THE NEWSLETTER

VOL 21

ECONOMICS

AROUND THE

GLOBE

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 Vol 21, Bulls and Bears Page 2

Is India Becoming a Manufacturing Powerhouse?

India's Merchandise Exports Soar to Record High in 2021-22

I ndia ' s m e r c h a n dise exports to uched a $352. 7 6 b i l l i o n . Electronics g oods are

recor d h i g h o f $418 billion in th e 2021-22 now o n e o f t h e top items i n India's
f i n anc i a l y e ar, exceedin g the i mpor t b a s k e t , after gold, following a
gover n m e n t ' s t arget by about 5% and massi v e p u s h f r om the producti on-linked
recor d i n g a 40% growth o ver the i ncen t i v e s c h e m e.
https://m.economictimes.com/industry , https://telecomtalk.info/india-likely-to-become-a-5g-manufacturing/373676/, https://images.app.goo.gl/Xyp6bbvsPZz4d5716

previ o u s y e a r , official data sho wed. The

data released by the Ministry of The t o p f i v e export destinations for
Comm e r c e a n d Industry on Sunday I ndia a r e t h e US, the UAE, China,
revea l e d t h a t I ndia's exports in March Bangl a d e s h , a n d the Netherlands, with a
alone reached $40.38 billion, the signi f i c a n t s h a r e of the exports going to
maxim u m i n a single month, driven by devel o p e d c o u ntries. Sarangi pointed
robus t g r o w t h in petroleum products, out t h a t t h e U S is India's bigge st market
engin e e r i n g , gems and jewellery, f or e n g i n e e r i n g goods, while th e UAE is
chemi c a l s , a n d pharmaceuticals. The its largest m arket for petroleum
Depar t m e n t o f Commerce had set a produ c t s , a n d the Netherland s is the
merch a n d i s e e xport target of $400 l arge s t m a r k e t for drugs and pha rma.
billion fo r 2 0 2 1 -22, up from $29 2 billion
i n 20 2 0 - 2 1 . I ndia co n c l u d e d an interim trade deal
with Au s t r a l i a on Saturday, with more
I n a p r e s s b r i e f i ng on Sunday, Commerce t han 9 5 % o f I n dian goods getting duty-
and I n d u s t r y Minister Piyush Goyal f re e a c c e s s t o the Australian market
l aude d I n d i a 's diversified export f ro m t h e d a y o f implementing the pact.
portf o l i o , w h i c h he said shows the I n Fe b r u a r y , I n dia and the U AE also
count r y ' s m a n ufacturing abilities and signe d a c o m p rehensive FTA, which will
growt h in h i - t e c h goods, electronics, and i mme d i a t e l y e l i m inate duties for 90% of
agric u l t u r a l p r oducts. He poi nted out I ndia ' s e x p o r t s t o thin value terms to the
t hat t h e f r e e - t rade agreemen ts (FTAs) UAE, c o v e r i n g sectors including gems
I ndia i s e n t e r i ng into are a imed at and j e w e l l e r y , textiles, leath er, and
i ncre a s i n g e x ports of finished or engin e e r i n g g o o ds from the day the pact
i nter m e d i a t e goods, highlighting that come s into force.While ec onomists
I ndia i s n o l o nger just an exp orter of expec t i m p o r t s to touch the hig hest ever
prima r y g o o d s . on a c c o u n t o f elevated prices of global
crude oi l a n d commodities, Ad iti Nayar,
Direc t o r - G e n e r a l of Foreign Trade chief e c o n o m i s t at ICRA, said th at India's
Santo s h S a r a n g i also noted that India's expor t s h a d surpassed expectations,
expor t s a r e g r a dually moving towards drive n by r i s i n g commodity pr ices and
manu f a c t u r e d goods, visi ble in robus t M a r c h exports.She expects the
engin e e r i n g and electronics goods curre n t a c c o u n t deficit to recede to
expor t s , w h i l e export of non-p etroleum under $ 2 0 b i l l i on in the fourth q uarter of
goods w a s u p b y more than 30% at 2021- 2 2 f r o m $ 2 3

CHRIST (Deemed to be University), Bannerghatta Campus

 Vol 21, Bulls and Bears Page 3

f ourt h q u a r t e r of 2021-22 f rom $23 With t h e s u c c e s sful conclusion of trade

billion i n Q 3 . deals w i t h A u s t ralia and the UAE, and
ongoi n g n e g o tiations with other
In conclusion, India's record high count r i e s , I n d i a 's exports are p oised for
merch a n d i s e e xports in the 2021-22 conti n u e d g r o wth. This achievement is
f i n anc i a l y e a r i s a clear indicati on of the not o n l y s i g n i f i c ant for India's economy
count r y ' s g rowing manufacturing but a l s o f o r i t s standing in the global
capab i l i t i e s , d i v ersification, and ability marke t p l a c e , establishing it as a
t o ad a p t t o changing global trade comp e t i t i v e p l a yer and valuabl e partner
dynam i c s . T h e government's efforts to i n in t e r n a t i o n a l trade.
i ncre a s e e x p o rts of finished or
i nter m e d i a t e g oods through f ree-trade
agree m e n t s w i th key partners have
borne f r u i t , l e a d ing to significan t growth
i n ex p o r t s o f e ngineering, ele ctronics,
gems and jewellery, and
pharm a c e u t i c a l s , among other s ectors.
https://leistritzcorp.com/ , https://www.businesstoday.in/

-Aishwary Raghuwanshi

CHRIST (Deemed to be University), Bannerghatta Campus

 Vol 21, Bulls and Bears Page 4

Million Dollar Question: Which is the safe investment?

I n r ec e n t t i m e s , the Financial Markets Consi d e r i n g a l l these factors in mind,

and Ba n k i n g s ector is suffering from
i nsta b i l i t y due to various factors
i nduc e d b y COVID-19 and Russia -
Ukrai n e W a r such as asse t prices
colla p s e , m a r ket prices spike and
expec t a t i o n s o f widespread def aults led
t o a s u r g e i n b o rrowing costs and supply
and d e m a n d c h ain shocks. Th e major
shock ca m e o n March 10, 2023, when
Silic o n V a l l e y Bank (SVB) failed after a
bank r u n m a k i ng it the second largest
bank f a i l u r e i n the United St ates and
sendi n g s h o c k s in the financial markets,
f ollo w e d b y t h e collapse of oth er banks
such a s C r e d i t Suisse. This cha nged the
www.winvesta.com http://paperdirect.com
i nves t o r s i n t h e present situati on are in
chaos fo r f i n ding a safe haven for
i nves t m e n t . T h e best way to invest for
t hem i s g o l d a s gold prices are expected
t o ha v e a n u p w a rd trend for a f ew years
as p e r t he s e c u lar uptrend whic h usually
l asts f o r f o u r t o five years irrespective
of the p a s t y e a rs’ evidence considering
t he ot h e r t w o s afe investments such as
t he US T r e a s u ry Bond and UK Glit are
t urni n g o u t t o be volatile and inflation
rate i n t h e s e two countries are higher
and ex p e c t e d to continue in the
upcom i n g y e a r s also shows that gold can
be ad j u s t e d f or the rise in prices in

shift o f f o c u s o f investment fo r people f utur e y e a r s .

t o ot h e r h a v e n s such as gold an d silver.

Dolla r I n d e x r e tracted immediat ely after

t he S V B ’ s c r i s i s from 106 leve ls to 103
l evel s w h i c h f u rther provided support
f or t h e su r g e i n gold prices. Go ld prices
i n th e w o r l d m a rket have reach ed $1880
per o u n c e , w h ich affects the price of
silve r , w h i c h h a s reached $23 per ounce.

Howe v e r , i n v e stment in gold needs

cauti o n a s t h e past pieces of evidence
have s h o w n g o l d is proving to be a safe
haven o n l y f o r a period of a m onth. For
examp l e , the price of gold grew
i mme d i a t e l y a f t er the 2001 terrorists
attac k b u t i t b ecame volatile after 2
weeks an d t h i s goes the same for the
2008 U. S . A f i n a ncial markets crisis. This
shows t h a t g o ld is losing its value
conse q u e n t l y s o that it can pe rform in
t he n e x t s t o r m .
-Kriswin E

CHRIST (Deemed to be University), Bannerghatta Campus

 Vol 21, Bulls and Bears Page 5

Tax Benefits for Debt Mutual Funds Scrapped?

What are debt mutual funds?
Debt m u t u a l funds are a type of
i nves t m e n t f u n d that primarily invests in
f i x ed- i n c o m e s e curities such a s bonds,
deben t u r e s , g o v ernment securi ties, and
other de b t i n s t r uments. These funds are
mana g e d b y p r ofessional fund managers
who i n v e s t t h e money collec ted from
i nves t o r s i n v a rious debt securities with
diffe r e n t m a t u r i ties and credit r atings to
gener a t e r e t u r ns. Debt mutual funds are
consi d e r e d t o b e a low-risk in vestment
optio n a s c o m pared to equit y mutual
f unds s i n c e t h e y invest in fixe d-income
secur i t i e s t h a t offer a fixed rate of
retur n . T h e r e t urns generated by these
investopedia.com
This ma k e s t h e m an attractive post-tax
optio n f o r l o n g term investor s in the
highe r i nc o m e t ax brackets compared to
f i x ed d e p o s i t s (FDs) and bonds . Interest
i ncom e f r o m F Ds and bonds is taxed at
an in d i v i d u a l ’ s i ncome tax slab rate.
Post F i n a n c e B i ll
Effec t i v e 1 s t A pril 2023, debt m u t u a l
f unds w i t h o n ly around 35% equity
expos u r e are going to be taxed
diffe r e n t l y f r o m now on. They will be
t axed at t h e i n v e stor’s slab rates and are
now c o n s i d e r e d as short-term capital
gains . Wha t d o e s t h at mean? Well, it

f unds a r e p r i marily dependent on the mean s th a t t h e investments you make in

preva i l i n g i n t e rest rates, credi t quality debt m u t u a l f unds won’ t e n j o y t he
of t h e u n d e r l y ing securities, and the i ndex a t i o n b e nefit (a. k . a i n f l a tion
matur i t y p e r i o d of the inve stments. adjus t m e n t ) a n y more.
I nves t o r s c a n c hoose from a v ariety of
debt mu t u a l f und categories, such as
l i q uid f u n d s , s hortterm fund s, long-
t erm f un d s , a n d credit risk fund s, among
other s . E a c h c a tegory of debt mutual
f und has a different in vestment
objec t i v e , risk profile, and return
poten t i a l . O v e r a ll, debt mutual funds are
suita b l e f o r i n vestors who are looking
f or a l ow - r i s k i n vestment option with a
regul a r i n c o m e stream and capital
prese r v a t i o n .

The si t u a t i o n b efore the fina nce bill -

fisdom.com , www.news18.com

Curre n t l y , any capital gain on

redem p t i o n o f a debt fund held for three
years o r l o n g e r is treated as long-term
capit a l g a i n a n d is taxed at a flat 20
perce n t w i t h indexation benefit. Any
capit a l g a i n o n redemption bef ore three
years i s t r e a t e d as short-term capital
gain an d i s t axed at an ind ividual’s
i ncom e t a x s l a b rate.

CHRIST (Deemed to be University), Bannerghatta Campus

Vol 21, Bulls and Bears Page 6

Equity Exposure to
Indian stocks, ETFs
and equity 0-35% 36%-64% 65% and more
oriented mutual
funds

Equity funds
All debt funds
Aggressive hybrid
Gold ETF
Balanced fund
Multi-asset funds
Fund Types Hybrid Balanced advantage
Conservative
Funds funds
hybrid fund
Arbitrage funds
International FoF

As per your
Short-term tax slab
As per your tax slab 15% (less than 1 year)
capital gain (less than 3
years)

20% with
10% on gains more than
Long-term indexation
As per your tax slab Rs 1 lakh (more than 1
capital gain (more than
year)
3 years)

I n th e p a s t , i f you had made a fixed

depos i t o f R s 1 lakh in a bank with an
i nter e s t r a t e o f 7%, you would have had
https://www.piggy.co.in/blog/best-debt-funds/

t o pay t ax o n t h e interest income every

year b a s e d o n your slab rate. But, i f y o u
had i n v e s t e d t h at same Rs 1 lakh in a
mutua l f u n d a nd held it for o ver three
years , t he p r o f i t o n sale would be
consi d e r e d a s c apital gains an d would
only b e s u b j e c t to tax in the year of sale.
Unlik e fi x e d d eposits, which a re taxed
every ye a r a s ‘ i n com e f r o m other
sourc e s ’ . Plus, t h e g a i n s from mutual
funds we r e a d j u sted for inflatio n using a
proce s s c a l l e d indexation.

CHRIST (Deemed to be University), Bannerghatta Campus

 Vol 21, Bulls and Bears
Let’s b r e a k i t down for you with an
examp l e ! A s s u m ing you invest Rs 1 lakh
i n bo t h o p t i o ns, each providi ng a 7%
retur n .
Let’s ex a m i n e the tax implications for
both i n c o m e s i f you fall under the 30%
t ax b r a c k e t :
Investment
Particulars
in FD
https://www.wealthzi.com
Tax 7%*30% = 2.1
Effective Return 4.9%
The p o s t - t a x r e turn from FDs does not
even b e a t t h e i nflation rate of 5 % in our
examp l e . W h i c h means you lose money
when y o u i n v e s t in FDs?
With t he r e c e nt developments, it may
seem l i k e t h e debt funds are now on
equal f o o t i n g w ith fixed depo sits but
t here ar e s t i l l many reasons w hy debt
f unds c a n b e a great investment option:
Unlik e F D s , d ebt mutual funds are
t axed only when you sell the
i nves t m e n t s . T herefore, it can be a
great t a x d e f e r r a l vehicle.
CHRIST (Deemed to be University), Bannerghatta Campus
Page 7
Investment in Debt Mutual Fund
(7%-5%)*20%= 0.40
Here, the return will be adjusted for 5%
inflation. Only 2% will be taxed
6.60%
Flexi FD s p r o v i de the flexibility to
withd r a w funds without penalty.
Howe v e r , i f y o u opt for regula r FDs,
you’l l ha v e t o p a y an early withdrawal
penal t y r e g a r d l ess of the inves tment
perio d . B u t i n t h e case of debt funds,
once a c e r t a i n period has elapsed,
t here i s n o e x i t load. Therefore, debt
f unds o f f e r g r e ater liquidity an d can
be mo r e c o s t e f fective than Ban k FDs.
The r e t u r n s f rom debt funds are
highe r t h a n F D returns
Debt m u t u a l f unds treat gains as
capit a l g a i n s , while FDs cate gorize
t hem as i n c o m e from other sources.
This m e a n s t h a t in case of loss i n debt
mutua l f u n d s , you can carry them
f orwa r d a n d o ffset it against gains.
Unfor t u n a t e l y , this option i s not
avail a b l e f o r F Ds
-Mayur Singh
 Vol 21, Bulls and Bears
Deutsche Bank's Precarious Future:
A Looming Resemblance to Credit Suisse's Troubles
Deuts c h e B a n k , with a longstanding
prese n c e i n t h e global financial industry,
i s f a c i n g a n a r ray of challen ges that
t hrea t e n i t s very future. Th e bank's
strug g l e s w i t h profitability and exposure
t o h i g h - r i s k a s s e ts have put it a t danger
of f o l l o w i n g i n the footsteps of Credit
Suiss e ; a b a n k that has suffe red from
f i n anc i a l h a r d s h ips in recent ye ars. One
of the m o st significant factors
contr i b u t i n g to Deutsche Bank's
strug g l e s i s - i t s inability to maintain
profi t a b i l i t y .
http://apnews.com/ , https://images.app.goo.gl/hX5238Uv7t6NaTzp6 , https://images.app.goo.gl/v2RW5cUobKcYeX6q6
Despi t e e f f o r t s to reduce costs and
restr u c t u r e t h e business, the bank has
been u n a b l e t o generate consistent
profi t s . T h e bank's share price has
dropp e d b y m o re than 80% since 2007,
refle c t i n g i t s l a ck of financial success.
As a result, many invest ors are
quest i o n i n g the bank's long-term
strat e g y a n d i t s ability to comp ete with
i t s in d u s t r y p e e r s.
Anoth e r m a j o r area of concern is the
bank' s e x t e n s i v e exposure to high-risk
asset s a n d m a rkets. The bank has a
comp l e x t r a ding operation , with
signi f i c a n t p o s itions in derivat ives and
struc t u r e d p r o ducts. As a result, the
bank i s v e r y much exposed to market
volat i l i t y a n d downturns- w ith the
poten t i a l for significant losses if
some t h i n g g o e s wrong. Credit S uisse has
f aced si m i l a r d ifficulties in the past,
with l os s e s i n its trading division
contr i b u t i n g t o the bank's financial
diffi c u l t i e s i n r ecent years.
CHRIST (Deemed to be University), Bannerghatta Campus
Page 8
Addit i o n a l l y , D eutsche Bank h as been
strug g l i n g w i t h legal and r egulatory
chall e n g e s t h a t have had a negative
i mpac t o n i t s reputation and bottom
l i n e. T h e b a n k has been fined billions of
dolla r s f o r n u m erous violation s, market
mani p u l a t i o n and sanctions breaches.
These f in e s h a ve not only affe cted the
bank' s fi n a n c e s but also undermined its
posit i o n i n t h e industry and with its
custo m e r s .
To av o i d t h e f ootsteps of Credit Suisse,
Bank m u s t t a k e a proactive app roach to
i mpro v i n g i t s p rofitability and reducing
i t s v u l n e r a b i l i ty to high-risky assets.
This c o u l d i n volve scaling back its
t ra di n g o p e r a t ions, concentrating on
core b a n k i n g activities, and exploring
new revenue streams in wealth
mana g e m e n t a n d digital banking. To
i mpro v e i t s r i s k management, Bank must
have r i g o r o u s p rocesses and co ntrols in
place t o i d e n t i fy and manage potential
ri s ks e f f e c t i vely. This includes-
enhan c i n g i t s c ompliance and r egulatory
f ra me w o r k s a n d investing in technology
and data a n alytics to boost risk
mana g e m e n t a bilities. Moreo ver, the
bank mu s t r e b uild trust and confidence
amon g i t s i n v estors, customers, and
other s t a k e h o l ders. To do so, Deutsche
Bank mu s t r e c o mmit itself to et hical and
respo n s i b l e b u s iness practices, including
t ra ns p a r e n c y a nd accountability. The
bank m u s t a l s o address the cultural
i ssue s t ha t h a v e contributed to its past
probl e m s , s u c h as a focus on short-term
gains a n d i n s u f ficient internal c ontrols.
-Dhruv Puri
Vol 21, Bulls and Bears Page 9

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