Indian Economy News & Discussion - Nov 27 2017

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Atmavik
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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Atmavik » 05 Jul 2019 07:46

i am surprised not to find much discussion about kaleshwaram project in Telangana. looks like an ambitious project from the few youtube videos i have seen. This is our biggest lift irrigation project consuming a massive amount of electricity.

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

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Yagnasri » 05 Jul 2019 09:32

As far as drinking water goes, lifting water makes sense. But for irrigation at large scale? I am not sure. But political leaders think that makes sense in terms of voting and may even makes sense financially etc.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A Deshmukh » 05 Jul 2019 14:30

no thread on Budget?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby ricky_v » 05 Jul 2019 16:43

Posting here, as there is no dedicated thread
The pension benefit will be extended to 3 crore retail traders under PM Karam Yogi Maan Dhan Scheme. It requires only Aadhaar numbers and bank accounts.
₹1 crore worth of loans proposed to MSMEs. The Government will extend pension benefits to 3 crore retail traders and shopkeepers who have a revenue of less than ₹1.5 crore.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby ricky_v » 05 Jul 2019 17:01

Highlights:
1. Gas, homes, water to all by 2022.
2. Excise increase on petrol, diesel by 1 re/litre.
3. Fdi increase in insurance intermediaries.
4. Import of gold increased from 10 to 12.5%.
5. Surcharge on taxable income above 2 cr.(3-7%).
6. Tax exemption on loans for electric vehicles.
7. Corporate tax on companies with turnover 400 cr.
The government will launch a scheme to invite global companies through a transparent competitive bidding to set up mega-manufacturing plants in sunrise and advanced technology areas such as Semi-conductor Fabrication (FAB), Solar Photo Voltaic cells, Lithium storage batteries, Solar electric charging infrastructure, Computer Servers, Laptops, etc,” Sitharaman said.
.
8. Recapitalisation of banks by 70000 cr.
9. Npa reduction by 1 lk cr.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Guddu » 05 Jul 2019 17:18

Defense budget has remained same, but no basic customs duty on foreign equipment purchases. What is the basic customs duty on military purchases ?...that is the actual increment to the budget.
“Defence has an immediate requirement of modernisation and upgradation. This is a national priority. For this purpose, import of defence equipment that are not being manufactured in India are being exempted from the basic customs duty,"

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby arshyam » 05 Jul 2019 19:17

Budget 2019: All Schemes Announced By The Finance Minister In Her Speech - Swarajya

As is the tradition, several new schemes across sectors were announced by the Finance Minister Nirmala Sitharaman in her budget speech today (5 July).

Here are the schemes at a glance

1. Interest Subvention For MSMEs

As part of the budget, Rs 350 crore has been allocated for FY 2019-20 for 2 per cent interest subvention for all GST registered MSMEs, on fresh or incremental loans.

2. Pradhan Mantri Karam Yogi Maandhan Scheme

The scheme, similar to the earlier PM Shram Yogi Maandhan Scheme, will extend the pension benefit to about three crore retail traders and small shopkeepers whose annual turnover is less than Rs 1.5 crore. Enrolling into the scheme will be on a self-declaration basis and will only require the person’s Aadhar and bank account details.

3. Pradhan Mantri Matsya Sampada Yojana (PMMSY)

Recognising the allied nature of fisheries with other agricultural activities in India, the scheme will help establish a robust fisheries management framework. This will address critical gaps in the value chain, including infrastructure, modernisation, traceability, production, productivity, post-harvest management, and quality control. The scheme will be implemented through the Department of Fisheries under the Ministry of Agriculture and Farmers Welfare.

4. SFURTI

The ‘Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI) aims to set up more Common Facility Centres (CFCs) to facilitate cluster based development to make the traditional industries more productive, profitable and capable for generating sustained employment opportunities. The focused sectors are Bamboo, Honey and Khadi clusters. The SFURTI envisions setting up 100 new clusters during 2019-20 which will help enable 50,000 artisans to join the economic value chain.

5. Jal Jeevan Mission

The mission, under the Department of Drinking Water and Sanitation under the newly formed Jalshakti Ministry, will focus on sustainable water supply management across the country. Its primary focus will be integrated demand and supply side management of water at the local level, including creation of local infrastructure for source sustainability like rainwater harvesting, groundwater recharge and management of household wastewater for reuse in agriculture.

As part of the Mission, the government is seeking to ensure Har Ghar Jal by 2024, that is piped water supply to all rural households by 2024.

6. Revamping IDEAS Scheme

In pursuit of bilateral and multi-lateral coordination with other nations, the Indian Development Assistance Scheme (IDEAS) provides concessional financing for projects and contributes to infrastructure development and capacity building in the recipient developing countries. The scheme was first mooted during first NDA government in its 2003-04 budget speech and was last extended by the Modi government for five years from 2015-16 to 2019-20. The FM has proposed a revamp of the scheme during her budget speech.

7. Faceless e-Assessment Scheme

In a major relief to taxpayers, the government plans to roll out in a phased manner a scheme to ensure that personal interaction between tax officers and accesses is minimised. Cases selected for scrutiny shall be allocated to assessment units in a random manner and notices shall be issued electronically by a Central Cell, without disclosing the name, designation or location of the Assessing Officer. The Central Cell shall be the single point of contact between the taxpayer and the Department.

8. Sabka Vishwas Legacy Dispute Resolution Scheme

The scheme will help unlock over Rs 3.75 lakh crore blocked in litigations in service tax and excise from the pre-GST tax era, thereby making this amount available for consumption and further investment by the trade and business-owners. The relief under the scheme varies from forty percent to seventy percent of the tax dues for cases other than voluntary disclosure cases, depending on the amount of tax dues involved. The scheme also provides relief from payment of interest and penalty.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby KJo » 05 Jul 2019 19:26

I am curious to know how they plan to get cooking gas to all homes by 2022. Are they talking piped gas like how they do in the US and other countries? Or just improve the distribution channel for the cylinders? I am not sure that piped gas to all is a viable idea.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby arshyam » 05 Jul 2019 19:57

How will Budget 2019 help the common man? - TNIE

Finance Minister Nirmala Sitharaman presented her maiden budget in the Parliament on Friday, becoming only the second woman to present the Union budget in the history of independent India.

Emphasising that Budget 2019 is for all, FM Sitharaman said that the government's approach towards every programme is based on 'Gaon, Garib and Kisan'. Presenting the 89th budget, the Finance Minister announced a slew of schemes and measures, from rural development to women empowerment.

Bidding adieu to a colonial-era tradition, Sitharaman carried the budget papers in a 'bahi khata', which is a ledger, wrapped in a red coloured cloth, instead of a briefcase.

ALSO READ: Budget 2019 highlights

In the budget speech, she acknowledged that crowdsourced inputs from the public were of huge help in formulating the Union Budget.

Here's Budget 2019 at a glance:

1. Taxation:

In a big relief for taxpayers, FM announced income tax exemption for income up to Rs 5 lakh per annum. Also, now one can file I-T returns using Aadhaar card in place of PAN card, making it interchangeable. For the super-rich, there is an additional 3% increase in tax for an income from Rs 2 crore to Rs 5 crore and 7% for an income above Rs 5 crore.

2. Affordable housing:

To facilitate affordable housing, the FM announced an additional deduction of Rs 1.5 lakh on interest paid on loans borrowed up to 31 March, 2020 for purchase of a house up to Rs 45 lakhs. Also, from now on, the housing finance sector will be regulated by the RBI and not National Housing Bank.

ALSO READ: A please-all Budget for everyone from Nirmala Sitharaman

3. E-Vehicles:

In a major push for e-vehicles, electric vehicle purchasers will get an additional Rs 1.5 lakh incentive for loans. With that, India is also set to become a global hub for manufacturing e-vehicles.

4. Bharat Net:

In an initiative to provide better internet connectivity to all the panchayats in India, the Pradhan Mantri Grameen Digital Saksharata Abhiyan has been announced. BharatNet will help bridge the rural and urban digital divide.

5. Rural development:

In the second phase of PMAY-Gramin, 1.95 crore houses, including amenities such as toilets, LPG and electricity, will be provided to eligible beneficiaries. By 2022, every single rural family except those who are unwilling to take the connection will have electricity and clean cooking facilities.

6. Swachh Bharat Mission:

India will become open defecation free by 2 October 2019 as over 9.5 crore toilets have been built under the Swachh Bharat mission since October 2014. The FM also proposed to extend the mission to undertake sustainable solid waste management in every village.

7. Women empowerment:

The FM stated that the government is going beyond just women-centric policies to build a gender-neutral nation. Amid huge applause in the lower house, she proposed to expand the Women Self Help Group (SHG) Interest Subvention Programme to all districts in India to encourage women entrepreneurship.

8. Water management:

'Jal Shakti Mantralaya' to work with states to ensure 'Har ghar jal' for every household by 2024, under #JalJeevan Mission. The FM also emphasised that water and sanitation for all is the priority of the government. The proposal comes at a time when major cities of the country are reeling under a severe water crisis.

9. Education:

A new National Educational Policy will be brought in to transform the Indian educational system. The FM also proposed to bring in major changes in higher education as well as the school system. Foreign students will be invited to the country under the ‘Study In India’ programme. Rs 400 crore will be allocated for world-class higher education institutions in FY20.

10. The Aadhaar upgrade:

The FM announced that Aadhaar and PAN cards are interchangeable while filing I-T returns. She also said Aadhaar cards would be issued to NRIs with Indian passports on their arrival in India without the mandatory 180-day wait.


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Re: Indian Economy News & Discussion - Nov 27 2017

Postby arshyam » 05 Jul 2019 20:03

https://www.moneycontrol.com/news/india ... 72211.html

Centre's key expenditures for 2019-20

> Defence: Rs 3.05 lakh crore
> Home Affairs: Rs 1.03 lakh crore
> Education: Rs 94,854 crore
> Health: Rs 64,999 crore
> Transport: Rs 1.57 lakh crore
> Major subsidies: Rs 3.01 lakh crore
> Rural development: Rs 1.40 lakh crore
> Urban development: Rs 48,042 crore
> Pension: Rs 1.74 lakh crore
> Agriculture and allied activities: Rs 1.51 lakh crore
> North East development: Rs 3,000 crore
> IT and telecom: Rs 21,783 crore
> Transfer to state: Rs 1.55 lakh crore

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby arshyam » 05 Jul 2019 20:10

Perhaps one of the best proposals to come from this budget, given the growing reports of water shortage around the country. This article summarizes what ZBNF is.

Government To Focus On ‘Zero Budget’ Farming: Here’s All That You Need To Know About It - M R Subramani, Swarajya

Finance Minister Nirmala Sitharaman, presenting her maiden Budget in the Parliament, said the government would focus on “Zero Budget” farming.
This is in keeping with the suggestions of the Economic Survey 2019 to shift from green revolution to green methods.
It is also a tribute to the agricultural scientist Subhash Palekar, who invented ‘Zero Budget’ farming based on natural farming principles.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Karthik S » 05 Jul 2019 20:23

arshyam wrote:https://www.moneycontrol.com/news/india/india-union-budget-2019-live-speech-live-updates-nirmala-sitharaman-narendra-modi-budget-highlights-income-tax-slab-railway-budget-2-4172211.html

Centre's key expenditures for 2019-20

> Defence: Rs 3.05 lakh crore
> Home Affairs: Rs 1.03 lakh crore
> Education: Rs 94,854 crore
> Health: Rs 64,999 crore
> Transport: Rs 1.57 lakh crore
> Major subsidies: Rs 3.01 lakh crore
> Rural development: Rs 1.40 lakh crore
> Urban development: Rs 48,042 crore
> Pension: Rs 1.74 lakh crore
> Agriculture and allied activities: Rs 1.51 lakh crore
> North East development: Rs 3,000 crore
> IT and telecom: Rs 21,783 crore
> Transfer to state: Rs 1.55 lakh crore


Still not much increase in defence, was expecting significant increase after balakot episode.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 06 Jul 2019 00:10

Transport: Rs 1.57 lakh crore


Govt plans to spend 100 lakh crore on infrastructure in the next 5 years.

So the first year should be at least around 15 lakh crore.

The budget allocation is 1.57 lakh crore. That's just 10%. How are they going to make up the remaining 90% considering private infrastructure companies are not doing great, they have no money to invest neither do banks to lend money?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Vips » 06 Jul 2019 17:58

Guddu wrote:Defense budget has remained same, but no basic customs duty on foreign equipment purchases. What is the basic customs duty on military purchases ?...that is the actual increment to the budget.
“Defence has an immediate requirement of modernisation and upgradation. This is a national priority. For this purpose, import of defence equipment that are not being manufactured in India are being exempted from the basic customs duty,"


Budget 2019: Duty exemption to improve cash flow of forces.

The withdrawal of customs duty on imported defence items that are not manufactured in India is likely to improve cash flow for the armed forces but a lack of additional funds is expected to hit defence modernisation.

Finance minister Nirmala Sitharaman reversed the customs duty on defence items that was imposed in 2016, a move that will reduce paperwork for the forces. Prior to this, customs duty paid for such items was loaded onto the purchase price by foreign vendors, creating an unnecessary bureaucratic chain. Interests of Indian manufacturers will be protected as the exemption has been given to only those items that are not made in India.
Defence minister Rajnath Singh said that the move will augment the defence budget by Rs 25,000 crore on account of savings in expenditure on customs duty over the next five years (Benefit of Rs 5,000 Crores a year)

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby saip » 06 Jul 2019 20:46

Defense outlay went up from 285000 (2018-19 revised) to 305,000 -- an 8% increase.

What am i missing?

Link

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Karan M » 07 Jul 2019 04:38

Guddu wrote:Defense budget has remained same, but no basic customs duty on foreign equipment purchases. What is the basic customs duty on military purchases ?...that is the actual increment to the budget.
“Defence has an immediate requirement of modernisation and upgradation. This is a national priority. For this purpose, import of defence equipment that are not being manufactured in India are being exempted from the basic customs duty,"


Around $4Bn/5 years, or around $800 Mn a year, at Rs68 to the dollah.
A lot of complaints IMHO miss the mark. Huge budget increases are not possible, given capex (military) is already ~31.29% of federal capex. How are we to fund this if not for external borrowing, which is a problem by itself? A defence cess would be a good one time idea IMHO, but should not create a moral hazard of Govts relying on it all the time, which guys like Raoul Baba or INC would exploit, by wasting existing budget.
Some comments: Pensions are around a third of the revenue budget, > than 1 Lakh crore Rs, which is around 3-4x the capex budget at 4Lakh crore plus. Capex budget is marked as slightly less than pensions, at $14Bn. Real question is how much of this amount is earmarked for existing capex, limiting new purchases.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Karan M » 07 Jul 2019 05:23

Need to understand what they are doing for urban areas?
http://pib.nic.in/newsite/PrintRelease. ... lid=191304

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A Nandy » 07 Jul 2019 14:46

https://timesofindia.indiatimes.com/bus ... 113391.cms

Auto manufacturers have been facing muted sales for quite some time now. The slowdown has forced companies to adjust their production schedules to market demand.

Automakers like Mahindra & Mahindra (M&M) and Tata Motors have also announced adjusting production to tapering market demand to cut down inventories.

In May, overall passenger vehicle wholesales in India witnessed the steepest decline in nearly 18 years, dropping by over 20 per cent amid continued weakness in retail offtake.


The decline in May was the worst since September 2001, when sales had dropped by 21.91 per cent.


And this is how you remind the Govt that the middle class exists! Severely curtail all spending :D

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby tandav » 07 Jul 2019 21:33

A Nandy wrote:https://timesofindia.indiatimes.com/business/india-business/maruti-cuts-production-in-june-for-fifth-month-in-a-row/articleshow/70113391.cms

Auto manufacturers have been facing muted sales for quite some time now. The slowdown has forced companies to adjust their production schedules to market demand.

Automakers like Mahindra & Mahindra (M&M) and Tata Motors have also announced adjusting production to tapering market demand to cut down inventories.

In May, overall passenger vehicle wholesales in India witnessed the steepest decline in nearly 18 years, dropping by over 20 per cent amid continued weakness in retail offtake.


The decline in May was the worst since September 2001, when sales had dropped by 21.91 per cent.


And this is how you remind the Govt that the middle class exists! Severely curtail all spending :D


This is Ola Uber effect... why buy when car is available at finger tips. Automobile companies must factor this into account. There is no space for parking and therefore no one is buying new vehicles

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rishi_Tri » 07 Jul 2019 21:57

tandav wrote:
A Nandy wrote:https://timesofindia.indiatimes.com/business/india-business/maruti-cuts-production-in-june-for-fifth-month-in-a-row/articleshow/70113391.cms



And this is how you remind the Govt that the middle class exists! Severely curtail all spending :D


This is Ola Uber effect... why buy when car is available at finger tips. Automobile companies must factor this into account. There is no space for parking and therefore no one is buying new vehicles


Deleted.
Last edited by Rishi_Tri on 07 Jul 2019 22:57, edited 1 time in total.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rishi_Tri » 07 Jul 2019 21:57

tandav wrote:
This is Ola Uber effect... why buy when car is available at finger tips. Automobile companies must factor this into account. There is no space for parking and therefore no one is buying new vehicles


This is the Let the Indian Economy Rot Effect...

IT industry is at best now Hindu growth rate industry.
There have been big job losses in Telecom industry.
Job losses in Airline industry are well chronicled.
Real Estate sector has been rotting for years.
Pharmaceutical industry has plateaued out. .. and now
Automobile industry is struggling and signs were there for everyone to see for years...

All these were big job creators in the last two decades. Led to massive urbanization though without commensurate infra creation. The middle class grew, tax collection grew and helped the economy / country grow.

There is no new breakthrough industry on horizon. Any new industry is replacement for already existing one. Policy and government spending is not supportive of existing industries - aviation and real estate are case in point.

Fact that taxes are being raised means the government does not know where to get additional revenue from.

NDA government has lost its way when it comes to fixing the economy. E.g., tax exemption on buying property upto 50 lacs in value has been increased but there are million houses searching for buyers not because people don't have cash because those apartments are half complete and builder is either behind jail or bankrupt.

For the first time in last two decades I am not bullish on Indian economy.
Last edited by Rishi_Tri on 07 Jul 2019 22:59, edited 1 time in total.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby tandav » 07 Jul 2019 22:06

The breakthrough industries as per me are as follows

1) Green construction (sustainable cities)
2) Infra buildout (Water, Roads, Rail, Metro, Ropeway, Low speed Low alt VSTOL Aviation)
3) Tourism (mostly internal)
4) Rent rather than buy models (for everything)
5) Retirement homes
6) Fitness and Sports
7) Marine Habitats (Sea/Oceans as Production System / Resource)
8) Space
9) Fixing excess carbon as biomass (in all areas possible) Sea and Land
10) Influencing weather patterns... green desert areas (Thar, Gobi, Sahara) etc

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby yensoy » 07 Jul 2019 22:49

There has to be a massive surge in infrastructure - not just spending the money but getting the value out of it - so that we are able to expand cities to vast areas with good interconnectivity. Currently we are maxed out in the urban areas - no roads, no parking, no water, no drainage. How can you grow when fundamental necessities are severely limited? Let the government spend the money needed to get more livable space, and the private industry, finance and consumers will step in to purchase the new Indian dream, and companies will expand operations to ensure jobs keep coming.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby ricky_v » 07 Jul 2019 23:30

There is a large scope for the goi to improve upon the economy and the following will just rehash ideas that were from the mouth of the goi itself.
Electronics /Semiconductor/ Navigation
1) Now the goi has recently stated that it will give a boost to set up fab industries, which i for one find extremely odd as this was announced by the goi in 2014-15, and there were 2 companies interested, what happened in the interim? we had digital india and make in india, renaming of the ministry to deity, but they were focused more on the IT part of the issue rather than at the core fabrication design/construction shop.
Now that they are interested again and with the thawing us-china relationship,it is imperative now more than ever to give wings to their own ideas.
2) Information on navic on the domain is limited though we can hope that good news is on the horizon. This gives the public a good space to create an infrastructure in many modes, integration with the existing e-commerce, fisheries/cold storage, agro based industries being just one way.
Marine Transportation/Luxury Vessels
1) This is a large untapped market, and can be broken into: construction, operation, maintenance, associated dog and pony.
As i recall there was some goi scheme about opening up a centre at a&n for ship building though it was mainly for repair/hull maintenance.
2) Operation and maintenance would create an infrastructure, and this can be scaled down for yachts, sails, modern fishing vessels etc.
Transportation- Seaplane
During the mudis visit to some place in gujarat, he visited via seaplane and there were some indications that the business in this particular segment was on; dont hear much on it, but can also be crisscrossed with our incipient domestic aviation sector.
Education
Not strictly related, but the goi should introduce a law that the admin position of the machinery can only be filled by non-engg, non-medical personnel but after some grace period, say 15 years. This would ensure that the engg/tech segment is not too overloaded and the arts/science streams can be used for babucracy(technocracy on ad-hoc basis to be considered).
For breakthrough industries, i suspect we are all trapped, first there was electrical and its production, transmission, usage, followed by the automotive and lastly we had communication and its spawn of technology and data. Biotech has not yielded such scale where it can be justified as a different philosophical industry.
People of my generation and one younger have made streaming and sm marketing, insta weirdness, gaming and rpging / larping their industry, patreon can be considered a platform for global self- employment and demographic cut-off.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rishi_Tri » 08 Jul 2019 02:08

ricky_v wrote:There is a large scope for the goi to improve upon the economy and the following will just rehash ideas that were from the mouth of the goi itself.
Electronics /Semiconductor/ Navigation
1) Now the goi has recently stated that it will give a boost to set up fab industries, which i for one find extremely odd as this was announced by the goi in 2014-15, and there were 2 companies interested, what happened in the interim? we had digital india and make in india, renaming of the ministry to deity, but they were focused more on the IT part of the issue rather than at the core fabrication design/construction shop.
Now that they are interested again and with the thawing us-china relationship,it is imperative now more than ever to give wings to their own ideas.


With C-DAC, C-DOT I shall hazard to say we were ahead of our big friendly neighbours in high performance computing and telecom equipment till late 90s / early 2000s and then everything gave away. There was even Semi Conductor Complex Ltd. for attempting to build chips and eventually becoming a fab. C-DOT was as good as ISRO. We could have taken credible shot at network technology.

This is at best boiler plate material from some babu without much thought. To show that something is being planned, thought about.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Karan M » 08 Jul 2019 02:34

Some concerning stuff in terms of declining growth of key segments etc, purely because many claim the Govt is not doing much yet to provide any direct growth or industry related stimulus. It can be argued though that by fixing the rural distress they are in effect fixing growth challenges. Net, I am not convinced by the analysis. It seems pretty shady in parts. For instance acknowledging Arvind Sub's analysis was dodgy, then claiming even so growth is slowing down. Lolwut? Yes, mass crony capitalism, shady behavior by corporates has come to light. It had to. And is being fixed gradually.

https://finception.in/markets/indian-economic-slowdown/
https://finception.in/markets/indian-ec ... -part-two/

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 08 Jul 2019 07:44

https://www.orfonline.org/expert-speak/ ... ssion=true
#Budget 2019-20: Steel katora will cost more, but e-vehicles will fetch relief


At the ORF roundtable discussion on the Union Budget there was much animated banter on whether this year’s ‘bahi-khata’, as the annual account of how Government proposes to spend public money is to be known now onward in keeping with the spirit of Quit India 2.0- is “a budget for the poor” or “a poor man’s budget”. In the era of nuance-free public debate conducted through social media, such fine distinctions of the English language possibly do not matter anymore. Nuances apart, a conflation of the two to describe this year’s budget would perhaps not be misplaced.

In other words, NDA 3 could have done a far better job of framing a populist budget for the poor without turning it into a poor man’s budget, that has left the best brains in the country wondering how this year’s ‘bahi-khata’, devoid of crucial numbers, actually serves the stated goals of kick-starting the stalled engine of growth, creating jobs and dazzling the world with an all new production of the ‘India Story’ – all of it by dedicating Government to the service of the poor. The treacly ‘thank you’ note to taxpayers, namely the salaried classes and entrepreneurs, was indication enough that this budget was not meant for them, never-mind Prime Minister Narendra Modi’s solemn acknowledgement two years ago that their time had come.

So broadly here’s what we have. The single biggest increase in allocation is for the farm sector, or to be precise, for farmers by way of cash handouts. Team Modi could have gone to town with this allocation. But it did not. From Finance Minister Nirmala Sitharaman’s speech it would seem that realisation had at last dawned that agriculture was a State List subject and the Centre’s role should be no more than that of a facilitator. But, the expanded dole and a wishy-washy reference to impediments to farm sector growth like the APMC would belie that impression. The promise to double farmers’ income by 2025 has been reiterated. Nobody knows for sure what is being done to achieve that target through efficient land use and increased productivity. At the moment, an elusive monsoon and potential drought is of topmost concern.



A whopping Rs 70,000 crore has been gifted to public sector banks and some more to NBFCs — which could well be described as reward for inefficiency and worse leading to gigantic NPAs. Recapitalising banks to restart big ticket lending and spur credit offtake, and in turn reignite investment, is not a bad idea per se. But what is the road map ahead? Can the economy absorb fresh investments in the absence of demand? More important- is there a guarantee that banks will not be left holding the proverbial can as borrowers either shrug their shoulders (Jet Airways) or settle down to country life in Britain (Kingfisher Airlines)?

Government investment in infrastructure is a surefire way to revive core industry, fuel growth and restore investor confidence apart from creating jobs. Towards that end embracing an ambitious outlay of Rs 100 lakh crore for infrastructure creation over five years is an excellent idea. What is discomfiting is that we do not know, where this money is going to come from. In this budget all investments taken together have been pegged at Rs 33,000 crore. To meet its Rs 100 lakh crore target, infrastructure alone would need Rs 20 lakh crore. Even, if this were to be partly financed by the private sector, Government would still need to come up with a sizeable amount.

With its humongous majority, a 350-seat Government was expected to be more daring and risk-taking than tinkering with marginal taxes to- in a manner of speaking, fleece the rich to feed the poor. In the afterglow of his sweeping victory, Modi ji, whose absolute power in government and authority in party have made him Modi Xi, could have and should have signalled a firm and irreversible departure from statism and fetish for the public sector through structural reforms, opening up the economy and giving primacy to forces of market (and merit) without compromising an inch on national interest.

Sadly, he did not. This is reflected in the modest ‘strategic disinvestment’ – not strategic sale or outright privatisation – of our white elephants which, to paraphrase the parable cited by the Finance Minister continue to trample upon and lay to waste the harvest of public finances. Setting a target of Rs1,05,000 crore through strategic disinvestment is an incremental Rs 20,000 crore increase over that set in the previous budget. Nearly two-thirds or more of it will go into meeting government expenses that have nothing to do with either asset creation or investment. Even if say- all of the Rs 33,000 crore earmarked for investment were to come from strategic disinvestment then where does the remaining Rs 72,000 crore go? Social welfare?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 08 Jul 2019 08:31

https://www.orfonline.org/expert-speak/ ... ive-52788/
Budget of small things that contributes to the government’s larger $5 trillion narrative


The biggest problem India is facing today is a slowdown in economic growth to 6.8%, still the world’s fastest but not fast enough. There are two major causes for this slowdown. First, technical reasons such as liquidity and financing. Sitharaman attempts to fix this problem by proposing Rs 70,000 crore of capital to public sector banks (PSBs), which in turn are expected to open their lending taps. This capitalisation will come with promises to strengthen the governance systems at PSBs. On the non-banking financial companies (NBFCs) side, she has proposed a one-time, six-month partial credit guarantee to PSBs “for the first loss of up to 10%,” apart from strengthening the regulatory authority of RBI over NBFCs.

Looked at this in isolation, these seem to be good proposals. Will they work? The answer is not so straightforward. There is a loud and clear trust deficit in the economic system today. This deficit prevents entrepreneurs from taking on projects. Worse, it prevents bankers from giving loans for fear of spending time in jails if they go bad. For this, Sitharaman can do little — the economic system needs to change and understand that every business failure is not fraud, every bad loan not a scam. The government together, and not Sitharaman alone, needs to get over this “jail them” approach and start rethinking solutions, otherwise economic agents will eschew risk and place their monies in government bonds.



India’s infrastructure building has become a huge challenge. PPP projects have fallen steadily over the past six years — from 132 projects worth Rs 72,230 crore in 2011-12, they fell to 66 projects worth Rs 2,460 crore in 2013-14 and crashed to seven projects worth Rs 420 crore in 2017-18. This is a problem that goes beyond finance or operations into ethics. The way of doing business has changed over the past five years. Laws relating to bankruptcy, benami transactions and the Goods and Services Tax have plugged loopholes of corruption. While the old way of doing business is narrowing and dying, the new way is yet to come up — in transition stands India. Fixing this will take time.


Sitharaman’s Budget seeks to inject efficiencies into the regulatory system. Taking the regulatory authority on housing finance away from National Housing Bank — itself a refinancer and lender and hence conflicted — to Reserve Bank of India. Or, separating the National Pension System Trust from Pension Fund Regulatory and Development Authority that regulates NPS. In themselves, these are small steps. But when viewed through the prism of systemic efficiencies and conflicts of interest, they matter and could be the blueprint for regulatory frameworks going forward.

Overall, a Budget of small things that contributes to the government’s larger economic and non-economic narrative — Sitharaman’s task has only begun. The roadmap is clear, for execution we wait.


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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 08 Jul 2019 11:10

The govt. seems extremely focused on reducing the fiscal deficit%GDP number, probably driven by economic advisors who believe this will remove the imaginary "crowding out" effect and lead the private sector to invest and boost growth.

I am skeptical of this approach. Business investment is driven by demand first and foremost. In a system where demand growth is slowing, it will be hard for businesses to justify new investments and jobs. This will lead to further slowdown in incomes and demand -- a spiral down.

Moreover, the crowding out effect is a mirage. financial condititions are extermely tight and this is due to high interest rates (which can be brought down by RBI) and high spreads due to credit fears. To the govt's credit, they did announce some measures to support the secondary debt markets.

Sad to say, but this economic orthodoxy is causing a lot of potential to remain unfulfilled. The first priority should be growth and jobs, given our demographic profile.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Patni » 08 Jul 2019 16:40

Well In Indian system goverment is both the ultimate lander or surity and the ultimate borrower with lowest risk to default for bank! In such reality, the governments credit offtake does have big impact on terms available to private sectors.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 08 Jul 2019 22:26

Rahulsidhu: what's your take on the sovereign bonds plan ? Personally, I wonder why the government didn't simply authorize RBI to raise the ceiling of foreign holdings in Indian rupee denominated debt instead. It would take away the exchange rate risk element, though at the cost of a higher coupon rate. But higher demand might push down yields there. Raising FDI limits and percentage floats are both good options.

I haven't had a chance to look at the latest economic survey, but will do so sometime soon.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Manu » 08 Jul 2019 23:12

I have to say, this budget is very disappointing. Modi ji does not understand Economics. He understands the uplifting of the poor, and he does it well. But you can only rob Peter to pay Paul, as long as Paul is healthy enough to be robbed. What has been happening is nothing but redistribution of wealth, which is only tolerable to a limit.

We need to unleash entrepreneurial animal spirits, not cage them with high taxes/cess /BS Yojnas.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 09 Jul 2019 00:06

What specific sections of the budget make it redistributory in nature rather than an overall development focused one ?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Manu » 09 Jul 2019 01:17

BJP has backed fiscal discipline over stimulus. I suppose I'll answer in a more broad way, what I don't like about the budget:
(a) Corporate tax of 25%, already higher than our SEA neighbors. It should have been applied to all, not just Turnover of up to 400 Crores. This makes us non-competitive .
(b) While there were no changes to the Rs. 5 lacs/yr ceiling on individual income tax, they announced a 3% and 7% surcharge on people making Rs. 2-5 crore and above Rs. 5 crore respectively.Hiked the income tax on these individuals to help the government pay for recapitalizing banks (PSU banks to get Rs 70,000 Cr capital ) and supporting small business - this is clearly re distributive in nature. People will flee, if they can.
(c) Increase minimum public shareholding in listed cos to 35% from 25% - this is not likely going to go down well with foreign investors.
(d) Who not remove long-term capital gains tax on return on investment from equity?

Ujjwala, Kisan Samman, Awas Yojana, Gramin Awaas, Matritva Vandana, Janani Suraksha, Antyodaya Anna, Jan Aushadhi Kendra - literally all these schemes are welfare/re-distributive in nature. Wealth redistribution was OK from 2014-19. New imagination is needed now.

As an example from above, Ayushman Bharat provides 150 K health and wellness centers with free essential drugs and diagnostic services and additionally, National Health Protection Scheme covers 100 million+ poor and vulnerable families, providing coverage of up to $7,800 per family/year for secondary/tertiary care hospitalization (4 times India's real per capita income). With an estimated 500 million beneficiaries.

Of course, one realizes, we are caught in a trap, had it been Congress - their stated mission was to redistribute 3.6% of GDP , as an income supplement, to the poorest fifth of India’s population (mostly from 2 states).

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 09 Jul 2019 02:57

Much better post describing your position. Thanks.

a. I agree that corporate tax rates need to be more competitive with SEA.

b. Let's look at effective tax rates. Up to Rs.10 lakh, rates are 11.25% plus cesses. Upto 50 lakh, it is 29%. Between 50lakh to 1cr, a 10% surcharge is applied on applicable tax i.r. effective rate of 31.9%. Between Rs.1-2cr, the surcharge is 15%, so 33.35% . From 2-5cr an additional 3% surcharge is applied, or 34.22% , and above 5cr, an additional 7% surcharge making an effective rate of 35.38% .

In other words, the two highest slabs saw an increase in effective rates from 33.35% to 34.33% and 35.38% respectively. Rs.5 cr is close to $750,000 . Scanning over the list of top marginal tax rates amongst most of the developed world, you'll find that pretty much everyone's top effective rate exceeds these numbers. About the only option is UAE, and that route can be plugged with legislation.

Beyond that, here's no cause for the claim that we over tax the rich - they in fact have it much better than anywhere else, where they'd pay a minimum 1.33x, if not 1.5x as much in effective tax rate on income, e.g. peak IT rate in Austria is 55% . They pay less in peak tax rate because they get fewer services from it, and as they get more, they pay more too.

c. Why does a larger float bother foreign investors ? And if they're bothered, so what ? There's a larger picture to look at than merely the short term squeeze on the secondary market due to promoters being forced to implement secondary offerings to dilute their holdings. 25% public float is a very low level, and does not generate sufficient price discovery.

d. I support lowering but not removal of tax on LTCG. I also support tax deferral scheme for the super-rich who can invest in the market and gain from lower LTCG tax rates in the process, while their wealth is thus locked into deferred schemes from which money cannot be pulled out without a penalty.

I disagree with notion that Ujjwala etc are all collectively a bad thing. Some of these are unavoidable subsidies, e.g. PM KISAN. However, sitting around within our middle class lifestyles claiming these are 'redistributory', makes us blind to something very basic - until as recently as 2014, our socio-economic measures were pathetic. As of that year, between 55-60% of rural India did not have access to proper roads, electricity, sanitation, cooking fuel or banking.

There's a good reason the western press repeatedly wrote stories about "35% of Indians live on less than $2 a day" or that "there are more extreme poor in India than Subsaharan Africa". Those were true. After nearly quarter of a century of liberalization, we only brought development to about 40% of the rural areas. What's happened between 2014-2019 is that many of these measures have risen from 45% to 95%. Rural roads, banking inclusion, sanitation coverage, access to cooking gas... all of them. It's the reason for the GE 2019 result. I described this issue in a few posts about 3 months ago - here''s one, and another.

However, the effort isn't yet complete - access to healthcare, clean water and bridging the male-female health/education gap is critical for long term growth. We cannot grow at 10% if effectively 30-40% of our population lives a day to day existence. Their contribution to GDP (never mind growth, just GDP) is non-existent, and that was the situation in 2014.

The paradigm has improved dramatically, and the political gains show it, but the problem isn't fixed. Water and health in particular are critical requirements to fix, as is at least basic access to housing.

None of these are about INC or redistribution - access to basic public goods and services is something that needs to be near universal . India has until recently failed very badly at it. China and SEA fixed such basic things - food, water, roads, electricity etc - basic quality of life needs, decades ago.

India would never have been able to implement good economic policy if a vast swath of people could easily be bribed with a metaphorical bag of rice, because their existence was so subsistence level that they'd decide on that basis.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 09 Jul 2019 05:34

Suraj wrote:Rahulsidhu: what's your take on the sovereign bonds plan ? Personally, I wonder why the government didn't simply authorize RBI to raise the ceiling of foreign holdings in Indian rupee denominated debt instead. It would take away the exchange rate risk element, though at the cost of a higher coupon rate. But higher demand might push down yields there. Raising FDI limits and percentage floats are both good options.

I haven't had a chance to look at the latest economic survey, but will do so sometime soon.


I am mystified by it too.

I doubt the govt. will hedge their eurobond issuance, so in all likelihood it will have the benefit of lower USD coupons but at the risk of an INR slide (which does happen from time to time).

On the plus side, it will lead to a sovereign USD yield curve for India, which may help Indian corps get better pricing for their eurobond issuances. Or it may not. They better go the whole hog and issue a decent size or it will be just more illiquid bonds that never trade in the market.
Notable that Chinese companies raise a LOT in international bond markets without the sovereign being there.

On the negative side, it will create even more pressure on the govt. to pay attention to the clueless ratings agencies, which will keep on advocating lower budget deficits etc. Will also put the currency under a spotlight, with any slide leading to panic around the possibility of sovereign default and what not.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 09 Jul 2019 05:47

Manu wrote:BJP has backed fiscal discipline over stimulus. I suppose I'll answer in a more broad way, what I don't like about the budget:
(a) Corporate tax of 25%, already higher than our SEA neighbors. It should have been applied to all, not just Turnover of up to 400 Crores. This makes us non-competitive .
(b) While there were no changes to the Rs. 5 lacs/yr ceiling on individual income tax, they announced a 3% and 7% surcharge on people making Rs. 2-5 crore and above Rs. 5 crore respectively.Hiked the income tax on these individuals to help the government pay for recapitalizing banks (PSU banks to get Rs 70,000 Cr capital ) and supporting small business - this is clearly re distributive in nature. People will flee, if they can.
(c) Increase minimum public shareholding in listed cos to 35% from 25% - this is not likely going to go down well with foreign investors.
(d) Who not remove long-term capital gains tax on return on investment from equity?

Ujjwala, Kisan Samman, Awas Yojana, Gramin Awaas, Matritva Vandana, Janani Suraksha, Antyodaya Anna, Jan Aushadhi Kendra - literally all these schemes are welfare/re-distributive in nature. Wealth redistribution was OK from 2014-19. New imagination is needed now.

As an example from above, Ayushman Bharat provides 150 K health and wellness centers with free essential drugs and diagnostic services and additionally, National Health Protection Scheme covers 100 million+ poor and vulnerable families, providing coverage of up to $7,800 per family/year for secondary/tertiary care hospitalization (4 times India's real per capita income). With an estimated 500 million beneficiaries.

Of course, one realizes, we are caught in a trap, had it been Congress - their stated mission was to redistribute 3.6% of GDP , as an income supplement, to the poorest fifth of India’s population (mostly from 2 states).


With regards to (c), note that this is just a proposal to study. No firm decision has been taken yet.

Agree on the taxation. This "balancing the books" approach is a killer. When they come up short in their deficit projection, they resort to un-principled little taxes, cesses, surcharges here and there, totally pi$$ing everyone off. The govt. needs to understand that it can take financial risk in a way that households and corporates cannot. It should lower taxes, push for better compliance hope for size of the pie (GDP) to grow. Tax receipts will follow.

Even if taxes fall short of the target, they can issue bonds and ask RBI to buy them (this is not necessarily inflationary, contrary to popular belief). Individuals, corps cannot do that, so they will in face of falling demand simply retract spending/investment.

Even more than income taxes, what needs an immediate cut is the high GST.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 09 Jul 2019 06:37

Suraj wrote:b. Let's look at effective tax rates. Up to Rs.10 lakh, rates are 11.25% plus cesses. Upto 50 lakh, it is 29%. Between 50lakh to 1cr, a 10% surcharge is applied on applicable tax i.r. effective rate of 31.9%. Between Rs.1-2cr, the surcharge is 15%, so 33.35% . From 2-5cr an additional 3% surcharge is applied, or 34.22% , and above 5cr, an additional 7% surcharge making an effective rate of 35.38% .


I have seen on SM that the highest effective tax rate is greater than 42% for income above 5 crore.
The surcharges you are using seem to be wrong. The "additional surcharge" seem to be in addition to what surcharge was existing before which was significant in itself.

https://economictimes.indiatimes.com/wealth/tax/latest-income-tax-slabs/articleshow/62751981.cms

Code: Select all

Income                            surcharge
--------------------------------------------
50 lakh and 1 crore          10%
1 crore and 2 crore          15%
2 crore and 5 crore          25%
above 5 crore                  37%


How much additional money is it even going to generate?


https://www.businesstoday.in/union-budget-2019/columns/union-budget-2019-finance-minister-nirmala-sitharaman-individual-taxpayers-disappoints-super-rich-income-tax/story/362511.html

The Budget proposals provide an increase in surcharge from 15% to 25% for individuals having income exceeding Rs 2 crore but less than Rs 5 crores. Similarly, the surcharge stands increased from 15% to 37% for individuals earning income over Rs 5 crores. This essentially means that the effective tax rate increases from 35.88% to 39% for individuals earning income from Rs 2 crores to Rs 5 crores and almost 43% for individuals earning income above Rs 5 crores.


The new surcharges just look preposterous.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby yensoy » 09 Jul 2019 07:21

China highest tax bracket rate is 45%. US highest tax bracket rate is 37%.

Both have other taxes galore - property/social security in the US (and state income tax & sales tax in some states), VAT in China.

I see no reason for ultra rich in India to be taxed at any less rates than the above on high marginal income, just as what FM has done.


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