classifying them according to the risks associated with them.
Objectives of portfolio management are as follows:
Capital appreciation
To maximize Returns on Investment (ROI)
Risk optimization
Career Opportunities:
Investment Banks - Investment Bankers, Security Salespeople, Traders
Commercial Banks - Loan officer, Branch Manager, Investment Bankers, Traders
Money Management Firms - Portfolio Manager, Equity Research Analyst
Hedge Funds - Portfolio Manager, Equity Research Analyst
Private Equity Firms - Investment Bankers
Real Estate Firms - Financing Specialist, Analyst, Deal Manager
Types of business
There are four types of business organizations: Sole Proprietorship, Partnership, Company,
and Limited Liability Company (LLC).
Sole Proprietorship - A business owned and run by one person for their own benefit. The
business's existence is entirely dependent on the owner's decisions.
Partnership - Refers to a business owned by a minimum of 2 and a maximum of 50
people. They are of two types- General partnership (does not require a formal agreement,
but all partners' liability is unlimited) and Limited partnerships (requires a formal
agreement and partners' debt can be limited).
Company - It's a separate legal entity from its owners. A private limited Company has a
minimum of 2 and a maximum of 200 shareholders. While a public limited company can
have as many shareholders as possible.
Limited Liability Company - Similar to a limited partnership, an LLC provides owners with
limited liability while providing some of the income advantages of a partnership.
A financial market is where people trade financial securities, commodities, etc. The stock
market, bond market, forex market, derivatives market are a few examples of the financial
market.
Money Market deals with the trading of debt instruments like inter-corporate deposits,
certificate of deposits, treasury bonds, commercial papers, commercial bills, etc. Trading
occurs in a very short term in the money market. Money market participants are large
institutional investors, mutual funds, and commercial banks.
Capital market deals with the trading of financial instruments like equity, public sector bonds,
and units of mutual funds. Capital markets are composed of the suppliers and users of funds.
Capital markets are mainly composed of primary and secondary markets. The stock market
and bond market are the most common capital markets.
Forex, also known as FX or Foreign Exchange market, is an over-the-counter global
marketplace. The foreign exchange market determines the currency's exchange around the
world. Forex is the largest financial market in the world, which works 24 hours a day. The
trade of currency always takes place in pairs. Hence, the value of one currency will be relative
to the value of another currency in the pair. The most liquid trading pair is EUR/USD.
Financial Statements:
Financial statements are formal records of the financial activities and position of a business,
person, or other entity. Income Statement, Balance Sheet and Cash flow Statement are the
three primary financial statements.
Income statement shows a business' income and expenditures. It also shows whether the
business is making a profit or a loss for a given period. It also provides information about the
operations of the enterprise which includes sales and the various expenses incurred in the
stated period.
Balance sheet shows the position of the business at a particular point in time. It shows the
company's assets, liabilities, and equity. In a balance sheet, Assets = Liabilities + Owner's Equity
Cash Flow Statement measures how well a company generates cash to pay its debt obligations,
fund its operating expenses, and fund investments. It helps stakeholders understand how the
company's operations are running, from where it is getting cash, and how money is being
spent. The cash flow statement has three sections that report cash flow for three different
kinds of activities - Operating Activities, Investing Activities, and Financing Activities.
Scope of Finance Function: Investment, Financing, and Dividend Decisions
1.Investment Decision: Investment decisions are often referred to as Capital Budgeting or
Capital Expenditure (CAPEX) decisions. These decisions create revenue and profits for the
firms.
2.Financing Decisions: These decisions have got to do with the source of funds. A
corporation can raise money from lenders or from shareholders. Overall, the financing choices
available to large corporations are endless, and the decisions related to these are financing
decisions.
3.Dividend Decisions: The profits after tax can be distributed to the shareholders or can be
retained by the firm. These decisions related to the appropriation of profits after tax are
dividend decisions.
IFRS vs. US GAAP
GAAP (Generally Accepted Accounting Principles) is a common set of accepted accounting
principles, standards, and procedures that companies and their accountants must follow when
they compile their financial statements. This is the accounting standard generally followed in
USA.
IFRS (International Financial Reporting Standards) is a set of international accounting
standards, which state how particular types of transactions and other events should be
reported in financial statements. IFRS guidelines are less comprehensive and lack details
compared to GAAP.
The International Accounting Standards Board is the independent accounting standard-setting
body of the IFRS Foundation outside the United States.
The Financial Accounting Standards Board is a private, non-profit organization standard-setting
body formed to establish and improve GAAP in the United States.
Fixed Asset Valuation
Only the cost model can be used to value fixed assets in GAAP.
IFRS also recognizes revaluation models in addition to cost models.
Business cycle
A business cycle refers to the cycle of fluctuations in the Gross Domestic Product (GDP). It
explains the expansion and contraction in the economy.
Various stages of the Business Cycle are:
1. Expansion: Expansion is the first stage in the business cycle. This stage depicts an
increase in positive economic indicators like income, output, employment, and profits.
2. Peak: The economy then reaches its upper saturation point, i.e., peak. The peak is the
second stage of the business cycle. The economic indicators do not increase any further
and are at their highest.
3. Recession: The recession is the next stage. The demand starts falling rapidly, and all the
positive economic indicators like income, output, employment, etc., start to fall.
4. Depression: The next stage is Depression, which indicates a commensurate rise in
unemployment. The growth in the economy in this phase continues to decline.
5. Trough: In the Trough Stage, there is further decline until the positive indicators reach
their lowest point. It is the negative saturation point for the economy.
6. Recovery: After reaching its negative saturation point, the economy comes to the stage of
recovery. The economy now has a positive attitude, and positive indicators start increasing.
Initial Public Offering (IPO) is the issuance of public shares by a company to raise capital
from public investors. By issuing an IPO, a private company transforms into a public company.
Once a company decides to go public, it will be regulated by SEBI. Hence, the company has to
disclose a few details mandatorily for the knowledge of investors.
Follow-on Public Offering (FPO) is the issuance of shares by a company listed on a stock
exchange. The company issues additional shares after an Initial Public Offering (IPO) to raise
more capital to expand or to pay off the debt. Companies use FPO to diversify their equity base.
FPO is also known as secondary offerings.
IMAJOR IPOs of 2022
What is Fundamental & Technical Analysis
Fundamental Analysis refers to the method of analyzing securities by determining the
intrinsic value of the stock. It involves making an analysis of the financial performance and
position of the company. It assesses all the factors that have the capability to influence the
value of the stock, called fundamentals, which are nothing but financial statements,
management, business concept, competition, etc. It aims at analyzing the economy as a whole,
the industry to which it belongs, and the firm itself.
It focuses on both the past and the present data and is relevant for long-term investments.
Technical Analysis refers to the process of analyzing price volume movements. It predicts the
change in the price of a security based on market information. It determines whether the
uptrend or downtrend in price will continue or will reverse in the future. The main objective
of the technical analysis is to identify the right time to enter or exit the market. It focuses
only on past data and is relevant for short-term investments.
There are two methods for conducting technical analysis:
Understanding Chart Patterns: The chart patterns help in determining the direction of the
trend. Green-colored candlestick is referred to as showing the bullish trend, while redcolored candlestick shows a bearish trend.
Examples of Chart Patterns are Spinning Top, Hammer and Hanging Man, Head and Shoulders,
Double Top, etc.
Technical Indicators: These indicators are heuristic or mathematical calculations based on
price, volume, or open interest of security used by traders who follow technical analysis. They
predict as well as confirm the trends.
Examples of Technical Indicators are Simple Moving Average (SMA), Relative Strength Indicator
(RSI), Stochastic Oscillator, Moving Average Convergence Divergence (MACD), etc.
Shares, Bonds, and a few basic concepts related to them in the simplest possible terms
Share: It refers to a unit of ownership in the company. A share is a unit in the share capital of
a company and includes stock.
Types of Shares
Equity Shares: Those shares which are not preference shares are known as equity shares.
Members holding equity shares carry voting rights. The rate of dividend is not fixed.
Preference Shares: It carries the following two preferential rights over holders of equity
shares.
Preferential right in respect of dividend at a fixed rate or a fixed amount
Preferential right in respect of repayment of capital in the event of winding up
Primary Market: Primary market is the market where the bond or new stock is sold for the
first time.
Initial Public Offering: It refers to the process of offering shares of a private corporation to
the public in a new stock issuance.
Share Market/ Stock Market: It refers to a collection of markets and exchanges where
regular activities of buying, selling, and issuance of shares of publicly held companies take
place.
Example: SENSEX, NASDAQ, etc.
Market Capitalization: It refers to the market value of a company's outstanding shares of
stock. It is calculated by multiplying the total number of the company's outstanding shares by
the market price of its share.
Net Worth: Net worth refers to the difference between the assets and liabilities of the
company. It presents a snapshot of the company's current financial position.
Bonds
It refers to the unit of corporate debt issued by the company. It is a long-term debt security
that enables firms to borrow money for a fixed period of time at a fixed rate by multiple
lenders.
Coupon
It is the annual interest payment that the bondholder receives from the date of issue of bond
till its maturity.
Coupon Rate
It is calculated by dividing the periodic interest payments received by the face value of the
bond.
Yield to Maturity
It refers to the total return anticipated on a bond if the bond is held until it matures.
Zero-Coupon Bond
It refers to the debt security that does not pay any interest but instead trades at a deep
discount, offering full face value at the time of maturity. The difference between the face value
and the price of a zero-coupon bond indicates the investor's return.
Golden Rules of Accounting: Real, Nominal, Personal A/c
There are 3 Golden Rules of Accounting. To understand the three golden rules, one needs to
have an understanding of the three types of accounts, which are:
a) Real Accounts: These accounts are recorded in the ledger as Assets or Liabilities. The
balances of these accounts are not closed at year-end, and the balance amount remaining is
carried forward to the next year.
Ex. Building a/c of a business
b) Personal Accounts: These are recorded as accounts belonging to individuals, firms, and
associations. Ex. Creditor a/c: creditor of a business
c) Nominal Accounts: These are Ledger accounts of all incomes, expenses, losses, or gains.
Ex. Interest a/c
Based on the above accounts, there are three golden rules to be followed when recording any
transaction:
1. For a real a/c: Debit what comes in, credit what goes out
2. For a personal a/c: Debit the receiver, credit the giver
3. For a nominal a/c: Debit all expenses and losses, credit all incomes and gains
Discounting
We use discounting to find the present values of payment or a stream of payments that is to be
received in the future. As we know, A dollar is always worth more today than it would be worth
tomorrow if money has a time value. As the discount rate increases, the level of risk associated
with an investment and its future cash flows also increases.
Ex. The present value of $110 at the beginning of a year is $100 if the discount rate is 10% per
annum.
Time Value of Money
Time Value of Money is a concept which states that the same amount of money will have a
higher value today than it will have in the future. The reason behind money having higher value
is its ability to earn interest. As money can be deposited in a bank to earn interest or invested
in assets (Real of Financial) to earn a return, any amount of money is worth more the sooner it
is received
How is TVM calculated?
FV = Future value of money
PV = Present value of money
i = Interest rate
n = Number of compounding periods per year
t = Number of years
Based on these variables, the formula for TVM is:
FV = PV x [ 1 + (i / n)](n x t)
Net Present Value (NPV)
Suppose we want to identify whether a project is a good investment opportunity or not. The
simplest way to do this is by comparing the initial investment with the cash generated using
that investment. If the cash generated using the investment is more than what we had invested,
it is a good opportunity and vice versa. Cash received is called cash inflow, and the cash paid is
called cash outflow.
Since cash inflows and outflows take place during different time periods, and because of the
time value of money, their value can differ significantly from the amount, we need to find the
present value of these cash flows and then subtract outflows from inflows.
Net present value (NPV) is the difference between the present value of cash inflows and the
present value of cash outflows over a period of time. NPV is used in capital budgeting and
investment planning to analyze the profitability of a projected investment or project.
Internal Rate of Return (IRR)
IRR is a measure of an investment's rate of return. The term 'Internal' refers to the fact that
IRR does not consider external factors like inflation, cost of capital, or financial risks.
Generally, if the IRR is more than the Discounting Rate, we accept the project. If IRR is less than
the Discounting Rate, we reject the project.
The net present value becomes zero at the discount rate equal to IRR. Sometimes more than
one IRR is also possible for an investment opportunity.
Annuity
An annuity is a stream of equal cash flows at equal time intervals made over a predetermined
time period. Annuities can be used for a variety of purposes, but the most common one is
providing a steady income for retirees.
The formula for the present value of an ordinary annuity is given below. (An ordinary annuity
pays interest at the end of a particular period, rather than at the beginning, as is the case with
an annuity due.)
PV = PMT× {1 - (1 / (1+r)n )} ÷ r
where:
P.V. = Present value of an annuity stream
PMT = Money value of each annuity payment
r = Interest rate (also known as the discount rate)
n = Number of periods in which payments will be made
Perpetuity
A perpetuity is a security that pays for an infinite amount of time. In Finance, perpetuity is a
constant stream of identical cash flows with no end.
The present value of a perpetuity is calculated as follows:
PV = PMT ÷ r
Where:
PV = Present value of a perpetuity
PMT = Money value of each cash flow
r = Interest rate (also known as discount rate)
Non-performing asset (NPA)
A Non-performing asset (NPA) is described as a classification for loans or advances in respect
of which the interest and/or installment of the principal amount has remained ‘past due’ for a
specified prolonged period. In other words, an asset (loan or advances made by a bank) is
labeled as a non-performing asset when it ceases to generate any income for the lender. Once
the borrower has failed to make interest or principal payments for 90 days, the loan is
considered to be a non-performing asset.
NPAs impose financial burdens on the lender; a large number of NPAs over a period of time can
suggest to regulators that the financial health of the bank is at risk.
NPAs may be categorized as a substandard asset, a doubtful asset, or a loss asset, based on
the length of time overdue and the likelihood of repayment.
According to a report by CARE Ratings, the ratio of gross NPAs of banks for the quarter ended
in September 2020 has fallen to 7.7% from 8.2% in June 2020 and 7.9% in March 2020.
NBFC
A Non-Banking Financial Corporation (NBFC), also known as a nonbank financial institution
(NBFI), is a financial institution offering certain bank-like services but has not been granted a
banking license from the regulator. They are not allowed to accept demand deposits from the
public, and this limitation keeps them outside the purview of conventional oversight from the
financial regulator. There are several NBFCs, and below is a non-exhaustive list of some of
these:
Asset Financing Companies (AFCs)
Housing Finance Companies (HFCs).
Investment Companies (ICs)
Loan Companies (LCs)
Micro Finance Institutions (MFIs). For more info on NBFCs Click here
Corporate Governance
Refers to the set of rules, processes, or laws by which an enterprises' business is operated,
regulated, or controlled. It involves keeping in mind the best interests of all stakeholders.
Corporate governance can be said to be based on 4Ps, namely - People, Process, Performance,
and Purpose. It makes companies accountable and transparent so as to minimize expropriation
and unfairness for stakeholders.
Arbitrage
Arbitrage is a type of trade when security, currency, or commodity is nearly simultaneously
bought and sold. The purpose is to benefit from the difference in prices for the same financial
instrument offered on different exchanges.
Diversification
Diversification is to include different types of investments like stocks, bonds, real estate,
commodities, etc., in the portfolio to mitigate the risk. Even for stocks, one should invest in
more than one industry to diversify the portfolio. It will help to hedge against the market
volatility, and it will reduce the risk so that it will give higher returns in the long term.
Mutual Funds
A mutual fund professionally manages a well-diversified investment portfolio on behalf of the
investors, and they charge small fees in return. It could be an ideal investment vehicle for
those who do not know how to invest or do not have enough time to follow market trends
regularly. Investors can select a mutual fund scheme based on their financial goals.
Mergers and Acquisitions
When a company takes over another company, it becomes the new owner; it's called an
Acquisition. From a legal viewpoint, the target company ceases to exist; the buyer controls the
business. Buyer's stock continues to be traded, while the target company's stock ceases to
trade.
A Merger is the voluntary fusion of two companies into one new legal entity. The firms that
agree to merge are roughly equal in terms of size, customers, the scale of
operations, etc. Therefore, the term "merger of two equals" is sometimes used. Mergers are
mostly done to gain market share, reduce operational cost, expand to new territories, unite
common products, and increase profits—all of which should benefit the firms' shareholders.
After a merger, shares of the new company are distributed to existing shareholders of both
original businesses.
Reserve Bank of India (RBI)
RBI is the central bank of India, which is the only bank that is authorized to plan, prepare, and
implement the monetary policy for India. The primary objective of RBI is to maintain price
stability by keeping inflation in check. It also ensures the consistent growth of the economy
while making decisions. RBI issues currency and also exchanges or destroys currency not fit
for circulation. RBI is known as the 'bank of all banks' because it regulates all banks in India.
Security and Exchange Board of India (SEBI)
SEBI, also known as the Securities and Exchange Board of India, is the regulator and controller
of the capital markets of India. The stock market, money market, etc., fall under the bracket of
the capital market. SEBI primarily works for the best interest of the investors to maintain their
confidence in the market by ensuring many checks and balances to maintain transparency.
SEBI was given statutory power under the SEBI Act, 1992 on 30 January 1992.
Basel Norms
Basel Norms are the international standards issued by the Basel Committee that aim to deal
with the banking regulations and was established to strengthen the banking system all over the
world. The committee was established in 1974 and included central bank governors of ten
countries to solve the issues regarding the regulatory framework of financial institutions.
Basel I
Basel is the first accord issued by the Basel Committee on Banking Supervision (BCBS) in Basel,
Switzerland. The accords were first established in 1988 and deal with the minimum capital
requirements for banks. The main aim of these norms is to minimize the risks associated with
the financial institutions, which include the credit risks that occur when a borrower from the
bank cannot repay his loan.
Basel II
The Basel 2 accord was first published in June 2004 and has devised rules regarding cash that
has to be maintained by financial institutions to compensate for their operations as well as
other liquidity risks. This norm is second in the series of accords issued by the
Basel Committee on Banking Supervision (BCBS). The Basel 2 norms were added to the Basel I
norms to accommodate more deep models for calculating regulatory capital. These norms
suggested mandating the financial institutions to hold more capital, which is in correspondence
to the risks associated with the institution.
The three crucial pillars of Basel II are:
Minimum Capital Requirement: It deals with the regulatory capitals for the bank which will
compensate for the credit risk, market risk, and regulatory risk associated with the bank
·Supervisory review: This pillar works as a regulator for pillar I and provides a framework
to deal with systematic risk, liquidity risk, and legal risk associated with the bank.
·Market discipline: It mandates the institution to provide information relating to the
institution to the investors and the various stakeholders. This pillar helps them to establish
the capital sufficiency of the financial institution.
Basel III
These norms were published in the aftermath of the financial crisis of 2008. These were first
published in November 2010 and was scheduled to be introduced from 2013; however, it was
extended to 31 March 2019. The accord deals with the problems faced during the financial
crisis. It aims to strengthen the bank's capital requirements by increasing the banks' liquidity
and decreasing the financial leverage associated with the banks.
WAT Topics
1. Role of AI/ML in Finance
2. The anticipation of the world towards the turnaround of global financial markets
3. How can the MSME sector evolve in these recessionary conditions?
4. The exploding use of A.I. in the investment and banking sector
5. The implication of US-China trade wars on the macroeconomic growth of the Indian
economy
6. Steps the Indian government is taking to combat an economic slowdown
7. Is the Insolvency and Bankruptcy Code, 2016, a useful reform to recover back bad loans?
8. ESG Investing
9. Structural changes in the Indian banking system to tackle the problem of growing NPAs
10. Rise of Cryptocurrencies and Blockchain
11. Rise of Gig Economy
12. Rapid growth of IPOs in India
13. Digital Currency by RBI
14. Online security and data protection in the investment and banking sector
15. Growth in Mass-Market loans
16. Real-time credit decisioning & Underwriting
17. Implication of the Russia-Ukraine war on the Indian economy
18. FTX collapse
P.I. Questions
Q1. What are the various capital budgeting methods?
Q2. Explain NPV and IRR
Q3. Can we have multiple IRR? When do we have multiple IRR?
Q4. Which method is better to make an investment decision - NPV or IRR?
Q5. What do you mean by the financial statements? What are its types? How are they
interlinked with each other? State the treatment of prepaid expenses in each of the financial
statements?
Q6. What is the market cap of the company? Is it the same as the net worth of the company?
Q7. What is depreciation? Why do we calculate it? What is the rate of depreciation on
furniture? Compute the depreciation on the chair you are sitting by both methods?
Q8. If you are to invest in a company's share, what are the three things you will check in their
books of accounts?
Q9. What is the importance of the different financial statements? Which, according to you, is
the most important and why?
Q10. How is Corporate Income double taxed?
Q11. How will you decide which project to Finance?
Q12. Extempore on Budget
Q13. What is GDP (Purchasing Power Parity)
Q14. Difference between cost, financial, and management accounting.
Q15. What is the difference between operating leverage and financial leverage?
Q16, What is the difference between the balance sheet of the company and a bank?
Q17. What is the difference between Depreciation and Amortization?
Q18. What is the difference between Gross Profit and Contribution?
Q19. What are important financial ratios for the banking sector?
Q20. Explain significance of diversification in investing.
Q21. What does Alpha and Beta of an asset signify?
Preparation Tips or Potential Interview questions:
1. Read financial statements from the annual reports of the company in which you were
working if you have work experience
2. Pick any one sector and thoroughly prepare on the growth, investments, key financial
parameters used in the sector analysis, and recent current affairs
3. Be very clear with the basic concepts, especially if you have a commerce/economics
background. Financial statements, capital budgeting methods, financial ratios are some
important topics. Be clear with the concepts of depreciation, amortization, tangible and
intangible assets, and other basic accounting terms. You should be able to answer
everything if your basics are clear
4. Must study Financial Crisis 2008 and recent M&A deals in India
5. In case you are sure that Finance is the domain you wish to choose, be clear about various
career opportunities in Finance and your preference among them
6. Have a basic understanding of SENSEX, NIFTY, and stock markets
7. How did the COVID-19 pandemic boost monopolization and market power?
Some Important Concepts
About Consulting
Let's define Consulting according to the Oxford dictionary: "Engaged in the business of giving
expert advice to people working in a specific field." In other words, a consultant advises a
specific group of people.
That's it! It's just that simple.
So, who is a consultant?
A consultant has some expertise that a group of people finds valuable, and people within that
group are willing to pay the consultant to access their knowledge.
Why is Consulting so valuable?
The answer to that lies in the core meaning of Consulting.
The true meaning of Consulting
Suppose the consultant is someone who gives advice. Then, the question is, why do people need
guidance, and why are they willing to pay for it?
People ask for advice because they want to change, attain, or become something.
That's why people want advice to get to a certain point, but they need to learn how to get there.
They are either facing obstacles or can't overcome them.
The true meaning of consulting is helping people solve problems and move from their current
state to their desired shape. The more valuable that desired state is to someone, the more they
are willing to pay for help.
Why do people hire Consultants?
There are three main reasons people decide to bring in outside advice:
They need help to figure it out or get to their desired state independently.
They have a general idea but want to get there faster.
They want to save time and effort by following an efficient and proven system.
Consulting is more than just giving advice. It involves a hierarchy of purpose:
Providing information to a client.
I am solving a client's problems.
I am making a diagnosis that may necessitate the redefinition of the problem.
They are making recommendations based on the diagnosis.
She is assisting with the implementation of recommended solutions.
I am building a consensus and commitment around corrective action.
We are facilitating client learning—teaching clients how to resolve similar problems in the
future.
Permanently improving organizational effectiveness.
Broad classification of Consulting:
When someone says, "I'm a consultant," they will typically fall into one of three categories.
Management Consulting - Management Consulting is what most people think of when
someone says "consulting." This field is dominated by large firms like McKinsey, Bain &
Company, and Boston Consulting Group, which are hired to help enterprise businesses
improve strategy and operations or manage significant business events like mergers and
acquisitions.
Corporate Consulting is a catch-all category for those with a "Consulting" job description in
the corporate world. It involves in-house consulting services, implementation teams, B2B
consulting businesses, and many others.
Independent Consulting - When someone has developed expertise in an area, they choose
to build and run their own business around that expertise.
Classification based on functionality:
Management Consulting - Management consultants, also known as business consultants or
organizational advisors in practice, focus on all sorts of regulatory concerns, from
strategy to various elements within management. Management Consulting is a collective
term for all services under Strategy Consulting, Operations Consulting, and HR Consulting.
Management Consultancy frameworks are often used to assess several factors.
Strategy Consulting - Strategy Consulting describes consultants who operate at the
highest level of the consultancy market, focusing on strategic topics like corporate and
organizational strategy, economic policy, government policy, and functional strategy.
Their focus lies more on quantitative/analytics skills, and their job description revolves
more around advising and overseeing implementation. Examples of Strategy consulting:
Corporate Strategy
Business Model Transformation
Mergers and Acquisitions
Organizational Strategy
Digital Strategy
Operations Consulting - Operations consultants are consultants who help clients
improve the performance of their operations. Consultancy activities in this segment
vary from advisory services to hands-on implementation support for primary functions
(e.g., Sales, Marketing, Production, etc.) and secondary purposes (e.g., Finance, HR,
Supply Chain, ICT, Legal, etc.)
Human Resource Consulting - HR consultants help clients with human capital
challenges and improve their HR department's performance. Chief topics central to HR
consultants' job descriptions are organizational changes, change management, terms
of employment, learning & development, talent management, and retirement
Financial Advisory Consulting – This segment generally works on questions that address
financial capabilities and, in many cases, the analytical capabilities within an organization. A
financial consultant often works with a company's CFO or the strategic consultant to help
the business align its financial goals (e.g., overhead costs, return on investments, profit
margins, etc.) with strategic goals.
IT Consulting - Technology consultants, also known as IT, ICT, or digital consultants, focus
on helping clients with the development and application of Information Technology (IT)
within their organization. IT consultants focus on transitions (projects) in the ICT landscape,
contrary to regular IT employees, who work on day-to-day IT operations (so-called
'business as usual’ activities).
Marketing Consulting – Whether you need a new logo for your company, a new market
position for one of your brands, a new social media strategy to interact with your
customers, or are planning and implementing a marketing strategy, a marketing consultant
helps in all marketing aspects of a firm's business.
Compliance and Legal Consulting – These consulting services help firms adhere to federal
and local laws and regulations. A compliance consultant must have a sound knowledge of
local laws and regulations, as it's essential for successful businesses to comply with local
and federal laws.
Others – This includes consulting groups that are not commonly practiced and can be
classified as "Small Shops."
Real Estate consulting
Engineering consulting
Design consulting
Pharma consulting
Petro consulting
Sustainability consulting
PR consulting
Skills required by a consultant
How will an MBA help you bag your dream consulting role?
1. An MBA can help you bridge the gap between your professional experience and
consulting opportunities.
2. MBA programs immediately connect you to a priceless network of people who are
invested in your success.
3. The MBA internship program improves your chances of landing your ideal full-time
consulting position. During the internship, you will have the opportunity to work in your
desired role and hone the necessary skills.
4. Provide numerous opportunities to learn, expand your horizons, and transform.
Tools and Methodologies for Consulting
Business experts have several tools at hand to analyze company performance that
consultants and business analysts use and that you might consider adding to your own set
of tools.
What is a Business Framework?
As an independent consultant, clients ultimately hire you to solve a problem or pain point.
Frameworks are helpful tools that help you analyze the issue, structure your thinking, and
communicate your recommendations. Business frameworks can help you articulate goals
with solid business writing and develop a blueprint for success. You can take a broader
conceptual framework and scale it to fit your needs. A business framework also gives you a
starting place and a common vocabulary that you can edit to fit your client's goals.
Business Frameworks for Consultants
Seven business frameworks that can be used across disciplines to answer some of the most
common business questions:
1. The 3C: Corporation, Competition, and Customer
The 3C model is a classic strategy model.
Whether you are a management consultant
hired to improve costs or a technology
consultant tasked with adding
infrastructure, the 3C model can support
analyzing intrinsic and
Extrinsic factors to developing sustainable
solutions.
(https://online.visual-paradigm.com/knowledge/strategic-analysis/what-is-ohmaes-3c-model/)
2. Porter's 5 Forces
Power is a critical element of your and your client's success. To sustain profitability and a
competitive position, you want to balance the power in your favor. Porter's Five Forces is a
valuable tool in helping you to understand both the power of your current competitive position
and the planned position.
Porter's five forces are:
1. Competition in the industry
2. Potential of new entrants into the industry
3. Power of suppliers
4. Power of customers
5. The threat of substitute products
Key Takeaways
Porter's Five Forces is a framework for analyzing a company's competitive environment
The number and power of a company's competitive rivals, potential new market entrants
suppliers, customers, and substitute products influence a company's profitability
Five Forces analysis can guide business strategy to increase competitive advantage
3. SWOT Matrix
The SWOT Analysis framework is used to evaluate the Strengths (S), Weaknesses (W),
Opportunities (O), and Threats (T) of a venture or a project.
Identifying your company's core competencies helps you define your company's positioning
and competitive advantage. A core competency is proficiency in an area that competitors do
not easily replicate. It allows your company to deliver unique value to customers, thus giving it
a "leg up" on the competition. One example is how the employees and the unique culture of
Southwest Airlines allow them to provide better customer service and faster turnaround
times for planes.
4. PEST Analysis
PEST helps you understand the broader Political, Economic, Socio-Cultural, and Technological
environment in which you operate.
The fundamental PEST analysis includes four factors:
Political factors relate to how the government intervenes in the economy. Specifically,
political factors include tax policies, labor laws, environmental laws, and political stability.
Economic factors include economic growth, exchange rate, inflation, and interest rate.
These factors significantly affect how businesses operate and make decisions. For
example, interest rates affect a firm's cost of capital and, therefore, to what extent a
business grows and expands. Exchange rates can affect the costs of exporting goods and
the supply and price of imported goods in an economy
Social factors include cultural aspects and health consciousness, population growth rate,
age distribution, career attitudes, and emphasis on safety. High trends in social factors
affect the demand for a company's products and how that company operates. For example,
an aging population may imply a smaller and less-willing workforce (thus increasing the cost
of labor). Furthermore, companies may change various management strategies to adapt to
social trends caused by this (such as recruiting older workers)
Technological factors include technological aspects like R&D activity, automation,
technology incentives, and the rate of technological change. These can determine barriers to
entry, minimum efficient production level, and influence outsourcing decisions.
https://venturefounders.com/pest-analysis/
5. BCG Matrix
The BCG Growth-Share Matrix provides a framework for deciding how to use resources. It is
also helpful in assessing each product or business unit's ability to generate profit continuously.
Four categories of BCG matrix
Four categories of BCG matrix
The BCG growth-share matrix breaks down products into four categories:
Question marks – High Growth, Low Market Share (Uncertainty)
Dogs – Low Growth, Low Market Share (Less Profitable)
Stars – High Growth, High Market Share (High Competition)
Cash cows – Low Growth, High Market Share (Most Profitable)
It is simple to implement and easy to understand. Larger companies can use it to seek volume
and experience effects. It predicts the future actions of a company.
Hence, the company can decide on its proper management strategy. It helps managers
evaluate balance in the firm's current Question Marks, Dogs, Stars, and Cash Cows portfolio.
https://www.business-to-you.com/bcg-matrix/
7. MECE
MECE is a systematic problem-solving framework that helps to solve complex problems. It
can help you eliminate confusion and focus on critical data that point toward success.
Benefits of using a Business Strategy Framework
A business framework can analyze and guide your client's and your business's decisions. For
example, the 3C Model can help you develop a competitive strategy for your client or can be
applied to develop a social media marketing plan for your brand.
There is no one best framework, and you often use multiple frameworks in your client's work.
Frameworks save you time by providing a starting point for information gathering and analysis,
but remember, your expertise and common sense are the most powerful framework you have.
These tools are time-savers, but your business insight will ultimately deliver value to your
client.
https://www.caseinterview.com/mece
Guesstimate Questions
1. Calculate the number of COVID tests to be conducted in Delhi daily.
2. How many Samsung phones are currently being used in India?
3. .How many masks were sold in April 2021?
4. .How many masks were sold in the previous month?
5. How much drinking water is needed for your hometown?
6. How many volleyballs can you place inside the room we are currently in?
7. How many weddings are held in India each day?
8. Estimate the total revenues from Harry Potter films if they are released today.
9. How many people fly in and out of Mumbai Airport every day?
10. What is the size of the market for disposable masks in a day?
11. How many golf balls/ footballs would fit inside a Boeing 747?
12. Guesstimate the total revenue earned by the Indian tourism industry in February and March
2021.
13. How would you estimate the market size of the food delivery industry?
14. How many extra petrol pumps are needed in India in the current scenario?
15. How would you estimate the revenue of a Cricket stadium hosting a T20 match?
16. What's the daily requirement of tomatoes for McDonald's?
Interview Questions
1. Why do you want to pursue consulting?
2. What makes a good consultant?
3. What, according to you, is essential to be a consultant?
4. What is the primary cause of concern for consulting firms around the world?
5. Facts vs. instincts. Which is more important?
6. Bottom-up vs. top-down approach. Which is better, according to you?
7. How should consultants set prices for projects?
8. How do you size a market?
9. Why do companies need consultants?
10.Tell me about a time when you faced an ethical dilemma and how you managed it.
11. How would you explain a complicated technical issue to a client?
12. How does a consultant segment a market?
13. What factors will you consider if you want to start a McDonald's outlet in India?
14. What skills do you believe are crucial for success in management consulting?
15. Which industry do you see evolving and why?
16. What are some important ethical considerations for consultants?
Typical Business Problems
Do you think an alliance makes sense? Would the market share value of the whole be
higher than the sum of the parts?
Five new competitors will enter the market in the next three years. We need a sales
forecast for the next five years. Develop a strategy that would allow us to preserve/gain
market share
My marketing department is burning money. I need to reduce costs without affecting
performance and sales in any way
I need a Data warehouse built for my company. I don't even have a single centralized data
repository – everything exists on employees' laptops in a thousand spreadsheets. How do I
go about it?
I want to introduce my product/service in China, Taiwan, and Malaysia. Please build me a
roadmap and entry/launch strategy
The following articles/videos may help you:
How Consultants Project Expertise and Learn at the Same Time | Co-working Consulting
Consulting Is More Than Giving Advice (hbr.org)
6 Tools Every Business Consultant Should Know (harvard.edu)
Project Management Consulting Skills - How consultants manage projects and file structures YouTube What Does A Consultant Do - Successful Coaching & Consulting Secrets Ep. 4 YouTube
Other Sources:
https://www.mbopartners.com/blog/how-grow-small-business/top-business- frameworks/
https://www.bcg.com/en-in/about/our-history/growth-share-matrix
https://fourweekmba.com/3c-model/
https://expertprogrammanagement.com/2018/05/pest-analysis/
https://www.consultancy.in/career/types-of-consultants
https://www.consulting.com/what-is-consulting-definition
What is Marketing
The process of developing, communicating, delivering, and trading offerings that are valuable
to customers, clients, partners, and society at large collectively is known as marketing.
What is Sales
An activity that involves transferring the ownership of a good or commodity to the buyer in
exchange for a monetary price is known as a sale. For example, an insurance agent trying to
sell insurance, a salesperson selling encyclopedias door to door.
Difference between Marketing and Sales
The primary objective of sales is to match the expectations of the customers. Marketing
involves a range of activities, from selling to distributing. Its main objective is to sell a
company’s goods and services. In Sales, the main focus is to increase sales and maximize
revenue. In contrast, Marketing’s primary focus is to increase customer satisfaction. It also
aims to promote goods and services, price them, and make them available to customers. It
also focuses on after-sales services.
The 4Ps of Marketing
1. Product
A product is any good or service that fulfils consumer needs or desires. It can also be
defined as a bundle of utilities that comes with physical aspects such as design, volume,
brand name, etc.
Product Mix
Product mix, also known as product assortment or product portfolio, refers to the complete
set of products and services. A product mix consists of product lines, which are associated
items that consumers use together or think of as similar products or services.
Product Line
Similar products with different colours, sizes, tastes, etc., are sold under one brand name.
E.g., Oreo's Chocolate, Normal, Orange, etc., flavours & their different weights.
Product Line Length
It is defined as the number of products in a single product line. The previous example shows
that Oreo has a product line length of 3.
Product Line Width
It is defined as the number of similar product lines parallel. You may have two or more brands
under the biscuits or beverage category. E.g., Coca-Cola has a Minute maid line, Coke line,
Sprite, and Powerade. Each of these lines has different variants & SKUs, which makes product
length.
Product Mix Width
It is the total of all product lines under all the categories. If we see Unilever's product mix, we
will find various types such as skin soap, detergent, deodorant, ice cream, shampoo, etc. The
total of the entire range makes the product mix width.
2. Price
Price is the amount you charge customers for the previously determined product or service.
The right price drives up the most amount of sales and the most profit for your company. The
price also must be related to the product’s real and perceived value.
Below are some standard pricing methods:
a. Value-based Pricing: You set your prices according to what consumers think your
product is worth with value-based pricing.
b. Competitive Pricing: When you use a competitive pricing strategy, you set your prices
based on what the competition charges. This can be a good strategy in the right
circumstances, such as a business just starting, but it leaves little room for growth.
c. Price Skimming: If you set your prices as high as the market will possibly tolerate and
then lower them over time, you'll be using the price skimming strategy. The goal is to skim the
top off the market by reducing prices to attract the mass. It can work with the right product,
but you should be cautious.
d. Cost-Plus Pricing: This is one of the simplest pricing strategies. You take the product’s
production cost and add a certain percentage. While simple, it is less than ideal for anything
but physical products.
e. Penetration Pricing: It can be challenging for new companies to get a foothold in highly
competitive markets. Some companies attempt to push new products by offering lower prices
than the competition. This is penetration pricing. While it may get you customers and decent
sales volume, you'll need a lot of them, and you'll need them to be very loyal to stick around
when the price increases in the future.
f. Economy Pricing: This strategy is popular in the commodity goods sector. The goal is to
price a product cheaper than the competition and make money with increased volume. While
it's an excellent method to get people to buy your generic soda, it's not a great fit for SaaS and
subscription businesses.
g. Dynamic Pricing: In some industries, you can get away with constantly changing your
prices to match the current demand for the item. This doesn't work well for subscription and
SaaS businesses because customers expect consistent monthly or yearly expenses.
3. Place
The place is the channel of distribution a company chooses to increase the reach of its
products.
Various distribution channels that can be used are:
• Direct Sales: Door-to-door, Selling at Manufacturer's Plant
• Indirect Marketing Channel: One-Level Channel, Hybrid Distribution Channel, or
Multi-Channel Distribution System.
• Ecommerce
4. Promotion
Promotion includes all the advertising and public relations that make up your promotional
strategy for your product. Promoting your product aims to show consumers why they need
it, what problem it will solve for them, and why they should fork over their hard-earned
money for it.
What is Segmentation, Targeting, and Positioning?
Segmentation is a marketing technique that helps a marketer identify and profile a distinct
group of buyers according to their needs. Once the segmentation is complete, the marketer
must decide which segment to target to sell their product or service. This process is called
targeting. After segmentation and targeting, the marketer must establish and communicate
the benefits of offering to develop an image in the customer's mind which is known as
positioning.
5Cs of Marketing
5C Analysis is used to examine the environment in which a company works. Along with risk
exposure to numerous environmental elements, it can provide light on the main success
factors. The five Cs are context, company, collaborators, customers, and competitors.
a. Customer - Identify the needs and target clients you seek to please. Market segments,
purchase frequency, volume, retail channels, and consumer wants are possible to study
topics based on long-term trends.
b. Company- Evaluate your organization's capacity to satisfy those customers' needs.
Consider whether your business has the appropriate product range and technical know-how.
The "SWOT" study is an excellent technique for identifying the strengths and weaknesses of
your business.
c. Competitors - Find out whom your organization competes with to satisfy customers'
needs. Is the rival a real threat or just another possible rival? What precisely do they sell?
What are their advantages and disadvantages?
d. Collaborators - Ascertain whether an outside source or third-party assistance, such as
distributors, suppliers, etc., can benefit the business.
e. Context/Climate - Examine any constraints brought on by:
Economic concerns include growth rate, labor costs, and business cycle stage. Social
concerns include demographics, education, and culture.
Technological developments have an impact on cost structures.
Environmental concerns include climate, recycling practices, waste disposal, and
sustainability.
Legal framework concerns include employment law, consumer law, and health and safety
regulations.
Key trending concepts
What is Digital marketing?
Digital marketing is a type of direct marketing that uses interactive media like emails,
websites, online forums and newsgroups, interactive television, mobile communications, etc.,
to connect buyers and sellers electronically.
What is Social Media Marketing?
It is a marketing strategy to promote your brand and product on numerous social media
platforms, such as Facebook, Twitter, and others, to raise brand recognition and produce
leads for the company.
What is Content marketing?
The creation and promotion of material for a product, brand, or consumer awareness, lead
generation, or increased website traffic is known as content marketing.
What is a Brand?
A brand is a collection of qualities of a good or service that a consumer associates with it
through a name, symbol, logo, design, or other trademarks. Brand management is essential to
create a package of benefits for various product categories, product differentiation from
rivals, and building a corporate image.
What is AIDA?
The AIDA model is the foundation for every brand's marketing plan. Attention, Interest, Desire,
and Action are abbreviated as AIDA. Each phrase corresponds to a specific step in the
purchasing process.
Awareness
To make customers aware of offerings, a marketer needs to catch their attention and notice
or take in visual media. Various approaches are implemented to get potential customers'
attention, like placing an ad in an unusual but noticeable place. Personalized messages, like
those used in one-to-one marketing, are harder to ignore than generic proposals.
Interest
Customer interest must be piqued and held long enough to gain information about the product.
One approach to maintaining interest is presenting concise and well-paced information
delivered by an exciting character, voice actor, or mascot.
Desire
Desire is often built up by selling on a product's features, showing superiority over similar
products, and demonstrating versatility. Essentially, this is the presentation of a product or
service's value proposition, the compelling benefits that induce a consumer to select this
particular offering, leading to the decision to purchase.
Action
The final step is closing the sale and convincing the customer to act on interest, which may
involve overcoming objections and making a call to action (CTA)
Important Concepts
Fiscal Policies:
It is the means through which a country controls its revenues and expenditures to achieve
economic objectives. The two principal instruments of Fiscal policy are taxation and
government spending. The changes in the above two components are expected to bring out a
difference in the aggregate demand, savings, investments, and income distribution. It is the
sister strategy to monetary policy through which a central bank influences a nation's money
supply. Fiscal policy can be contractionary or expansionary in nature.
Monetary policies:
Monetary policy is the process by which the monetary authority of a currency controls the
supply of money, often targeting an inflation rate or interest rate to ensure price stability and
general trust in the currency. Monetary policy is maintained by changing the interest rate or
the amount of money banks need to keep in the vault (bank reserves). Monetary policy is
referred to as either being expansionary or contractionary, where an expansionary policy
increases the total supply of money in the economy more rapidly than usual, and a
contractionary policy expands the money supply more slowly than usual or even shrinks it.
GDP:
The gross domestic product (GDP) is one of the primary indicators used to gauge the health of
a country's economy. It is the market value of all the finished goods and services produced
within a country in a particular time period.
One of the ways to calculate GDP is by expenditure method:
GDP= C+ I +G + NX
"C" equals all private consumption or consumer spending in a nation's economy.
"G" is the sum of government spending.
"l" is the sum of all the country's businesses’ spending on capital.
'I NX" is the nation's total net exports, calculated as total exports minus total imports.
(NX = Exports- Imports)
A country’s GDP can also be calculated using the Income method and the Value-Added method.
Real v/s Nominal GDP:
The main difference between real and nominal values is that real values are adjusted for
inflation while nominal values are not. Generally, for a country with positive inflation, nominal
GDP will often appear higher than real GDP. Nominal GDP = Pt * Qt)
Where P refers to the price, Q is the quantity, and t indicates the year (usually the current
year).
Real GDP = Z (Pb * Qt)
Where, b denotes the base year.
India's Nominal GDP $3.18 trillion
PPP India's GDP
$10.19 trillion
GDP by Sector
Agriculture : 18.80%
Industry : 28.20%
Services : 53.00%
One uses the nominal GDP figures to determine the total value of the products and services
manufactured in a country during a particular year. However, when one wants to compare
GDP in one year with past years to study trends in economic growth, real GDP is used.
Taxes:
Direct Taxes, as the name suggests, are taxes that are directly paid to the government by the
taxpayer. It is a tax applied to individuals and organizations directly by the government, e.g.,
income tax, corporation tax, wealth tax, etc. A direct tax cannot be shifted to another individual
or entity. The individual or organization upon which the tax is levied is responsible for fulfilling
the tax payment.
Indirect Taxes, are applied to the manufacture or sale of goods and services. These are initially
paid to the government by an intermediary, who then adds the amount of the tax paid to the
value of the goods/services and passes on the total amount to the end user. It can also be
defined as a tax that increases the price of a good so that consumers are actually paying the
tax by paying more for the products. Examples of these are sales tax, service tax, excise duty,
etc. Indirect taxes, unlike direct taxes, can be shifted from one taxpayer to another.
Deficit:
Fiscal Deficit: It is an economic phenomenon where a government's total expenditures exceed
the revenue that it generates (excluding money from borrowings). Deficit differs from debt,
which is an accumulation of yearly deficits. The primary component of fiscal deficit includes:
Revenue deficit: It is an economic phenomenon where the net amount received fails to meet
the predicted net amount to be received. Capital expenditure: It is the fund used by an
establishment to produce physical assets like property, equipment, or industrial buildings. In
India, the fiscal deficit is financed by obtaining funds from the Reserve Bank of India.
Primary Deficit:It is an amount by which a government's total expenditure exceeds its total
revenue,excluding interest paymentson its debt.
Primary Deficit = Fiscal Deficit— Interest Payment
The total borrowing requirement of the government includes the interest commitments on
accumulated debts. The primary deficit reflects the extent to which such interest
commitments have compelled the government to borrow in the currentperiod.
GST:
Goods and Services Tax (GST) is a comprehensive tax levy on the manufacture, sale, and
consumption of goods and services at a national level. Through a tax credit mechanism, this tax
is collected on value-added goods and services at each stage of sale or purchase in the supply
chain. The system allows the set-off of GST paid on the procurement of goods and services
against the GST, which is payable on the supply of goods or services. However, the end
consumer bears this tax as he is the last person in the supply chain. Experts say that GST is
likely to improve tax collections and boost India's economic development by breaking tax
barriers between States and integrating India through a uniform tax rate. (Source:
http://gstindia.com/)
Balance of Payments(BOP):
The Balance of Payments shows the country’s transactions with the rest of the world. It notes
inflows and outflows of money and categorizes them into different sections. The balance of
payments, also known as the balance of international payments, encompasses all transactions
between a country's residents and its nonresidents involving goods, services, and income;
financial claims on and liabilities to the rest of the world; and transfers such as gifts. The
different sections of the Balance of Payments are:
Current Account Balance of Payments measures transactions for goods and services
(used to be called visible and invisibles). It measures the inflow and outflow of goods,
services, and investment incomes. The current account comprises the trade balance(which
is a trade in goods) and also includes the balance of trade in services. The main
components of the current account are: 1. Trade in goods (visible balance) 2. Trade in
services (invisible credit), e.g., insurance and services 3. Investment incomes, e.g.,
dividends, interest, and migrants’ remittances from abroad 4. Net transfers — e.g.,
international aid
Current Account Deficit: A measurement of a country's trade in which the value of goods and
services it imports exceeds the value of goods and services it exports. The current account
also includes net income, such as interest and dividends, and transfers, such as foreign aid.
However, these components comprise a smaller percentage of the current account than
exports and imports. A current account deficit represents negative net sales abroad.
Developed countries, such as the United States, often run current account deficits, while
emerging economies often run current account surpluses. Countries that could be a better
end to run current account deficits.
Financial Account (Capital) Balance of Payments The capital account of the balance of
payments measures the outflow and inflow of capital into the economy. It takes into
account the movement of capital, both short-term and long-term, and the loan repayments.
This includes: i) Foreign direct investment, ii) Purchase of securities by investors
Loans by international financial institutions in a floating exchange rate, a current account
deficit must be matched by a surplus on the financial account.
Balance of Payments Crisis
A balance of payment crisis, also called a currency crisis, occurs when the current account
deficit cannot be maintained. It means there will be a fall in foreign exchange reserves, and the
country needs more capital flows to finance the current account deficit. Crises are generally
preceded by large capital inflows, initially associated with rapid economic growth. However, a
point is reached where overseas investors become concerned about the level of debt their
inbound capital is generating and decide to pull out their funds. The resulting outbound capital
flows are associated with a rapid drop in the value of the affected nation's currency.
Balance of Trade
The difference between a country's imports and its exports is termed as balance of Trade. The
balance of trade is the largest component of a country's balance of payments. Debit items
include imports, foreign aid, domestic spending abroad, and domestic investments abroad.
Credit items include exports, foreign spending in the domestic economy, and foreign
investments in the domestic economy. A country has a trade deficit if it imports more than it
exports; the opposite scenario is a trade surplus.
Inflation
Inflation is defined as a sustained increase in the general level of prices for goods and
services. As inflation rises, the purchasing power of the currency falls. It represents the loss
of real value of money.
Inflation rate = (this year's price index — last year's price index)/last year's price index
There are two main price indexes to measure inflation:
Consumer Price Index (CPI): A measure of price changes in consumer goods and services
purchased by households.
Wholesale Price Index (WPI): It represents the price of a representative basket of
wholesale goods.
There are several types of inflation:
Deflation: When the general level of prices is falling. This is the opposite of inflation.
Stagflation: The combination of high unemployment and economic stagnation with
inflation.
Hyperinflation: It refers to unusually rapid inflation. In extreme cases, this can lead to the
breakdown of a nation's monetary system.
Foreign Direct Investment (FDI)
An investment made by a company or entity based in one country, into a company or entity
based in another country. The investing company may make its overseas investment in a
number of ways - either by setting up a subsidiary or associate company in the foreign
country, or by acquiring shares of an overseas company. An investing company may make its
overseas investment in several ways - either by setting up a subsidiary or associate company
in a foreign country, acquiring shares of an overseas company or through a merger or joint
venture. Entities making direct investments typically have a significant degree of influence
and control over the company into which the investment is made.
An increase in FDI may be associated with improved economic growth due to the influx of
capital and increased tax revenues for the host country. Host countries often try to channel
FDI investment into new infrastructure and other projects to boost development. (Source:
http://www.investopedia.com/)
Types of Markets:
Monopoly: A situation in which a single company or group owns all or nearly all of the
market for a given type of product or service. By definition, a monopoly is characterized
by an absenceof competition, which often results in high prices and inferior products. For
example, Hindustan Aeronautics Limited has a monopoly over the production of aircraft.
Oligopoly: A situation in which a particular market is controlled by a small group of firms.
An oligopoly is much like a monopoly, in which only one company exerts control over most
of a market. In an oligopoly, there are at least two firms controlling the market.
Oligopolies can result from various forms of collusion, which reduce competition and lead
to higher prices for consumers. Example- Most of the telecommunication in India is
dominated by Airtel, Vodafone, Idea, and Reliance.
Perfect Competition: Perfect competition is the opposite of a monopoly. Under perfect
competition, there are many buyers and sellers, and prices reflect supply and demand. A
market structure in which the following five criteria are met:
All firms sell an identical product
All firms are price takers - they cannot control the market price of their product.
All firms have a relatively small market share.
Buyers have complete information about the product being sold and the prices charged by
each firm; and
The industry is characterized by freedom of entry and exit.
Important terms
Cash Reserve Ratio (CRR): It refers to the ratio of demand deposits, time deposits, and cashon-hand that commercial banks are required to maintain with RBI. Lowering CRR will leave
the banks with excess reserves towards making loans and would, therefore, increase the
money supply.
Statutory Liquid Ratio (SLR): It refers to the ratio of demand deposits and time deposits that
commercial banks are required to maintain in the form of cash, gold, or government
securities. Like CRR, It determines how much of their deposits commercial banks will have
available towards making loans.
Repo Rate: Repo rate is the rate at which the central bank of a country (Reserve Bank of India
in case of India) lends money to commercial banks in the event of any shortfall of funds. Repo
rate is used by monetary authorities to control inflation. In the event of inflation, central
banks increase the repo rate, which acts as a disincentive for banks to borrow from the
central bank. This ultimately reduces the money supply in the economy and thus helps in
arresting inflation.
Reverse Repo Rate:
Reverse repo rate is the rate at which the central bank of a country borrows money from
commercial banks within the country. It is a monetary policy instrument that can be used to
control the money supply in the country. An increase in the reverse repo rate means that
commercial banks will get more incentives to park their funds with the RBI, thereby
decreasing the supply of money in the market.
Bank Rate:
This is the rate at which RBI lends money to banks or financial institutions. The Bank rate
signals RBI's long-term view of the economy and outlook for interest rates. If the bank rates
were to increase, banks would increase lending rates to their customers to maintain their
profit margins.
Various Policy Rates by RBI (as on December 07, 2022):
SLR Rate
18.00 %
CRR
4.50 %
Repo Rate
6.25 %
Reverse Repo Rate
3.35 %
Marginal Standing Facility
Rate
6.50 %
Bank Rate
6.50 %
Standing Deposit Facility Rate
6.00 %
Lending/ Deposit Rates By RBI(as on December 07, 2022):
Base Rate
8.10% - 8.80%
MCLR (Overnight)
7.05% - 8.05%
Savings Deposit Rate
2.70% - 3.00%
Term Deposit Rate > 1
Year
6.10% - 7.25%
Important Links
Current Affairs:
India's GDP forecast : World Bank: shorturl.at/nrFX3
Inflation Rate in India : January Data: shorturl.at/rQRSZ
Finshots Recap—The best stories on economics 2022: https://finshots.in/archive/recap2022-the-best-stories-on-economics/
General Economics:
http://www.rbi.org.in/scripts/Glossary.aspx
http://indiabudget.nic.in/budget2015-2016/survey.asp
http://www.google.com/publicdata/directory
http://www.tradingeconomics.com/
http://www.economist.com/debate/archive
http://forbesindia.com/blog/category/economy-policy/ http://blogs.lse.ac.uk/indiaatlse/