The document discusses how demonetization and GST have changed the face of India by formalizing and financializing the economy. It notes that demonetization increased funds for banks to lend, moving the economy from cash to digital payments. GST is described as a business reform rather than just a tax reform. It is expected to make India more competitive globally and shift it from a trading hub to a manufacturing hub as systems improve. The challenges discussed include revenue slippages during GST implementation and higher government spending. Impacts on wealth are discussed for equity, debt, real estate and gold markets.

1. The Changing face of
India

2. Changing Face – After DEMO & GST
• Financialization of Indian
Economy
• Formalisation of Indian
Economy
• Government spending

3. Financialization of Indian Economy
• On November 8, 2016, Indians had more
money in currency notes than in equity
markets and DMAT accounts
• After DMO, banks had more funds to
finance or give credit
• Main Stream from Cash Economy

4. Cash is NOT King
• You start paying for your daily need from cash to
digital money
• Vendors, Transport & Logistic, Drivers all who are
in this chain get money in bank
• Companies are now focusing to expand their reach
in rural areas

5. IMPACT
ANALYSIS
• ₹ 21.45 lakh Crore
AUM of Indian
Mutual Fund
Industry
• 10 lakh Crore (May 2014) – 20
lakh Crore (May 2017)
Industry AUM
• 1.66 Crores Investors;
• SIP - ₹ 5,516 Crore
SIP Book
• Top 5 (M,D,K,C,B) – 71.53%
• Top 15 -84.09 %
AUM
Contribution
Nov. & Dec. 16 FII sell and Domestic purchase

6. Formalisation of Indian
Economy
• Unorganised Sectors to Organised Sectors
• Sectors - textiles, garments, chemicals, building materials,
where unorganised sectors are large and they give unfair
competition to organised sector
• Impact - Company pay minimum wages, bother about
pollution and environment, pay your tax properly

7. Impact Analysis
• GST is not a TAX REFORM it’s a BUSINESS REFORM
• Changing face – From Trading Hub to Manufacturing Hub
• Price will come down in future when systems get smooth and flawless
• More competitive with global world

8. Government
Spending
• Private Investment is on back foot
• Record of Govt. spending on following sectors:
- Roadways
- Railways
- Defence
- Renewable Energy
- Urban Infrastructure
• Better order book for companies who are into
this business
• More employment and jobs

9. Challenges
• Revenue Slippages during implementation
phase of New Tax (GST)
• Higher Govt Spending
• Bank’s NPA
• Urgency of job creation

10. How it Impacts your Wealth?
• Equity Market
• Debt Market
• Real Estate
• Gold

11. EQUITY – Positive Signs
• Highest Govt. Spending
• Huge Domestic Inflows
• Rural Wages growth

12. Focus
themes and
Key Sectors

13. Global
market –
Positive in
last one year
As on 29 September 2017, Source – Bloomberg. Performance data is in local currency

14. EQUITY
• US - North Korea tension
• Govt. front end Capex – Deficit has
already reached 96% (Apr – Aug) of
full year budget estimate
• FII Selling intensity was highest on
monthly basis after Jan. 2008
• Delay in Earning Growth

15. EQUITY
• Lumpsum – Large Cap & Multi Cap
• Period – 4 years or more
• SIP – Still the best bet

16. DEBT Market
• Recapitalisation of 2.11 Lakh Crore-
• 1.35 Lakh Crore by issuing Recapitalisation Bonds,
• 76,000 Crore from Budgetary Allocation.
• Negative for short Term as Supply increase
• No immediate impact on fiscal deficit.
• More funds to provide credit and accelerate growth in system.
• Effect on earning growth

17. Real Estate

18. Gold
• When the dollar falls, gold typically rises.
• Investors are keen to use the commodity
as a diversifier in their portfolios and
reduce risk as equity markets trade at
elevated levels.
• Can be in your portfolio up to 10% - 15%.

19. Thank You.
Manish P. Hingar
Chief Belief officer
FORM is temporary but CLASS is permanent.
@finhospital