Greenvissage Explains – February 2024 edition

Greenvissage explains, Can Bitcoin ETFs provide a safe pass to investments in Cryptocurrencies?

In the realm of finance, few innovations have captivated the world’s attention quite like Bitcoin. Since its inception in 2009 by an anonymous individual or group using the pseudonym Satoshi Nakamoto, Bitcoin has emerged as a groundbreaking digital currency, challenging traditional notions of money and revolutionizing the way we think about value exchange. Powered by blockchain technology, Bitcoin operates on a decentralized network, free from the control of any central authority, such as governments or financial institutions. Its unique properties, including limited supply, transparency, and security, have propelled it into the spotlight, attracting investors, technologists, and policymakers alike. However, governments have prohibited or heavily regulated Bitcoins due to concerns about their potential for facilitating illicit activities such as money laundering, tax evasion, and funding illegal transactions. Additionally, Bitcoin’s decentralized nature challenges traditional financial systems and control mechanisms, raising fears of destabilizing effects on national currencies and monetary policies. Government restrictions have been a key hurdle in the meteoric rise of cryptocurrencies. However, that might be a thing of the past now, at least that’s what the institutions are promising with the introduction of – Bitcoin ETFs!

Imagine buying Bitcoin as easily as investing in a stock through your brokerage account. That’s the dream that Bitcoin ETFs offer. Unlike directly buying crypto on exchanges, ETFs hold underlying Bitcoin assets, allowing investors to trade them through familiar channels. This removes the hurdles of dealing with crypto wallets and navigating unfamiliar platforms, potentially attracting millions of new investors who were previously hesitant due to complexity. After years of scepticism from regulators, the approval of Bitcoin ETFs in countries like Canada and the US signifies a turning point. It lends legitimacy to the cryptocurrency industry and could pave the way for wider institutional adoption. This could bring much-needed stability to the notoriously volatile Bitcoin market. ETFs could significantly increase the liquidity of Bitcoin, meaning it becomes easier to buy and sell. This could lead to more efficient price discovery, reflecting the true value of the asset. With easier entry and exit points, investors might be more comfortable allocating a portion of their portfolio to Bitcoin, further driving its adoption.

Despite the positive outlook, concerns linger. The underlying volatility of Bitcoin remains, and ETFs might not shield investors from price swings. Additionally, the potential for manipulation and security breaches within the ETF structure itself needs careful consideration. Regulatory oversight and investor education will be crucial for ensuring a safe and responsible environment. Yet, the arrival of Bitcoin ETFs marks a significant step forward for cryptocurrency integration into mainstream finance. While challenges exist, the potential benefits are undeniable. As the market matures and regulations evolve, Bitcoin ETFs could become a powerful tool for investors seeking exposure to this dynamic asset class. However, it’s crucial to remember that any investment carries risk, and careful research and a well-diversified portfolio are key to responsible investing, regardless of the asset.

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Greenvissage Explains, Why the New MSME Payment Rule Sparked Debate in India.

The Indian government introduced a new regulation in Budget 2023, impacting Micro, Small, and Medium Enterprises (MSMEs), aiming to address a long-standing issue – delayed payments. Section 43B(h) of the Income Tax Act mandates buyers to settle payments for goods procured from MSMEs within the timeframe agreed upon, not exceeding 45 days from the invoice date. If such payments were not cleared within 45 days or less, the amount outstanding as of March 31 of the year, would be a disallowed expense for income tax purposes. This amount would be allowed again to be claimed as expense, in the year in which payment is made. While the intent is noble – ensuring financial stability for MSMEs – the rule has ignited debate, raising concerns and questions about its feasibility and potential unintended consequences. Effective from the assessment year 2024-25 i.e. April 1, 2023, the rule applies to all businesses and individuals purchasing goods from MSMEs registered under the MSMED Act, 2006.

While wholesale and retail traders can register as MSMEs after the July 2021 notification, a crucial caveat exists. The notification included traders for the limited purpose of benefitting from RBI’s Priority Sector Lending (PSL) norms. Therefore, all other benefits, including the tax relief for delayed payments under the MSME Act, are not available to traders. Thereby, section 43B(h) will be applicable only if the vendor is a Manufacturer or a Service Provider, while Traders would be excluded from the purview of this section. Since the section is effective from April 1, 2023, any payments in respect of transactions before that date will also be excluded from the impact of this section. For Section 43B(h) purposes, a simple written declaration clearly stating the enterprise type as Micro or Small suffices for creditor recognition. This eliminates the potential hurdle of mandatory registration and empowers unregistered MSMEs to enforce their right to timely payments within the stipulated 15 or 45-day timeframe. While the rules are unclear in many respects, the above are interpretations made by the expert and will be subjected to various judicial proceedings in the future, until clarifications are issued by the government.

Supporters hail the rule as a game-changer for MSMEs. Timely payments will improve their financial health, allowing them to reinvest in growth, create jobs, and contribute more effectively to the economy. It also promotes fair business practices and fosters an environment conducive to MSME success. However, concerns around implementation and potential disruptions loom large. Industries like textiles, with inherently complex logistics and payment cycles, express difficulty adhering to a strict 45-day limit. Businesses might face challenges integrating the new terms into their financial systems and adjusting existing contracts. Open dialogue with stakeholders, industry-specific considerations, and flexible approaches are vital. While the new rule represents a positive step towards empowering MSMEs, its success hinges on careful monitoring, addressing industry concerns, and ensuring clarity and flexibility in its application.

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Greenvissage explains, What is the Pradhan Mantri Suryodaya Yojana?

The Indian Prime Minister has recently launched the ‘Pradhan Mantri Suryodaya Yojana,’ marking a renewed commitment to harnessing solar power. With a focus on installing rooftop solar power systems in one crore households nationwide, this initiative holds the promise of not only reducing electricity costs for consumers but also contributing significantly to India’s renewable energy goals. Rooftop solar panels, the cornerstone of this initiative, offer a decentralized and environmentally friendly solution to energy needs. These photovoltaic panels, when installed on rooftops, are connected to the main power supply unit, thereby reducing reliance on grid-connected electricity. One of the primary benefits of rooftop solar panels is the potential for consumers to generate surplus solar power, which can be exported to the grid. This surplus power can then be monetized, providing additional income to households while contributing to the overall energy grid.

The launch of the Pradhan Mantri Suryodaya Yojana comes in the wake of previous government initiatives such as the Rooftop Solar Programme, launched in 2014. Despite the ambitious target of achieving 40 gigawatts (GW) of rooftop solar capacity by 2022, the country fell short of this goal. Consequently, the deadline was extended to 2026. The new initiative is seen as a strategic step towards achieving this target, underscoring the government’s commitment to bolstering India’s renewable energy sector. India’s current solar capacity reflects both progress and potential for growth. As of December 2023, the total rooftop solar installed capacity stands at approximately 11.08 GW. Gujarat leads the pack with 2.8 GW, followed by Maharashtra with 1.7 GW. However, it’s noteworthy that the majority of rooftop solar installations are in the commercial and industrial sectors, with only 20% in the residential sector. This highlights the untapped potential within residential areas, where solar energy could play a transformative role in meeting electricity demands.

In the broader context of renewable energy, India has made significant strides. The total solar power installed capacity in the country has reached around 73.31 GW, with Rajasthan and Gujarat emerging as top performers. However, given the country’s surging energy demand, driven by rapid economic growth and urbanization, there’s an urgent need for further expansion in renewable energy capacity. India’s commitment to renewable energy is underscored by its ambitious targets. Despite being one of the largest consumers of coal, the country aims to achieve 500 GW of renewable energy capacity by 2030. Additionally, India aims for 50% of electricity generation from non-fossil fuel sources by 2030, with renewables already contributing 30% to the total installed capacity. To complement the Pradhan Mantri Suryodaya Yojana, the government has implemented various other initiatives to harness solar energy effectively. These include the National Solar Mission, Solar Park Scheme, Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM), Suryamitra Skill Development Programme, and participation in the International Solar Alliance. The launch of the Pradhan Mantri Suryodaya Yojana marks a significant milestone in India’s transition towards sustainable energy. By leveraging rooftop solar power, the initiative not only empowers households but also contributes to the nation’s renewable energy targets.

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