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Indian Economy News & Discussion - Aug 26 2015

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Austin » 07 Aug 2017 10:06

Prem wrote:https://www.rbi.org.in/Scripts/WSSView.aspx?Id=21564
Reserves now 393 Billions, on way to cross 400 Billion in next few weeks.


They should focus on increasing the Gold Reserves part of forex which is just ~ $ 20 billion

Why just $1.4 billion in SDR ?

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Austin » 07 Aug 2017 10:10

Suraj wrote:PPP was created to better represent the value of output of the same goods and services generated by different countries with widely disparate exchange rates, e.g. a haircut is the same everywhere . PPP and absolute are two sides of a coin . The former assumes every standard goods or services are worth the same, but can be distorted by lack of convertibility . Absolute measures everything in dollars but adds the distortion hat the same thing cost different $ prices in various places.


If you cannot take that Rupee or Yuan and buy what ever you want across the globe but the same USD/Euro/Yen guy can do it then it really does not matter it is just a question of internal stastics for the nation.

Unless we have a full free floating currency and capital account convertibility of Rupee where any citizen can exchange its curreny with what ever currency or goods or service he wants across the globe then it would be a true benchmark

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 07 Aug 2017 10:27

Austin wrote:If you cannot take that Rupee or Yuan and buy what ever you want across the globe but the same USD/Euro/Yen guy can do it then it really does not matter it is just a question of internal stastics for the nation.

Unless we have a full free floating currency and capital account convertibility of Rupee where any citizen can exchange its curreny with what ever currency or goods or service he wants across the globe then it would be a true benchmark

You are missing the point, and oversimplifying things. The same $ buys you different things around the world (e.g. simplified as the Big Mac Index), for reasons far more complex than mere convertibility between currencies. Capital account convertibility exists in the west because the most fundamental trait of the western economies is that they are capital surplus, and they NEED capital account convertibility to chase returns on that capital easily.

The cost of goods, labor and energy all differ across countries. Some have vastly greater population and therefore low cost of labor. Others have huge supplies of energy and therefore cheap cost of energy. India is capital deficient, energy deficient and labor surplus. Your arguing for a prescription suited to a capital surplus, energy surplus and labor deficient country (any western nation) to be applied to a diametrically opposite one.

You describe lack of convertibility as some kind of big central issue affecting PPP. It's not. Not even close. Countries are differently endowed, in capital, labor and energy. They construct an economy out of what they have access to. They liberally permit what benefit them, and restrict what hurts them. They play with the combination of labor, capital and energy they have.

Your example cases of Europe or US may have full convertibility, but have no freedom of labor. If anything, they're politically closing doors on whatever they do permit now. Let's pretend Indian Rupee becomes fully convertible. Since we also want to eliminate all other distortions, we also immediately permit free movement of labor into the developed west. And oh, prices of all goods and services are equalized. Petrol costs fixed at the same level everywhere.

If that going to happen ? Never. The west will portray what benefits it - capital account convertibility because they are capital surplus - while being VERY careful with what they don't have enough of - cheap labor. They'll leverage it externally, but will never gut their own workforce in the name of 'freedom of labor', which is the labor equivalent of capital account convertibility.

So please, don't simplistically claim things about capital account convertibility. It's a far more nuanced issue than what such an argument portrays. Neither PPP nor absolute GDP formulae are perfect. But they are complementary.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Austin » 07 Aug 2017 13:43

Well if you argue about Labour , I can also argue about free movement of capital something West has and we dont.

IF surplus was the criteria then China has capital surplus yet it does not have a free floating currency or a capital account convertible one.

Like I said you can use these metrics for internal purpose to benchmark things , But you cant use that on a global scale when you dont have currency which is neither free floating nor capital account convertible like USD or Euro so that you can Universally Bench Mark them against its peers , there is no market forces working on them but is tightly regulated by respective CB .....worse in case of Chinese.

Let China make their currency fully free floating and convertible whose value is decided by Market Forces and not PBOC then we can talk.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Hari Seldon » 07 Aug 2017 17:44

Simpler still, can I buy in India for Rs 65 what i can buy in US for $1?

Depends on the basket of goods and services I'm looking at but chances are the two baskets will look vastly different in quality and quantity. Hence, PPP.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Supratik » 07 Aug 2017 19:01

Free market assumes free movement of both capital and labor. Then why do western nations have visa caps and other assorted restrictions. Convertability has to do with confidence about economy. India stopped short after the east asian crisis. We don't want that to happen. India and China are doing fine with present restrictions. It has very little to do with PPP.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 07 Aug 2017 19:02

Austin wrote:Well if you argue about Labour , I can also argue about free movement of capital something West has and we dont.

Boss, that's the point *I* tried to make - that countries with substantial capital surplus will support and emphasize convertibility because they need it, not because it's 'better'. Their emphasis is suited to their needs. At the same time they'll be hypocritical about free movement of labor.

Don't be an agent of their hypocrisy. It's unwelcome here. Every time you talk about 'free floating currency' I'm going to ask 'yeah and where's the west's free movement of labor ?' . You can't have any capital or put it to use without labor. It's just piled of printed paper otherwise.
Austin wrote:IF surplus was the criteria then China has capital surplus yet it does not have a free floating currency or a capital account convertible one.

China is capital surplus due to decades of mercantilism, but does not have institutions that enable it to quickly move to full convertibility. You don't become developed just by being capital surplus. China is an undeveloped economy with a developed economy capital situation. China risks capital flight if they achieve full convertibility. You and I both know that. They open themselves to potential currency speculator attacks like Soros did with the Pound in 1992.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 07 Aug 2017 19:05

Supratik wrote:Free market assumes free movement of both capital and labor. Then why do western nations have visa caps and other assorted restrictions. Convertability has to do with confidence about economy. India stopped short after the east asian crisis. We don't want that to happen. India and China are doing fine with present restrictions. It has very little to do with PPP.

The west originally sought the free movement of capital and of goods, while restricting movement of labor because it would depress wages. As countries like China became economically powerful by being efficient low cost producers, they became to emphasize restriction on movement of goods as well . Now it's just capital that they emphasize the movement of. And of course control of technology.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Viv S » 07 Aug 2017 23:34

Supratik wrote:Free market assumes free movement of both capital and labor.

Just a minor correction. "Free market" refers to a market environment free from govt or other external intervention. "Free trade", on the other hand, is usually limited to goods but MAY also extend to capital and services depending on the nature of the FTA.

What you may be thinking of is the "single market" or "economic union" which involves free movement of both labour and capital.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 07 Aug 2017 23:51

Viv S wrote:Just a minor correction. "Free market" refers to a market environment free from govt or other external intervention. "Free trade", on the other hand, is usually limited to goods but MAY also extend to capital and services depending on the nature of the FTA.

What you may be thinking of is the "single market" or "economic union" which involves free movement of both labour and capital.


If there was no government intervention what would keep labor or capital from crossing political boundaries?
"Free market" by the above definition is largely an ideological construct that doesn't exist anywhere.

The necessity of "free trade agreements" - why should they be necessary if there are free markets at both ends of the agreement? - also shows that "free market" is a mirage.

"Single market" makes sense - it is a market in which all the participants operate under the same laws, regulations, etc., and within which labor and capital can move***. There can be a "trade agreement" between two different "single markets", and the "free trade" part of a "free trade agreement" tries to make compatible the different laws, etc., that the two "single markets" work with.

(*** e.g., China is a single market, but labor cannot freely move from rural to urban areas.
e.g., US is in principle a single free labor market, in practice, for some professions, the licensing requirements create a barrier to movement, such as for teachers, lawyers, etc.)

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Viv S » 08 Aug 2017 00:51

A_Gupta wrote:If there was no government intervention what would keep labor or capital from crossing political boundaries?
"Free market" by the above definition is largely an ideological construct that doesn't exist anywhere.

The necessity of "free trade agreements" - why should they be necessary if there are free markets at both ends of the agreement? - also shows that "free market" is a mirage.

A free market as defined by libertarian anarchists doesn't exist anywhere/is a mirage. In colloquial usage, its usually used to distinguish from markets/economies with significant SOE presence and/or interventionist regulators.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Sicanta » 08 Aug 2017 14:29

RBI surveys a wake-up call for the Narendra Modi government

http://www.livemint.com/Opinion/9VrEH0H ... -govt.html

Image

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There is, however, one important area where the current government, aided by RBI, has done exceptionally well—it has succeeded in taming the inflation monster. That is why households’ perceptions of overall current economic conditions are still nowhere as bad as they were in 2013 or early 2014. Chart 3 shows the perception of current economic conditions from RBI’s consumer confidence survey. Note, however, that “net responses” have turned negative in the last two quarters, which means that the proportion of those surveyed who thought current economic conditions were worse than a year ago is higher than the proportion who think conditions have improved. It is not a good sign that the percentage of people who think that economic conditions have worsened in the past year is just a bit higher than in March 2014.

Image

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby yensoy » 08 Aug 2017 14:49

Now that everything has been tightened up - demonetization, linking of Aadhar with PAN, identifying benami transactions, GST - the government has to necessarily push for the next step which is debt driven centrally fueled investment. This investment has to be towards infrastructure, basic materials, manufacturing, housing, health and education. Maybe even include activities like water conversation, environmental improvements (to undo the effects of devastation of the past), urban growth and transportation. We should be taking a deficit of 5% of GDP towards fueling this economy, i.e. nothing short of 100B$/year, probably even a few times that.

Otherwise the government would have lost the plot.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Sicanta » 08 Aug 2017 16:49


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

Postby Suraj » 09 Aug 2017 12:48

India's Demonetisation Leads To A 24% Rise In Tax Returns Filed, 42% Increase in Advance Collections
The government's demonetisation drive and the subsequent “Operation Clean Money“ seem to have smoked out those avoiding taxes, resulting in a massive jump in the number of returns filed this year as well as individuals paying taxes.

As they say, it's not just demonetisation:

The number of Income Tax (I-T) returns filed for 2016-17 year grew by 25 percent to 2.82 crore, as increased number of individuals filed their tax returns post demonetisation, the tax department said today.

Additionally, advance tax collections from personal income tax showed a growth of about 42% over the corresponding period in FY17. Personal income tax under self-assessment tax (SAT) grew at 34% over the corresponding period a year ago, CBDT said. “This clearly shows that substantial number of new tax payers have been brought into the tax net subsequent to demonetisation,” CBDT said.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Theo_Fidel » 09 Aug 2017 22:19

Sicanta wrote:There is, however, one important area where the current government, aided by RBI, has done exceptionally well—it has succeeded in taming the inflation monster.


How much of the control of inflation is related to the other indicators.

If you go back and look through the growth history of Japan/SK/China the thing that strikes you is the surging inflation that rolled through the system during their strong growth phases. As a similar resource poor nation I have long said that inflation is not the monster that everyone in India makes it out to be. Yes food inflation is bad, but food inflation is complete other animal. In India time and again the economy is crushed to control food inflation. At our stage of development, as a resource poor nation, we should be burning up with the fever of inflation. This is what flips the currency exchange rate and allows exports to power the industrial sector for products there is little local demand for.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Karthik S » 09 Aug 2017 22:22

Theo_Fidel wrote:
Sicanta wrote:There is, however, one important area where the current government, aided by RBI, has done exceptionally well—it has succeeded in taming the inflation monster.


How much of the control of inflation is related to the other indicators.

If you go back and look through the growth history of Japan/SK/China the thing that strikes you is the surging inflation that rolled through the system during their strong growth phases. As a similar resource poor nation I have long said that inflation is not the monster that everyone in India makes it out to be. Yes food inflation is bad, but food inflation is complete other animal. In India time and again the economy is crushed to control food inflation. At our stage of development, as a resource poor nation, we should be burning up with the fever of inflation. This is what flips the currency exchange rate and allows exports to power the industrial sector for products there is little local demand for.


Which resources are you talking about here?

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Theo_Fidel » 09 Aug 2017 22:30

Karthik S wrote:Which resources are you talking about here?


Looking at our import bill would give you an idea I think,
but yes for our population we need to a import a ton of stuff and more in future.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby guru.shetty » 09 Aug 2017 22:59

Suraj wrote:India's Demonetisation Leads To A 24% Rise In Tax Returns Filed, 42% Increase in Advance Collections
The government's demonetisation drive and the subsequent “Operation Clean Money“ seem to have smoked out those avoiding taxes, resulting in a massive jump in the number of returns filed this year as well as individuals paying taxes.

As they say, it's not just demonetisation:

The number of Income Tax (I-T) returns filed for 2016-17 year grew by 25 percent to 2.82 crore, as increased number of individuals filed their tax returns post demonetisation, the tax department said today.

Additionally, advance tax collections from personal income tax showed a growth of about 42% over the corresponding period in FY17. Personal income tax under self-assessment tax (SAT) grew at 34% over the corresponding period a year ago, CBDT said. “This clearly shows that substantial number of new tax payers have been brought into the tax net subsequent to demonetisation,” CBDT said.


I do not have expertise in this area. But the data seems to be all over the place. There is this guy (who clearly has an axe to grind) who has a whole thread about this:

For e.g., the below link shows 2.85 crore for tax filers in 2013.
https://twitter.com/jamewils/status/894742631799865344

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 09 Aug 2017 23:18

Tim Worstall's blow hot blow cold attitudes to India are indeed a known commodity...

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 10 Aug 2017 01:02


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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Atish » 10 Aug 2017 01:24

I am confused now. Has the tax base increased or not?

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby disha » 10 Aug 2017 01:55

^ Tax base has substantially increased. So has tax returns and so is tax that is collected.

Everybody's economic condition worsened since

1. They lost their black money stash
2. They now need to pay taxes
3. The real estate market is technically in a deep dive since people have lost their black money stash and all the speculation is taken out of market.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby disha » 10 Aug 2017 03:04

vijayk wrote:https://swarajyamag.com/economy/what-demo-and-gst-would-lead-to-in-2019


1. I did not write the article :-D

2. Glad to see somebody from the outside confirm my line of thoughts.

Now at least there are two with similiar thoughts and hence it is an ideal echo chamber (who knows the author got the ideas from here!) OR we are reading things right. Only time will tell.

Now here is an article which belongs in this thread as much as in GST thread:

http://economictimes.indiatimes.com/news/economy/policy/gst-impact-over-25-of-trucks-idle-amid-drop-in-interstate-movement/articleshow/59779231.cms

But for now, wholesale and distribution businesses in particular are hesitant to despatch untaxed cargo under the GST regime. Untaxed invoices dodging the tax authorities have virtually disappeared from freight markets, except for a few interstate destinations in Rajasthan, Madhya Pradesh, Bihar, Chhattisgarh, Gujarat, parts of Maharashtra and the North-East, said Singh of IFTRT. That’s led to a postponement of new truck purchases and a rise in defaults on hire purchase dues.


And this

Another truck company executive said his company had started seeing a 10-15% increased efficiency in goods movement, which effectively means the existing fleet can do that much more business. Vinod Aggarwal, MD and CEO at VE Commercial Vehicles, expects demand to be slow in the coming two months before things normalise in the GST ecosystem. “There are hiccups expected in the next one or two months,” he said. “Starting September, the demand may pick up. Customers are in wait-and-watch mode.


Read the bolded part above and one will go :-? :D

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby dsreedhar » 10 Aug 2017 07:16

The number of tax filers increased to 2.82 crore. India population is 120 crore. Just curious, what is the ideal figure when 100% of population files tax returns.
I think the govt should link tax filing to any kind of govt sops to people.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby guru.shetty » 10 Aug 2017 07:43

A_Gupta wrote:Indian IT department data
https://www.incometaxindia.gov.in/Docum ... 016-17.pdf

Image


I don't seem to see the number 2.82 crores anywhere in that link. The total has only seemed to increase by 2% (from 6.12 crores to 6.26 crores), though that is likely because a lot of people will file a little late. That 6.26 crore number likely includes people who had a TDS (for e.g in bank accounts), but don't file returns. I have always found India income tax data all over the place. It could be just that they keep changing the terminology very often. Another place where data is all over the place is Tax to GDP ratio.
Last edited by guru.shetty on 10 Aug 2017 07:54, edited 1 time in total.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby guru.shetty » 10 Aug 2017 07:47

dsreedhar wrote:The number of tax filers increased to 2.82 crore. India population is 120 crore. Just curious, what is the ideal figure when 100% of population files tax returns.
I think the govt should link tax filing to any kind of govt sops to people.


In the US, ~55% of the people pay federal taxes. If you include Social security and Medicare taxes, it is a lot more.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Karthik S » 10 Aug 2017 08:40

dsreedhar wrote:The number of tax filers increased to 2.82 crore. India population is 120 crore. Just curious, what is the ideal figure when 100% of population files tax returns.
I think the govt should link tax filing to any kind of govt sops to people.


Let's see, 120 crore population, if we take 4 per household, it means we have around 30 crore households. Let's assume only 1 member per family earns ( which is more likely true apart from IT people). Therefore around 30 crore potential taxpayers. Now considering the BPL and Agri households combined will form 70% of such potential taxpayers. That leaves us to 9 crore potential taxpayers. That means roughly 30% in the tax bracket pay taxes based on our assumed numbers. Is this a low number? Probably, but would it increase over say certain period, very likely.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby dsreedhar » 10 Aug 2017 09:19

Thx karthik.
So the target is the 9 Cr first at least in the next 5 yrs. Then slowly bring in the Agri folks. The ones seeking govt farm loans and waivers should be made to file tax returns.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby A Deshmukh » 10 Aug 2017 09:55

guru.shetty wrote:
A_Gupta wrote:Indian IT department data
https://www.incometaxindia.gov.in/Docum ... 016-17.pdf

Image


I don't seem to see the number 2.82 crores anywhere in that link. The total has only seemed to increase by 2% (from 6.12 crores to 6.26 crores),

We need to compare with AY 2017-18 numbers.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Aditya_V » 10 Aug 2017 17:59

The data is misleading, there are lot of people for whom TDS is deducted but dont bother filing returns 1) Not Bothered 2) Filing Returns would mean filing higher taxes. Example Salaried person with FD interest Income has to file resturn, then that FD Interest would get taxed at 30% and he has to cough up the balance 20%, similarly people with small busuiness where 2% TDS has been deducted or TCS has been deducted. Filign a return would mean paying some more amount of Taxes. Many people file a return only if they have to claim a refund. This year year there has been that change resulting in tax collections going up. Thats why in page 2 of above link Direct Tax collection is going up by 1.1 lac crores for AY 16-17. On pg 5 Indirect tax collection has gone up from 4.95 crore in 2013-14 to 8.61 lac crore for AY 2016-17.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby a_bharat » 10 Aug 2017 18:12

AY 2016-17 corresponds to FY 2015-16.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Supratik » 10 Aug 2017 18:57

All this howling by MSM about low number of IT tax payers suggests they neither understand economics nor have common sense. It is like asking why your neighborhood beggar is not buying Gucci shoes. There is a taxable base and a taxable threshold both of which depends on economic activity. As the economy moves from lower to middle to upper middle income status the tax base is going to expand. Ofcourse post-demo and GST those not paying direct and indirect taxes will be very less. It is just that most people don't have a taxable income. It is a reflection of the state our country has been kept by 45 years of socialism. Most Indians pay some kind of indirect taxes. Only some Indians pay direct taxes. Give them proper, productive jobs they will contribute taxes. Right now about 50% of labor is in agriculture and you want US style tax base.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Karthik S » 10 Aug 2017 19:32

CNBC-TV18‏Verified account @CNBCTV18Live 1h1 hour ago
More
Replying to @CNBCTV18Live @RBI @Latha_Venkatesh
RBI to transfer Rs 30,659 cr to govt as dividend for year ended June 30, 2017 |


Apparently this figure is half that was transferred last year. Looks like the counting process has reduced this amount, which should have been atleast twice last year's figure.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Suraj » 10 Aug 2017 23:48

That's not how the dividend works. The difference is the cost of the entire demonetization exercise - the time, effort and manpower expended in collecting and tabulating old notes, and printing and distributing new notes.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Sicanta » 11 Aug 2017 01:20

Govt introduces wage code bill in Lok Sabha

http://www.livemint.com/Politics/rKAHja ... Sabha.html

he government on Thursday introduced in the Lok Sabha ‘The Code on Wages’ bill which seeks to empower the Centre to fix a “universal minimum wage” aimed to benefit over 40 crore unorganised sector workers. Once approved by Parliament, even workers getting monthly pay of higher than Rs 18,000 would be legally entitled to a minimum wage. At present, laws on wages do not cover workers getting monthly wage of more than Rs 18,000. Besides, the minimum wage will be applicable on all classes of workers.

“It is for simplification, rationalisation and making it less cumbersome. No way workers’ right is being infringed... It is going to bring in a historical change in the wages for workers and universal minimum wages will be implemented for the first time in India,” Dattatreya said.

The bill would help generate employment and attract entrepreneurs, he said, adding that there were 44 labour laws which were being clubbed in four codes and the bill introduced today deals with the code on wages.

The Code provides for the government to determine the minimum wages every five years using factors like skills required for the job, arduousness of work, geographical location of work place and other aspects.

Such wages are to be fixed on recommendation of panels comprising an equal number of representatives of employers and employees, and independent persons, according to the Code on Wages, 2017, Bill.

Under this, the government will fix the number of hours of work that would include a day of rest every seven days. The payment for work on a day of rest will not be less than overtime rate.

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Vayutuvan » 11 Aug 2017 04:47

Suraj wrote:That's not how the dividend works. The difference is the cost of the entire demonetization exercise - the time, effort and manpower expended in collecting and tabulating old notes, and printing and distributing new notes.

Sorry I don't understand. The costs of the bolded part cannot be as high as 30K crores, or is it?

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

Postby Suraj » 11 Aug 2017 07:08

Just the cost of printing the new currency notes is ~15k crores. 30K crore is not a large sum - less than $5 billion . The total face value of currency taken out of circulation was over $200 billion, with about half of that replaced by new notes .

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

Postby Aditya_V » 11 Aug 2017 14:19

Also RBI is not a money making organisation, If it is making huge money it is actually an indirect tax since it is making profits from Commercial Banks who in turn will be passing on costs to consumers. RBI is there to ensure that the economy is on rails not to declare huge dividends.

As per RBi website this it is function, it job is not to earn profits by squuezing Banks who in turn will squeeze the aam aadmi

"to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage; to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth."

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Re: Indian Economy News & Discussion - Aug 26 2015

Postby Dipanker » 11 Aug 2017 20:53

Suraj wrote:Just the cost of printing the new currency notes is ~15k crores. 30K crore is not a large sum - less than $5 billion . The total face value of currency taken out of circulation was over $200 billion, with about half of that replaced by new notes .



Has to be more than that. As per this Indian Express article from May 2017, currency in circulation had reached 80% of the pre-demonetization level. RBI data from Aug 02 says YOY net change in circulation ( assuming that I am reading it correctly) is -10% (approx), so current level of currency circulation is 90% of pre-demonetization level which sounds about right given that it was 80% in month of May.

Iirc many on the forum were predicting a much higher reduction in circulation, apparently they have been proven wrong.


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