Till 31st March 2018, India witnessed many economy shaping events. InvestXP brings to you, in no particular order, the 10 most impactful events that influenced the market and economy in the financial year 2017-18.
Implementation of Goods and Services Tax:
After a lot of buzzes, the GST was rolled out to replace the existing indirect taxation system in Indian economy on July 1, 2017. The entire complex and multiple indirect taxes were replaced by one ultimate tax, primarily to cope up with the cascading effect of the earlier tax regime.
- Jump in the Ease of Doing Business Index:
The highly awaited ‘Doing Business Report 2018’ issued by World Bank on the last day of October in 2017 appreciated various reforms undertaken by Modi government that pushed India’s rank to 100th slot from earlier 130th. For the general public, a high ease of doing business ranking means that regulatory environment is more conducive to the starting and operation of a local firm.
- Recapitalisation of PSU banks:
Government shall infuse fresh funds into banking system amounting to ₹ 2.1 lakh crore from which ₹ 1.35 lakh crores would come from recapitalization bonds. The market welcomed this move as a much-needed substitute to cope up growing NPAs.
- The bullish reaction of Sensex:
FY18 has largely been a very good year for the equity markets as Sensex notched gains of nearly 12%. In addition to the foreign fund flows, the rally in Indian equities in FY18 has been led by strong liquidity support from the domestic investors.
- Moody’s upgraded India’s rating:
Global rating company, Moody’s Investors Service has upgraded India’s sovereign rating to Baa2 from Baa3 and changed the outlook to stable from positive. While justifying the upgrade, it said that the reforms undertaken by the government will “improve the business climate, enhancing productivity, stimulating foreign and domestic investment, and ultimately fostering strong and sustainable growth.”
- Japan’s investment in Bullet Train:
In September, our PM Abe and Mrs Abe visited Gujarat. Both Abe and Narendra Modi also inaugurated the high-speed train project, which would connect Ahmedabad and Mumbai in just two hours. This project should be completed by the end of 2023.
- Bitcoin created huge individual wealth:
The FY 18 was for the cryptocurrency. Bitcoin touched its peak rate in late December and rebounded to lower levels. It created a lot of buzzes and attracted government’s attention towards it. The government came up with new rules to formulate regarding the taxation of bitcoin holding capital gains.
- The year of IPOs:
The FY18 could well be called the year of IPOs (initial public offerings). According to a latest Motilal Oswal report, over 120 companies hit the primary market and have raised ₹70,000 crore so far, much higher than that of ₹29,100 crore in FY17.
- Crude Oil & Commodity:
Oil prices had moved up to $71 a barrel, which is at the upper end of government’s comfort zone. The government has been cutting down taxes in order to minimize the impact of crude oil on the common man. Apart from crude oil, India is a major importer of most metal commodities. While it is a large exporter of agriculture commodities, the benefit of it is restricted largely to the traders and rarely passes down to the farmer.
- The impactful Budget:
- To implement MSP for all crops; MSP hiked to 1.5 times of production costs;
- Rural haats to be upgraded to Grameen agricultural markets;
- Year’s Budget to focus on agriculture and rural economy;
- Women SHGs will be encouraged to take up organic farming;
- ₹2,000 crore fund for development of agro-market;
- 2 crore additional toilets to be constructed under Swach Bharat Abhiyan;
- Free power connections to 4 crore homes;
- To provide free LPG connection to 8 crore women under Ujjwala scheme
Author | Kshitij Chitransh