Commerce Department Volume 1 | Issue 19 | 2 July 2017

NEW FEET IN CAMPUS!

“You may see me struggle but youwill never see me quit”

This statement echoes the mind-set ofevery Christite on campus. Dedication, hardwork and of course perseverance was exhibitedby every student who entered Christ JuniorCollege. And what better fruit can their hardwork bear than the Christite tag, itself! Yes, thisexplains the hard time our first years had to gothrough to step into our college, as an officialChristite. Thousands of young minds with greatexpectations apply for a seat in CJC but onlythe few fortunate ones get a chance to a part ofthis great institution.

With students performing exceptionallywell every year, the filtering of students on thebasis of their applications has been nothing lessthan a tedious process. This time, the Statesyllabus results were announced first followedby ICSE results, which did not fail to astoundall of us. But then considering the fact that theresults of CBSE students arrived late, only alimited number of seats was available to them.Moreover, CBSE students have their results interms of CGPA, the highest being 10. Therewas no scope of comparing percentages asmany applications submitted by the studentscarried a 10 CGPA. This made the process offiltering extremely difficult. Hence to scrutinizethe students, CJC had to introduce entranceexams for the first time!

The entrance exam was based onaptitude and subjective knowledge of students.This was something that had never happenedbefore but CJC was always known to settle fornothing but the best. The students who camewith flying colours in this entrance exam got an

opportunity to study under this institution.

On a personal note, I really appreciateevery student’s effort and congratulate them allon their successful admission. “Hardships oftenprepare ordinary people for an extraordinarydestiny.” With that said, I hope all the youngminds utilize every opportunity in this campus,discover the best in themselves and grow to anextent that they create new opportunities notjust for this college but for the future itself!Welcome to the Christite family!

Tanushree II CAMS - K

NO MORE “TECHS” IN TECHNOLOGY?

We are currently living in a worldwhere regardless of our age and talent, finding ajob is one of the most difficult tasks at hand.Especially in a country like India, with such alarge population, an immense number of peopleare unemployed and unable to make ends meet.How can we fulfil the vision of India in 2020made by Late Dr. APJ Abdul Kalam if thiscontinues to be the state of affairs in ourcountry?

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Let’s talk about our current stance: joblay-offs happening in the IT industry. Thissimple statement strikes up a huge discussion,right? Mint reported that top seven IT firms inIndia will lay off approximately 56000 people.That is definitely not a small number. Thesimple reasons would be rise of automation,freeze on hiring Indians abroad, sluggish globaleconomy and low demand. It seems to me thatour IT sector is facing and existential crisisitself.

And in all this mayhem, most peopleare not able to survive with the amount ofmoney being paid to them. Junior employeesworking up to fifteen or sixteen hours a day arestill being paid approximately 18,000 permonth. They automatically feel dismayed aboutthe amount of effort they put into joining theorganization they were striving for.

The reason behind this dishearteningfact is simply that senior employees arereceiving a disproportionately larger income. Ifcompanies were to reduce their salary hikes andurge them to start working for longer hours sothe workload of the younger employees wasreduced, , then in my opinion, a massivechange would be brought about in the presentcondition. Industries like Health and Telecomare blooming with success and a career in thisfields is a profitable choice as it provides themwith a good income which enables them to leada comfortable life.

I personally feel that it is about timethat we as a country work towards equality andthe mutual benefit of our people. It is time that

the senior employees decide to help out theirorganization by any means to provide a brighterfuture for it and help improve its reputation.

Yashna I CAMS – J

Creativity at its Best!

Ever felt like you can manage anytricky scenario? Have you ever wanted to tradein the stock market? Are you keen on realestate? If yes, COM-ARENA is what you'redefinitely looking for! Put together by two ofthe finest minds in college, COM-ARENA hasleft no stone unturned. It is a platform whereyou can experience the chaos. Soundsconfusing? We’ll clear it up for you.

COM-ARENA is a two day eventfilled with amazing opportunities to explore thefield of commerce. The class as a whole istested on their ability to communicate in toughsituations and of course win events in a clashesof gargantuan proportions. It has the eventssuch as "product launch", "crisis management"and "ground zero" on day one. Day two iswhere it gets loud and energetic as "mockstock" and "pronopoly" that is propertymonopoly commence and finish with the grandshowdown. If this sounds too simple, you canbe sure that it is filled with tiny surprises thatwon’t just knock you off your seat but willdefinitely affect your gameplay. Trust us whenwe tell you that it matches the Christitewavelength!

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From showcasing your talents in launching a highly competitive market-oriented product, to handling the asset crippling crisis of a global company, to testing your analytical and investing skills in mock stock and ground zero, to testing your logical and fast thinking skills in pronopoly- we have it all under one roof, one name, one event; COM ARENA. An event as grand as this deserved a final showdown and that's what we gave you. COM ARENA for the first time in CJC history, a poker game with business quiz! Gamble, bet and win but that is only if you know the answers to mind boggling business questions! Comprising of 6 teams, this event not only tests your quizzing skills but also how you bet based on your hand to take that one big risk to win big.

This event was nothing less than a grand success here at CJC. It is a culmination of knowledge, skill and the passion to win. If you have the ability to rely on your instincts and read and play on others minds, you would have enjoyed the two days of this fantastic event. COM ARENA organised by Vinit and Vaibhav is hopefully an event that will become a tradition in the coming years

here at CJC!

Vinit & Vaibhav II CAME - L

NOT SO BLACK ANYMORE, EH?

The 2008 recession brought majordevastation to many economies in the world.But, its impact on the Indian economy wasvery minimal. The reason behind this, veryironically, is black money!

This economic crisis led to a majorfall in prices of properties. But the pettycorruption of using unaccounted money forthe buying of major commodities created abarricade against the banking sector’s crisis.So this is how it works. Before starting, I’dlike to quote Professor Kaushik Basu,“Economics is not a moral subject”. Almostall properties that are bought in India are mademostly by cash. So, for example, let’s say theprice of the property proposed by the seller/broker is 1000 rupees, the seller will only takerupees 500 formally. The rest of the cash thatis paid will not be accounted for (by cash). Bythis, both the buyer and the seller benefit i.e.the sellers gets a concession while they paytheir capital taxes and the buyers for theirproperty taxes as the declared value of theproperty is lower.

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At this juncture, when property wassold at 100-110% mortgages in the UnitedStates and the United Kingdom, the bankloans provided in India were still within theirproperty price limits; hence we had a win-win situation. Though it was not very moral,India got out of a subprime crisis that causedcollateral damage elsewhere with utmostcomfort.

This is how the recession washandled indirectly in India, and we weresuccessful. The irony is definitelyastounding!

Saideep II CAME - L

WHAT WOULD HAPPEN IF 1 USD =

INR 1?The Indian dream is to have a currency equivalent to the USD. Imagine that it was so, have you ever thought of the consequences?

If 1 INR became equal to 1 USD , you would be able to buy an iPhone for Rs. 220/-It's not like you would be buying a 200 ml bottle of Coca Cola for 10/- bucks. It would also reduce proportionately to a few paise.

That's how the economy works. When a currency rises in the International Market, the domestic value of the currency also improves.

There's a reason why being a "Millionaire" [USD 1,000,000] in the US is a big thing while “Lakshadipathi” [INR 10,00,000]

sounds like being regular middle class in India.

With that said, as a commerce fraternity, I believe our task is very clearly cut out at the interest of nation to spread the awareness and importance of the devaluation.

Kavana II CAMS - K

THE DALAL RIGSomebody once said,” Time and

Tide wait for none,” and this controversy isone where time had definitely overtakenjustice. Let’s take a walk back in history.

In 1992, Harshad Mehta managed tograb the whole country’s attention throughthe infamous BSE scam. Now what was theBSE scam? The securities scam of 1991-92refers to a transfer of bank funds wortharound 3500 crore deceptively into the handsof stockbrokers- the to dog being our veryown Harshad Mehta. Along with hisassociates he had managed to maneuver theSensex which surged over 4500 points.

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And one may ask how did theyadminister to execute this master plan? Theysimply took advantage of the numerousloopholes in the banking system and drainedfunds from inter-bank transactions. The maininstrument in their game was Ready ForwardDeals (RDF- a 15 day loan from one bank toanother) between banks. The lending wasdone on government securities. In this scam,the deliverance of the securities and paymentswas done via brokers who would be the onlyone to know the other party. The craftybrokers perfected the technique and startedtrading in their own account, pretending to beundertaking transactions on the behalf of abank to maintain the frontage of their scam.

They joined hands with banks that providedbogus BRs which Mehta passed onto otherbanks which paid him money under theconjecture that they were lending alongsidesecurities. Then they bought massive amountsof shares at a premium across many industryverticals causing the Sensex to risedramatically. The shares were finally sold atimmense profits.

Mehta continued with hismanipulative strategy, and thereby created afeel-good market course. However, upon therevelation of the con, several banks found theywere holding BRs of no value at all. Mehta

had by then swindled the banks of anastounding Rs 4,000 crore. The scam cameunder scathing criticism in the IndianParliament, leading to Mehta's eventualimprisonment. He was charged with over 70Criminal cases and 600 Civil action suits. Butalas, on 21 st December 2001 at the age of 48,Mehta departed to his “heavenly” abode with‘only’ 27 cases pending on him.

Swathi II CAMS - K

THE QUANTITY THEORY OF MONEY

Wealth is often measured in terms ofmoney, and often, the more the money, thegreater the wealth. But is money always agood thing or is money in excess a hindrancefor the economy? The works of greateconomists like Irving Fisher show that moneyin excess in an economy, leads to a largeimpact on general prices. MV=PT is animportant equation with regards to inflation.M stands for the amount of money in theeconomy, V stands for the flow of that money,or the velocity of the money, P stands for theprices in the economy in general and T standsfor the number of transactions in the economy.

MV when thought about represents theentirety of the money in the economy and atwhat rate it is being spent, or quite simply,how fast the money circulates in the economy.PT represents the total price of transactionsthat happen in the economy. And it is obviousthat the two would match as a majority of flowof money is merely through transactions.

With that in mind, it leads us to a fewconclusions:

1.If M rises, or more money isinjected in the economy, one of two things

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must happen to hold the equation true-The prices must rise (inflation) or theremust be a greater number oftransactions, considering that peoplewould buy better than buy more,inflation seems the likelier option

2. If the velocity of the moneyis to decrease (V) then there would alesser of transactions (decrease in T)

These relationships lead to theconclusion that injection of money inan improper manner or improper timewill lead to havoc in regards to theprices and hence the consumers. Thereason why this happens is because ona normal basis only the demand andsupply of goods is taken into accountbut there is rarely an insight into theother half of the equation, that part ofthe equation is what really matters. Thedemand and supply for money howeverwould greatly impact this setting.Consider injection of money into thissystem and the amount raises theamount of money that each of thebuyers has by 50%. This would meanthat there is a greater amount of moneyfollowing the same amount of goods,the logical step would be to increasethe prices to meet the increased amountof money. This happening on a largerscale is what results in inflation.

Madhav II CAME - L

MADE IN CHINA

An exchange rate is the priceof one currency when compared toanother. Basically, it’s the price ofmoney. You would be familiar with it ifyou’ve ever gone abroad. For example,you can’t use rupees to buy a cup ofcoffee at a Starbucks in the US. There,you would have to pay in Dollars.

Why is the dollar worth 64rupees? The USD is a lot more indemand in the world market than theINR. That’s because more countrieswant to trade internationally with theUSA rather than India. The currentaccount of a country is the account inwhich it records all the trade in goods,services and current transfers withother countries.

A country with a currentaccount surplus is likely to have thevalue of its currency appreciated. Acountry with a huge current accountdeficit will probably have adepreciating currency.. A floatingexchange rate is when the price of onecurrency can keep changing and isaffected by market forces, i.e. demandand supply for the goods and servicesfrom that country.

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Let’s think about it for a second. Ifthe currency of a country depreciates, thenits price will decrease. That means that ifyou’re importing goods (buying goodsfrom another country), you’ll be payingmore. Take the $5 coffee at today’sexchange rate (1 USD = 64 INR) as anexample. If you wanted to import the coffeeto India (obviously, no one will importcoffee into India, but bear with me here),you would be paying Rs. 320 for each cup.Suppose the rupee depreciates, though, toRs, 70 per $1, then you’ll be paying Rs.340 for the EXACT SAME cup! And ifyou were originally exporting (sellinggoods to another country) coffee to the USat $2 per cup, then you would be makingRs. 128 in sales per cup. Then if the rupeedepreciates to Rs. 70 per $1, you’ll get Rs.140 per cup!

For a long time, you might havenoticed that China’s exchange rate,compared to the US’s, has generally stayedthe same for a long time. Why would theChinese do that? It makes no sense at all!Or does it? China is well known for theirexported goods. They don’t seem to beamazing products, but they’re so cheap thatdemand is huge. How do they manage tokeep their prices that low? Well, they keeptheir exchange rate fixed to the USD. Afixed exchange rate is one that neverappreciates or depreciates, and if it does so,the change is negligible.

The Chinese do not import a lot ofgoods or services. They export a lot,though. That means that China has acurrent account surplus. Remember when Itold you that a current account surplus islikely to lead to an appreciation of thecountry’s currency? If the Chinese Yen wasnot fixed, the value of the currency wouldhave skyrocketed. And that means therevenue from exports would fall, leading toa fall in the growth of the economy. That’swhy they keep their currency fixed. Thatway, they can maximize revenue. Andconsidering that they have low raw materialcosts, their profits are very high.

Now that doesn’t seem fair, doesit? The Chinese have now become amonopoly in many industries. In manycountries, several goods are imported fromChina. This leaves very little demand forthe local producers. That’s why manycountries in the United Nations are opposedto China’s strategy and are trying to changetheir ways.

Thankfully for the rest of theworld, China is now looking to stopcontrolling its currency, and let it float justlike all other currencies. It’ll weakenChina’s grip on the global market and allowother firms to increase their market share,leading to better economies in manydeveloping countries. Until then, though, Ihope all of you will think twice beforebuying a product with the “Made in China”label.

Omkar Nagarhalli I CAME - L

EDITOR’S NOTE ‘An investment in knowledge pays

the best interest.’ With that said, thestudents of Christ Junior College aim tolearn beyond the spectrum of ‘textbook’knowledge. “Comlette” is one suchinitiative taken up by the students ofcommerce to not only hold the lamp ofknowledge in the field of commerce butignite it themselves.

Madhav II CAME -LSwathi II CAMS - KSaideep II CAME - L

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