Indian Economy News & Discussion - Nov 27 2017

kittoo · Post by **kittoo** » 14 Nov 2019 11:08

Slowly I am convinced that the slowdown is for real. But I am also hopeful because the government has indeed taken steps in the right direction. Its a government that listens, so I wont say that they are not aware (a few denial statements from some ministers aside). But yeah, economy has been the biggest weak point of Namo government.

kit · Post by **kit** » 14 Nov 2019 11:57

kittoo wrote:Slowly I am convinced that the slowdown is for real. But I am also hopeful because the government has indeed taken steps in the right direction. Its a government that listens, so I wont say that they are not aware (a few denial statements from some ministers aside). But yeah, economy has been the biggest weak point of Namo government.

Not quite in India alone, economies like Germany and France ., blocs like EU are either stagnant or going into recession., i think this is more related to aggressive market policies in US and China .

India should have been isolated due to its large internal market but this has been negated by Chinese goods coming in from China and through ASEAN.

A full review of Chinese trade practices in India through third country FTAs is the need of the hour.

sajo · Post by **sajo** » 15 Nov 2019 17:49

kit wrote:
India should have been isolated due to its large internal market but this has been negated by Chinese goods coming in from China and through ASEAN.

A full review of Chinese trade practices in India through third country FTAs is the need of the hour.

Will an international body to monitor COO malpractices for circumventing trade barriers help? India alone cannot really monitor this alone, especially in all sectors.

PS : It wasnt always like this, I guess. I still have some toys manufactured and purchased in India about 30-32 years ago, and the quality was easily at par or better than what we would have gotten from China, even if the Cheeni juggernaut was the same back then as it is today. Toy companies have all but disappeared from our manufacturing horizon these days. Classic example of how a competent industry with great potential was wiped off due to policy myopia.

Haresh · Post by **Haresh** » 16 Nov 2019 03:11

sajo21 wrote:
kit wrote:
Toy companies have all but disappeared from our manufacturing horizon these days.

I am glad I read those words, as I wish to ask your advice & opinion. I have an interest in fine Japanese carpentry. Recently I have branched out into making wooden toys. I will be selling these on the internet.
During my visit to Punjab last year I was often asked if I could help people economically, I can't I am not rich and I do not want to encourage dependency.
However I can pass my skills on. Unemployment in rural Punjab is quite bad.
It would take me about 5 days to teach a group of five people how to make toys. Do you think this is viable?
It wouldn't be a huge factory, but hand made toys, with an emphasis on skill transfer & development.

As I get older (I am 54) I intend to travel to India every other year, I could transfer a lot of those skills.
Do you think this is viable?

Rahul M · Post by **Rahul M** » 16 Nov 2019 09:48

I think it is. Couple of years back went to Khan market to buy a toy for a friend's kid. I was shocked that even the wooden toys were imported, from some european country, of all places.
As I buy toys for my own kid, funskool is the only desi company in sight.

Aditya_V · Post by **Aditya_V** » 16 Nov 2019 12:22

There is brand called Zephyr toys which I buy for my children.

Starting from an unused lift shaft, this is how Zephyr grew into a Rs 15 Cr educational toy brand

what plagues Indian industry is mainly lack of main metallurgical factories, poor and expensive transport Infra, lack of enough Electricity- for which we need lots of Nuke plants plus politics is done at every level. If you look closely the Media connected Internationally funded NGO mafia has a role to play in each of these choke holds. They opposes every Metal plant from POSCO to Sterlite, try to stop Narmada or any development dams, Roads, Highways , land acquisition for Railways, OIL exploration, GAS pipelines, PORTS and Bridges, local weapons manufacturing, NUKE power plants etc.

They are a well oiled machine and each of these are interconnected, it will take atleast 20 years to roll back step by step these well entrenched mafias who have the paws right across India and its bureaucracy. They have been fighting a civilisational war which we Indians are completely unaware off.

Vikas · Post by **Vikas** » 16 Nov 2019 15:56

How does one ensure that one is buying 'Made in India' stuff if buying from e-com websites like Amazon or Fk or Snapdeal ?

Haresh · Post by **Haresh** » 16 Nov 2019 17:46

Vikas wrote:How does one ensure that one is buying 'Made in India' stuff if buying from e-com websites like Amazon or Fk or Snapdeal ?

It is usually hidden in the details somewhere, not displayed obviously.
I purchased a running top, imagine my horror when it turns out it was made in pak, it's being returned!!!

Peregrine · Post by **Peregrine** » 16 Nov 2019 18:15

Looking to close Essar Steel deal soon : L N Mittal

- Mittal’s ArcelorMittal, the world’s largest metal company, has partnered with Japan’s Nippon Steel & Sumitomo to acquire Essar Steel

- ArcelorMittal holds a majority stake in the JV, which has made a payment of Rs 42,000 crore for Essar Steel and will infuse another Rs 8,000 crore to improve the bankrupt entity’s operations

MUMBAI: After waiting on the fringes of India’s steel sector for 13 years, business tycoon L N Mittal is set to make it to the centre stage with the acquisition of Essar Steel.

After the Supreme Court approved Mittal’s resolution plan for the bankrupt Essar Steel on Friday, he said he is “looking forward to closing the acquisition soon”. This acquisition will make Mittal the third-largest private metal player in India, behind JSW Steel and Tata Steel.

Mittal’s India play is expected to alter the dynamics of the steel industry, but analysts say the impact would be mainly on small players and not on large entities. “Domestic companies like Tata Steel and JSW Steel have large-scale operations in India and they also compete with Mittal in certain major markets globally,” said Gaurav Dua, head (capital market strategy and investments), Sharekhan by BNP Paribas

Mittal’s ArcelorMittal, the world’s largest metal company, has partnered with Japan’s Nippon Steel & Sumitomo to acquire Essar Steel. ArcelorMittal holds a majority stake in the JV, which has made a payment of Rs 42,000 crore for Essar Steel and will infuse another Rs 8,000 crore to improve the bankrupt entity’s operations.

The JV intends to ramp up shipments of Essar Steel, the largest metal maker in western India, to 15 million tonnes from 8.5 million tonnes. “We wish ArcelorMittal and Nippon Steel the very best on their entry into the Indian market. They are acquiring a world-class facility in a market that has a long runway for growth,” said a spokesperson of Essar Group, the erstwhile promoter of Essar Steel.

Ironically, ArcelorMittal-Nippon gets control of Essar Steel at a time when metal prices are sliding, and demand is softening in India. The automobile industry, on which the steel sector depends for 20% of its business, is also facing its worst challenges in more than a decade.

Domestic players grappled with declining margins during the second quarter of fiscal 2020 as prices fell sharply amid demand weakness and high inventories. Established players had said that there won’t be a “Jio” moment in the steel industry despite ArcelorMittal-Nippon’s entry.

It couldn’t be ascertained whether ArcelorMittal-Nippon plans to make any changes to the existing team running Essar Steel. “Typically, in such deals, some top-level changes are effected. Some senior employees from the parent company are usually sent on permanent or temporary basis to do a reality check. The parent would want to implement its own strategy and would like to have its ear to the ground and is expected to relocate people from other parts of the business to India to oversee the transition. Key posts like CFO, CHRO are likely to be filled from the parent to implement a culture change and align with global policies,” said Ronesh Puri, MD, Executive Access (India). He added that lower levels are usually given a long rope to see how they perform on achieving the deliverables and help the firm course correct. Essar Steel, led by CEO Dilip Oomen, has 4,500 people on its rolls.

Over the past 13 years, Mittal made several attempts to get a foot in the door of the Indian steel market. The India-born magnate tried to set up greenfield plants in Jharkhand and Odisha in 2005 and 2006, but they didn’t materialise.

In 2010, the tycoon signed an agreement with the Karnataka government to set up a 6-milliontonne plant. Land acquisition process for this project has been completed recently. He had also inked an automotive steel venture with state-owned Steel Authority of India but that too was unsuccessful. After overcoming more than a decade of bureaucratic and legal hurdles, Mittal is now set for a run-in with macro-economic challenges that entail steering Essar Steel.

Cheers

Haresh · Post by **Haresh** » 17 Nov 2019 00:38

Aditya_V wrote:There is brand called Zephyr toys which I buy for my children.

Just checked them out,
https://zephyrtoys.com/
Thanks for the link to the story. They do not manufacture wooden toys, their products are great & I have just tweeted them out, so hopefully they will get some PR.

I am interested in wooden toys, what I am keen to do is develop craftsmanship. Indian goods are regarded as badly made, low quality items.
With regards to tools and equipment. In the UK this is easy to obtain, is that so in India?
We have this company https://www.machinemart.co.uk/
What is the situation in India, would I have to search high and low?

chetak · Post by **chetak** » 17 Nov 2019 02:45

kittoo wrote:Slowly I am convinced that the slowdown is for real. But I am also hopeful because the government has indeed taken steps in the right direction. Its a government that listens, so I wont say that they are not aware (a few denial statements from some ministers aside). But yeah, economy has been the biggest weak point of Namo government.

isn't this a global phenomenon and not isolated specifically to India.

CalvinH · Post by **CalvinH** » 17 Nov 2019 02:47

https://m.timesofindia.com/business/ind ... 090771.cms

What’s the point in selling BPCL which is a profit making company and a Maharatna!!

Cain Marko · Post by **Cain Marko** » 17 Nov 2019 14:10

Always was curious, would some of SUsu's ideas work. He does seem to be more of an economist than either jaitley or nms.

vijayk · Post by **vijayk** » 18 Nov 2019 04:04

https://swarajyamag.com/politics/good-p ... forms-push
Good Politics To Good Economics: Modi Moves On Article 370, Ayodhya Set Stage For Reforms Push

Good politics, it is often said, makes for good economics. While this can often be true, a lot depends on what one means by good politics. In Narendra Modi’s first term as Prime Minister, his politics revolved around themes like anti-corruption, anti-cronyism, tax-compliance, and pro-poor schemes like Ujjwala, Ayushman Bharat and Jan Dhan. But was that good politics resulting in good economic outcomes? The jury is out, for after small spikes in economic growth, we ended up with a cyclical and structural slowdown. We are yet to see the light at the end of this tunnel.

In the end, Modi again had to use cultural and nationalistic cues to get him across the majority mark in the Lok Sabha elections. It was good politics – good in the way he defined it – that enabled him to cross the finish line comfortably. Not good economics.

In his second term, where the country’s economic problems are looking tougher than ever, it is good economics alone that will enable good politics. If Modi gets his economic act together over this year and the next, the economy will be trundling along smoothly from fiscal 2021-22 or calendar 2022 at the latest.

The good news is that Modi and his Home Minister have got the political bits done early in the second term, which means that the Prime Minister and his Finance Minister, Nirmala Sitharaman, can now fully concentrate on taking the economy forward.

The two big moves in the first six months of Modi 2.0 were the evisceration of Article 370 and the Supreme Court’s unanimous judgement in the Ayodhya case, which hands over the Ram Janmabhoomi to Hindus and compensates Muslims with five acres of land elsewhere.

While it is easy to give all the credit to the court – which is obviously necessary – the reality is that courts are convinced by arguments, and most of the arguments in any case comes from the lawyers representing various parties. The fact that the court bought the arguments of the Hindu side more than those proffered by the Muslim side suggests that the former got a lot of help from various quarters – including possibly the government – to pitch their arguments in the right way. In the end, it was the guarantee of the government handling the post-verdict fallout safely that would have emboldened the five-judge bench to arrive at the right conclusion.

The link between these two political events – Article 370 and Ram Mandir – and future economic policy-making is indelible.

By ticking off two boxes in the Sangh Parivar’s agenda, what Modi and Amit Shah have essentially bought themselves is freedom to get on with big reforms on the economic front – reforms that may not be to the Parivar’s liking. Modi’s adroit move of withdrawing from the China-dominated Regional Comprehensive Economic Partnership (RCEP) also silenced the Sangh’s economic think-tank, the Swadeshi Jagran Manch

For example, if Bharat Petroleum is to be sold, we can get the best price only if well-funded bidders like Saudi Aramco can seek to own it. Investment by a Wahhabi state is hardly what the Sangh would want, but getting a good price for your assets means allowing people you may not like to also bid.

While tax cuts for the middle class may be popular, the big corporate tax cuts announced in September could hardly have been very popular with the Sangh, which tends to be suspicious of multinational corporations in general. Highly-profitable foreign-owned companies will be the biggest beneficiaries of this tax cut.

vijayk · Post by **vijayk** » 18 Nov 2019 23:52

Cain Marko wrote:Always was curious, would some of SUsu's ideas work. He does seem to be more of an economist than either jaitley or nms.

He wants to abolish IT and GST. He wants to keep AirIndia and every idiotic public sector. How does he reconcile opposite ideas?

tandav · Post by **tandav** » 19 Nov 2019 00:35

Recession is due to GST implementation:
GST implementation as of date forces provider of service to pay GST with no practical mandatory enforceable liability of receiver of service to pay the vendor. This has lead to a situation where a provider of services is forced to 1) not only provide services (such as payment of salary, ESIC, EPF, PT, travel, testing etc), but 2) also forced to pay GST (typically 18%) and since all the invoicing is on accrual basis technically invoice should be done when service is provided.

Most MSMEs are reluctant to raise GST invoices since nearly 18% of invoice value is to be paid towards GST (+ liability for income tax). This GST payment sucks aways liquidity from the company. Therefore most MSME Companies do not raise invoices until after the money is released by client. Many larger companies are forcing their vendors to pay the GST before accepting an invoice. After the GST is paid the client company can sit pretty, take input credit and delay payment to the vendor for petty reasons for 6-8 months with no penalty on them. In many cases companies are borrowing money from Bank to pay GST. In the present GST regime it is better to sit back and relax rather than work provide services and lose more of your hard earned money and assets to pay GST and Income tax due to client non payment.

GST regime has done nothing to help reduce payment delays.

tandav · Post by **tandav** » 19 Nov 2019 00:37

The lack of invoicing then leads to firing of employees and therefore lack of demand. If the companies don't get paid they will not be able to sustain salary payments. Lack of salary translates to lack of B2C demand

M_Joshi · Post by **M_Joshi** » 19 Nov 2019 02:31

Malaysian GST has a provision in which if a vendor is not paid within 6 months then the input credit claimed by the purchaser on those invoices can be reversed on the request of the vendor. Similar provisions can be easily be brought in Indian GST system as well & the biggest defaulter on this would be Govt departments themselves for they are the ones delaying the payments the most.

vijayk · Post by **vijayk** » 19 Nov 2019 03:04

Well … in that case, NS and Modi better focus on that ASAP. Wonder how a gujju who understands business pulse so well is letting this idiocy for so long. No wonder they got screwed in MP, RJ, and now MH after almost losing GJ. Haven't they got screwed enough?

Yagnasri · Post by **Yagnasri** » 19 Nov 2019 11:16

While I agree with the problems with GST like delay in getting refund etc the exceptions which sought will only lead to problems like falsification of records and bribes.

The basic problem with us is we have far bigger informal economy and people involved in that do not want to do things formally even now. The main reason is the payment of taxes both direct and indirect which they were not paying before GST came. Entire business models wherein totally tax free goods and services are provided are no longer viable if GST is paid.

milindc · Post by **milindc** » 19 Nov 2019 16:03

Yagnasri wrote:While I agree with the problems with GST like delay in getting refund etc the exceptions which sought will only lead to problems like falsification of records and bribes.

The basic problem with us is we have far bigger informal economy and people involved in that do not want to do things formally even now. The main reason is the payment of taxes both direct and indirect which they were not paying before GST came. Entire business models wherein totally tax free goods and services are provided are no longer viable if GST is paid.

Absolutely correct Sir. The business models don't work if they become formalized. Simple example is the hordes of plot layouts in towns and villages. These plots are investment vehicle for parking black money, and become unviable if they need to dole out white.

kit · Post by **kit** » 19 Nov 2019 16:36

milindc wrote:
Yagnasri wrote:While I agree with the problems with GST like delay in getting refund etc the exceptions which sought will only lead to problems like falsification of records and bribes.

The basic problem with us is we have far bigger informal economy and people involved in that do not want to do things formally even now. The main reason is the payment of taxes both direct and indirect which they were not paying before GST came. Entire business models wherein totally tax free goods and services are provided are no longer viable if GST is paid.
Absolutely correct Sir. The business models don't work if they become formalized. Simple example is the hordes of plot layouts in towns and villages. These plots are an investment vehicle for parking black money and become unviable if they need to dole out white.

Is this where we say we are fu@$$$?

I think the process/solutions need time ( which we in BRF don't have, also that competing economies don't wait ! )

Probably this is time to tax imports, get out of FTAs, get into hibernation/protection mode and recover before thinking of competing

Kaivalya · Post by **Kaivalya** » 19 Nov 2019 18:48

kit wrote:
milindc wrote:
Absolutely correct Sir. The business models don't work if they become formalized. Simple example is the hordes of plot layouts in towns and villages. These plots are an investment vehicle for parking black money and become unviable if they need to dole out white.
Is this where we say we are fu@$$$?

I think the process/solutions need time ( which we in BRF don't have, also that competing economies don't wait ! )

Probably this is time to tax imports, get out of FTAs, get into hibernation/protection mode and recover before thinking of competing

Real estate seems to be a big sink for benami , unaccounted money etc. There are two related posts : bigger construction companies are taking over smaller companies, also 10% of flats of Jaypee construction are unclaimed! TOI report ( forgive me I dont know how to cross link posts )

If we loosen up the 10% benami (ED can attach ) and use the proceeds to pump the money into other real estate sectors - that would be strengthening of the builder and economy.Even if we go inward that is what we have to do some day. Why not do it earlier..

Smaller construction companies gobbled up by larger construction companies or pooling their cash flows has to be facilitated. We should avoid money getting locked up at all costs...

tandav · Post by **tandav** » 19 Nov 2019 21:45

M_Joshi wrote:Malaysian GST has a provision in which if a vendor is not paid within 6 months then the input credit claimed by the purchaser on those invoices can be reversed on the request of the vendor. Similar provisions can be easily be brought in Indian GST system as well & the biggest defaulter on this would be Govt departments themselves for they are the ones delaying the payments the most.

provision is there but paying GST bites into cash flow massively. Most service industry has very little input credit. Your hard earned money is stuck for 6-8 months. Clients string you along... Taking interest cost on this money 2% per month x 6 = 12% of 18% is around 2% of contract value which is a significant % of profit. Not only does the vendor lose his investment he also loses money to govt. There is no penalty on the client

Kaivalya · Post by **Kaivalya** » 20 Nov 2019 06:43

tandav wrote:
M_Joshi wrote:Malaysian GST has a provision in which if a vendor is not paid within 6 months then the input credit claimed by the purchaser on those invoices can be reversed on the request of the vendor. Similar provisions can be easily be brought in Indian GST system as well & the biggest defaulter on this would be Govt departments themselves for they are the ones delaying the payments the most.
provision is there but paying GST bites into cash flow massively. Most service industry has very little input credit. Your hard earned money is stuck for 6-8 months. Clients string you along... Taking interest cost on this money 2% per month x 6 = 12% of 18% is around 2% of contract value which is a significant % of profit. Not only does the vendor lose his investment he also loses money to govt. There is no penalty on the client

Tandavji - will the real interest rate that went down like this change that thought process

https://tradingeconomics.com/india/interest-rate from 9+% to 5% during the same time (10 years ) change the math?

It seems like 2% per month assumes less credit availability than what should be for a credible business. As we formalize the borrowing costs should go lower. To formalize we need to pay taxes, be transparent about revenues etc. I understand that not everyone's borrowing cost is the same...but more the formal...lower the rate...

Also how does inflation that went down from 10.5% to half of that during the same time (10 years ) change that math?

https://www.statista.com/statistics/271 ... -in-india/
My question: is the math more emotional than actual?

vimal · Post by **vimal** » 20 Nov 2019 07:41

M_Joshi wrote:Malaysian GST has a provision in which if a vendor is not paid within 6 months then the input credit claimed by the purchaser on those invoices can be reversed on the request of the vendor. Similar provisions can be easily be brought in Indian GST system as well & the biggest defaulter on this would be Govt departments themselves for they are the ones delaying the payments the most.

Slightly OT for this thread but it seems Malaysia abandoned it's GST in favour of Sales Tax and Service Tax starting September 2018.
Also, their GST rates were at 6% with 0% on a lot of items. Maybe they also have a large informal economy which does not like to pay taxes.

vera_k · Post by **vera_k** » 20 Nov 2019 08:17

Are there any solutions for improving the GST implementation? Or should the GST be retired?

tandav · Post by **tandav** » 20 Nov 2019 08:25

Kaivalya wrote:
tandav wrote:
provision is there but paying GST bites into cash flow massively. Most service industry has very little input credit. Your hard earned money is stuck for 6-8 months. Clients string you along... Taking interest cost on this money 2% per month x 6 = 12% of 18% is around 2% of contract value which is a significant % of profit. Not only does the vendor lose his investment he also loses money to govt. There is no penalty on the client
Tandavji - will the real interest rate that went down like this change that thought process

https://tradingeconomics.com/india/interest-rate from 9+% to 5% during the same time (10 years ) change the math?

It seems like 2% per month assumes less credit availability than what should be for a credible business. As we formalize the borrowing costs should go lower. To formalize we need to pay taxes, be transparent about revenues etc. I understand that not everyone's borrowing cost is the same...but more the formal...lower the rate...

Also how does inflation that went down from 10.5% to half of that during the same time (10 years ) change that math?

https://www.statista.com/statistics/271 ... -in-india/
My question: is the math more emotional than actual?

In general the cost of unsecured loans is 22% per year. I know since I have taken it and paying EMI every month. Govt themselves charges 1.5% per month as interest on delayed tax payments. Secondly there is also the interest cost of the money spent in providing services/goods which is also significantly. Assuming say 50% of invoice value is cost of providing services then the cost of interest on non payment rises to 7%. If the client defaults on payment loss is 57%. Vendors are the most screwed as a defaulting company assets will first go to pay tax, then employees, then loan, then if anything left over pay vendors. Vendors get nothing if tax invoice is not raised.

Govt departments are the most defaulting and late paying entities in market.

Second why put a caveat on credible business. If vendor was given a WO/PO then client has verified vendor credibility, it is the client who has to prove their own credibility by making payments. Why should vendors have to take loan to pay tax. Why is there no protection from the tax regime to the vendor. Why there no penalty or charge of interest to client for non payment. Why vendor has to pay tax in cash pronto to Govt when the billing is on accrual basis not actual cash receipts.

tandav · Post by **tandav** » 20 Nov 2019 08:36

1) Reduce GST to 6% flat 18% not tenable
2) Make all invoicing directly on GST portal with provision for clients to make online payment. Presently invoices are generated offline and then uploaded. Any offline payments made
3) At time of payment let client pay GST directly to Govt rather than to vendor and then vendor making payment to govt
4) auto charge interest to invoice to client and govt enforces this via GST mechanism rather than depending on courts
5) GST officials are very zealous in getting their tax payments however their mandate should first ensure vendor gets paid. There is no value add to economy if Tax System only focus getting tax payments rather than ensuring payment to vendors. Currently the govt asks vendor to approach a different agency for delay of payment and this is only for MSME and I am not sure if it is functional
https://www.moneylife.in/article/will-t ... 55744.html
6) Instead of calling vendors they should call clients to make payment to vendors for unpaid invoices.
7) there is no easy online method of verification of payments which is the stupidest aspect of GST

vimal · Post by **vimal** » 20 Nov 2019 10:17

tandav wrote:1) Reduce GST to 6% flat 18% not tenable
2) Make all invoicing directly on GST portal with provision for clients to make online payment. Presently invoices are generated offline and then uploaded. Any offline payments made
3) At time of payment let client pay GST directly to Govt rather than to vendor and then vendor making payment to govt
4) auto charge interest to invoice to client and govt enforces this via GST mechanism rather than depending on courts
5) GST officials are very zealous in getting their tax payments however their mandate should first ensure vendor gets paid. There is no value add to economy if Tax System only focus getting tax payments rather than ensuring payment to vendors. Currently the govt asks vendor to approach a different agency for delay of payment and this is only for MSME and I am not sure if it is functional
https://www.moneylife.in/article/will-t ... 55744.html
6) Instead of calling vendors they should call clients to make payment to vendors for unpaid invoices.
7) there is no easy online method of verification of payments which is the stupidest aspect of GST

I did not know that things are so bad w.r.t GST. It seems govt managed to replace one system of inefficient tax collection with another system of bureaucratic system which actually penalizes honest tax payers. I really hope the current government remedies this situation asap.

Kaivalya · Post by **Kaivalya** » 20 Nov 2019 10:33

tandav wrote:
Kaivalya wrote:
Tandavji - will the real interest rate that went down like this change that thought process

https://tradingeconomics.com/india/interest-rate from 9+% to 5% during the same time (10 years ) change the math?

It seems like 2% per month assumes less credit availability than what should be for a credible business. As we formalize the borrowing costs should go lower. To formalize we need to pay taxes, be transparent about revenues etc. I understand that not everyone's borrowing cost is the same...but more the formal...lower the rate...

Also how does inflation that went down from 10.5% to half of that during the same time (10 years ) change that math?

https://www.statista.com/statistics/271 ... -in-india/
My question: is the math more emotional than actual?
In general the cost of unsecured loans is 22% per year. I know since I have taken it and paying EMI every month. Govt themselves charges 1.5% per month as interest on delayed tax payments. Secondly there is also the interest cost of the money spent in providing services/goods which is also significantly. Assuming say 50% of invoice value is cost of providing services then the cost of interest on non payment rises to 7%. If the client defaults on payment loss is 57%. Vendors are the most screwed as a defaulting company assets will first go to pay tax, then employees, then loan, then if anything left over pay vendors. Vendors get nothing if tax invoice is not raised.

Govt departments are the most defaulting and late paying entities in market.

Second why put a caveat on credible business. If vendor was given a WO/PO then client has verified vendor credibility, it is the client who has to prove their own credibility by making payments. Why should vendors have to take loan to pay tax. Why is there no protection from the tax regime to the vendor. Why there no penalty or charge of interest to client for non payment. Why vendor has to pay tax in cash pronto to Govt when the billing is on accrual basis not actual cash receipts.

I understand that it hurts when money gets stuck : there are 3 issues

Interest rate :

I was basing my comments based on https://www.bankbazaar.com/personal-loan.html which puts 22% on the higher end.

And the associated issue is overall difference in earning ( with reduced interest rates, inflation rate) . Even though interest seems higher - value is similar.

10 years back I am not even sure if there was unsecured loans because the risk was not quantifiable. Local lender was the only choice. Nowadays unsecured loans against direct deposit paycheques is much easier. I.e credit is better...if we want the rates to go down more data,transparency and revolving credits have to be factored in ( like GST )

What government asks to pay is more of a fine than interest rate.

Default protection and government delay : You are absolutely right that vendors have to be protected against delay and default ( especially against government ). Policies must be geared towards vendors getting paid. In Khan land a lien can be placed on a delaying/non paying entity at zero cost and the delaying entity has to prove to court to remove it. All lenders can pull lien history of any entity.

Contracts : Contracts have to enforce payment appropriately (accrual or actual ) This should not even go to courts and go directly to CIBIL or some agency like that should penalize the delaying entity and enforce penalties. If I miss a payment on my credit card it goes somewhere and increases my cost - same applies for anyone who do not pay their vendor bill within specified time.

Please note contracts and defaults are related but not the interest rate issue with GST process or the GST rates. Forgive me for the Khan land example

chetak · Post by **chetak** » 20 Nov 2019 13:12

Haresh wrote:
Aditya_V wrote:There is brand called Zephyr toys which I buy for my children.
Just checked them out,
https://zephyrtoys.com/
Thanks for the link to the story. They do not manufacture wooden toys, their products are great & I have just tweeted them out, so hopefully they will get some PR.

I am interested in wooden toys, what I am keen to do is develop craftsmanship. Indian goods are regarded as badly made, low quality items.
With regards to tools and equipment. In the UK this is easy to obtain, is that so in India?
We have this company https://www.machinemart.co.uk/
What is the situation in India, would I have to search high and low?

I think that there is a town quite close to bangalore where some wooden toys are made.

They have a longish history of toy making.

Channapatna – The Toy Land of Karnataka. The incredible streets of Channapatana are filled with the colorful wooden toys which one cannot find anywhere else. The small town produces ample wooden toys which are so unique and showcases the unblemished talent of the craftsmen

chetak · Post by **chetak** » 20 Nov 2019 16:02

https://www.youtube.com/watch?v=wuuRfo44TXg

Economic Monopoly through Halal Process | Veeresh Malik and Sanjay Dixit | Jaipur Dialogues 2019

isubodh · Post by **isubodh** » 21 Nov 2019 20:22

CalvinH wrote: What’s the point in selling BPCL which is a profit making company and a Maharatna!!

I think there multiple reasons
- Why have multiple companies in same field, IOCL is enough
- In 10 - 15 yrs time, most vehicles will be electric, then these Oil psu's will be sick like BSNL
- Capital received can be invested in Nuclear power for reliable and baseline power
- Having more competition in fuel retailing will will bring new services and prices down
- Why Govt should run business, it just needs to govern them and make play by rules

A_Gupta · Post by **A_Gupta** » 21 Nov 2019 21:06

Yes, also sell when you get the highest price for it - when it is profitable.

Non-profitable PSUs - decide if there is a time-bound strategy to make them perform better and prep for sale; or else sell ASAP.

Vayutuvan · Post by **Vayutuvan** » 22 Nov 2019 13:46

timing the market is very very very hard. otherwise every ram dixit and hari would buy low and sell high., hain?

kit · Post by **kit** » 22 Nov 2019 15:44

https://worldview.stratfor.com/article/ ... ate-change

A_Gupta · Post by **A_Gupta** » 22 Nov 2019 15:52

Vayutuvan wrote:timing the market is very very very hard. otherwise every ram dixit and hari would buy low and sell high., hain?

Not “timing the market”. Things of higher quality will get a higher price.

alexis · Post by **alexis** » 24 Nov 2019 13:51

https://www.livemint.com/news/india/why ... 77580.html

Not a good news...

nandakumar · Post by **nandakumar** » 24 Nov 2019 14:46

alexis wrote:https://www.livemint.com/news/india/why ... 77580.html

Not a good news...

The survey is for the period 2017-18. But we already have aggregate national income, private final consumption expenditure and savings data in the aggregate for 2017-18. I don't understand this noise about survey data.