Indian Economy News & Discussion - Aug 26 2015

pgbhat · Post by **pgbhat** » 27 Sep 2017 15:29

vina wrote:I Need To Speak Up NOW

The prime minister claims that he has seen poverty from close quarters. His finance minister is working over-time to make sure that all Indians also see it from equally close quarters.

Austin · Post by **Austin** » 27 Sep 2017 15:31

vina wrote:No wonder you get a sticker shock when you go eat at a restaurant today.

Right Vina and that is so very true , it appears prices have shot up 50 % over night when you see the bill for one plate idli

hanumadu · Post by **hanumadu** » 27 Sep 2017 15:35

Banks are flush with money after DeMo and JanDhan. Industry is not willing to take fresh loans and they won't until they deleverage themselves and start generating profits. And there is idle capacity in steel and power. The only way higher growth could have been generated was just write off all the NPAs and give a free pass to banks and industry, against which many here were when other countries were doing the same during the global economic crisis. There is no way out of this rut other than wait it out till private industry starts generating healthy profit again.

As for govt wasting the bonanza from low fuel prices, most of it went to the states. And what ever Modi could mop up by eliminating wasteful LPG, fertilizer and other subsidies, he is spending on road and railways which is at least helping nurse steel industry to health.

All those who said Modi wasted it should say on what he wasted and how else he could have spent the money.

Patni · Post by **Patni** » 27 Sep 2017 16:32

IMHO we are seeing the effect of blows on informal (Black economy, lets say conservatively at ~10% of formal or White economy), which has now been significantly weakened, due to Demo and GST. More people and firms are now forced to pay taxes on real income and serious efforts are being made to uplift real poors. We are going through transition so slow down is expected as has been pointed out by many. I believe short term pain is being overblown and sky is falling narrative is being paddled to cause mischief and they are wishing that it damages current government.

Yagnasri · Post by **Yagnasri** » 27 Sep 2017 16:38

https://blogs.timesofindia.indiatimes.c ... s-assured/

Views of Jay Panda.

Gus · Post by **Gus** » 27 Sep 2017 16:40

heh...everybody is coming out of the woodworks already..

next up..I predict Aroooooonnnnnn SHOURIE !!!!! (call out NBA style..)

A_Gupta · Post by **A_Gupta** » 27 Sep 2017 16:47

^^^

I think everyone is carefully ignoring ADB's statement that all the Asian economies show cyclicity in their growth trends, and the current uptick has lasted longer than is common. "The duration of the current upturn, which started after 2013, has so far been shorter than past episodes for Malaysia and Taipei,China, but has already stretched beyond the past average for the Republic of Korea (ROK), the Philippines, India, Indonesia, and Thailand".

ADB says a government can lengthen the upturn by building infrastructure that addresses productivity bottlenecks.

chetak · Post by **chetak** » 27 Sep 2017 16:54

Austin wrote:
vina wrote:No wonder you get a sticker shock when you go eat at a restaurant today.
Right Vina and that is so very true , it appears prices have shot up 50 % over night when you see the bill for one plate idli

The govts, both state and center, are rude, unwelcome, uninvited, gate crashing "guests" at every restaurant table in the country.

under the guise of GST, the restaurant owners have jacked up their prices, arrogantly tacked on a "service" charge and are thumbing their noses at the customers and pointing to the govt for the price rise.

To do this, restaurants have paid off the local state and municipal inspectors with this money being channelled right to the top, especially in places like KAR.

In the meanwhile, amma type canteens, started by the sidharamiah and the congis are being sabotaged by the business affected restaurant owners at every locale.

The scheme is virtually falling flat on its face with the congis being left red faced.

Austin · Post by **Austin** » 27 Sep 2017 17:06

chetak wrote:
Austin wrote:
Right Vina and that is so very true , it appears prices have shot up 50 % over night when you see the bill for one plate idli
The govts, both state and center, are rude, unwelcome, uninvited, gate crashing "guests" at every restaurant table in the country.

under the guise of GST, the restaurant owners have jacked up their prices, arrogantly tacked on a "service" charge and are thumbing their noses at the customers and pointing to the govt for the price rise.

To do this, restaurants have paid off the local state and municipal inspectors with this money being channelled right to the top, especially in places like KAR.

In the meanwhile, amma type canteens, started by the sidharamiah and the congis are being sabotaged by the business affected restaurant owners at every locale.

The scheme is virtually falling flat on its face with the congis being left red faced.

Not really jacked up prices for the same price now you pay 18 % more for GST something previously you paid not more than 2-5 % in some small resturants/hotels.

Why would resturant owner jack up prices that would affect the end customer and their business , if any thing else they will reduce it to match up to old prices pre-GST.

But the point here is the sticker price for any food has now gone up speically for the poor/middle class folks who would eat in Udpi or similar small hotel/restaurant, this is a first hand experience

I am told by my collegues who frequent 5/7 star hotels that GST has helped in reducing the cost of stay/ ( perhaps even food ) there. So the big hotels are gaining from this

Yagnasri · Post by **Yagnasri** » 27 Sep 2017 17:12

One of the Gora fellows views on Indian economy:

http://economictimes.indiatimes.com/mar ... n&from=mdr

Austin · Post by **Austin** » 27 Sep 2017 17:17

******** deleted ***********

Austin · Post by **Austin** » 27 Sep 2017 17:19

pgbhat wrote:
vina wrote:I Need To Speak Up NOW

The prime minister claims that he has seen poverty from close quarters. His finance minister is working over-time to make sure that all Indians also see it from equally close quarters.

From yashwant write up

And please note that the methodology for calculation of the GDP was changed by the present government in 2015 as a result of which the growth rate recorded earlier increased statistically by over 200 basis points on an annual basis. So, according to the old method of calculation, the growth rate of 5.7 per cent is actually 3.7 per cent or less.

We need to accunt GDP growth of previous government by adding 200 basis point since the calculations have changed .....So if they achieved 8 % then it has to be viewed 10 % by new method

chetak · Post by **chetak** » 27 Sep 2017 17:20

Austin wrote:
chetak wrote:
The govts, both state and center, are rude, unwelcome, uninvited, gate crashing "guests" at every restaurant table in the country.

under the guise of GST, the restaurant owners have jacked up their prices, arrogantly tacked on a "service" charge and are thumbing their noses at the customers and pointing to the govt for the price rise.

To do this, restaurants have paid off the local state and municipal inspectors with this money being channelled right to the top, especially in places like KAR.

In the meanwhile, amma type canteens, started by the sidharamiah and the congis are being sabotaged by the business affected restaurant owners at every locale.

The scheme is virtually falling flat on its face with the congis being left red faced.
Not really jacked up prices for the same price now you pay 18 % more for GST something previously you paid not more than 2-5 % in some small resturants/hotels.

Why would resturant owner jack up prices that would affect the end customer and their business , if any thing else they will reduce it to match up to old prices pre-GST.

But the point here is the sticker price for any food has now gone up speically for the poor/middle class folks who would eat in Udpi or similar small hotel/restaurant, this is a first hand experience

I am told by my collegues who frequent 5/7 star hotels that GST has helped in reducing the cost of stay/ ( perhaps even food ) there. So the big hotels are gaining from this

The earlier price of food in various restaurants had a tax component that was not separately shown in the all inclusive sticker price.

that all inclusive old sticker price has now become the "new" price to calculate the GST, whereas it should have been the old sticker price minus the included tax component that should have been used to calculate the GST that has now been prominently added on. I am told that the previously included tax was more than the GST rate and so the new prices should have in fact come down slightly.

Marten · Post by **Marten** » 27 Sep 2017 17:26

Austin is right in that hotels and restaurants that were paying taxes and reporting income more or less accurately are less affected. Those that have to pay up will of course feel the pain. I don't think folks complained when prices doubled earlier. Now, since the taxes are visible, some consternation is to be expected. Post is specific to GST on hotels/restaurants, please do not extrapolate to other industries because I do not understand those at all.

Aditya_V · Post by **Aditya_V** » 27 Sep 2017 18:39

Austin wrote:
pgbhat wrote:

From yashwant write up

And please note that the methodology for calculation of the GDP was changed by the present government in 2015 as a result of which the growth rate recorded earlier increased statistically by over 200 basis points on an annual basis. So, according to the old method of calculation, the growth rate of 5.7 per cent is actually 3.7 per cent or less.
We need to accunt GDP growth of previous government by adding 200 basis point since the calculations have changed .....So if they achieved 8 % then it has to be viewed 10 % by new method

Sar Yashwant Sinha is talking Hogwash, under the new method GDP methods can be also lower than the cost factor method. I hope someone can back up this with hard data than mental masturbation. And 2nd the earlier data was based on IIP numbers for items which skewed growth, like Pan Masala Gutka etc which were heavily represented and now dropped.

While yes economy has slowed I think Yashwant Sinha saying 3.8% instead of 5.8% is pure Hogwash along with Rahul Gandhi and Leftist cabal saying economy has crashed etc. ure manure ignoring fundamentals. Govt defecits are reasonable and so are forex reserves etc.

GST is a major disrupting event which will bear fruits over time.

http://pib.nic.in/newsite/PrintRelease. ... lid=161745

http://www.hindustantimes.com/business/ ... YhObN.html

geeth · Post by **geeth** » 27 Sep 2017 19:05

About Restaurant bills:

I think they are digging their own grave because:

(1) if the turnover is less than 20 lakhs/annum, no need to register under GST. But you cannot add tax in your bill.

(2) if the turnover is less tha 75 lakhs/annum, you can opt to pay a compounded tax of 1%. Hear again you cannot add tax in the bill amount.

(3) If the turnover is more than 75 lakhs, you must register and show tax in bill. But if the bill amout is less than certain minimum value, you can make a consolidated bill for such small amounts make one bill per day. There are something more to it.

The point is, as I understand, most of the restaurants have declared themselves under category (1) or(2), but continue to collect tax from customers (which they should not) and obviously NOT DEPOSTING IT TREASURY.

The central and state tax will have to be shown separately. So both centre and state have jurisdiction . Old ways of bribing the local taxman will not work anymore.

Imagine a tax sleuth collecting such bills and sending a show cause notice after six months or s year....The restaurant owner will have to pay the tax, penalty (which is stiff) and probably end up in jail also. Even Modi cant do a jack about stopping the punishment. The arms of law are indeed long...

Now erudite members can continue $hitting all around the forum blaming Modi.

Aditya_V · Post by **Aditya_V** » 27 Sep 2017 19:10

One of my school mates, hates present govt, Citibank has managed to sell him 16% interest rates instead of earlier 13% because of GST on Interest!!! Now what I can I say, you can blame Modi all you want saying GST has pushed up your interest rate and call yourself educated.

vina · Post by **vina** » 27 Sep 2017 19:16

Well, let's put numbers. If a restaurant works just 300 days a year for a sales of 75lakhs, you are looking at a daily sales of just Rs 25000. Now any small darshini type in a major city will easy see this turnover Andy pay 18% gst.

geeth · Post by **geeth** » 27 Sep 2017 19:27

^^ what is your point?

Aditya_V · Post by **Aditya_V** » 27 Sep 2017 19:29

Well yes but earlier Manufacturers were bearing the TAX burden including many goods under the Earlier Section 4A, so the rich were only interested in importing from China running shops, restaurants and real estate. GST has made a more level playing field with Restaurant Services also having to pay thier share of tax. And has spelt doomsday for many in VAT departments milking manufacturers and pain of getting C-Form, F-Forms and state check posts.

Restaurants are not supposed to legally collect service charge. Rather than paying 8%-10% of my earlier bill now I am paying 18% when I eat out. On thee other when going to resorts and bigger hotels rather than paying those Uber high Entertainment tax 30-40% it is now a more reasonable rate.

Plus the days of lobbying particular state govt to have a lower Vat rate for a business one is doing while levying high Vat on another item are over.

Earlier while buying a car people were unaware of thier Taxes as they never saw Excise Duty and CST bill now people can see the level of indirect taxes they pay.
Plus now states get a good share of Services which was earlier not there.

nam · Post by **nam** » 27 Sep 2017 19:32

Aditya_V wrote:One of my school mates, hates present govt, Citibank has managed to sell him 16% interest rates instead of earlier 13% because of GST on Interest!!! Now what I can I say, you can blame Modi all you want saying GST has pushed up your interest rate and call yourself educated.

I am curious about this story. What is GST on interest? I can understand service tax on processing the loan, but how will it effect the interest rate on the loan?

VAT is a very common tax around the world. Never heard of it being applied on loan interest rate.

Either your friend has been taken for a ride or he is lying.

Here is a report of effect of GST on Personal loans

https://www.tatacapital.com/blog/person ... rest-rates

geeth · Post by **geeth** » 27 Sep 2017 19:37

My question was to Vina.

Many of the restaurants that are not supposed to collect tax from customer are collecting it from customers, AND keeping it to themselves

nash · Post by **nash** » 27 Sep 2017 19:38

Govt may sell up to 60% stake in producing oilfields of ONGC, OIL

http://www.business-standard.com/articl ... 683_1.html

I think 60% is huge, it can very much fix the fiscal deficit situation, may be it happens over few years in pieces.

Not sure about the pros and cons of this decision.

chetak · Post by **chetak** » 27 Sep 2017 19:55

vina wrote:Well, let's put numbers. If a restaurant works just 300 days a year for a sales of 75lakhs, you are looking at a daily sales of just Rs 25000. Now any small darshini type in a major city will easy see this turnover Andy pay 18% gst.

If they show it.

A lot of PDS ration items are sold directly to restaurants by "agents" and that forms a good share of their daily inputs. Cheap rice etc are staple to this business. Illegal rice is available from govt/FCI warehouses where it is written off as rain damaged or eaten by rats. This is supposed to be destroyed under "supervision"

It is still business as usual. Instead of earlier collecting from PDS dealers, agents now collect the rations from customers.

rkirankr · Post by **rkirankr** » 27 Sep 2017 20:07

please check this video on my facebook. Gurumurthy's excellent speech https://www.facebook.com/ravikiran.kava ... 700997583/

vera_k · Post by **vera_k** » 27 Sep 2017 20:18

chetak wrote:The earlier price of food in various restaurants had a tax component that was not separately shown in the all inclusive sticker price.

that all inclusive old sticker price has now become the "new" price to calculate the GST, whereas it should have been the old sticker price minus the included tax component that should have been used to calculate the GST that has now been prominently added on. I am told that the previously included tax was more than the GST rate and so the new prices should have in fact come down slightly.

I saw jewelry stores in MH charging 3% GST as well. Except that the state government already charged 1% VAT, which is no longer being charged. So the net differential would be 2%. Either there is something we're not understanding about the GST or the level of non-payment of taxes was quite substantial prior to GST.

Gus · Post by **Gus** » 27 Sep 2017 20:23

businesses will always look for an opportunity to hike prices when others are hiking..whether it is "justified" or not.

chetak · Post by **chetak** » 27 Sep 2017 20:53

Gus wrote:businesses will always look for an opportunity to hike prices when others are hiking..whether it is "justified" or not.

darshinis in bangalore operate on extremely high margins. Their inputs are untraceable in money trail terms as even today it continues in the tried and tested black mode of no bill, all cash and carry methodology. All the buggers use a lot of cheap PDS items in their menu. Even the effing chutney they serve, the coconut pulp is bought from local biscuit manufacturers on mysore road, who extract all the milk from it and basically sell the residue as cattle feed. This is purchased by the darshinis/hotels and cleverly reconstituted as "coconut chutney" with some clever culinary tricks.

These guys all have GST registrations, also collect the tax but do not pay the tax as they are below the set levels of GST obligations. There is no restriction on any body registering for GST, even if they do not meet the turnover requirements.

Where there is a will there is always a well designed baboo(n) loophole.

geeth · Post by **geeth** » 27 Sep 2017 20:59

These guys all have GST registrations, also collect the tax but do not pay the tax as they are below the set levels of GST obligations. There is no restriction on any body registering for GST, even if they do not meet the turnover requirements

My understanding is that, once you register under GST, you have to file returns. If the turnover is below 20 lakhs, you have the option not to register.

nam · Post by **nam** » 27 Sep 2017 21:13

If the 20 lakh limit is correct, then lot of small business will not come under GST. I don't think business under 20 lakhs have any book keeping.

Business with 20 lakh turnover is not a poor business.

You will only want to register for GST if you want to get input credit (provided GST has been paid for input). If not.. it is business as usual.

Historically shops would sell stuff without bills. Customer would not pay Sales tax and shop keeper doesn't show the sale. win win for both.

Now the shopkeeper who would have paid GST for his input, would want credit for it. So now the customer has to pay by bill !

So something which should have lawfully done (Sales tax), is now done because shopkeeper wants input credit...

hanumadu · Post by **hanumadu** » 27 Sep 2017 21:24

chetak wrote:
Gus wrote:businesses will always look for an opportunity to hike prices when others are hiking..whether it is "justified" or not.
darshinis in bangalore operate on extremely high margins. Their inputs are untraceable in money trail terms as even today it continues in the tried and tested black mode of no bill, all cash and carry methodology. All the buggers use a lot of cheap PDS items in their menu. Even the effing chutney they serve, the coconut pulp is bought from local biscuit manufacturers on mysore road, who extract all the milk from it and basically sell the residue as cattle feed. This is purchased by the darshinis/hotels and cleverly reconstituted as "coconut chutney" with some clever culinary tricks.

These guys all have GST registrations, also collect the tax but do not pay the tax as they are below the set levels of GST obligations. There is no restriction on any body registering for GST, even if they do not meet the turnover requirements.

Where there is a will there is always a well designed baboo(n) loophole.

You seem to know everything about everybody.

chetak · Post by **chetak** » 27 Sep 2017 21:27

hanumadu wrote:
chetak wrote:
darshinis in bangalore operate on extremely high margins. Their inputs are untraceable in money trail terms as even today it continues in the tried and tested black mode of no bill, all cash and carry methodology. All the buggers use a lot of cheap PDS items in their menu. Even the effing chutney they serve, the coconut pulp is bought from local biscuit manufacturers on mysore road, who extract all the milk from it and basically sell the residue as cattle feed. This is purchased by the darshinis/hotels and cleverly reconstituted as "coconut chutney" with some clever culinary tricks.

These guys all have GST registrations, also collect the tax but do not pay the tax as they are below the set levels of GST obligations. There is no restriction on any body registering for GST, even if they do not meet the turnover requirements.

Where there is a will there is always a well designed baboo(n) loophole.
You seem to know everything about everybody.

Used to sometimes eat free in many darshinis owned by friends and relatives.

Not anymore, though.

Prefer MTR now.

Manish_Sharma · Post by **Manish_Sharma** » 27 Sep 2017 21:55

I think detractors (insiders & outsiders) both know very well that current low growth numbers are for very short period only. Soon within 6 months things will be on track, all hiccups gone. That's why rrr+yashwant+Rahul are making concerted attack.

Here I repost in full details:

http://m.economictimes.com/markets/expe ... 788681.cms

I don't respond to quarterly numbers, India is growing faster than any other country: Jamie Dimon, JP Morgan Chase
By Saloni Shukla & MC Govardhana Rangan, ET Bureau | Updated: Sep 22, 2017, 12.45 PM

PMorgan Chase chairman and chief executive Jamie Dimon spoke to Saloni Shukla and MC Govardhana Rangan in an interview.

Edited excerpts :
Last time we met you were very optimistic about India ... one year on our GDP growth has suffered ... what do you have to say now?

I don't worry about quarterly numbers ... India is growing faster than any other country on the planet. The government has made a lot of changes, which is going to be very good for the future. The effect that they have next quarter is not going to say much but a lot of good changes that are been made with Aadhar, GST, and the Bankruptcy law, all of which are and will be very positive.

You met the Prime Minister just before meeting us what is the message that he gave you?

You have a very good and strong Prime Minister and he has made a lot of changes. We got an update on some of the actions that the government has taken and more actions that he wants to take such as more affordable housing. We shared with him what JP Morgan does here in India. We do research on 120 Indian companies and this research, along with our macro-economic views, are shared around the world, which helps the world to learn more about India. We also serve almost 500 MNCs that conduct business in India.

Most people have criticized demonetisation especially because of the growth lost ... Do you see any long term benefits of demonetisation?

The purpose was to create bank accounts and address the issue of illicit money. It was a bold thing to do, which most countries have not done. But if countries want to tackle corruption, it’s a wise thing to do at one point of time. Corruption holds countries back because it hurts small businesses, individuals and the government.

Emerging economies including India are getting a lot of fund flows. There is a perception that Indian earnings do not have the potential to attract such fund flows?

Markets are markets, they go up and they go down. I think good investors are pretty wise and speculators are going to come and go. But part of this reflects the optimism about the long term future of India.

You have the 5th largest economy in the world. When I was here a year ago you were 7th and I think the stock market reflects a little bit of that.

It has been said that foreigners are more optimistic about India than Indians. You must have interacted with a fair number of CEOs during this visit, is that sense that you get?

This is a universal phenomenon, if you went to America you would probably say the same thing. Countries are generally more sensitive to their own problems, which is a good thing because they want to change them.

People on the outside tend to look at what is the pace of change - what is different now than before and the difference is huge.

SwamyG · Post by **SwamyG** » 27 Sep 2017 21:59

My die hard BJP friend is upset, he says earlier they ate ice creams and paid no taxes. Now they are paying 18% taxes. This is after 30% tax on income. People are adding the numbers and it looks like the middle class is definitely upset. What is happening? Thoughts?

Zynda · Post by **Zynda** » 27 Sep 2017 22:21

Earlier the MRP (Max Retail Price) which was the listed/selling price on items like Ice Cream included all the possible levies/taxes. Now, these folks are charging additional GST on the MRP value. Instead they are supposed to charge GST on the actual charge that is incurred to the seller. So the sticker shock on eatables post-GST. The sellers are being unscrupulous and trying to maximise profit by just adding GST on earlier prices.

Personally, I have decided to minimize eating out from here on...at least be on wait & watch for the next 6 months. Hoping that somehow GoI can bring in some kind of vigilance to curb down acts like the above and save on Vit-M

SwamyG · Post by **SwamyG** » 27 Sep 2017 22:40

Thanks. I found a good read here: https://cleartax.in/s/impact-gst-food-s ... t-business

rohiths · Post by **rohiths** » 27 Sep 2017 22:42

Random misinformation being spread on GST and govt is clueless as always. Just to clarify
Firstly, GST is positioned as a new tax whereas it subsumes VAT, Service tax, Excise duty etc.
Second , the tax burden will be lesser for honest tax payers at the same tax rates as they can avail input tax credits which were previously not available.
Thirdly people who complain about regulatory compliance never talk about compliance for a whole host of taxes from VAT to Service tax to Excise duty to Octroi. Each one had to be filed. Interstate commerce was so difficult and every Tom dick and Harry had to be bribed
Fourthy, the impact on small businesses will be limited as business less than 20 lakhs turnover is exempt from GST. For business with revenue less than 50 lakhs they can minimze filings through the composite scheme. The limit for state vat used to be 5 to 10 lakhs.
Fifth, The informal economy should not be unduly affected as it can still evade taxes as long as it does not deal with a powerful compliant player. They can evade taxes if all the supply chain components are non compliant. Given the nimbleness of small companies this is what will happen.I would forecast that many markets outside of metros will be filled with unbranded products after a few months

Chandragupta · Post by **Chandragupta** » 27 Sep 2017 23:19

Composite scheme is doa. You cant sell out of state, you get no credit for tax you pay and you cant sell via ecommerce. Doesnt make much sense.

nam · Post by **nam** » 27 Sep 2017 23:38

SwamyG wrote:My die hard BJP friend is upset, he says earlier they ate ice creams and paid no taxes. Now they are paying 18% taxes. This is after 30% tax on income. People are adding the numbers and it looks like the middle class is definitely upset. What is happening? Thoughts?

Sounds like he is a well to do person to get in the 30% bracket.

And complains about expensive ice-cream?

Indian Salaried Income tax are some of the most generous on the planet. And I can tell this based on personal experience.

Gus · Post by **Gus** » 27 Sep 2017 23:46

SwamyG wrote:My die hard BJP friend is upset, he says earlier they ate ice creams and paid no taxes. Now they are paying 18% taxes. This is after 30% tax on income. People are adding the numbers and it looks like the middle class is definitely upset. What is happening? Thoughts?

If he really thinks he was not paying taxes before, then ask him -

1. was there taxes before, but trader was generous in not collecting from him?

2. was there taxes before, but trader did not collect, and did not report, and was a tax evader?

3. was there no taxes due and suddenly there are taxes?

and go from there, depending on the answer.

Again, as I posted elsewhere, in my experience, asking right questions that lets the other guy get to the right answer himself is what works. telling him the answer, only makes him jump to something else.

that is, assuming the guy is not trolling. if so, you have saved yourself a bunch of time...