Marketing Indicators – The Various Scenarios

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The marketing as a whole and also in day to day life is supported by the various types of the indicators and these ease the life of an individual or as a whole to a great deal. There are several type of the indicators and some of these have been found to be indicating towards the economic slow down and there are some other that indicate towards the fastening of the economy. Those who had weathered the era of the de monetisation and the disruption caused in the individuals lives as alone or as a group, and now further facing Goods and the service tax (GST), induced trauma in just a few months and now the future looks very un certain. The Indian economy looks to be in a peculiar limbo, several indicators that have been taken together point that the economy is in the grip of the slow down in the present scenario that is existent in India. While on the other hand, the current GDP data and the forecasts point to the robust growth now and the forthcoming. With the coming up of the GST, the MSMEs have been hit the maximum as the business men in the micro, small and the medium enterprises deal mostly in the cash and also maintain rudimentary accounts and as a result of this, they have been hit the most. First, the down side, number crunching by the business standard indicates that the bank loans grew by a mere 1.7 percent in the last financial year (2016-2017), the lowest in over the two decades (sine 1995-1996). The port folio of the loan of the public sector banks, which account for over the 70 percent of the assets of the banking sector, actually contracted by the 2.5 percent. Such severe slow down in the banks lending is symptomatic of an over all economic slow down. If there is an economic slow down, then for sure it will indicate it self by the falling inflation and all this can be seen precisely as to what has happened. The consumer price index for June 2017, compared to an year ago was up by a mere 1.5 percent. This result was below the expectation and way below the expectations and below the reserve bank of India medium term target of the 4 percent. So the economy should be dragging its feet hardly. The IMF has retained its earlier forecast that the Indian economy will grow by a robust 7.2 percent in the current financial year and then will gradually rise to a formidable 7.7 percent in the neat year of the 2018 – 2019 and one thing that one needs to appreciate here is that in both of these scenarios, the growth of the India will remain higher than that of the republic of the China.

The rate of the growth did go down in the last three quarters of the last financial year, with a sharp fall of over one percentage point, brought on by the demonetisation in the last quarter of the year. As a result of this the rate of the growth for the year 2016 – 2017 fell up to 7.1 percent and this level of the achievement is way below the rate of the 8 percent that has been achieved for the year 2015 – 2016. But in the contrast, according to the IMF fore cast, 2018 – 2019 will experience a sharp return in the growth and the momentum of the growth to pre demonetisation levels. The abysmally low increase in the lending of the banks was brought by the dual balance sheet problem. Numerous large projects of the infra structure were found to be gone as sour and hence as a result of this, the crash in the global steel demand post the global financial crisis traumatised the Indian steel producers. And as a result of this, red ink on the balance sheets of the concerned firms that consequently were found to be defaulting on the bank loan repayments. With this the red ink was found to be splashed across the public sector bank balance sheets. With the large no of the borrowers who are defaulting, the future appears to be very murky as these borrowers have been put on the fast track recovery process under the new bankruptcy code and hence are in no position that could enable them or bring them in such a position that the they are able to re negotiate there respective bank loans and finally return to putting there projects back in to the shape. The recovery in the global steel demand is at the new normal of the low growth with the continuing over capacity. Price recovery is also taking place but not at the any kind of the pace to pull the troubled Indian producers out of the morass. Thus the scenario of the banks of the bad loans is not at all expected to be improving in the near quick year or two and hence finally the industry will start to invest again once the capacity constraint is in the sight but that is not the case right now in the present visible situation. An economy which is under the influence of the very serious slow down in the investment i.e. the rate of the gross capital formation, particularly in the infra structure, is laying up trouble for it self in the coming future. A very high growth rate, fuelled mainly by the expenditure of the consumption, will then be able to meet the constraints of the capacity and hence as a result of this leading to the prevention of the rise in the out put. This will lay the foundation for the renewed inflation. Hence as a result of this, the impact of the demonetisation may be gone with the passing time but this needs to be kept in mind that the other down sides tend to remain in the picture and one of the very important down side that has been noticed id that of the second shock. The second shock to the system in about n year or so is the result of the initiation of the goods and the service tax. As the reports are coming from the day 1, all these are keen to suggest things and one thing being suggested by the news reports is that this type of the tax is directly impacting the MSME i.e. the micro small and the medium enterprises sector in the hardest possible way, the same way the demonetisation hit this micro small and the medium enterprise. The main reason why this type of the sector as compared to the other types of the sector operating in the country, was hit the hardest was that this type of the sector is the one sector that is very much dependent on making the cash transactions, also have not been maintaining any type of the record except the rudimentary accounts. Also this have resulted a large type of the small business men to shut there shops as this GST according to them is a new worrying unknown.


This in turn is rein forcing the job less growth scenario and as a result of this, a lot more are now moving towards the cities mainly because of the reason that the agriculture in the India in the present developed scenario is not at all able to sustain these types of the individuals or the businesses and hence are not able to provide the required jobs to the need full of the individuals. The workers of the agriculture sector in India, who had some how weathered the demonetisation disruption in their day to day lives have been forced by the developed circumstances to face the second goods and the service tax induced trauma in just a short span of the time. As a result of this all, it becomes a lot more difficult to find out the sum total of the indicators pointing up or down, the rural distress manifest in the farmers agitations and the lack of the promised new jobs have been found to be pointing downwards. On the other hand low inflation has prevented life for the ordinary people from becoming very unbearable and then manifesting itself through the declining support for the government. As for the highly commendable growth rate, experts both in India and even world wide have been forced to question its credibility from time to time. As if all this was not at all enough, there is a trouble on the another front – bad blood between the government and the banking regulator, the reserve bank of India, over the interest rates. The government’s point in India is that since the inflation level in today’s scenario is so low that the time has come to ripe the lower interest rates and as a result of which the speed of the growth can be fastened in a quick motion. But one point to take care of and to be brought to the notice is that how much faster the growth can take place or whether it can take place above 8 percent or not, which is on the horizon and whether even faster growth is environmentally sustainable. Lower interest rates and a rise in the moneys supply is good for the government as it aids the revenue buoyancy. On the other hand, the RBI’s top priority is to restore the bank balance sheets to the health. It is absolutely firm on putting an end to window dressing though it naturally does not use that expression. Lower interest rates will increase the space for the window dressing by lending a fresh amount to a borrower so that he can make enough payments to regularise the account. This way things will look orderly with out any real improvement in the health of the either the borrower or the lender.


The market in which the process of the marketing is to be done, shows the various types of the indications from time to time but all these factors need to be analysed from time to time for different types of the situations in the different types of the working conditions and followed by the various types of the marketing conditions. Here a credit analyst comes on to be a very healthy factor in order to read the mind of the market and study and have an in depth analysis of the various indications being given by the market. A credit analyst mainly focuses on the analysing the financial data of the customer, companies that are applying for the credit or the loans in order to find out the risk that any type of the bank or the various other financial institutions or the other lending or the credit granting institutions can face on the funds that have been loaned. The main job of this type of the analyst is to be accountable for assessing the applications of the loan applicants mainly by using a range of the criteria, including the purpose of the application, credit viability, customer payment history, customer credit worthy ness. The major role played by this type of the analyst is that he or she is the major decision maker of the customer credit as he or she is the one who deals with the programmes of the computer to in order to maintain the history of the various credits of the various types of the customers and also is responsible for the keeping up of the financial records up to date. With out the recommendation of the credit analyst, the banks, the insurers and the company will not be able to extend the loan for the business, the home or the cars and also occasionally the employee’s pay rolls as well. Now in under standing the various indicators here, it is very important to understand that this type of the analyst can be commercial in the nature. When he or she in any type of the situation acts as to be commercial in the nature, he or she works with the banks and the other lenders in order to determine the ability of the businesses to repay the loans and various types of the other debts. Commercial analysts are usually used by the government authorised agencies, banks, commercial lenders etc.

For getting in to this field one would require a bachelor’s degree in the finance, accounting or another related field like ratio analysis, statistics, economics, calculus, financial statement analysis and the risk assessment. These subjects are very necessary to function as a credit analyst as they aid in the risk assessment. Subjects like the industry and the ratio analysis are very necessary because accessing the risk for a company includes accessing its environment. One can also go for a post graduate diploma in the banking and the finance to get a professional and the practical knowledge of these sectors. Credit analysts start their career as the junior analytics after getting a degree in the accounting, finance or another related business field. Credit analysts can work in a variety of the fields and the various types of the locations. Many works for lending the institutions like the banks or the various other insurance companies. And along with this, there has been observed a great demand in the investment, working for an asset manager or the private equity firm as a bond analyst or for the rating agencies like the Moody’s or the standard and the poors, determining the risks of the investing in a company or the country. Some of the positions deal with the consumer credit evaluation, overseeing analytical departments etc. In some firms, senior analysts over see a team handling analysis for a particular market, region or the industry. Top performing analysts can be seen rising to the financial management positions over seeing the analytical departments, making final credit decisions and monitoring departmental performance. Now the remuneration is that the plethora of the opportunities is reflected in the salary range that is received by the credit analysts. The annual salary for the credit analysts is in the range of the Rs 5 lakh to the Rs 8 lakh and this depends on the level of the experience and the type of the industry and the geographic location.


Now if the present day scenario is observed, this is a cut in the time as the balance of the risk favours the reduction in the interest rates. All the eyes are on the reserve bank of India’s monetary policy committee as it meets to review the banks monetary policy stance. As every time, this time also the expectations have been found to be running very high that the monetary policy committee will this time as required will relax its overly cautious stance and then will finally cut the interest rates and as it has been observed that in deed the discussion in most of the circles is not on whether or not the bank will cut its policy or the repo rate, but the main focus is on the quantum of the rate cut, that whether will it settle for a 25 basis points cut or will it take the courage in its hands and finally surprise the markets and go in for a 50 basis points cut. While a rate cut alone is unlikely to do much as it is far less likely to do any type of the harm and finally breach the inflation band. Surely, this time around it would be quite out of order and also out of the character for the normally conservative RBI to go in for the aggressive cut in the rates. More so since it is now officially an inflation targeter and a sharp reduction in the interest rates could send the demand and then finally the prices spiralling. But the bank has come a long way from the days when it seemed to be fighting a loosing battle against inflation. To have an in depth analysis, it is important that we under stand the facts and the figures that have come out and it is necessary that we compare these and if we go back to August 2013, inflation was hovering at close to the double digits, the gross domestic product growth had slowed to 5.5 percent in the year 2012 – 2013, the rupee at this time was also falling rapidly following the then United states federal reserve chairman, Ben Bernanke’s hint that said that the fed might end its easy monetary stance and the over seas investors were not able to get out of the country fast enough and as the rupee touched a historic low at that point of the time to as low as of Rs 68.85 to the dollar on the date august 28, 2013 and it was at this point of the time that the picture looked really very grim. Now fast forward the scenario of that time to the scenario of today, far from the depreciation observed, the rupee has been going from strength to the strength. At Rs 64.33 to the dollar on the last Friday of the July, 2017; it is now at this point of the time over valued in the reserve bank of India’s own reckoning. Yet the over seas investors seem quite oblivious of the coming and passing on danger. In the phase of the July 2017, it has been observes that there has been an in flow of $ 2.4 billion in the portfolio flows, taking the total for the year to date close to the $ 25 billion.

The monetary policy committee on the paper still has a large set of the reasons to cut as to maintain the status quo on the rates. It must there fore make an informed judgement of the balance of the risks and hence the reality that comes in to the existence here is that while the cut in the rate alone is unlikely to be able to do much good or stimulate the level of the growth, it is far less likely to do any type of the harm and hence in such a scenario the balance of the judgement must favour a rate cut.


So what has changed? On the face of it every thing on the political front, we have a single party majority government firmly in the saddle at the centre on the economic front, the country’s macro economic fundamental are in the much better shape, the current account deficit is less than one percent down from 4.8percent in the august 2013; inflation is down to1.54 percent well below, not only the average of 10 percent consumer price inflation between 2008 and 2013 but also below the lower end of the inflation target of 26 percent set by the central government under the new monetary policy framework and related inflation targeting regime ;the fiscal deficit is at 3.5 percent [2016-2017], down from 5.8 percent in 2012-2013 and stock market indices have gone through the roof , with the national stock exchange and the nifty 50 crossing the 10000 marks for the first time in history of our nation. The only fly in the ointment is the rate of the growth that stubbornly refuses to pick despite an improvement in other macro fundamentals. The country’s gross domestic product grew just 6.1 percent in the period January to the march 2017. Worse, the ratio of the gross fixed capital formation to the gross domestic product, which acts as a very critical and an indifferent method to help in measuring of the investment and as a result of all this acts as the key to the growth for the future, which has rather fallen than increasing. Against this back ground, the MPC has the difficult task of the weighing of the pros and the cons of the rate cut, knowing full well that it could well be a case of the damned if it does and damned if it does not, the arguments should be taken for the cutting of the rate. One, at 6.25 percent, the bench mark policy rate or the repo rate is the same as when the inflation was found to be hovering at over the mark of the level of the 10 percent as against the latest reading of the 1.54 percent. This puts the real rate of the interest, usually defined as the nominal rate of the interest less the level of the inflation at over the 4 percent, which is not at all above the reserve bank of India’s own preferred real rate of the interest of 1.5 to 2 percent, but also close to the highest rate of the interest in the whole world. Two, despite the pay out to the government employees under the 7th commission of the pay, demand has not at all picked up in that expected significant manner. The utilisation of the capacity remains as usual at a low level and then finally leading to the pricing of the power of the various types of the manufacturers, which is normally very weak in the status. Three, the gods of the rains have been very kind in the nature to all of us, so the result of this has been that the prices of the food which have always been very volatile in the nature but it has been seen that they have been having the potential to skew the consumer price inflation dramatically are unlikely to play spoil sport in whole of this sequence of the acts. Four, the prices of the global commodities like that of the prices of the oil seem to have benign. Five, the private corporate investment remains comatose. A reduction in the rates of the interest that makes the investment avenues more attractive could revive the animal spirits and finally lead to the pick op or the boom required in the level of the investments. There have been arguments at the various points of the times against the cut in the rates. On the flip side, we have the old known familiar fears. One of them is the United States Federal Reserve whose actions are seen to have an enormous bearing on the global capital flows, is poised to surely raise the rates of the interest again before the end of the year of the 2017. It is also very likely to begin the contracting of the size of its bloated balance sheet relatively and comparatively soon in the fixed words of the chair man. Janet Yellen. Both of these actions can lead to an out flow of the dollars from the emerging economies of the market and this also includes the nation of the India. At such a time, a reduction in the rates of the interest could well in fact cause the reduction in the attractive ness of the markets even further. One thing that should be kept in the mind here is that the bulk of the in flow in the recent months has come in to the debt markets, riding on the higher rates of the interest. Another reason is that the full impact of the higher housing allowance paid out in the terms of the recommendations of the commission of the pay has not played as yet. So we could see a surge in the demand in the near by time to come. After this the third reason is the goods and the service tax that has come in to the play. This tax has not yet resulted in a sharp increase in the prices so far as still these are very early days for the nation like India to be leading life with the goods and the service tax. But on the other the real story is that the rate of the tax on the services is up close to the 4 percent and this is bound to bring a increase in the level of the all of the services across the board. Such type of the increase on some of the times is not able to reflect in the price index given the relatively low weight of the services in the consumption basket used to compute the consumer price inflation. The markets of the stock look very over valued in the nature. Any type of the reduction in the levels of the interests will help the markets to move up further and hence ultimately increasing the gap between the markets and the real economy. Another reason for the fears can be summarised as the fact that the cut in the rate is very unlikely to incentivise the corporate sector to borrow when they are already struggling under the weight of the loans that have been taken earlier. Nor will it incentivise the banks to lend when they are struggling under the weight of the non performing assets.

This article has been written by KJ Singh a MBA Graduate from a prestigious Business School In India
Article Published:October 8, 2017
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