Indian Economy: News and Discussion (June 8 2008)

Locked
Ameet
BRFite
Posts: 841
Joined: 17 Nov 2006 02:49

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Ameet »

India's Next Global Export: Innovation
Called jugaad, India's improvisational style of invention focuses on being fast and cheap—attributes just right for these times.

http://www.businessweek.com/innovate/co ... 864965.htm

A Hindi slang word, jugaad (pronounced "joo-gaardh") translates to an improvisational style of innovation that's driven by scarce resources and attention to a customer's immediate needs, not their lifestyle wants. It captures how Tata Group, Infosys Technologies (INFY), and other Indian corporations have gained international stature. The term seems likely to enter the lexicon of management consultants, mingling with Six Sigma, total quality, lean, and kaizen, the Japanese term for continuous improvement.
shravan
BRF Oldie
Posts: 2206
Joined: 03 Apr 2009 00:08

Re: Indian Economy: News and Discussion (June 8 2008)

Post by shravan »

Barclays bank curbed by Indian finance regulator
10 December 2009
India's financial regulator has suspended UK bank Barclays from dealing in products that allow foreign investors to buy Indian stocks.

Barclays said it was continuing to "co-operate fully" with the Securities and Exchange Board of India (SEBI) to try to resolve the matter.

SEBI accuses Barclays of not correctly disclosing details of how its Indian investment products operate.

Barclays has been given until 18 December to make a formal response.

SEBI said it was seeking information from Barclays regarding its Indian investment products issued between January 2006 and January 2008.

Investing in Indian stocks has become increasingly popular for overseas investors in recent years, as their value has risen on the back of India's continuing fast-paced economic expansion.
Suraj
Forum Moderator
Posts: 15043
Joined: 20 Jan 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Suraj »

Industrial production grows 10.3% in October
Output at factories, utilities and mines rose 10.3 percent in October from a year earlier after gaining a revised 9.6 percent in September, the statistics agency said in New Delhi today. That was less than the median 12 percent estimate in a Bloomberg News survey of 20 economists.

“Industrial growth is leveling off,” said Robert Prior- Wandesforde, senior Asia economist at HSBC Holdings Plc in Singapore. “A flattening in industrial growth very much fits with our view and we expect it to move in a range of 8 percent to 10 percent over the next few months.”
Note that both August and September IIP data was revised upwards subsequently, and October will quite likely follow the trend. Further, considering November's massive automobile sales growth, we are likely to see double digit IIP growth that month as well. This means at least close to double digit industrial output in third quarter, which suggests strong 3Q GDP data as well, even if agricultural growth is negative as expected.
Prasad
BRF Oldie
Posts: 7793
Joined: 16 Nov 2007 00:53
Location: Chennai

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Prasad »

I guess this belongs here -

‘India’s high tariffs impede agricultural imports from U.S’
The report “India: Effects of Tariffs and Non Tariff Measures on US Agricultural Exports” was released by the US International Trade Commission (USITC), an independent, non-partisan fact finding federal agency, at the request of the Senate Committee on Finance.
S.Gautam
BRFite -Trainee
Posts: 43
Joined: 26 Oct 2009 22:00

Re: Indian Economy: News and Discussion (June 8 2008)

Post by S.Gautam »

^^
Doesn't the U.S. have a massive federal subsidy program for agriculture? They have no right to whine.
Katare
BRF Oldie
Posts: 2579
Joined: 02 Mar 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Katare »

Yes they do!

But with food inflation in India at 20% and persistent food shortage/inflation for last several years, we need to have a policy that allows for easy import of food items from large food producing countruies to meet short term mismatch in demand and supply.

Regardless of how much we produce there will always be short term mismatch for some food items every year, that would need to be met with imports. The current system of state owned entities taking forever to plan and than launch large global tenders for imports eventually cause even global prices to shoot up. What they eventually import comes too late and usually too low in quality to impact domestic market prices.

Someway of controlling food prices based on liberal non-centralized private sector import is needed with stringent protections for small farmers.
Sudip
BRFite
Posts: 378
Joined: 28 Oct 2008 05:42
Location: Paikhana

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Sudip »

London to 'lose out' to Shanghai
The survey, carried out by law firm Eversheds, suggests business leaders think the West is facing accelerated competition from the East.
More than 90% of bosses in Shanghai and Mumbai are confident in their economic outlook for 2010.
This compares with 22% of business leaders in London and 35% in New York.
Across the United Arab Emirates, 69% said they were confident of their economic prospects over the coming year.
In Evershed's Boom or Gloom report, New York will still be seen as the most significant financial centre with London and Shanghai vying for second place.
A total of 600 senior executives across London, Mumbai, New York, Shanghai and the UAE were canvassed for the survey.
Commenting on the findings, Alan Jenkins, chairman of Eversheds thinks companies across the world are reacting to and recovering from the global financial crisis at varying rates.
"More established economic centres are still digesting the extent of the crisis. Confidence levels in the East are in stark contrast to the traditional economic powerhouses," he said.
Katare
BRF Oldie
Posts: 2579
Joined: 02 Mar 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Katare »

Read This Before You Buy India
In fact, Shah said, if you factor out India's four most underdeveloped provinces, the country has matched China's growth over the past 15 years. And while he acknowledged that it's not realistic to pull the laggards out of any data set, he wanted to show us that even though India's development has been uneven, the country is just as capable as China of torrid growth.
A decade ago, India's regulated fixed-line provider offered woefully poor service, and customers had to wait years to get a telephone. Now, the deregulated mobile sector provides some of the world's best service at some of the world's lowest prices. Efficient per-second billing allows even cash-strapped Indians to own phones.
"Take Tata Motors (NYSE: TTM), for example," he continued. "It's the only carmaker in the world making cars for both $2,000 and $200,000."
Abhijeet
BRFite
Posts: 805
Joined: 11 Nov 2001 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Abhijeet »

Good article. I think this part is key:
The secret of this success was the introduction of competition to the marketplace and the establishment of partnerships between well-capitalized foreign companies, such as Vodafone (NYSE: VOD) and SingTel, with nascent domestic providers that had local knowledge.
In other words, not just undifferentiated foreign capital, but capital from companies that know how to run global businesses in the same space. I think the Indian retail industry would benefit a lot from being able to tie up with (or compete with) global leaders like Ikea and Walmart if they open stores in India.

Maybe more controversial right now, but the same is probably true of letting foreign banks service retail clients in India.
Katare
BRF Oldie
Posts: 2579
Joined: 02 Mar 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Katare »

Moody's upgrades outlook for rupee

Moody's upgrades India's local currency rating
Moody’s said the exceptional strength of India’s external position was such that holding a foreign currency government debt instrument was less risky than holding a local currency government debt instrument.
What a change from 1990 when MMS was morgaging gold in London to avoid default. :twisted:
Vipul
BRF Oldie
Posts: 3727
Joined: 15 Jan 2005 03:30

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Vipul »

Advance tax payments surge, reflecting growth.

Advance tax payments made by the top 100 companies in Mumbai, the country’s financial hub, have risen by one-fourth, indicating that the economy’s growth trajectory has begun to stabilize and that the Union government is on target to meet revenue projections.
Suraj
Forum Moderator
Posts: 15043
Joined: 20 Jan 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Suraj »

Another piece of (expected) positive news:
Export growth turns positive in November
After falling continuously for 13 months, the country’s merchandise exports registered a growth of 18 per cent in November, at $13.2 billion (Rs 61,800 crore) against $11.16 billion (Rs 52,250 crore) in the same month last year.

Total exports for April-November 2009 were $104.25 billion (Rs 4.9 lakh crore), a fall of 22.3 per cent from the $134.2 billion (Rs 6.3 lakh crore) in the corresponding period of last financial year, indicated official data released today by Union commerce secretary Rahul Khullar.

Khullar said the low base in November last year (when the economic crash had begun) was mainly responsible for the growth this November. It does not, he emphasized, indicate a surge in demand for Indian goods in international markets.

Some major sectors that did well during the month were petro products, gems and jewellery, basic chemicals, iron ore, readymade garments, manmade fibre and leather products. Exports of petroleum products reached $2.4 billion (Rs 11,240 crore) in November against $1.3 billion (Rs 6,100 crore) in the same month last year, whereas gems and jewellery exports topped $2.15 billion (Rs 10,070 crore) from $1.6 billion (Rs 7,500 crore) in November 2008.
GST task force propses rates and exemptions
The Thirteenth Finance Commission’s taskforce on the proposed goods and services tax (GST) has recommended a 5 per cent central GST and 7 per cent state GST on all goods and services, except five specific categories.

It has proposed a zero rate for exports though it is not in favour of any special dispensation for the special economic zones (SEZs).

For inter-state transactions, the taskforce, in its report, recommended zero-rated structure through adoption of the modified bank model. Pending constitutional amendment, the report suggested that the collection from 7 per cent state GST should accrue to the state government and devolution to the third-tier (local) government should be made based on recommendations of state finance commissions.

The exemption list includes public services of Union, state and local governments, service transaction between an employer and employee, unprocessed food articles sold under the public distribution system, educational and health services provided by non-government schools, college and agencies.

It has favoured doing away with area-based exemption and replacing it with direct investment-linked cash subsidy in case the government wants to support industry for balanced regional development.

The taskforce has also recommended that “sin” goods comprising emission fuels, tobacco products and alcohol should be subject to a dual levy of GST and excise with no input credit for excise. “However, industrial fuels should be subjected only to GST with the benefit of input credit like any other intermediate good,” the report said.

Central taxes proposed to be subsumed in GST are central excise duty, including additional excise duty, service tax, additional customs duty, all surcharges and cesses. Among state taxes that should be subsumed are value added tax, including purchase tax and central sales tax, and entertainment tax, among others.
Vipul
BRF Oldie
Posts: 3727
Joined: 15 Jan 2005 03:30

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Vipul »

Symbol for rupee in final lap.

Panel shortlists five candidates, decision on winning entry in January.

The long wait for a symbol of the rupee is expected to end by March next year. A committee headed by Reserve Bank of India (RBI) Deputy Governor Usha Thorat has shortlisted five symbols from 4,000 entries for a public competition to select a design for the symbol.

The announcement of the final winner is expected in January, but a finance ministry official said the process would be over by March. “RBI has given its recommendations, but it will need the approval of the finance minister as well as the Cabinet. This may take two-three months,” he said.

The official, however, said a formal launch would take time because a software would have to be in place for the new symbol. Besides, a decision needs to be taken on whether the symbol will be used on currency notes and coins.

The final interview of the five candidates took place a couple of days back in New Delhi. The finalists are from very different backgrounds. While two are design professionals, one is doing his PhD in industrial design at IIT-Bombay, one is an architect trained at MIT, while one is a high school computer science teacher at Thalassery.

While the five candidates will be awarded Rs 25,000, the winner will get Rs 2.5 lakh.

The candidates, four of whom are from Mumbai, are Jitiesh Padmashali (working with advertising agency JWT), Shahrukh J Irani (design professional), D Udaya Kumar (IIT student), Nondita Correa-Mehrotra (MIT, and renowned architect Charles Correa’s daughter), and Shibin KK (teacher in Kerala).

The contest, which closed on April 15, was open only to resident Indians.

Unlike other major currencies of the world like the dollar, the pound, the yen and the euro, the rupee does not have a globally recognised symbol. The rupee is generally shortened to Rs and is sometimes described as INR (Indian rupee).

That is about to change. “The symbol of the rupee will have an iconic meaning, which is to convey the brand value of the currency and the nation. The launch of a symbol is a step towards making it internationally acceptable for trading,” a senior RBI official said.

While none of the candidates were willing to talk on the issue, sources privy to the discussions between government officials and the shortlisted candidates said the symbols suggested were a mix of the traditional Indian script and the Roman script. The blend will make the symbol recognisable to both the common man in India as well as foreigners.

The government has said the symbol should represent the historical and cultural ethos of the country and should be applicable to the standard computer keyboard. :?: :idea:

India’s move to unveil a symbol for the rupee comes at a time when the dollar’s status as a reserve currency is being questioned following the global financial crisis which started with the collapse of Lehman Brothers in 2008. While Russia and China started lobbying for replacing dollar as the global reserve currency, a recent report of the UN Conference on Trade and Development suggested a new global currency to replace the dollar.
Ameet
BRFite
Posts: 841
Joined: 17 Nov 2006 02:49

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Ameet »

Kerala Plans 1st Islamic Bond

http://www.bloomberg.com/apps/news?pid= ... ewLRVU8Tqw

Kerala, the communist-ruled Indian state that relies on Middle East remittances for a quarter of its economy, plans to sell the nation’s first Islamic bonds next year to help pay for infrastructure projects.
pgbhat
BRF Oldie
Posts: 4163
Joined: 16 Dec 2008 21:47
Location: Hayden's Ferry

Re: Indian Economy: News and Discussion (June 8 2008)

Post by pgbhat »

ashish raval
BRFite
Posts: 1390
Joined: 10 Aug 2006 00:49
Location: London
Contact:

Re: Indian Economy: News and Discussion (June 8 2008)

Post by ashish raval »

^^ since when a Foreign company allowed to buy an Indian Media company. Foreign Media in India is a very very dangerous issue. We should not allow any FDI in media.
Singha
BRF Oldie
Posts: 66601
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Singha »

time warner and NDTV - sauron is taking over saruman's operations in eisengaard. its not a bad guy taking over the good.

the last scattered remnants of rivendell and gondor must be on guard.
Surya
BRF Oldie
Posts: 5034
Joined: 05 Mar 2001 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Surya »

good one Singha

Vishnu can bleat more about swiss minarets now
chetak
BRF Oldie
Posts: 32283
Joined: 16 May 2008 12:00

Re: Indian Economy: News and Discussion (June 8 2008)

Post by chetak »

Ameet wrote:Kerala Plans 1st Islamic Bond

http://www.bloomberg.com/apps/news?pid= ... ewLRVU8Tqw

Kerala, the communist-ruled Indian state that relies on Middle East remittances for a quarter of its economy, plans to sell the nation’s first Islamic bonds next year to help pay for infrastructure projects.

http://www.ummid.com/news/December/09.1 ... st_law.htm
'Decision to form Islamic Banking dangerous for India'

Tuesday, December 08, 2009 10:25:54 AM, ummid.com News Desk

Kochi: Janata Party president Subramanian Swamy on Tuesday criticised the LDF government’s decision to accord sanction for formation of an Islamic banking company by the Kerala State Industrial Development Corporation (KSIDC), reports The Hindu.

According to the leading South Indian English daily, Subramanian Swami while speaking to reporters said that the proposed banking company had to follow Islamic law. The decision was “scandalous and dangerous” for the country.

He said it was regrettable that the CPI (M)-led government was promoting a particular religion.

If secularism was scrapped to favour a particular religion, it would set a dangerous trend. It would be like a separate electorate system introduced during the British rule, The Hindu quoted Swamy as saying.

He said that the decision also went against the provisions of the Banking Regulation Act 1949 because no interest could be charged under the Islamic law.

The decision also violated the guidelines of the Reserve Bank of India. He pointed out that a seven-judge bench of the Supreme Court had held that no money of the tax payers shall be used to promote an institution of a particular religion.

Suraj
Forum Moderator
Posts: 15043
Joined: 20 Jan 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Suraj »

The 13th Finance Commission task force's GST report gets praise. While this is a dry tax law matter, its economic implications are very significant, because it will significantly enhance interstate commerce and general economic activity. GST is slated to go into effect from Apr 1 2010, replacing the current mess of indirect taxes and levies.
Finance Commission Report on GST flawless
Notable features of the Task Force recommendations are:
* A single tax rate of 7 per cent for the states and 5 per cent for the Centre.
* Inclusion of all goods and services in the GST including real property, banking services, petroleum, electricity, alcohol and tobacco.
* Subsuming of all indirect taxes, including stamp duties, entry tax not in lieu of octroi, purchase tax, and the Central Sales Tax (CST).
* Full endorsement of the destination principle of taxation by shifting the tax base from production to consumption.

These well designed features will result in tremendous simplification and rationalisation of tax structure and could prove to be the tipping point for converting the Indian tax regime from one of the worst to one of the best in the world. It would yield substantial dividends to the Indian economy providing gains within a range of 0.9 to 1.7 per cent of GDP. It will strengthen India as a single common market and provide a stable source of revenue for the states and local governments. The cooperation between the Cente and states in the design and implementation of GST will dawn a new era of cooperative federalism.

One of the interesting features of the report is the creation of a council of state finance ministers, which will be responsible for any modifications to the design of GST and for providing compensation to individual states for any loss in revenues due to GST. This body is an innovative compromise between the fiscal sovereignty of the states and the Centre and the need for harmonisation and cooperation.

While the paper has clearly defined a vision for the new tax regime, there are many hurdles that remain. Even though the model outlined by the Finance Commission is a win-win for both the Centre and the states, the states may be reluctant to take the giant leap that it entails. The states have been skeptical of the adequacy of the 7 per cent to replace their current revenues.

The Finance Commission has spent endless hours to confirm the validity and robustness of this calculations. This rate is indeed adequate to replace the current state taxes and provide some surplus from improved compliance and larger GDP, which has not been factored by the Finance Commission while calculating the rate.

The second concern of the states will be the inclusion of sectors such as real estate and alcohol, which are the exclusive reserve of the states under the current constitutional division of taxation powers. Modern GSTs make no exceptions for such sectors. Their inclusion in GST is essential to eliminate cascading and to ensure proper reporting and compliance by all sectors of the economy.

There are also certain technical features in the design of GST, which may prove to be challenging. Most notable among these is the taxation of banking services. No country in the world has been able to design a model for inclusion of financial services within a VAT/GST framework. India, if successful, will chart a new course, which could well become the model, which the rest of the world could emulate.
Due to the adverse monsoon, food prices are up. However, the upcoming Rabi season should significantly moderate price pressures:
Food inflation near 20%
Food inflation has been on the rise, primarily due to high prices of potato, other vegetables and pulses the whole of this calendar year, even when the overall headline inflation has been in the negative territory.

Year-on-year food inflation stood at 10.28 per cent in the corresponding period in 2008 and even on this high base, there was a near 20 per cent increase in prices. Food inflation for the week ended November 28, 2009 was at 19.05 per cent.

Analysts expressed concern for consistently rising food inflation and attributed it to drought, speculative activities and supply side hurdles. Most economists expect a moderation with the Rabi harvest, which will enable the government to induce more foodgrains in the system.
jamwal
BR Mainsite Crew
Posts: 5727
Joined: 19 Feb 2008 21:28
Location: Somewhere Else
Contact:

Re: Indian Economy: News and Discussion (June 8 2008)

Post by jamwal »

India Makes Push for Solar Power
AWAN, India -- Getting money to build India's largest private solar-power plant was easy compared with getting the required 152 signatures from local bureaucrats in the state of Punjab, says eco-entrepreneur Inderpreet Wadhwa. Making a profit on the project could prove to be even tougher.


Mr. Wadhwa is the founder of Azure Power Inc., which built the plant on 13 acres of farmland in this village in northern India. The plant started generating power this month and was inaugurated by top Indian officials Tuesday. It is a milestone in India's push to make solar power an important contributor to its energy mix.

But the challenges Azure faced in setting up the facility and the tough economics it will have to overcome to make a profit show how difficult it will be for India to meet its target of generating 20,000 megawatts of solar power, or roughly 13% of its current national power output, by 2022.

Mr. Wahdwa thinks the government's target is overly ambitious. "Let's walk before we can run," he says.
wig
BRF Oldie
Posts: 2162
Joined: 09 Feb 2009 16:58

Re: Indian Economy: News and Discussion (June 8 2008)

Post by wig »

suraj ji,
1. GST is unlikely to be implemented by 01 april 10 for a wide variety of reasons; princiapl among them is the inability of states to agree on uniform rates.eg. delhi revised vat rates on certain goods yesterday to beat the implementation dates.
2. one thing i am distrubed about is that presently the central indirect taxes of Exise and Service taxes will not be set off against local (state ) taxes like VAT.
this beggars logic. if set offs are to be limited to cgst (central goods and service tax ) and not carried over to sgst(state good and service tax- read VAT/LST) how will there be seamless transfer of goods. even today limited set off of taxes paid is there between customs (CVD) Excise and service tax but that does not carry over into state VAT.
today we probably have more controls in interstate transfers than inter country transfers!
wise geeks make profits just out of trading in e1, e2 forms (requried under CST)
VAT has certainly raised revenues, but perish the thought that it has brought transperncy in consumer pricing or brought all transactions under the the vat regime. when vat was introduced with much fanfare in financialyear 2205-06 this was the most tom-tommed expectation. it never happened. the regime of indirect taxes works pretty much in the old wayward manner.
3. this will result in more or less the continuation of the present indirect tax regime (old wine in a new bottle)
4. the white paper postulates that a wide variety of local taxes like octroi etc will be subsumed. the empowered group chaired by WB finance minister is unlikely to do any such thing from the reports that i read (newsppaers journals).
5.
Suraj
Forum Moderator
Posts: 15043
Joined: 20 Jan 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Suraj »

wig: There'll certainly be some hurdles implementing GST, simply because we're such a large cacophonous country. Even VAT took a while to get going - there were some prominent outliers (Uttar Pradesh ?) for a while initially. To be fair, VAT by itself wasn't meant to be a panacea, but was a necessary step towards a full GST system. It had to be publicized positively then - how else would they get everyone on board ? However, the article goes a little too far crediting something that's not yet been implemented.

Since you seem to be familiar with this topic too, would you like to drive a discussion summarizing what GST is, what it is meant to replace, how it is meant to work, and what the potential pitfalls are, in detail ? It would help attract more participants who may otherwise be unfamiliar with what it is.

PS: Please don't bother with formal 'ji's :)
wig
BRF Oldie
Posts: 2162
Joined: 09 Feb 2009 16:58

Re: Indian Economy: News and Discussion (June 8 2008)

Post by wig »

sorry, but there was a power break and i went off the net!
suraj ji,
the internet is wonderfully anonymous. I use "ji" as a matter of courtesy as one never knows the age of the person whom i am addressing. please permit me the privilege of using it.
i am not very computer savvy.
but, yes i will be happy perhaps greatly honoured if i can be of assistance in any way that you feel is convienent over the entire spectrum of direct and indirect taxes in India.
if you could provide me your e mail id it would perhaps be more convienent
neel
BRFite -Trainee
Posts: 68
Joined: 09 Dec 2005 15:10

Re: Indian Economy: News and Discussion (June 8 2008)

Post by neel »

Suraj wrote:Another piece of (expected) positive news:
GST task force propses rates and exemptions
The Thirteenth Finance Commission’s taskforce on the proposed goods and services tax (GST) has recommended a 5 per cent central GST and 7 per cent state GST on all goods and services, except five specific categories.

It has proposed a zero rate for exports though it is not in favour of any special dispensation for the special economic zones (SEZs).

For inter-state transactions, the taskforce, in its report, recommended zero-rated structure through adoption of the modified bank model. Pending constitutional amendment, the report suggested that the collection from 7 per cent state GST should accrue to the state government and devolution to the third-tier (local) government should be made based on recommendations of state finance commissions.

The exemption list includes public services of Union, state and local governments, service transaction between an employer and employee, unprocessed food articles sold under the public distribution system, educational and health services provided by non-government schools, college and agencies.

It has favoured doing away with area-based exemption and replacing it with direct investment-linked cash subsidy in case the government wants to support industry for balanced regional development.

The taskforce has also recommended that “sin” goods comprising emission fuels, tobacco products and alcohol should be subject to a dual levy of GST and excise with no input credit for excise. “However, industrial fuels should be subjected only to GST with the benefit of input credit like any other intermediate good,” the report said.

Central taxes proposed to be subsumed in GST are central excise duty, including additional excise duty, service tax, additional customs duty, all surcharges and cesses. Among state taxes that should be subsumed are value added tax, including purchase tax and central sales tax, and entertainment tax, among others.
It is great to hear that the GST modalities are at such an advanced stage. It is also gratifying to see that service in the context of GST has been defined sufficiently broadly that even government services and labour services rendered by employees to employers are in need of special exemption. It is also nice to see equal tax treatment for private competitors to government schools and hospitals.

I question the argument in favour of exempting intermediate input goods from Pigovian taxes that are not levied on final products containing them. If a product takes much fuel to produce, it should be discouraged by taxation just the same as if the consumer had produced it himself.
Suraj
Forum Moderator
Posts: 15043
Joined: 20 Jan 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Suraj »

wig: Please feel free to post your insights about GST and related issues in this thread. Consider it an achievement if you get a healthy discussion going :)

neel: You're not the only one who was perturbed about the whole 'sin tax' view towards fuels in the GST task force report. Kelkar seems to have exceeded the brief of the committee that regard.

Finance Ministry's Mid-Year Review 2009-10
(i) The macro economic situation confirms signs of a turnaround for the economy. The first quarter GDP released on August 31, 2009 had hinted at a recovery with growth in real GDP being placed at 6.1 per cent (up from a level of 5.8 per cent each in Q3 and Q4 of 2008-09). The growth in real GDP in Q2 was 7.9 per cent. GDP growth in the first half (H1) of 2009-10 is now placed at 7.0 per cent.

(ii) While there is a deceleration in the growth of agriculture and allied activities from a level of 2.7 percent in second quarter (Q2) of 2008-09 to 0.9 per cent in of 2009-10, the levels of growth in industry at 8.3 per cent (6.1 per cent in Q2 of 2008-09) and services at 9.3 per cent (9.8 per cent in Q2 of 2008-09) indicate the broad based nature of recovery.

(v) The rise in the prices of primary articles of consumption of the common man observed in recent times is indeed a cause of concern, and this needs to be attended to on an urgent basis. The current episode of increase in prices does not appear to be a product of aggregate demand expansion in the economy. Its dominant cause is the supply-side constraint, due to reduced food production or, more accurately, the expectations of a reduction in food production over the next months that the drought and poor monsoon in India have inevitably given rise to.

(xi) The fiscal performance in the first half of the fiscal year 2009-10 meets the FRBM target in respect of the benchmark of non-debt receipts, which was placed at 40.5 per cent of the BE 2009-10. Fiscal deficit and revenue deficit at 49.3 per cent and 58.4 per cent respectively were higher than the prescribed FRBM benchmark of 45 per cent of Budget Estimate. These owe to the on-going fiscal stimulus measures, revenue receipts being primarily back-loaded and the outgo of arrears in H1 consequent on the Sixth Pay Commission recommendations.

(xii) The levels of fiscal expansion undertaken by the Government are short-term responses (conforming to international best practices), but are not sustainable on a long-term basis. The medium term fiscal policy statement 2009-10 has provided the roadmap with fiscal deficit declining to 5.5 per cent of GDP in 2010-11 and further to 4.0 per cent of GDP in 2011-12. The timing of the exit and the pace at which it should be carried out will depend on the strength of the recovery and its sustainability without fiscal stimulus. The report of the Thirteenth Finance Commission and the proposed goods and services tax coupled with the initiative on direct taxes code could provide the right impetus to fiscal consolidation process.
Strait Times: Indian Govt raises GDP forecast to 7.75%
INDIA'S economy has turned around and could grow by over 7.75 per cent this year, the government said on Friday, but warned surging food inflation was hitting the 'common man' and must be tackled fast.

'The clouds of uncertainty (about economic growth) have lifted,' the finance ministry said in a review of Asia's third-largest economy submitted to parliament that surveyed the first half of the fiscal year.

'The macro-economic situation confirms signs of a turnaround,' said the report which underscored India's new role in helping spearhead global economic recovery.
Singha
BRF Oldie
Posts: 66601
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Singha »

business standard:

Rlys white paper shows black spot in Lalu era
BS Reporter / New Delhi December 19, 2009, 1:10 IST

The white paper (official position statement) on organisational, operational and financial performance of the railways, presented in Parliament today, busted former railway minister Lalu Prasad’s claims of raking in record profits during his 2004-09 stint.


The document says changes made in accounting norms during the last five years had inflated ‘cumulative cash surplus before dividend’ by a whopping 55 per cent to the claimed Rs 88,669 crore. If payouts for the sixth pay commission demands on an accrual basis (Rs 26,306 crore), and appropriation to the Depreciation Reserve Fund (Rs 22,952 crore) are taken into account, the figure falls to Rs 39,411 crore.

Dismissing Prasad’s claims that his regime had witnessed the financial best of the Railways, the report holds, “The best period for Indian Railways financially in the last two decades was not the last five years, but the period between 1991-96”.

In fact, it points out that if the generally accepted growth elasticity for transport of 1.25 is applied, the traffic growth performance has been “below par” for Lalu’s entire five-year period. The growth in the economy had, for the most part, fuelled growth in freight traffic. However, the railways’ contribution to the national GDP had remained stagnant at 1.18 during the period.

Still, it says several measures initiated between 2004-05 and 2008-09 such as augmentation of carrying capacity of wagons, reduction in terminal detention and increasing maintainence cycles for better asset utilisation had helped register a 14.11 per cent CAGR (compounded annual growth rate) in earnings from freight traffic. The efforts had been compounded by increases in freight rates, including a compounded increase of 44 per cent in foodgrain and 35 per cent in fertilisers.

Earnings from passenger operations show a CAGR of 10.52 per cent during the previous minister’s tenure. The report says though there had been no upward revision in general passenger fares, the earnings increased due to revision of upper-class fare structures and higher Tatkal charges.

The number of seats under the Tatkal scheme had been increased to 14.2 per cent in 2008-09 from 5.6 per cent in 2005-06. “This had the effect of reducing seat availability through the normal route, inconveniencing the public, but at the same time enhancing passenger earnings, without increasing fares.”

The white paper states the consultant who had been brought in to analyse the accounts of the railways of the past five years has suggested the financial reporting be made more transparent.
Katare
BRF Oldie
Posts: 2579
Joined: 02 Mar 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Katare »

By discrediting Lalu, Mamta is trying to set a favorable backdrop to ensure her failure as RM won't look that bad .

One of the accounting change that she is talking about was asked by CAG/goI audit. The other one is suugested by her own consultant now.

Not a single financial figure from last 5 years for earning, revenue or expanses has been changed. Lalu picked up all the low hanging fruits during a booming economy and now mamta is stuck with hard choices and 6th pay commission fallout to show further successes or even sustain it on current levels.

Lalu's five year saw excellent productivity, financial, safety, capacity and investment gains.

Time block of 1991-96 falls in the middle of the pay commission so if you take out last year from Lalu's era he'll top that era. Also the comparision she makes is after discounting all the real and perceived accounting (& other) changes from Lalu era and even than he is second best showing a real and dramatic turnaround in his era.

I'll put a small summary on railway thread when I get some time.
Sanjay M
BRF Oldie
Posts: 4892
Joined: 02 Nov 2005 14:57

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Sanjay M »

Here's an article that usefully mentions how India and China not only have the best long-term growth prospects, but how they also have the best counter-cyclical growth potential:

http://economictimes.indiatimes.com/new ... 357615.cms
wig
BRF Oldie
Posts: 2162
Joined: 09 Feb 2009 16:58

Re: Indian Economy: News and Discussion (June 8 2008)

Post by wig »

pandyan ji,
i am enclosing the link for the GST white paper issued by the Union Government
http://pib.nic.in/archieve/others/2009/nov/gst.pdf
briefly
we have two types of taxes direct and indirect
direct taxes are paid by the assessee to the government; namely, income tax, wealth tax (This is an illustrative list)
indirect taxes though paid to the government are recovered from the consumer of the goods or services:
the union government levies central excise, service tax, etc.
the state governments levy; VAT, GST, Octroi, LST, excise on potable alcohol, and exicse on power generation, etc
central sales tax (CST) is the tax intermediary levied for inter state transfers of goods
goods and service tax is to substiute most of the indirect taxes.
the idea of vat was to increase the tax payer base. we have a very small base of people who pay taxes.
in central excise and service tax you can set off the taxes paid by your predecessor in the chain provided you are also going to add value and are not the end consumer.
VAT does the same at the state level.
GST at central level in theory will eliminate CST, and will work as one tax for set offs between Central excise and service tax
GST at state level will work as one tax head for VAT Octroi etc.
what will be the actual end results of implementing the tax from 01/04/2010 is not very easy to say. opinions differ,
the expereince of implementation of vat some years ago could to some extent be extrapolated to GST implementation
Suraj
Forum Moderator
Posts: 15043
Joined: 20 Jan 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Suraj »

Apr-Dec advance tax collections up 20%
The advance tax collection from India Inc rose 20 per cent in the first nine months of the current financial year, compared to the same period last year, with automobiles, consumer goods and metals leading the pack.

Advance tax payments by industries increased to Rs 1.13 lakh crore from Rs 0.94 lakh crore during the corresponding period last year, finance ministry sources said.

In the third quarter (October-December), the collections rose by 22.72 per cent to Rs 54,000 crore on substantial increase in advance payments from automobiles, consumer goods and metal companies.

After better advance tax collections compared to last year, the government expects the direct tax collections for the current year to exceed the Budget target of Rs 3.7 lakh crore.
Indirect tax collections down
Estimates show the government was able to garner only 46 per cent of its Budgetary target of Rs 2,69,477 crore for 2009-10, despite aiming lower than 2008-09 revised revenue collection of Rs 2,81,359 crore. It stood at Rs 1,84,000 crore in the same period last year.

The decline was primarily led by poor collections in customs duty, which fell 31.2 per cent to Rs 52,011 crore for April-November and 26.1 per cent to Rs 6,599 crore in November.

Service tax collections, which did not react immediately to the economic downturn and continued to rise even when customs and excise collections were falling, dropped 6.6 per cent to Rs 32,793 crore in April-November 2009-10. Excise duty collections, too, fell 17.4 per cent to Rs 61,020 crore.

Decline in excise duty collections in November was only 1.2 per cent at Rs 8,454 crore. The total indirect revenue mop-up in the month was at Rs 18,920 crore.

Despite revenue collections falling short of target, it may not put more burden on the fiscal deficit as GDP growth for the year is likely to be higher than expected at over 7 per cent. The government estimated the fiscal deficit at 6.8 per cent of GDP this year.
Katare
BRF Oldie
Posts: 2579
Joined: 02 Mar 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Katare »

Following reads like a fairly tale success story for Indian urban Infra development......
Jawaharlal Nehru National Urban Renewal Mission
The Planning Commission has said it will be difficult to spare additional government funds for the “very successful” scheme that has run out of its initial corpus and there is a need for private money to flow in.
Launched in December 2005, the scheme has generated a lot of interest from state governments, leading to the utilisation of the Rs 1,00,000 crore earmarked for seven years in the first four years of its implementation
With funds running out, the urban development ministry had sought Rs 50,000 crore more for the scheme from the Planning Commission. While a World Bank loan of $1 billion is likely to be sanctioned for the scheme, the need for funds is several times more.
Around 40 projects have been completed so far under the flagship scheme. Some of the projects completed are construction of a six lane flyover on Memnagar junction at Ahmedabad, a sea water desalination plant at Minjur in Chennai and a flyover at Rajiv Gandhi Circle-Volume II in Hyderabad.
Under the scheme, more than 460 projects were sanctioned in 63 mission cities with to improve the civic infrastructure and make it sustainable for the identified urban cities. Around 28 new cities may also be added to the list.
Suraj
Forum Moderator
Posts: 15043
Joined: 20 Jan 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Suraj »

FinMin is signalling strong Q3 GDP growth as well, since GDP growth in the first half of this fiscal was 7% (6.1% in Q1, 7.9% in Q2), and full year forecast of 7.5-8% implies 8% or higher GDP growth in Q3 and Q4:
Upbeat FM sees 8% growth
With the economy recording a growth rate of 7.9 per cent in the second quarter ending September 2009 and Mukherjee anticipating 8 per cent growth during the full year, industry fears the government might begin a gradual withdrawal of stimulus. This would be preceded by RBI ending easy monetary policy through an increase in the amount that banks are required to park with the central bank.

Prime Minister’s Economic Advisory Council Chairman C Rangarajan had said this week that RBI could increase interest rates, preferably by reducing liquidity by acting on the cash reserve ratio. His statement came following latest food price inflation figures showing a sharp increase of nearly 20 per cent, the highest in a decade.

A widening fiscal deficit, which is estimated to be 6.8 per cent for the current fiscal is adding on to the expectations that the government will start the process of fiscal consolidation soon. The government’s revenue collections lack the buoyancy witnessed in pre-slowdown phase, mainly due to excise duty and service tax cuts this year.
GST will lower tax burden 25-30%: FinMin
The new tax is expected to subsume various indirect taxes, including excise and value-added tax. The reduction in tax burden through GST, however, might not mean a cut in government revenue since the rates being discussed for GST are designed to be revenue neutral even as the new tax regime is expected to widen the tax base.
Overseas borrowings slip from October high
Last month, Indian companies borrowed a total of $2.58 billion through ECBs and FCCBs. ECBs are term loans raised by Indian companies in the overseas market. FCCBs are bonds issued in the overseas market which can be converted into equity by the holder at a stipulated price.

Most FCCBs and ECBs are benchmarked to the London Interbank Offered Rate (Libor), which is the rate at which banks lend funds to each other in the London interbank market.

“Spreads have been narrowing, so more and more Indian companies have been tapping this route. However, the trend continues in the sense that there are only bilateral and club deals happening. There are still no syndication deals happening,” said a senior executive of a foreign bank.

Once the Reserve Bank of India (RBI) guidelines come into force from January 1, companies will not be allowed to borrow for three years at spreads greater than 300 bps. Spreads for five-year loans will be capped at 500 bps.
KarthikSan
BRFite
Posts: 667
Joined: 22 Jan 2008 21:16
Location: Middle of Nowhere

Re: Indian Economy: News and Discussion (June 8 2008)

Post by KarthikSan »

Don't Overlook India's Consumer Market for China's
Starting from a lower base, the urban-rural income gap has slowly but steadily declined since the early 1990s. Over the past decade, economic growth in rural India has outpaced growth in urban areas by almost 40%. Rural India now accounts for half the country's GDP, rising from 41% in 1982 and 46% in 1993. In contrast, World Bank studies show that rural China accounts for only a third of the country's GDP and generates only 15% of China's GDP growth. Agriculture in rural India now accounts for merely half of rural GDP—and is falling. Agriculture was responsible for around 72% of rural GDP in the 1970s and 64% of it in the '80s. This means a balanced economy is developing in rural India, with rapid growth in nonfarm sectors such as manufacturing and services. Indeed, rural India is responsible for around two thirds of overall GDP growth and 60% of national demand. In contrast to China's countryside population, rural Indians do not have to migrate to urban areas to earn a better living.
Suraj
Forum Moderator
Posts: 15043
Joined: 20 Jan 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Suraj »

Agriculture accounts for less than half of rural GDP, as of 2007-08. However, I disagree with the article suggesting that rural residents don't have to migrate to cities for higher standard of living. Rural areas will saturate very quickly in terms of whatever standard of living they can provide. Urbanization is the only viable approach that can provide continued growth in economic standard of living, because it concentrates resources and economic activity, and is therefore more efficient.
KarthikSan
BRFite
Posts: 667
Joined: 22 Jan 2008 21:16
Location: Middle of Nowhere

Re: Indian Economy: News and Discussion (June 8 2008)

Post by KarthikSan »

Suraj wrote:Agriculture accounts for less than half of rural GDP, as of 2007-08. However, I disagree with the article suggesting that rural residents don't have to migrate to cities for higher standard of living. Rural areas will saturate very quickly in terms of whatever standard of living they can provide. Urbanization is the only viable approach that can provide continued growth in economic standard of living, because it concentrates resources and economic activity, and is therefore more efficient.
What do you mean by urbanization? Migrating people to cities or growing smaller towns and villages into cities? If it's the latter then I think that's already happening. I hang out on the skyscraper city forums and from what is posted there, the amount of industrial/real estate and infrastructure projects even in small TIER III towns is mind boggling. I think it has to do with penetration of TV media to even the farthest nook and corner of the country increasing people's aspirations for a better standard of living. Rural folk are not content with agriculture anymore. They are building and growing small services in their area of residence which will lead to manufacturing growth.
Suraj
Forum Moderator
Posts: 15043
Joined: 20 Jan 2002 12:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by Suraj »

KarthikSan wrote:What do you mean by urbanization? Migrating people to cities or growing smaller towns and villages into cities? If it's the latter then I think that's already happening.
Both.
KarthikSan wrote:I hang out on the skyscraper city forums and from what is posted there, the amount of industrial/real estate and infrastructure projects even in small TIER III towns is mind boggling. I think it has to do with penetration of TV media to even the farthest nook and corner of the country increasing people's aspirations for a better standard of living. Rural folk are not content with agriculture anymore. They are building and growing small services in their area of residence which will lead to manufacturing growth.
Indeed. This will result in many smaller towns progressively being abandoned as people cluster in those towns and cities that are more appealing to them in terms of economic prospects and standard of life.

Several of us are on SSC as well, including me :)
KarthikSan
BRFite
Posts: 667
Joined: 22 Jan 2008 21:16
Location: Middle of Nowhere

Re: Indian Economy: News and Discussion (June 8 2008)

Post by KarthikSan »

Suraj wrote:Indeed. This will result in many smaller towns progressively being abandoned as people cluster in those towns and cities that are more appealing to them in terms of economic prospects and standard of life.

Several of us are on SSC as well, including me :)
While what you say is true, I feel modernization/innovation in agricultural methods to suit our traditional crops should also happen concurrently to compensate for the people abandoning agriculture for other activities. This is very important to be a surplus food growing nation as our population grows. If not we'll just be another nation of corn growers :D I think there is a lot of space for commercial farming even though it has it's own disadvantages. But going forward well regulated commercial farming MIGHT be beneficial in terms of scale to produce innovations and also for the efficient use of already scarce water.
csharma
BRFite
Posts: 694
Joined: 12 Jul 1999 11:31

Re: Indian Economy: News and Discussion (June 8 2008)

Post by csharma »

One question I have is that how come India's economy has tripled in last 8-9 years from roughly 400 billion dollars to 1.2 trillion dollars. If one looks at the GDP growth rate and compounds the GDP one would arrive at a lower number. Exchange rate wise also I think we are hovering 46-47 band now. So how come the GDP grows at a seemingly faster rate than what the GDP growth numbers for individual years would suggest.
Locked