Indian Economy News & Discussion - Aug 26 2015

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arshyam
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Re: Indian Economy News & Discussion - Aug 26 2015

Postby arshyam » 19 Sep 2015 18:55

^^ A lot of the discussion is good data, if Suraj or any mod were to clean this up, please don't delete :). Chaanakya and Dipanker saars, let's move to the states discussion thread.

And given the order of magnitude difference between Bihar and other states, perhaps a new thread dedicated to discussing Bihar's issues and how to address them? As Modi repeatedly stresses, without Bihar (and the larger eastern belt), India will find it very difficult to grow beyond a point. We could enlarge the scope of the thread to the eastern states of BH, JK, WB, OR, AS and perhaps CG.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 19 Sep 2015 19:07

Subramanian Swamy predicts an Indian economic crisis in 2016
http://www.thehindu.com/opinion/lead/th ... 662610.ece

Theo_Fidel

Re: Indian Economy News & Discussion - Aug 26 2015

Postby Theo_Fidel » 19 Sep 2015 21:44

A_Gupta wrote:Subramanian Swamy predicts an Indian economic crisis in 2016
http://www.thehindu.com/opinion/lead/th ... 662610.ece


Swamy is a charlatan and a hack. I don't think anyone in BRF should take him seriously. Those ideas of his are straight from the 1950's and proven failures. 2016 will be just fine, there are 2 Indias right now, one that is growing strongly and one that is growing weakly. Nothing that Swamy proposes will hep the weak India, certainly not exporting agriculture :eek: , fixed exchange rate, good god! :eek: :lol: . We are in trouble, in fact we have always been in trouble because of hacks like him who refuse to learn from history and get a disproportionate share of the microphone. What is that definition of insanity again....

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Dipanker » 19 Sep 2015 21:48

rhytha wrote:I am unable to figure out your point of view that "since there are no industries" there are no "engineering colleges". Take the example of KTK right now, the present CM is not very business friendly, why do industries still invest in KTK, so political leadership is not the be-all and end-all.


I think you misunderstood me, I am not saying that at all.

What I am saying is when supply of engineers outstrips the demand by 4 fold leading to up to 80% and higher level of unemployment then you do not need more engineering colleges in these areas, and unfortunately that seems to be case pretty much in most part of the nation including the developed states. That's all I am saying!

Lets assume that Bihar had a good leadership and very friendly industrial policy, good infrastructure etc, my opinion is still it would not attract many industries since you need human resources, good law and order(i did see the stats you had posted, and accept it, but people/industries have voted with their feet, so thats the reality). People from other states will still not be ready to move to Bihar for work for various reasons.


You are making wrong assumptions, as per stat. (2012) the problem certainly not seem to be that of law & order, Bihar in fact appears to be one of the most peaceful state compared to rest of India! Also not that of human resources, for most jobs you will be able to find sufficient to surplus workforce. When you have a population of 100+ million, even if say only 5% people had the necessary skill to take up jobs, that is still a pool of 5 million people! In reality the numbers will be several times more.

Certainly lack of infrastructure is a big problem, I would say the single most important factor inhibiting growth. This is the result of lopsided growth strategy of the past where all industrial activities took place in south and north was meant for agriculture. In a sense north and south complemented each other nicely. Now south (Jharkhand) is no longer part of it, so it has been left with virtually nonexistent industrial infrastructure.

Corruption is another and so is poor leadership. Stereotyping of Biharis ( like the type you are indulging in) is also a problem.

Also putting all the blame on the leadership of state is also not good, there was lot of years before jungle raj when people could have chosen a leader who was development orientated.


Before the jungle raj South Bihar (now Jharkhand) used to the MOST industrialized region in the entire nation YES entire nation, and I am pretty sure it still must be in top 5 most industrialized region in the nation. There was no reason to partition the state, Laloo agreed it to to consolidate his hold on power (since he did not have any vote bank in south Bihar).

Anyway my last post on this topic since people are starting to complain.
Last edited by Dipanker on 19 Sep 2015 22:00, edited 1 time in total.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Theo_Fidel » 19 Sep 2015 21:58

Dipanker wrote:What I am saying is when supply of engineers outstrips the demand by 4 fold leading to up to 80% and higher level of unemployment then you do not need more engineering colleges in these areas, and unfortunately that seems to be case pretty much in most part of the nation including the developed states. That's all I am saying!


This is wrong thinking. Our supply of engineers is our competitive advantage. It would not surprise me if the majority never get a engineering oriented job. This is true of the advanced wold too. Many many engineers move onto non-engineering professions. All capitalistic economies are wasteful with people, this is just reality. Companies want to pick from a large pool and only pick the very best, and they want to do it at the lowest possible cost to them, they have no interest in giving everyone a job. For this they need a massive pool of people. What happens to the rest? This is where government must step in with that social safety net and gentle nudge these folks to move on ....

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Vayutuvan » 20 Sep 2015 10:41

hanumadu wrote:This thread needs a clean up. Of late, there is more cleaning up in this thread than relevant posts. Suraj bredator to the rescue once again!!

Hanumadu: all posts are about Indian labor economics which make them firmly on topic or so I opine. Feel free to take it forward or backward (I.e. Oppose that PoV).

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Singha » 20 Sep 2015 11:58

an apt comparison might be bihar and eastern UP.

western UP has a network of industrial cities based on their old crafts like metalware, leather, textile and tourism like meerut, agra, aligarh, moradabad, kanpur, lucknow, and the advantage of being close to NCR. roads and rails will surely be better. noida and ghaziabad are also huge economic centers. once u cross the yamuna into UP one can spot miles and miles of new colonies, bus addas, muscular highways....

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby chaanakya » 20 Sep 2015 12:22

If somebody makes a case that Bihar is having good Law and Order and that situation is normal when compared to many other states then I think we have no arguments. Same goes for UP.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Singha » 20 Sep 2015 15:06

BPCL all set to start work on Rs 5000 crore complex in Kochi
Economic Times

MUMBAI: State-run oil refiner Bharat Petroleum Corporation (BPCL) is all set to start work on the petrochemicals complex in Kochi with all green clearances in place and securing a Rs 4,000-crore loan commitment from State Bank of India.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Gyan » 20 Sep 2015 17:23

manoj wrote:http://giffenman-miscellania.blogspot.com/2013/09/nda-v-upa-close-encounters-with-facts.html
NDA v UPA: Close encounters with facts


1.GDP growth: Average GDP growth in 1998-2004 (NDA) was 6% a year. Average annual GDP growth in 2004-13 (UPA), up to June 30, 2013, was 7.9%.

Caveat 1: The Vajpayee-led NDA battled US-led economic sanctions following the Pokhran-II nuclear test in May 1998. It faced a short but expensive Kargil war in 1999 and the dotcom bust in 2000. When it took office, it had the lag effect of the East Asian financial crisis of 1997-98 to contend with.

Caveat 2: The UPA government, in contrast, benefitted from the economic momentum of the high (8.1%) GDP growth rate of 2003-04 – the NDA government’s final year – and rode that wave. The global liquidity bubble in 2004-08 bouyed foreign mflows, helping UPA-I achieve a high GDP growth rate in its first term. The Lehman Brothers collapse in September 2008 did hurt the Indian economy but the ensuing US Federal Reserve asset buying programme attracted a steady flow of near-zero interest dollars into India from 2009.
Despite these caveats, the UPA government’s average annual GDP growth rate of 7.9% in 2004-13 clearly scores over the NDA government’s average annual growth rate of 6% (though high inflation boosted the former significantly). First strike to UPA.

2. Current Account Deficit:
2004: (+) $7.36 billion (surplus).
2013: (-) $80 billion.
The winner here is clearly NDA. It ran a current account surplus in 2002, 2003 and 2004. Under UPA this dipped into deficit from 2006 and has spun downwards since.

3. Trade deficit:
2004: (-) $13.16 billion.
2013: (-) $180 billion.
Again, advantage NDA.

4. Fiscal deficit:
2004: 4.7% of GDP.
2013: 4.8% of GDP.

Not much to choose between the two.
Caveat: This extract from the Asian Development Bank Institute (ADBI) report, published in 2010, explains why and when the UPA government’s fiscal defict began to spiral out of control.
“The central budget in 2008–2009, announced in February 2008, seemed to continue the progress towards FRBM targets by showing a low fiscal deficit of 2.5% of GDP. However, the 2008–2009 budget quite clearly made inadequate allowances for rural schemes like the farm loan waiver and the expansion of social security schemes under the National Rural Employment Guarantee Act (NREGA), the Sixth Pay Commission award and subsidies for food, fertilizer, and petroleum.”
“These together pushed up the fiscal deficit sharply to higher levels. There were also off-budget items like the issue of oil and fertilizer bonds, which should be added to give a true picture of fiscal deficit in 2008–2009. The fiscal deficit shot up to 8.9% of GDP (10.7% including off-budget bonds) against 5.0% in 2007–2008 and the primary surplus turned into a deficit of 3.5% of GDP.
“The huge increase in public expenditure in 2008–2009 of 31.2% that followed a 27.4% increase in 2007–2008 was driven by the electoral cycle with parliamentary elections scheduled within a year of the announcement of the budget.”
The recent announcement of the Seventh Pay Commission comes again, not unexpectedly, at the end of an electoral cycle.

5. Inflation:
1998-2004: 5%.
2004-2013: 9% (Both figures are averaged out over their respective tenures).
Advantage again to NDA. Inflation under NDA was on average half that under UPA, leading to the RBI’s controversial tight money policy, high interest rates and rising EMIs.

6. External Debt:
March 2004: $111.6 billion.
March 2013: $390 billion.

The UPA suffers badly in this comparision, a result of lack of confidence in India’s economy and currency following retrospective tax legislation and other regressive policies, especially during UPA-2.

7. Jobs:
1999-2004: 60 million new jobs created.
2004-11: 14.6 million jobs created.

Clearly, the UPA’s big failure has been jobless growth – a bad electoral omen.

8. Rupee:
1998-2004: Variation: Rs. 39 to 49 per $.
2004-13: Variation: Rs. 39 to 68 per $.
(Rupee rose from 40-plus to 39 between October 2007 and April 2008.)
The NDA government’s economic and fiscal policies, despite the various crises of 1998-2000 pointed out earlier, evoked more global confidence, leading to a relatively stable rupee (Rs. 10 variation) compared to the Rs. 29 variation during UPA’s tenure.

9. HDI:
2004: India was ranked 123rd globally on the human development index (HDI) in 2004, with a score of 0.453.
2013: India has slipped 13 places to 136th globally on the HDI in 2013 with a score of 0.554.

10. Subsidies:
2004: Rs. 44,327 crore.
2013: Rs. 2,31,584 crore.

Here again, profligate welfarism, as the ADBI report quoted earlier shows, has led to a rising subsidy bill. Worse, a significant amount is siphoned off by a corrupt nexus of politicians, officials and middlemen.



I would like to add that during NDA regime, alongwith job creation, the asset prices (including real estate prices) were very low. This led to lot of benefits to middle class including abilty to buy their own homes. In UPA regime, the prices of real estate (say in Delhi NCR) went up by 10 times alongwith jobless growth, hence UPA regime was a statistical paradise for the nation wherein only super rich benefitted.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Yagnasri » 20 Sep 2015 20:27

Need is to bring back the wealth tax - All immovable properties including land etc shall be taxed at least 1% of their value and people shall be given full tax rebate if they purchase Infra bonds etc or IPOs of infra companies or manufacturing units. May be tax share market at 0.1% of the holding per month is not a bad idea. The second tax can be easy to collect. First to ensure all the shares are demated and then tax them based on their market quote. Computers will take care of it. With this money we can increase income tax base quite high say 20 Lacs per year and yet collect 80% of the income tax amount and free most of the salaries class from Income Tax. Indic Kings always took one sixth of the production as tax. May be a 15% income tax is justified.

We have too many things being taxed as on today. Take Stamp duty and registration fee. Both along with Income Tax are the reasons for honest people to create black money. Remove them and normal people will not have any reason or need to use black money or cash based transactions.

In a way Subbu makes lot of sense. Only salaries class and honest people are ending up paying direct taxes in our country and this is leading to lot of heart burn in the people.

Chanakya said people shall take care to protect their wealth form bandits and servants of the kings. Now we have only tax men in India.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby member_28108 » 20 Sep 2015 20:30

Wealth tax actually was a retrogressive step wherever it was introduced.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Vayutuvan » 20 Sep 2015 20:37

I think what yagnasri is proposing is property tax. Yes it should be high enough to support infra. And education.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Yagnasri » 20 Sep 2015 20:46

Yes. Tax on Immovable property. I remember when our house was 40K the property tax on it was 700 rupees. Almost 1.75%. There is nothing wrong in asking a man with a crore property to pay one lack as tax on it. This was all the real estate speculation will be beneficial to nation as people have to pay on the value of their properties.

Taxing share market is very easy and implementation can be fully automated.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Vayutuvan » 20 Sep 2015 20:47

Chaanakya: you want to improve manufacturing and produce something as opposed to trade and sell? Get operations people. The entire supply chain From raw material acquisition to reaching the warehouses/ points of consumption employ lot more than a few customer facing sales/marketing people. What will they market/sell if there is nothing to market/sell?

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Virupaksha » 20 Sep 2015 20:53

prasannasimha wrote:Wealth tax actually was a retrogressive step wherever it was introduced.

There should be low wealth tax (0.5-2% at most) and moderate inheritance tax, with minimal loop holes. A country progresses only if it broadbases wealth. The only countries which have escaped middle income trap are those which have broadbased their wealth. If India has to progress to a developed country status, there is no way except dispersal of wealth.

Concentration of wealth leads to rent seeking behavior. Instead of taking risks and going for more productive or efficient production, the onus will be protection of wealth from baap-dadas. Wealth tax and inheritance taxes forces people to look to employ their capital in productive fashion. This forces people to come out of rent seeking behavior.

Call wealth/inheritance tax retrogressive or what not. I dont care about labels, India needs broad dispersal of wealth - one of the most important and effective tools is wealth and inheritance tax.

Note: US, Europe all of them have inheritance tax or wealth taxes.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Theo_Fidel » 20 Sep 2015 20:54

Typically stock market money has already been taxed once. Only capital gains should be taxed.

Property is taxed to pay for the infrastructure behind it, roads, water, police, schools, etc. A 1% tax would unfortunately bankrupt a large portion of Indian land/property owners.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby chaanakya » 20 Sep 2015 21:01

Context of that well meaning advice Sir??

If it is flipkart, I don't know if they are in manufacturing or production of what they sell ( barring one or two items). Yes , they can use Operations man. And true if I want to do manufacturing I would get Industrial Production Engineer or Operations man in addition to whoever else is needed. But for overall management I would get someone who has some management experience in the relevant field: a generalist-Specialist sort of thing.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Vayutuvan » 20 Sep 2015 21:02

Stock market should not be taxed except for long term capital gains of course. Are there rules to prevent speculation? I.e frequent trading by individuals with the help of brokers? What is the friction in the stock market compared to US where it is quite high.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Virupaksha » 20 Sep 2015 21:02

Theo_Fidel wrote:Typically stock market money has already been taxed once. Only capital gains should be taxed.

Property is taxed to pay for the infrastructure behind it, roads, water, police, schools, etc. A 1% tax would unfortunately bankrupt a large portion of Indian land/property owners.

short term there will be huge disruption and property prices will crash, but lower middle class would start owning property as a result of that.

Keep a decent threshold - ~50lakhs (per person in the household, no exemptions)

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Virupaksha » 20 Sep 2015 21:05

vayu tuvan wrote:Stock market should not be taxed except for long term capital gains of course. Are there rules to prevent speculation? I.e frequent trading by individuals with the help of brokers? What is the friction in the stock market compared to US where it is quite high.

Why shouldnt stock market for short term gains be taxed? Is a rupee earned from stock market not equal to rupee earned from selling books or person behind a IT cubicle?

Dont mind me, I never could understand this exemption culture as only the rich and connected benefit from exemptions.

India has a transaction tax of about 0.1% per transaction for day trading.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby member_23694 » 20 Sep 2015 21:08

Yagnasri wrote:All immovable properties including land etc shall be taxed at least 1% of their value


Just want to understand for the following scenario. X a normal middle class inherits land in a city. Now with city development the cost of land has gone to say 2 crore. He does not want to sell the land due to emotional connect, but due to the above new tax suggestion, a fixed amount of 2 lac he needs to pay for tax which he may not afford. So indirectly he is being forced to sell his land. Is this fair ?

Better would be to ensure that Govt rate of property should be closer to market rate so that there is lesser chance of by passing registration cost etc. Once black money is reduced in such deals prices in the market will stabilize to real values. Tax transactions which should be proportional to current holdings of assets by the person.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Vayutuvan » 20 Sep 2015 21:09

Chanaakya: yes. I am generalising from flipcart. Flipcart like businesses have a long supply chain tail including logistics. If they don't improve their operations with fast growing business, they will fall flat on delivering the service. This is true for both services and production companies. Are people with Engg backgrounds put into mktg. positions - top or middle? Then they are setting themselves up for failure in two counts - people will leave after a year or two to get MBA. Those who stay would lose all their knowledge in a couple of years and will be reduced to glorified mktg., I.e. Sales.
Last edited by Vayutuvan on 20 Sep 2015 21:09, edited 1 time in total.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby chaanakya » 20 Sep 2015 21:09

vayu tuvan wrote:Stock market should not be taxed except for long term capital gains of course. Are there rules to prevent speculation? I.e frequent trading by individuals with the help of brokers? What is the friction in the stock market compared to US where it is quite high.


generally Short Term gains are taxed as they are treated as speculative. Ling term is encouraged as they are investment. But all at speculation at one level or the other since all hope for gains . Nobody worries about dividends which are pittance.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Virupaksha » 20 Sep 2015 21:15

dhiraj wrote:
Yagnasri wrote:All immovable properties including land etc shall be taxed at least 1% of their value


Just want to understand for the following scenario. X a normal middle class inherits land in a city. Now with city development the cost of land has gone to say 2 crore. He does not want to sell the land due to emotional connect, but due to the above new tax suggestion, a fixed amount of 2 lac he needs to pay for tax which he may not afford. So indirectly he is being forced to sell his land. Is this fair ?

Better would be to ensure that Govt rate of property should be closer to market rate so that there is lesser chance of by passing registration cost etc. Once black money is reduced in such deals prices in the market will stabilize to real values. Tax transactions which should be proportional to current holdings of assets by the person.

Why not?? Did he earn the land?? He got it not from his efforts but from some body else's effort. Now he is not utilizing his 2 cr asset productively and is showing a rent seeking behavior. If he doesnt want to use his land productively and is keeping others from using it, that kind of behavior destroys the productive capacity of India. There could have been a mall or some other productive use, which could have generated employment to tens of people. He is actively blocking the development, such behavior should not encouraged, if you want India to develop. You have an emotional connect to a land, good - use it productively and show the emotion instead of sitting on the land and stopping others also from using it.

I am more worried about the people who could not buy land for their own housing or building a factory, because these "emotional" people block them by taking productive land out of the market and laying eggs on it. These "emotional" people increase the costs for the productive and poor people.
Last edited by Virupaksha on 20 Sep 2015 21:18, edited 2 times in total.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby chaanakya » 20 Sep 2015 21:15

vayu tuvan wrote:Chanaakya: yes. I am generalising from flipcart. Flipcart like businesses have a long supply chain tail including logistics. If they don't improve their operations with fast growing business, they will fall flat on delivering the service. This is true for both services and production companies. Are people with Engg backgrounds put into mktg. positions - top or middle? Then they are setting themselves up for failure in two counts - people will leave after a year or two to get MBA. Those who stay would lose all their knowledge in a couple of years and will be reduced to glorified mktg., I.e. Sales.

Thanks, For whatever it is worth I think they have better record than others in quality of goods, delivery of the same in shortest possible time and their return and refund policy. I have used all the three or four e-commerce companies in India including Amazon. I would rate Flipkart operations far above all of them. So surely they have some top notch brains working for them. Probably they look to IIT for sourcing their top manpower needs for "best of the best of the best" . Their test will come when they scale up their operations. right now I am quite satisfied customer and would confidently place order.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Vayutuvan » 20 Sep 2015 21:17

Dhiraj: that's how it is in the U.S. One lady and her siblings inherited about 500 acre land after their father passed away. None of them were into farming and were working in average jobs. Within a week they sold the land to pay inheritance tax. They could have sold a part of the parcel for paying taxes but ones cut into two pieces, none of the corporate farming companies would lease a smaller parcel. Same applies to lots/houses/rental property. One cannot run a country's economy based on emotional attachment.
Last edited by Vayutuvan on 21 Sep 2015 02:29, edited 1 time in total.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby chaanakya » 20 Sep 2015 21:21

And the best part of it is we don't need LAB either. Just a Guideline values declared from time to time on which to tax. Right now there is clamour to increase GL values without it being connected to actual market demand and supply. But BJP would surely not come in 2019, that much would be pretty guaranteed.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Theo_Fidel » 20 Sep 2015 21:29

Virupaksha wrote:Why not?? Did he earn the land?? He got it not from his efforts but from some body else's effort. Now he is not utilizing his 2 cr asset productively and is showing a rent seeking behavior. If he doesnt want to use his land productively and is keeping others from using it, that kind of behavior destroys the productive capacity of India.


This is true full on capitalism, for which there is no consensus within India. I agree it is required to lower land costs and increase transactions, but when we get there, who knows....

As it is the consensus for capitalism is weak within India, all we can get is some states that allow it for private industry, but many states even oppose that. I don't know when this will change.
------------------------------

Short term capital gains for stocks can also be losses. So it will even out and your actual tax revenue will be marginal, probably not worth the effort. Long term stocks capital gains can be counted on.
Last edited by Theo_Fidel on 20 Sep 2015 21:35, edited 1 time in total.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Virupaksha » 20 Sep 2015 21:34

chaanakya wrote:And the best part of it is we don't need LAB either. Just a Guideline values declared from time to time on which to tax. Right now there is clamour to increase GL values without it being connected to actual market demand and supply. But BJP would surely not come in 2019, that much would be pretty guaranteed.

Actually it would, with a 50 lakh limit and with our registration values - only the elite would come under it. (Oh! every one here is part of elite 2% in India, whether he/she believes it). Understand even transferring it to benamis would not help much, as now benamis have to start paying taxes.

Speculation would fall and the lower middle class would vote - caveat being, it will take around 3-4 years to stabilise before the pressure to sell will increase. Infact India had a wealth tax which was abolished in 2015 -i.e. this year, by jaitley and modi. I had protested this once somewhere in previous pages. Also they had a limit of around 10 or 50 crore, which made too few people come under the bracket and had a laundry list of exemptions- i.e. that tax was only for show.
http://timesofindia.indiatimes.com/budg ... 408787.cms

The tax sacrifice is unimportant. It gives an updated list of wealthy people in India and will be updated by these people only.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Yagnasri » 20 Sep 2015 21:36

What is justification to have "just 5.75 Cr" for a flat. The words "just 5.75 Cr is an advertisement which I saw in Mumbai couple of days back. Other than Mumbai the flats are quite cheap with a 50 lacs plus can have a value of the flat. But not in Mumbai. Any logical reason? Such price is not there in any other city. What is that important in Mumbai? Just keep everything there so that your property value will increase? Soon other cities also will become like that. No honest person in India can purchase a house in India soon. Even now they can not in most of the towns and cities. Builders are only interested in high cost houses. They will not lower the prices even when there is no one to purchase them.

We live in a heart of city even after we retire our kids or in US and we do not have any reason to live there. All offices are near to your house. Anyone who has to go to them every day has to travel almost 100 Km just to attend the office? All these conditions are application to Mumbai and not any other city. Rest are quite ok. Most of the people these cities will face problem by 1% property tax. The people who have huge buildings in Bangalore or Delhi can always pay the amount if they want to live like that.

We have to remember we do not have a right to property in India. Now we all want farmers to leave their land. Why not householders who have no income or reason for living in houses worth several crores and are in the heart of the cities. Should they make way for others who has reason to live in the cities or pay some tax for living in the cities.

House is to live and not an investment. But in India you can have a 2 billion $ house (which in fact horrible to look at). This has to change. It is not just farmers who shall be without any attachment to their land.

There is no inheritance tax or estate tax in India. So we all can inherit and enjoy properties.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby member_23694 » 20 Sep 2015 21:40

Virupaksha wrote:Why not?? Did he earn the land?? He got it not from his efforts but from some body else's effort. Now he is not utilizing his 2 cr asset productively and is showing a rent seeking behavior


Wait a minute don't mix things. Word "emotional connect" seemed to have cause distraction .
Land acquisition for productive things for country's development overrides emotional connect IF done properly. I am not against it. It was just on a standalone property tax debate.

vayu tuvan wrote:Dhiraj: that's how it is in the U.S.

Agreed and its fine. But then i would also like to understand how much of black money is involved in property transactions in US. Would like to understand the black to white money proportion in property transaction in US vis a vis India. Can we directly apply it in India without fixing lots of other things ?

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Virupaksha » 20 Sep 2015 21:40

Theo_Fidel wrote:
Virupaksha wrote:Why not?? Did he earn the land?? He got it not from his efforts but from some body else's effort. Now he is not utilizing his 2 cr asset productively and is showing a rent seeking behavior. If he doesnt want to use his land productively and is keeping others from using it, that kind of behavior destroys the productive capacity of India.


This is true full on capitalism, for which there is no consensus within India. I agree it is required to lower land costs and increase transactions, but when we get there, who knows....

As it is the consensus for capitalism is weak within India, all we can get is some states that allow it for private industry, but many states even oppose that. I don't know when this will change.

Short term capital gains for stocks can also be losses. So it will even out and your actual tax revenue will be marginal, probably not worth the effort. Long term stocks capital gains can be counted on.

Couch it in terms of socialism as redistribution of wealth - if it is more politically palatable, I really dont care about labels. World wide experience shows that middle income traps and regressions are avoided only by broadbasing of wealth. I havent seen countries achieving that without wealth or inheritance taxes.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 20 Sep 2015 21:49

Mod Note

While I'm not inclined to move all the recent posts out, please use references when you post. If you write something substantial, please have a reference to articles or data about it. This is not Nukkad. If the trend of conversation continues, the last few pages will be moved elsewhere.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Virupaksha » 20 Sep 2015 21:53

dhiraj wrote:
Wait a minute don't mix things. Word "emotional connect" seemed to have cause distraction .
Land acquisition for productive things for country's development overrides emotional connect IF done properly. I am not against it. It was just on a standalone property tax debate.

Land acquisition is different from property or wealth tax.

vayu tuvan wrote:Dhiraj: that's how it is in the U.S.

Agreed and its fine. But then i would also like to understand how much of black money is involved in property transactions in US. Would like to understand the black to white money proportion in property transaction in US vis a vis India. Can we directly apply it in India without fixing lots of other things ?

Sir, child marriage for hindus was banned by sharda act in 1926. Execution improves with time. It changes behavior with time. It improves slowly. Laws need to consider whether it is right for the future - whether they will be executed 100% on the next day isnt a matter which is stressed on too much.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Yagnasri » 20 Sep 2015 21:58

Property value in our nation is high because lot of black money goes into it. Quite a lot of it. Further we tend to keep all the offices in one city. This is also not needed. There is also need to live in cities as other areas do not have power for most of the time. So almost every one want to live there. Madness and speculative mess is also one of the reason. We all want to earn crores of rupees by investing in real estate. NRIs also purchase and keep properties vacant. Just see the lands purchased near airports of Hyderabad and Bangalore.

If I am having 100 Cr worth shares surely I can pay 1% of it as tax? Just remove capital gains tax on it. Indian share market may worth about 2 Trillion $. Tax on that at 1% will be 20 Billion $ which is 130000 Cr at 65 rupees a $ . I am sure we are getting less capital gains tax now. Yes, there will be price manipulations etc, but those are to be checked.

What is the value of the real estate in our nation and how much we can get out of it at 1%? We can in fact give an option to the tax payer on in which project he or she want to pay? ISRO? DRDO? Universities? AIIMS like hospitals? High Schools? Defense Budget? A new capital if you are in AP? A lot can be done to make the tax acceptable to the people.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Yagnasri » 20 Sep 2015 22:00

Sorry Surajji. I have not seen your post. May be we move all of this into Nukkad.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Virupaksha » 20 Sep 2015 22:15

http://citeseerx.ist.psu.edu/viewdoc/do ... 1&type=pdf

It appears that the unequal access to economic and social opportunities that underlies this unequal asset distribution is inimical to sustainable long-term development. Although the data do not contain sufficient structure to allow inferences on the channels through which such an impact would come about, they suggest that, in the process of economic development, policies to improve access to assets and overcome structural inequalities may play an important role.

http://www.stern.nyu.edu/sites/default/ ... 042974.pdf
Four of the six economies that transitioned to high - income, Japan, the Republic of Korea, Portugal and Trinidad and Tobago have lower GINI indexes than each of the economies stuck in the middle - income trap. Hong Kong and Singapore (both city states - my addition) have high GINI indexes when compared within their own subset. But their indexes, of 43.44 and 42.48 respectively, are still relatively low when compared to the set of economies stuck in the middle - income trap


All the data or papers I have read show that there is a positive corelation between sustained development and gini index. However most scientific papers are circumspect about its causality (as they should be). Proving causality in scientific papers requires much more. Some papers even push for success of south korea and taiwan to their success in land reforms.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby vera_k » 20 Sep 2015 22:33

Virupaksha wrote:There should be low wealth tax (0.5-2% at most) and moderate inheritance tax, with minimal loop holes.


Wealth tax is on the books. But it is not enforced very well.

As a technical matter of implementation, all property owners could be served notices to pay wealth tax based on circle rates, unless they can show the property is self-occupied or rented out. But given the corrupt bureaucracy, that will simply enrich government officers.

It would be better to invest in IT systems to detect who has property that is not being productively used by correlating utility bills and rent receipts. Over time that will start bringing more revenue and also make more homes available to rent.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Bade » 21 Sep 2015 01:31

moved to RE thread.
Last edited by Bade on 21 Sep 2015 03:43, edited 1 time in total.


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