Hong Kong, Singapore Top List of Most Free Economies

According to annual Economic Freedom of the World report published by the Fraser Institute, Hong Kong has topped the list of the world’s most free economies this year. Next top four regions that have marked their positions in the rankings are Singapore, New Zealand, Switzerland, and Canada. America retained 16th position.

Down by 0.5 points from last year, this year Hong Kong scored 89.6 out of 100 points in the overall economic freedom. Singapore scored 89.4 in the rankings. Around 186 countries received rankings that were based on 10 quantitative and qualitative factors such as levels of personal choice, an ability to enter markets, the security of privately owned property and rule of law on a scale of 0 to 100.

It is noted that Hong Kong has “maintained its economic vitality” regardless of the swirling concerns related to China. It showed small improvements in areas such as business freedom, labor freedom and fiscal freedom.

One of the spokesmen of the Hong Kong government affirmed that the government is very happy with the ranking. In one of the interviews, he said, “The government will continue to uphold our fine tradition of the rule of law, a clean society with a level playing field, an efficient public sector, and a simple tax regime with low tax rates.” He also remarked that in a world of keen competition, they cannot afford to be complacent.

According to the list, the least free economies were countries such as Central African Republic, Argentina, the Republic of the Congo, Libya, and Venezuela whose scores were around three.

A Momentous Step towards a Stronger India

Narendra Modi can be banked upon one thing for sure – changing India for the better! He is one Indian leader who has been working to change things domestically and internationally for India without any fear. He has been consistently bold and revolutionary in cleansing and purifying the system. He has definitely taken some drastic measures trying to improve things; and without doubt, India needs these drastic steps to further improve its current political and economic scenario. The latest step of demonetisation was daring, which definitely shook things up, but all for a positive cause.

The night of November 8, 2016 is still fresh in most people’s memory, when Narendra Modi announced that all 500 and 1000 rupee notes would cease to be legal tender past midnight. Though most Indian political parties reacted that the manner of announcement without prior notice or planning was wrong, everyone agreed that the motive of demonetisation was right, and there was praise all along.

Mostly, people have saluted the PM for this historic move, which will surely make the future of India cleaner and more transparent. People understand that every change is difficult in the short run. They must also be confident that long-term gains are in the offing. Demonetization is always challenging in the short run, and can definitely turn advantageous in the medium and long run, if followed by the right policy measures.

As a matter of fact, demonetisation of Nov 8 was definitely inconvenient. The ensuing cash crunch was natural, as suddenly 86% of the currency in circulation ceased to be legal tender. However, it is important to understand demonetization better by analyzing its advantages and disadvantages.

Arun Jaitley, the Finance Minister of India has asserted that, “Demonetisation should be seen according to the effect on the economy. No doubt we will continue to be the fastest growing major economy. When you are in a cusp of history and you look at the long-term impact of these steps which are going to be taken, I think India is going to become a society in the long term with a certainly better GDP, cleaner ethics, a cleaner economy.”


The current demonetisation move is a master stroke as simultaneously the following were targeted: a) Eliminating fake notes, b) Restricting generation of black money, c) Restricting terror funding and other subversive activities, d) Encouraging people to disclose all income and pay tax, e) Becoming more cashless and digitized, and f) Hitting the parallel economy.

Demonetisation is not new to India. It has been resorted to twice previously to combat tax evasion and the consequent black money – in 1946, which was before independence, and in 1978 by the Janata Party.

Irrespective of its impact, the current demonetisation is a golden opportunity to start afresh. The Indian economy has obtained a never-before chance to “restart”, where it can reset or control extensively elements of the economy such as liquidity, inflation, and even fiscal and external deficit. As the rate of outflow will definitely be lower than the rate of inflow, the deposits can be specifically utilized towards infrastructure, education, roads, defence, energy, health, housing and facilities for the underprivileged. It’s a great opportunity for various economic reforms.

Finally, demonetisation should not be construed as an end; it is a means to a greater end. Thus, it must be complemented by other policy measures to achieve its objectives.


It must be accepted that it was definitely poorly planned and had a paralysing effect on economic activities in the short term. India is a cash-based economy where close to 83 percent of transactions materialise in the form of cash. As a result of demonetization, a cash deficit to the tune of Rs 8.5 trillion or 5.7 percent of the GDP is expected to materialise in the third quarter of FY17, which will reduce but continue into the fourth quarter of FY17.

Let’s look at some salient criticisms:

Wedding dampener: In India, cash is the only mode of payment for most petty products and services for marriages. However, social evils such as dowry and unnecessary expenses were hit.

Shrinkage of informal sector: The informal sector accounts for more than 40 percent of India’s GDP and provides employment to close to 80 percent of the labour force. Now, from the third quarter of FY17 to fourth quarter of FY19, the share of the informal economy in India could shrink from 40 percent to 20 percent, which would result in a short-term adverse effect as employment would reduce. However, it’s a great opportunity to set things right in the formal sector.

Rural woes: People in villages and semi-urban areas were the worst hit as they are almost entirely dependent on cash. However, it is a great opportunity to penetrate into these areas and teach the people the goodness of digitization, the organized sector and the banking system. Overall, the rural population has taken well the idea of India as a future digital economy.

Low economic growth: This is one of the biggest threats. Former Prime Minister Manmohan Singh, also an economist, has already suggested contraction in GDP by 2 percent. The Reserve Bank of India in its policy statement has also cut down growth forecast to 7.1 percent from 7.6 percent earlier for the current fiscal year.

Increase in unemployment: According to CPM’s Sitaram Yechury, since 8 November, four lakh jobs have vanished, and more will follow in construction and allied sectors, jewellery, textiles, leather and real estate.

Cost of printing new currency: This is an additional cost to the exchequer and entirely unnecessary. However, it should motivate India to go digital.


Every criticism of demonetisation is valid; however, it’s not devoid of positives. Demonetisation was a calculated move though the timing may not have been perfect. About five months back, the Income Declaration Scheme for all citizens was launched. Before that, Jan Dhan Yojana had already been implemented. Other policy measures to complement demonetisation include Revised Double Taxation Avoidance Agreement (DTAA) with Mauritius and Cyprus, The Benami Transactions (Prohibition) Amendment Act, 2016, and Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016.

Let’s consider some short- and medium-term benefits:

Counterfeit and unaccounted notes: Deep-rooted fake notes and unaccounted cash of the past many decades were tracked. Either they came back into the system, or became detritus. However, banks struggling because of NPA (non-performing assets or bad loans) have money to lend for agriculture, infrastructure, and social sector, as also for trade and industry.

Black money: 40 years had passed since the last demonetization, and a large amount of black money had been generated. Black money can’t be wiped out totally from the economy; however, gradual and slow processes will never be able to hit the black money generation in a way this latest demonetization move did. Further, the psychological strike on black money has deeply demotivated the generators and hoarders of black money.

Boost in deposit base as well as financial savings: The total deposits in banks after demonetisation crossed Rs 12.44 lakh crore on December 10, 2016 according to data released by Reserve Bank of India. This has helped people switch from holding unproductive physical assets to financial assets.

Reduction in lending rates and improved monetary transactions: With the rise in deposit base with the banks through CASA (current accounts, savings accounts), the blended cost of funds has come down, and so has the cost of borrowing. Consequently, several banks have lowered the interest rates.

Marginal Cost of Funds-based Lending Rate: MCLR has reduced the lending rates and will boost the economic activity in the medium-term.

Strong bonds: Higher bank deposit base would lead to higher SLR (statutory liquidity ratio) demand. Anticipation of monetary easing will further support bonds.

Real estate: Prices are down and would become more realistic in the future.

Terrorism: An important source of funding of terrorists is black money and counterfeit money. Demonetisation and slow release of new notes also helped in this cause, as no cash was available for funding terrorist activities.

Gambling and Money laundering: Will be discouraged as they thrive on cash.

Discouraged drug peddling: Demonetisation made it hard for drug peddlers to demand and supply products.

Increased Tax Collection: As per Data from the Urban Development Ministry for November 2016 showed an increase of 268% in tax collection by 47 local bodies, as compared with November 2015. Also, till December 19 2017, direct tax mop-up rose 14.4%, indirect tax grew 26.2%, central excise was up 43.3%.

Others: Black money is also used to inflate prices of major assets such as real estate properties and gold. This will take a back seat for some time.


Long-term benefits are undeniable. Meaningful changes are already visible in terms of higher digitisation, greater tax compliance and lower realty prices.

Actually, demonetisation has provided the government and the Reserve Bank of India an iron ladder which, if utilized properly, may take the Indian economy higher than just being the world’s fastest growing economy. It’s time to become the most robust, most digitized and the most advanced economy in the world.

Banking liquidity: Increased considerably, now the money can be largely supplied back into the system through ATMs in a calculated and controlled way. The total liquidity in the economy can be controlled.

Banking the unbanked population: Banking habits of the entire population will improve. Opening bank accounts has almost become mandatory for every citizen. Those who can’t open bank accounts on their own, are being provided these by the government as Jan Dhan accounts.

Disclosures and income tax paid: Of course, not all black money returned due to monetisation. However, whatever was disclosed and income tax paid on that, was a positive. This should help cushion the government’s FY17 fiscal deficit target.

Formalisation Effect: Going digital would greatly enhance Indian economy’s chance to transform into an organized economy. This is likely to enhance the government’s ability to tax commercial transactions resulting in a structural improvement in tax to GDP ratio in the economy.

Improved international image: India’s position on transparency and corruption at the global stage will improve adding to its investor appeal.

New income tax payers: The number of new income tax payers as well as the magnitude of reported and taxable income will rise.

Financial inclusion: The new notes with higher security features will make the economy more transparent. Digital transactions will rise dramatically. India has the potential for digital financial inclusion.


One of the biggest advantages of demonetisation is India’s expedited movement towards digitization. After the successful drive of Aadhaar Card, maximum digitization is possible. Besides banks, online wallet companies including Paytm, MobiKwik and FreeCharge will support.

Positives of digitization: a) Log of every purchase, b) Increased tax revenue, c) No deposits or withdrawal of currency, d) Money will be constantly in circulation or in the bank, e) Chance to lower taxes, f) Billing would increase, g) Cost of printing currency would reduce, h) Bribes will reduce, i) Tax avoidance will decrease, j) Misuse of laws would reduce, k) Social evils would reduce, and l) Day-to-day life would become easier.

Caution in digitization: To increase trust and reduce frauds in digital payments, cybersecurity systems must be strengthened considerably. Inter-operability of the payments system must be ensured and the newly created Unified Payment Interface (UPI) system must be popularized. However, cash is not bad. Public policy must balance both cash and digital payments. Transition to digitalisation must be gradual, inclusive and not controlled, and digitally deprived must be supported.


If India focuses on the right policies and measures, it will improve the economic condition at an unprecedented scale. The potential benefit to India and to the world is incalculable. India needs to seize opportunities by making smart investments in the right things boldly.

The following must be done immediately: fast, demand-driven remonetisation, a push to digital payments using incentives, bringing land and real estate (the long-suspected, main parking slot for black money) under the goods and services tax (GST) net, lowering tax rates and stamp duties, and improving the tax system.

In addition, the RBI should guarantee the public the amount of currency that the latter wants. The early elimination of withdrawal limits will build confidence; there should be no penalties on cash withdrawals. Tax reforms must be implemented and tax administration must be improved. For inclusive growth, the poor must be distributed subsidies through the Jan Dhan Aadhar Mobile mode (JAM).

Through other measures, people must be prevented from parking their savings in physical assets such as gold and real estate. The government must keep a tight leash on the corruption front. Low bank penetration in the rural areas and low financial literacy must be improved. Government must immediately generate a lot of employment opportunities by lending massively to the infrastructure sector.

India’s cash-to-GDP ratio is as high as 12%, roughly three times of even developing countries like Brazil and South Africa, as cash accounts for 98% transaction volumes and 68% of value. This needs to be reduced. There must be bold cut in tax rates.
Though India’s economic growth is likely to dip to 6.5 per cent this fiscal, it must rebound to 6.75-7.5 per cent in the next financial year, a number that largely agrees with IMF forecast of 6.6 percent. According to Chief Economic Advisor, Arvind Subramanian, “Even under this forecast, India would remain the fastest growing major economy in the world.”

Further, as per Economic Survey 2007, “Over the medium run, the implementation of GST, follow-up to demonetisation, and enacting other structural reforms should take the economy towards its potential real GDP growth of 8 per cent to 10 per cent.”

Significant financial data has been collected through the demonetisation drive. Similar to the population census data – where over a period of time relevant calculations are made, and appropriate policy measures or decisions are taken – this financial data would go a long way in improving financial conditions in the economy, making financial reforms and taking action against errant depositors.

And then, of course, as Mahatma Gandhi said, “A right cause never fails”.


Kailash Satyarthi (Nobel laureate): “It will check human trafficking and child slavery in the country.”

Adi Godrej (Chairman of Godrej Group): “Demonetisation is a good move for long term growth.”

Pankaj Jain (Group CEO, Logix Group): “Recent demonetization would not only bring more transparency and enhanced financial discipline in Indian economy but would also open the doors for a host of opportunities to new-age start-ups and entrepreneurs.”
World Bank President, Jim Yong Kim said, “I am a big fan of Modi!”

Washington Post: “… initiative is ambitious and … a crackdown against black money.”

The Independent: “Modi does a Lee Kuan Yew to stamp out corruption in India.”

Bill Gates: “It will help India move from shadow to a more transparent economy.”

G20 Summit Concluded in China

The 11th meeting of the G20 Group which accounts for the 85 percent of the world’s economy, 80 percent of global trade, and two-thirds of the world’s population was concluded in Hangzhou, China on 4–5 September, 2016. The Summit was aimed to bring profound measures for giving a new direction to the world economy and had the theme, “Building an Innovative, Invigorated, Interconnected and Inclusive World Economy”.

The leaders discussed to bolster the steps which they have taken to address corruption, tax evasion and avoidance, and other challenges that undermine the integrity of the global financial system. They committed to make use of all policy tools – including fiscal policy – to achieve the common aim of strong, sustainable, balanced, and inclusive growth.

In the declaring statement the G20 communiqué presented a central vision which the member states will follow to “strengthen the G20 growth agenda to catalyze new drivers of growth, open up new horizons for development, lead the way in transforming our economies in a more innovative and sustainable manner and better reflect shared interests of both present and coming generations.”

Apart from economic reforms, discussion on terrorism, migrant crisis, and climate change also took place. The communiqué lauded the World Bank for its efforts in collaboration with other international organizations and its shareholders in creating a global crisis platform for providing support to refugees and host communities in both low and middle income countries.

America and China announced that they will formally ratify the Paris climate change agreement to curb climate-warming emission. The move was highly appreciated as both the nations collectively account for more than 37 percent of global emissions. US Secretary appreciated the move saying, “It moves the needle in a way that no two other nations can accomplish.”

Along with the heads of 20 member states, the Summit was attended by presidents of Chad, Egypt, Kazakhstan, Laos, and Senegal, and the prime ministers of Singapore, Spain, and Thailand as well.

India and the US Sign Logistics Exchange Pact

India and the United States have recently signed a significant logistics defence agreement that will empower militaries of both the countries to utilize each others’ assets and bases to repair and replenish the supplies for making joint operations more efficient. Indian Defense Minister Manohar Parrikar and the United States’ Defense Secretary Ashton Carter have signed the “Logistics Exchange Memorandum of Agreement” (LEMOA) and have assured that it will facilitate opportunities for “practical engagement and exchange”.

The transparency was maintained about the fact that the reciprocal logistic support would be used exclusively during authorized port visits, joint exercises, joint training, and humanitarian assistance and disaster relief efforts. And, the logistics support for any other co-operative effort shall only be offered in a case-by-case basis through prior mutual consent of the parties, consistent with their respective laws, regulations, and policies.

This pact facilitates the provision of logistical support, supplies and services between the United States’ and Indian militaries on a reimbursable basis and offers a framework for governing them. This pact may include food, water, billeting, transportation, petroleum, oils, lubricants, clothing, medical services, spare parts and components, repair and maintenance services, training services, and other logistical items and services.

According to a joint statement after signing the pact both the countries agreed for this deal, because of the significance it will provide to facilitate innovative and advanced opportunities in defence technology and trade cooperation. Also, the United States has agreed to elevate defence trade and technology sharing with India to a level commensurate with its closest allies and partners. On the basis of this statement the defense ties among the two countries are based on their “shared values and interests,” and their “abiding commitment to global peace and security.”

Besides, during the meeting, Indian Defence Minister Manohar Parrikar and US Defence Secretary Ashton Carter had a discussion regarding the “wealth of progress” in bilateral cooperation and deepening strategic partnership between the United States and India.

Oyo Ventures in China

OYO rooms, more commonly known as OYO, have extended its presence in the Chinese economy.
This expansion is the third overseas expansion after Malaysia and Nepal for the Gurugram-based startup.
OYO is an Indian hospitality service and budget hotel network, founded by Ritesh Agarwal in 2013 and is exploring the two big markets of India and China, alongside other Eastern countries like Indonesia. It is also set to take its enterprise in United Arab Emirates. In September 2017, OYO had signed a 5 year MoU with the China Lodging Group to facilitate and strengthen collaboration in order to build a worldwide market leading hospitality business. The MoU signed is for both parties to explore opportunities for mutual collaboration in fields like knowledge and technology sharing, strategic alliances – including but not limited to local sourcing and procurement and joint loyalty programs and investments. The multi brand hotel group had made a $10 million equity investment in OYO to become a minority shareholder (less than 5 per cent). Currently, the chain comprises of over 11,000 exclusive or franchised rooms in 26 cities including Hangzhou, Xian, Nanjing, Guangzhou, Chengdu, Xiamen and Kunming among others.

It has also launched its services in Shenzhen, also called the silicon valley of China, and is considered one of the busiest and fastest growing ports in the world. It has covered 8 hotels with a room count of around 400.
AsiaOne believes that the reason behind this move is the massive prosperity China’s tourism Industry is witnessing. It enjoys an influx of both domestic and International tourists and their market is considered as fragmented as the Indian hotel market.

The firm has reportedly hired around 60-70 employees to run its operations in China.
Furthermore, a substantial rise in the number of hotels and headcounts is expected in the near future.

Hong Kong stock market becomes World’s 3rd largest

Hong Kong’s stock market has overtaken Japan to become the World’s 3rd largest stock market. The city’s equity market has become the 3rd most valuable, and just closely behind the US and mainland China.

The market value of the companies listed on Hong Kong bourses stood at $5.78 trillion, overtaking Japan’s stock market value that pegged at $5.76 trillion. Hong Kong’s stock market benchmark Hang Seng Index rose 17% since the beginning of the year, adding $937 billion of market value for stock trading with a major contribution from Tencent Holdings Ltd. that gained 22%. The bourse closed at its highest since June 2015. During the same period, Japan’s Topix Index climbed 8.3%. A stronger 2019 is predicted for Hong Kong and China expecting positive trade relations between China & US.

Eastern Africa is All Set to Reach the Sky

Expanding the aerial reach of the continent, East African countries are all making headway in the airlines industry. While Uganda is all set to reintroduce its national airline, carriers in Tanzania and Rwanda are also amplifying their presence. Kenya is also expected to raise its capital in Kenya Airways, where the government has 29 per cent shares. The Airlines is also reestablishing itself for a better outcome.

Yoweri Museveni, Uganda’s President said in a cabinet meeting that he wishes to revive the airline that went bankrupt earlier in the year 2001. He said that at the present time, Uganda has a stronger economic situation and is looking forward to start its own Airline for “Ugandan travelers are suffering because of, apparently, not having a national airline.”

In Tanzania, to acquire more aircrafts in the state-controlled airline Air Tanzania, the government has also allocated various funds in its last month’s budget as well.

In this rapid race of strengthening the fleet of the country, Rwanda too is going to start its first two Airbus A330 long race jets in the upcoming months. The country also has eight aircrafts that serve the people. In addition, the country also wants to become a regional trade hub and to achieve that it is planning to begin air travel to Asian and European countries from next year.

Keeping in mind the need to strengthen their economic position on the globe, these East African countries are on their move to develop airports and airlines for a better and faster transportation system.

Majid AL Futtaim to Increase Investments in the UAE

Majid Al Futtaim, the leading retail and Hospitality Company of The Middle East and North Africa, announced an investment increase of Dh30 billion over the next ten years in the UAE. Apart from strengthening the economic state of the Emirate, this investment will also boost up the retail sector of the country which is growing rapidly in the present time.

In this mega investment, this flourishing conglomerate plans to develop 10 new state-of the-art shopping malls under its City Centre brand, six hotels, a mixed-use community, 28 cinemas and 40 Carrefour outlets as well as expand six existing malls. Further, the company also plans to renovate and expand existing properties by enhancing their grandeur and beauty. The group said that it will undertake six expansions to its existing malls, including major extensions to City Centre Ajman and City Centre Me’aisem, which will turn them into regional malls. The company will also launch its first super-regional mall in Sharjah that will make it one of the best shopping destinations for the shoppers of the Emirate.

The company’s chief executive, Alain Bejjani proudly stated that “For more than two decades, driven by our vision to create great moments for everyone, everyday, we have continually transformed the face of shopping, entertainment and leisure both here in the UAE and across the Mena region. In doing so, we have contributed to Dubai and the UAE becoming among the top global tourist and retail destinations, enhanced the lifestyle of their residents”.

These investments, particularly in the retail sector, are transforming the fashion and retail industry of the country. Today, cities of the UAE have turned into a favorable destination that offer best shopping experiences to the customers.

Emirates NBD to invest in Digital Transformation Plan

In Dubai’s biggest bank – Emirates NBD has announced to invest AED500 million ($136 million) for the digital innovation and multi-channel transformation of its processes, products and services. The investment will take place over a span of next three years to support UAE’s ‘Smart City’ vision. This step is a benchmark in the Dubai’s digital transformation and shows that in the coming years, Emirates NBD will rise as a prominent leader in global digital banking industry.

The bank also plans to launch the UAE’s first digital bank targeted at millennials to offer customers the next generation of self-service money management.

Talking about their vision, Shayne Nelson, Group CEO of Emirates NBD said “We are making a commitment to the future with our digital transformation plan. This significant investment will drive further innovation and solidify Emirates NBD’s reputation as an innovation-led, customer-focused bank that is indisputably a market leader in the region.”

Earlier, the bank also introduced several digital banking services enabling a costumer to perform over 100 transactions. In addition, Emirates NBD is also the only bank in the UAE to offer e-payment capabilities through all bank channels for over 25 major service providers.

Focusing on the five important areas such as end to end process transformation; smoother, faster and more responsive customer interface; omnichannel experience, fortification of cyber security and anti-fraud capabilities; and enhancement data management and analytics, the bank is moving forward to offer better customer experience and next-generation banking options.

Presently, Emirates NBD is the only bank in the country that offers e-payment capabilities through all bank channels for over 25 major service providers, varying from card schemes, education sectors, telecom, transportation, utilities, among others.

It seems certain that Emirates NBD’s initiatives will follow the strong vision that will transform the bank industry of the UAE and will make it more digitized and effective. Further, these steps will also strengthen the Emirates NBD’s position in the GCC region.

Indian cabinet approves currency swap agreement with Japan

The Union Cabinet chaired by Prime Minister Narendra Modi gave its approval of USD 75 Billion for entering into a Bilateral Swap Arrangement (BSA), a currency swap agreement, between India and Japan thereby authorizing RBI to sign an agreement between Reserve Bank of India and Bank of Japan.

The agreement is concluded between the premiers of both the countries at a summit level meeting at Yamanashi, Japan. It is essentially meant to exchange and re-exchange a maximum amount of USD 75 Billion for maintaining the appropriate levels of the balance of payments for meeting short-term deficiencies in foreign payments.

This arrangement enables both countries to use the agreed amount of capital. Such an agreement is an exemplar mutual cooperation between the two countries for helping each other.