Takeaways from 2017


With every new year, we promise to achieve something we couldn’t accomplish the previous year. We make new resolutions and start the year with new expectations. Those goals which require behavioural change are the most difficult to accomplish.

2017 has been significant year in many ways as it impacted the habits of most Indians, let us look back at the events which directly or indirectly impacted our lives financially.

2017 started with empty wallets and long queues of DEMONETIZATION
The start for any year could not have been worse, it required the biggest behavioural change – life without cash. As you might recollect, how painful it was to get by basic needs (grocery, milk, vegetables) without cash in wallet. Most WhatsApp groups were overflowing with heated debates on pros and cons of Demonetization. The country saw 2000 rupee note for the first time and paytm became a household name.

Revolutionizing indirect tax regime – GST finally implemented
Coined as the biggest tax reform in the history of Indian economy, GST was finally implemented on 1st July 2017. Rationalization and transparency were cited as two main reasons behind GST. Most small businesses took a major hit after the twin events of GST and demonetisation, however as days went by things started to get better. The government also rationalized the GST rates of some products and services which were previously bracketed under higher rates.

MARKET INDEX – Setting new records
2017 was a great year for equity market, it brought smiles on the faces of investors, intermediaries as well as companies. Sensex touched its all-time high at 34,000 on 29th Dec and so did Nifty, hovering around 10,500 mark. Both these indices offered astonishing return, 27% approx calculated point to point. It has been the same story across the globe as most equity indices touched life time highs.

Inflows of more than Rs 6,000 crore every month via SIP
The market saw a systematic growth of 50% in one year via SIP in equity mutual funds. Mutual Funds surely lived up to “Mutual Fund Sahi Hai” in 2017 for investors. SIP became household name and a new saving method for most families.

Poor performance by Bonds and Gold
Both Bond market and Gold market saw volatility in their prices in 2017. Returns has been meagre at only 4.4% (Crisil Composite Bond Index) and 7.1% (Mumbai Spot gold price) compared to Shares at 27% (Sensex). The low interest rates impacted not just FDs but also other small savings instruments (PPF, NSC) affecting the most common method for saving.

Time to go Public – IPO Mania
As many as 36 companies were listed on 2017 raising a whopping Rs. 65,000 crores. A lot of Insurance companies (SBI, HDFC and ICICI, General Insurance of India, New India Assurance) and Asset Management companies (Reliance Asset Management, Aditya Birla Capital) became public.

RERA- Breathe of Fresh air for home buyers
Though passed by both Rajya Sabha and Lok Sabha in 2016, the Real Estate (Regulation and Development) Act finally came into force on 1st May 2017. The bill aims to regulate real estate industry, protect home buyers and boost investments in real estate as an alternative vehicle. For a long time, real estate price remained stagnant, demand being very slow. Major highlight of the bill is that it brings transparency to customers and accountability on developers on future projects.

Depositor’s money on stake? FRDI bill tabled on parliament
Depositors spent the last month of the year in fear of loosing their money. The reason – “Bail in” Clause in the Financial Resolution and Deposit Insurance Bill. This issue became a hot topic in the media and listed as one of the most contentious bill in India. Fundamentally “Bail-In” means depositor’s money as well as other creditor’s money can be used to fund the sick financial institution in case of incapability of operating further.

A proposed resolution to the mounting NPA problem – Amendment of IBC Bill
The Amendment Bill of Insolvency and Bankruptcy Code, 2017 seeks to replace the existing framework while protecting the interest of creditors. Currently, it is a long cumbersome process and doesn’t offer an economically viable arrangement. This bill restricts ineligible persons like wilful defaulters to break free of debt by paying only a portion of their due.

You will notice a few common themes running in these events – there has been steady migration from physical assets (real estate, gold) to financial assets (mutual funds, stocks), demonetization accelerated this movement. On the business front, there has been migration from unorganized to organized ones, GST has been the key enabler.

As we start 2018, take a moment to relook at our most important life goals. Let us make the required commitment part of our habit, so that we get closer to our goals without much thinking.

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