Indian Economy News & Discussion - Nov 27 2017

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

Postby Manish_P » 01 Feb 2020 20:13

Bart S wrote:There is a marginal improvement perhaps for younger people with lower incomes and no investments in tax saving ELSS/SIP, no housing loan and no personal mediclaim etc.
For typical family people who have a housing loan, avail of insurance and invest in retirement funds they straight away need to forego 3.75 lakh worth of deductions just to avail of the marginally lower slabs so its not going to give any savings.


Correct

Salaried claiming more tax exemptions unlikely to gain from new tax regime

Calculations show that salaried individuals claiming a large number of exemptions (80C, 80D, interest on housing loan, HRA and LTA etc) are likely to be better off in the existing income tax regime. “The higher the exemptions an individual was claiming, the less likely he is to benefit under the new personal tax regime,” said Shalini Jain, tax partner, EY India.


Check the tables given in the article for the differential figures

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 01 Feb 2020 20:22

https://www.thehindubusinessline.com/ec ... 676925.ece

Country set for record rabi cereal harvest: Report

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Schmidt » 01 Feb 2020 20:27

Brevity is the soul of wit
Clearly Nirmala Sitharaman hasn't heard of it

She kept rambling on and on til she fell ill and couldn't complete her speech

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Zynda » 01 Feb 2020 20:58

Based on the conversation I had with a friend, who understands economic policies a lot better than I do, it seems like doing away with these exemptions, they are removing incentives for people to make investments in various schemes like PPF etc. He had alluded that, this is the direction GoI seems to be heading towards even before the budget was presented. Perhaps, Modi wants to encourage spending by discouraging savings just like in the West. Problem is Western countries citizens have safety nets, which we do not have.

Taking away exemptions might work with younger folks, who at around mid-20s are now more focused on enjoying the experiences rather than savings.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 01 Feb 2020 21:21

There were some vocal people on the internet who did not want to take those deductions but wan't the cash in hand. I believe many of them are just politically motivated. I doubt many will use the new tax brackets sans the deductions but NS has taken away one more reason for rhona dhona. I don't know what people expected from the budget considering India is missing its revenue targets for the last two years. It seems cut taxes seems to be a silver bullet for all economic woes. Surely, life is not so simple, is it?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Philip » 01 Feb 2020 21:44

The market reaction is depressing. Worst fall for a long time.
I still cannot understand the nelsonian eye to the monster eating up the Indian economy,China and the annual $60+B trade deficit which has virtually wiped out the MSME entrepreneurship ambitions at the bottom of the pyramid.The main thought today across the board is safety,security, of employmant ( now at its worst state for 47 yrs.) assets and money and great concern at falling rates for deposits. There is little cheer and confidence in starting new ventures which generate widespread employment at the lower end of hhe pyramid. Remember that zillons invested in high-tech industry bring much automation with it and on-line sales are killing the service sector barring food delivery outfits and the like !

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby arshyam » 01 Feb 2020 21:51

I think this was the best they could do under the circumstances. The revenue deficit is already quite high, and these additional tax cuts will only widen the gap. It's a calculated risk to see if greater economic activity will plug that hole. To her credit, NS hasn't reduced funding to most key schemes and has stayed the course. As regards the stock market, Anand Ranganathan said it best on TimesNow: if the corporate tax cut had been announced in this budget instead of earlier, and everything else in the budget being the same, the stock market would have zoomed instead.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby arshyam » 01 Feb 2020 21:54

As regards the new income tax structure not giving much benefit, the old regime is still in place for those who would want to continue with it. The idea is to bring in a direct tax code eventually, while keeping the entry barrier low, so I see this as the first step. At least the government didn't replace the old regime outright and left the choice to tax payers. But eventually, these deductions would have to go - its only a matter of time.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Cain Marko » 01 Feb 2020 22:16

Philip wrote:Reducing personal tax on income v.welcome,but the std. deductions in the previous scales have been abolished.So one hand gives and the other takes away.Could've been better onthis xcore but I give a clear thumbs upcon this one.

Raising insurance on deposits.V.v.welcome.It could've been 10 lakhs though togenerate confidrnce in the banking system.Depositors will bd fofced to have mkltiple accts. with various banks adding to paperwork, KYC,etc.,an absolute pain.

The main factor,the dragon in the room, the $60+B trade deficit with China has not been touched at all.MSMEs which have collapsed tx. to cheap Chin imports, will be most wary at restarting and reinvest in the same style without protection from Chin goods.Sanctions and outright bans required, otherwise matters will further deteriorare.

Shouldn't MSMEs get a boost if spending increases thanks to reduction in IT? I think this budget is in the right direction - not dramatic but useful IMHO. If more drastic steps are required, they can always do more. Stock market reactions IMVHO matter little - they are a flash in the pan sort of thing - what exactly did the sudden jump after reduction in corporate tax achieve? Sustained real growth is far more important and this budget seems to be set accordingly. Plenty of attention to the meat and potatoes like infra and agriculture. With IT going down, I feel that spending will increase. Although more could have been done (and I guess it will be) - bit of a drip feed. Never know how the patient will react with a sudden and massive boost.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby jpremnath » 02 Feb 2020 00:21

hanumadu wrote:...NS has taken away one more reason for rhona dhona. I don't know what people expected from the budget considering India is missing its revenue targets for the last two years.


The govt is missing the revenue targets because the SME sector is practically on deathbed...Analysts and public expected the govt to appreciate this and bring in some meaningful reform in the GST and tax regime so that industry and consumption can be revived..The new income tax regime is not going to add more money in peoples hands ..There is a proposal for simpler GST from April. But we have to wait and see. From the past experience, all govt promises for big change has just fizzled out when the actual action takes place..
I know the stock market is not the biggest part of the economy. But the govt is not going to meet its disinvestment targets in a crashing market with low investor sentiment..Both the BSE and NSE has been wrecked by the bull in china shop which was Husmukh Adhia-Jaitley combine that they are in the same position from Jan 18...This has destroyed the market cap of most of the big PSUs that selling anymore stake in them will get far lower price than before..In a bouyant market, IPOs of LIC would have raked in billions...

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rishi_Tri » 02 Feb 2020 00:24

Brevity is definitely not FM's strength but this budget addresses many of what was going wrong:

Firewalling the Economy from Import:
- Rampant imports of household goods are going to be taxed - Higher customs duty on imported furniture and stuff. Great news for MSMEs. All the local furniture manufacturers shall benefit and lead to job creation. Stops sell out to ASEAN.
- Increased Tax on Imported Electric Vehicles and CKDs - Increase in customs duty on import of electric vehicles, completely kits etc. Helps the desi EV industry. Prevents dumping of Chini electric maal.

Settling Direct Tax Disputes (generates Tax Revenue and settles disputes):
- Pay actual disputed tax amount (not the ridiculous interest, interest on interest, penalties) by 31st March 2020 and settle the tax dispute.
- Pay actual disputed tax amount + nominal extra by 30th June 2020 and settle tax dispute.

Reduction of Taxes (betting on future):
-Reduced taxation for Cooperatives - reduced to bring on par with corporates
-Alternative tax regime for low to lower middle income earners. Reduces actual tax outgo... reduces tax collection by 40,000 crore.
-Removal of Dividend Distribution Tax... reduces tax collection by 25,000 crore.

Further Support to Infrastructure:
-Foreign Investment Funds shall be able to repatriate 100% of gains from 'notified infrastructure' projects after lock in period of three years. The Sheikh is welcome to invest, stay invested for three years and then reap the gains.
-Continued support of Airports, Railways, Expressways, Waterways, Cold Storage.

Bringing to Life Bharatiya High Tech (develop Bharatiya capability and stop reliance on imports)
-fund of 8,000 crore for Quantum Computing. - its a start but we have opportunity for total blowout here.
-policy for electronics manufacturing - this has really suffered over the last decade and couldn't come a day sooner.

Preservation of Culture and History (and indirectly supporting Tourism):
- Setting up of Indian Institute of Heritage and Conservation - finally organized approach to develop manpower to conserve India's immense heritage.
- Setting up of New Museums - 5 historic sites (Rakhigarhi, Hastinapur, Shivsagar, Dholavira, Adichanallur), National Maritime Museum - Lothal, National Tribal Museum - ranchi.

---- and much more.

We can definitely ask for way more, but this budget means that the powers be have listened and we are heading in the right direction. Vande Mataram.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Nikhil T » 02 Feb 2020 00:43

Schmidt wrote:Brevity is the soul of wit
Clearly Nirmala Sitharaman hasn't heard of it

She kept rambling on and on til she fell ill and couldn't complete her speech


The speech was poorly written as well - it was just hard to follow. At one point I heard something like “Action item 1 of 16 of the first theme’s second section”.

The Sensex which started the day at +30 pts ended at -990 pts - that summarizes the situation very well. I don’t think I remember a drop like that to a budget in recent times.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby VinodTK » 02 Feb 2020 00:53

Rahulsidhu wrote:
VinodTK wrote:My thoughts: to makeup for the shortage of funds for MOD capital assets procurement the MOF in the new budges should introduce

- 1 time tax (national safety tax) of 1% on goods / services / income
( excluding people in tax bracket of Rs. 500,000 and below)
- Duration: for a period of 4 years (ending in FY 2024).
- All the revenue generated should be used to procure captiol assets for IA/IAF/INS.
- This money should not be considered as part of the regular defense budget

- Would reduce the strain on the planned budget allocations and would allow the
MOD to get what it needs at a faster pace


Please understand that taxes do not come for free. A fresh tax of x% of GDP at this time would slow the economy down by M.x where M is much higher than 1. Which would also hurt the collection on existing taxes thus not only hurting the economy but also defeating the purpose of the new tax.

A plan which takes the economy back into a slump is hardly a plan for national strength.


Levy special cess to meet capital expenditure, Defence Ministry recommends to Finance Commission
NEW DELHI: The defence ministry has recommended levying of a special cess to meet requirements as current funds are not adequate for adequate preparedness of the armed forces. The ministry’s proposal to set up a non lap-sable fund and other options including monetising the land bank has been made to the Finance Commission (FC) that is tasked with examining alternate funding mechanism for security.
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Re: Indian Economy News & Discussion - Nov 27 2017

Postby kit » 02 Feb 2020 03:20

whats the thing about reining in the fiscal deficit by so much when "common sense" would be to spend spend and spend..maybe something what the congress would have done., kind of easy way out ! :|

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby ldev » 02 Feb 2020 04:26

NRIs may have to pay tax in India if not paying anywhere else: Budget 2020

The headline is slightly misleading. But 2 important changes that I can see. Going forward, to qualify as an NRI, one has to spend at least 240 days outside India vs 182 at present. And second, to close off the loophole for persons who do not have a tax domicile anywhere in the world and yet spend more than 182 days outside India, they will be taxed in India on their global income. But it will also ensure that Indian tax authorities will demand either a tax residency certificate and/or a resident permit in another country at assessment with countries that India has a double taxation treaty, and it will impact Indians from the Gulf who currently may spend more than 120 days in India in some tax years. Basically another headache for the NRI and another tool in the hands of the Income Tax Officer to make your life miserable if they choose to.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby arshyam » 02 Feb 2020 07:51

Jaggi's rather neutral take:

Budget 2020-21: Modi Didn’t Shoot For The Moon - R Jagannathan, Swarajya

That said, this budget has a few highlights that appear understated, even unexplained — and hence worth commenting on.

First, there is the direct tax amnesty scheme that is not quite an amnesty. <snip>

This is interesting. In each of the three actual amnesty schemes — one in 2015 and two in 2016 — the tax rates were so high that few actually bothered to take up the offer. But this time, the attraction is that you pay only the demanded amount and no penalties.

Assuming that the demands pertain to some years ago, the current inflation-adjusted value of that outstanding demand amount would be much lower, and hence the effective tax rates will be extremely favourable. Modi is delivering in this amnesty scheme something he could have done with his previous schemes.

No estimates were given on the scale of the amounts under dispute, but it is estimated to be in excess of Rs 8 lakh crore. If even one in eight litigants chooses to pay up, that would bring in Rs 1 lakh crore. That’s not peanuts.

Second, there is the cut in personal tax rates for the middle classes, but with riders. The expectation was that Sitharaman would indeed cut rates, but within the existing three-rate slab structure.

Instead, what she has given us is a seven-slab structure for those willing to forgo tax deductions. The surcharges remain. <snip>

What this new structure implies is that you now have to choose between not claiming deductions under the old system and the tax cuts. This scheme will benefit those who were not investing in homes with borrowed funds or investing in avenues which gave them a deduction from tax (80C etc).

The tax consultant is back in business.

A third noteworthy initiative was the government’s decision to list the Life Insurance Corporation (LIC) through an IPO, which almost went unnoticed in the general gloom of the markets.

But that is a future big-bang dismissed with just a line in the budget speech. An LIC that gets listed will probably have a valuation in the range of Rs 5-7 lakh crore, if not more, given its overwhelming dominance of the life insurance markets.

But the key question is whether there is anyone who can invest at these valuations, especially when they know that the government will never let go of its cash cow.
This bolded part is where the market sentiment comes into picture, as some posters have highlighted above. However, the actual IPO would be a few months away, and market sentiment need not be the same then. Let's see.

The fourth gambit was a reversion to the old dividend tax system. Under the dividend distribution tax (DDT) scheme introduced by P Chidambaram more than 20 years ago, companies paid DDT on distributed dividends, thus paying taxes both on profits and dividends.

On the other hand, people who were not required to pay taxes had to do so indirectly (with the company paying the DDT). DDT is now gone, and the dividend is taxable in your hands at your appropriate tax bracket.

The markets were probably disappointed by this since they wanted dividends to be completely free from tax.

Expectations on the abolition of the Long-Term Capital Gains (LTCG) tax were also belied. Little wonder, the Sensex crashed by nearly 1,000 points, and the Nifty by 300.

Some global concerns over the Coronavirus also played out, but the market will recover in the coming days, as the budget actually has no devil in it.

Modi lived up to his conservative instincts. The market had probably hoped that he would shoot for the moon. He didn’t.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby arshyam » 02 Feb 2020 08:08

^^ Does any of the above mean the budget was bad? Not in my reckoning. It was balanced, good in parts, somewhat lacking in parts, but has enough medicine to stimulate various sectors back into growth. I feel the IT slab reductions is a positive and will help out in the long run, though I felt real estate could have been given some more stimulus beyond affordable housing. Full disclosure: I too claim a lot of the deductions and so have got some to lose from that, but my overall tax rates will reduce in the new regime. So no complaints from me there. The main positive was that the govt clearly coming out to bat for the "wealth creators" and address feedback of industry. The suit-boot jibe can finally be laid to rest - the Modi govt for some reason took that to heart though it had no merit in the first place.

There is something in it for everyone: apart from personal IT, abolishing of DDT is one less headache for companies, increased audit exemption limits is one less headache for MSMEs, as are the increased tariffs on some imported goods that used to impact domestic manufacturers. Hopefully the RBI concurs on the need to extend the deadline for MSME debt restructuring as well. A year's extension to the tax holiday for builders and deduction for home buyers of affordable housing would help the struggling RE sector to some extent (as I said above, she should not have stopped at affordable housing).

Does this mean that everything is good? Not at all. There is still scope for GST improvements which NS also mentioned in her speech, while they have made some tweaks to the filing and refund process, there is still room to improve. Hopefully something comes from the danda shown to Infy that they get off their backside and fix the (still) persisting glitches. But it is also GoI's fault for allowing these glitches to fester till now.

Lastly, NS has shown a tendency to make policy changes outside of the budget too, so whatever was said yesterday need not be the end all of this year's policy moves. The corporate tax cuts announced late last year is a case in point. The important thing is that this govt is listening to feedback and tweaking things if something does not work as expected, so expect more changes a few months down the line.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby fanne » 02 Feb 2020 08:09

in USA also you are taxed on all world wide income at US tax rates, and then given credit for any tax that you have paid in any other jurisdiction. It is quite fair and nothing wrong with India doing it; and not against NRIs (in fact it maybe against tax evaders who have been gaming the system by remaining in foreign land just enough to avoid taxes.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 02 Feb 2020 08:11

VinodTK wrote:
Rahulsidhu wrote:
Please understand that taxes do not come for free. A fresh tax of x% of GDP at this time would slow the economy down by M.x where M is much higher than 1. Which would also hurt the collection on existing taxes thus not only hurting the economy but also defeating the purpose of the new tax.

A plan which takes the economy back into a slump is hardly a plan for national strength.


Levy special cess to meet capital expenditure, Defence Ministry recommends to Finance Commission
NEW DELHI: The defence ministry has recommended levying of a special cess to meet requirements as current funds are not adequate for adequate preparedness of the armed forces. The ministry’s proposal to set up a non lap-sable fund and other options including monetising the land bank has been made to the Finance Commission (FC) that is tasked with examining alternate funding mechanism for security.
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It's a very bad idea. That it has been seriously suggested only makes it worse.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 02 Feb 2020 08:33

fanne wrote:in USA also you are taxed on all world wide income at US tax rates, and then given credit for any tax that you have paid in any other jurisdiction. It is quite fair and nothing wrong with India doing it; and not against NRIs (in fact it maybe against tax evaders who have been gaming the system by remaining in foreign land just enough to avoid taxes.


Perhaps you should know that the US is moving away from this principle. Already the TCJA has moved to a territorial tax for Corporations. Individuals may not be far behind.

The problem with these hare-brained schemes is that besides not only do they make things more complicated and unfriendly, they also do not yield the results they target i.e. higher tax collections. They may make a small number of persons pay taxes on their global income, but many more will simply pay up for foreign passports. Last year the surcharges were hiked - the current fiscal is barely showing growth in tax revenues (which had been growing at very fast clips). Did it prove to be a good idea in hindsight? If not, why keep repeating it.

For some strange reason, we consider ourselves bound by an imaginary Maastricht treaty. The purpose of taxation should not be revenue maximization but ensuring a stable tax regime that ensures a stable currency and can be adjusted in response to economic fluctuations. The day this is understood by our overlords in the finance ministry, we will start growing at east-asian miracle type growth rates.

I don't care about the stock markets - they go up and down for a variety of reasons. But what does deserve a lot of attention is the need for jobs, especially private sector jobs. A few % of GDP growth will make or break the careers of a lot of young people.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vimal » 02 Feb 2020 09:24

.OT
Last edited by vimal on 02 Feb 2020 10:03, edited 1 time in total.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Nikhil T » 02 Feb 2020 09:50

arshyam wrote:
A third noteworthy initiative was the government’s decision to list the Life Insurance Corporation (LIC) through an IPO, which almost went unnoticed in the general gloom of the markets.

But that is a future big-bang dismissed with just a line in the budget speech. An LIC that gets listed will probably have a valuation in the range of Rs 5-7 lakh crore, if not more, given its overwhelming dominance of the life insurance markets.

But the key question is whether there is anyone who can invest at these valuations, especially when they know that the government will never let go of its cash cow.
This bolded part is where the market sentiment comes into picture, as some posters have highlighted above. However, the actual IPO would be a few months away, and market sentiment need not be the same then. Let's see.


Agreed. LIC IPO is probably the best thing in this an otherwise unimaginative budget. It will bring much needed transparency to LIC, which has been being misused by Finance Ministry for ages. It will require LIC to open its books to public scrutiny and that’s only a good thing.

The argument that it’s too big for anyone to buy is wrong. You can sell 1% or 2% like how Saudi did for Aramco recently.

Finally, it will also enable LIC to be run as a corporate. Currently, by law, LIC is required to give 5% of its surplus to Govt as annual dividend, and the remaining 95% is distributed amongst policyholders. This must be relooked at as companies should only be run with profit motive, not just to distribute all profits to its customers.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby yensoy » 02 Feb 2020 10:21

Nikhil T wrote:This must be relooked at as companies should only be run with profit motive, not just to distribute all profits to its customers.


You should read up on the Vanguard group in the US which is mandated by its own rules of incorporation to distribute all its profits to its shareholders i.e. customers. They are sitting on over $5T of investors money. Their low cost strategy is key to attracting more investments which in turn keeps their costs down as they can amortize research costs over more customers. They aren't doing too badly as a company, being the second largest investment house in the US (and possibly worldwide).

It should be up to the company to define itself in order to further its objectives. If GoI is a part-owner, they might decide to define an objective to be to increase the corpus of investment which can happen by returning some profit to shareholders.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby alexis » 02 Feb 2020 13:01

It has been quite a lackluster budget.

Taxes :
For salaried upper middle class, the budget offers nothing in terms of tax benefits.
https://images.livemint.com/img/2020/02/01/original/tax_1580583276378.png
For others, it offers marginal benefits.

Tax charter, if implemented properly is a good step.

Removal of DDT is a good step. No steps to widen the tax net - last year there were talks of getting professionals like lawyers, doctors etc to pay more tax and reduce the taxes on salaried; this budget has gone the opposite way!

Taxing NRIs - it will impact a very few people and they are likely to avoid it by getting a resident permit in a low tax country to avoid it and reduce their deployment of funds into India. There is no way IT Department can track these.

Nothing on GST simplification.

Others:
There is no push for job creations or any incentives for manufacturing or real estate sectors.
Marginal increase in defense expenditure. No further support for make in India.
Substantial reduction in outlays for Southern states. Not going to help BJP in these states.
LIC IPO - should be undertaken in a buoyant market; right now may not the the time.

Overall, very disappointing.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Karan M » 02 Feb 2020 17:34

The actual budget is fairly reasonable. Most sectors have seen an increase in overall spend, inflation or not, quantum of spend matters.
I dont see what all the bellyaching is about.

The GOI's debt level is 20% of the central outlay. The same as it sends to the states. They have done a reasonable job in keeping debt contained whereas hitting most requirements. The ammo has been conserved for when a real crisis emerges.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby tandav » 03 Feb 2020 01:11

GST issues non rectification is fatal. No getting around it... its is killing productive employment generating SME businesses across the nation. BJP will pay at the hustings due to this.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Karan M » 03 Feb 2020 02:08

That is a reasonable point to make but not directly related to the budget per se, is it.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby chetak » 03 Feb 2020 02:50

Karan M wrote:The actual budget is fairly reasonable. Most sectors have seen an increase in overall spend, inflation or not, quantum of spend matters.
I dont see what all the bellyaching is about.

The GOI's debt level is 20% of the central outlay. The same as it sends to the states. They have done a reasonable job in keeping debt contained whereas hitting most requirements. The ammo has been conserved for when a real crisis emerges.


Everything seems to hinge solely on how much the "middle class got". Rest of the budget: maro goli. :mrgreen:

A new and scruffier entitled class is rising now and it has all the venal characteristics of the paki pasand, well embedded and established congi, commie, naxal lootyens liberandus.

That is quite the predatory approach for a class that is very vocal on opposing Modi in the name of sickularism and more often than not, simply does not trouble itself to vote come election day, preferring instead to take take a short out of town vacation en famille.

look at the mess this so called "middle class" made when it simply did not vote in bangalore during the last assembly elections. I know that a great majority of my greedy neighbours just will not vote for Modi or his party but come budget day, these very clowns are all out in full force demanding their pound of flesh.

Karan ji,

I fully agree with you.

Given the need of the hour, the budget was more than OK.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby ManuJ » 03 Feb 2020 03:08

The only good thing that can be said about the budget was that it was not a disaster and will not hurt the economy. That in itself is a big improvement over last year.

I'm disappointed because this was the perfect year to bring in big bang reforms with no major elections in sight except Delhi and four years left for the next Lok Sabha elections. And the Economic Survey had raised big hopes, talking about the importance of wealth creators and suggesting radical but much-needed reforms like abolishing the Essential Commodities Act and dismantling FCI, which is probably the biggest burden on tax-payers and a big roadblock to improving the farmers' income.

As things stand today, Modi will be remembered more for his reforms in the political, social and administrative realms. But I'm still hopeful because of the clear-eyed Economic Survey. If Modi buys into that vision and implements even half of its recommendations in the coming months, we'll be in a good shape.

BTW, if I'm reading the numbers right, this budget allocated a few billion dollars to the Jal Jeevan scheme, though it needs overall about $50 billion. Of course, the money is not there to allocate, but it means that we're not going to get anywhere close to providing piped water to all by 2024.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rishirishi » 03 Feb 2020 05:48

The budget deficit is "only" 3,5%. What if the government pushed this up to 5% by printing money and put an additional tax of 0,5% of GDP. A total of 2% of GDP would translate into some 60 Billion dollars more to spend. If this is spent on roads alone, it would be sufficient to build 300 000 KM of 4 lane highway over 5 years (600 billion).

A question for the economists here. What will be the implications of this extra spending and is it possible to calculate the growth that would follow.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 03 Feb 2020 07:41

Image

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby sivab » 03 Feb 2020 11:52

https://indianexpress.com/article/busin ... h-6248076/

Behind new Income Tax regime: 92% used exemption under Rs 2 lakh

Justifying the introduction of new personal income tax slabs and rates, Revenue Secretary Ajay Bhushan Pandey told The Indian Express Sunday that it was a move away from an “inequitable direct tax regime” — and cited an analysis by his department that almost 92 per cent of those filing I-T returns availed exemptions of less than Rs 2 lakh.

In absolute terms, out of 5.78 crore tax filers, about 5.3 crore (91.7 per cent) claimed deductions of less than Rs 2 lakh, including those under section 80C, Section 80D, section 80CCD(1B) (additional deduction of NPS), deduction for housing loan interest and standard deduction in 2018-19.

Only 3.77 lakh taxpayers, less than 1 per cent of all tax filers, claimed deductions of over Rs 4 lakh, according to the department’s analysis.

Pandey said the new structure addressed issues of equity, and that he expected new entrants to the job market, smallscale business owners and those who have retired to move to the new regime.

“If you have a flat tax rate, it becomes inequitable in the way that you are taxing the rich and poor… Having a few tax slabs also becomes inequitable because there is a sudden jump…and there will be a tendency to understate income to get to a lower slab. Therefore, a progressive taxation system in income tax is internationally considered to be one of the best practices…if the level of income inequality is high in a society, it is much more simple and desirable to have multiple and graded income tax-structure,” he said.

In her post-Budget media interaction Sunday, Finance Minister Nirmala Sitharaman said the new regime will definitely ease the tax burden on many taxpayers. The intention of the government was to lower taxes over time along with elimination of exemptions and deductions, she said.

The new structure offered “deep cuts” in rates for middle class and lower middle class, she argued. This scheme will co-exist with the existing structure and will be optional. While the existing tax system has four tax slabs, the new one has seven tax slabs and offers lower rates.

“It will be obvious for anyone to see that because the rate cuts are deeper in the new scheme, we believe a taxpayer from a particular income bracket will be much better off coming into the new system. And the new system, however much I repeatedly say has no exemptions, there are a few exemptions also that we have allowed in the new system,” she said.

While calculating whether taxpayers will be better off in the new regime after forgoing exemptions, one also needs to take into account exemptions that have been continued. Once an individual opts for the new tax plan, there’s no returning to the existing plan that offers deductions and exemptions.

Pandey said it was tough to put a number to how many would opt for the new regime. “It is providing relief to those who, because of family circumstances or life situations, are not availing those exemptions or are not in a position to avail those exemptions. If the earlier system was inequitable to that section of taxpayers, why should they suffer? Therefore, we have provided relief,” he said.

“If there is someone above the age of 60, why would he need to put money in provident fund; why would he take life insurance; what he will take is some amount of health insurance. Why will he take a housing loan? He’s getting a pension, he has a certain number of years in his life and he would like to use that money. But because, for him, there was no scope or incentive to invest in such instruments, he was at a disadvantage,” Pandey said.


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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 03 Feb 2020 13:25

The manufacturing PMI data is also the highest recorded since Feb 2012 - the best in an 8 year period. Not too bad.
The Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, jumped to 55.3 last month from 52.7 in December. It was the highest reading since February 2012 and above the 50-mark separating growth from contraction for the 30th straight month.

"The PMI results show that a notable rebound in demand boosted growth of sales, input buying, production and employment as firms focused on rebuilding their inventories and expanding their capacities in anticipation of further increases in new business," Pollyanna De Lima, principal economist at IHS Markit, said in a news release.

A new orders sub-index that tracks overall demand hit its highest level since December 2014 and output grew at its fastest pace in over seven and a half years, pushing manufacturers to hire at the strongest rate since August 2012.

Meanwhile, both input costs and output prices rose at a slower pace, indicating overall inflation may have eased after hitting a more than five year high of 7.35% in December, although probably not below the Reserve Bank of India's medium-term target of 4%.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Vikas » 03 Feb 2020 15:48

chetak wrote:
Karan M wrote:[color=#FF0000].


Everything seems to hinge solely on how much the "middle class got". Rest of the budget: maro goli. :mrgreen:

A new and scruffier entitled class is rising now and it has all the venal characteristics of the paki pasand, well embedded and established congi, commie, naxal lootyens liberandus.

That is quite the predatory approach for a class that is very vocal on opposing Modi in the name of sickularism and more often than not, simply does not trouble itself to vote come election day, preferring instead to take take a short out of town vacation en famille.

look at the mess this so called "middle class" made when it simply did not vote in bangalore during the last assembly elections. I know that a great majority of my greedy neighbours just will not vote for Modi or his party but come budget day, these very clowns are all out in full force demanding their pound of flesh.

Karan ji,

I fully agree with you.

Given the need of the hour, the budget was more than OK.


Chetak ji, Why berate the middle class with choicest epitaph when it is the middle class which is the most important fulcrum of any decent society.
Meanwhile It was widely considered to be a so-so budget considering the high hopes everyone had with this budget due to slowing economic conditions. This is the general impression one gets from Industry and economists.
I don't think any budget should be judged by Tax rebate or how stock market behaves. More than budget, it is overall govt policies and direction that defines economic direction of the state.
Only we Indians tend to get super excited and charged by Budget day.

The rumor I have heard from my extended family folks in MoF is that the budget was primarily driven by Piyush Goel and chosen Babus. NS had little role in drafting of budget.

PS: There is hardly any govt which has done anything exclusively for middle class except for lollypop of rearranging Tax slabs but slide in cess on everything that can be cessed and indirect taxes.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Aditya_V » 03 Feb 2020 17:52

Indirect taxes have come down on a lot of goods under GST, Excise plus VAT, It has gone up by Services. Since people dont count the benefits, they only look at GST pain on Services.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 03 Feb 2020 18:45

I think reactions to the budget probably reflect expectations different people had from it.

If you think (like the policy-making team) that GDP growth at 5% going on to 6-6.5% next year is "good", then it makes sense. The budget does nothing major to alter this trend.

OTOH if you REALLY believe in the potential of the Indian economy which should be growing north of 10%, then you should be disappointed because this budget does nothing to take us from there to there.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rahulsidhu » 03 Feb 2020 18:47

Suraj wrote:The manufacturing PMI data is also the highest recorded since Feb 2012 - the best in an 8 year period. Not too bad.
The Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, jumped to 55.3 last month from 52.7 in December. It was the highest reading since February 2012 and above the 50-mark separating growth from contraction for the 30th straight month.

"The PMI results show that a notable rebound in demand boosted growth of sales, input buying, production and employment as firms focused on rebuilding their inventories and expanding their capacities in anticipation of further increases in new business," Pollyanna De Lima, principal economist at IHS Markit, said in a news release.

A new orders sub-index that tracks overall demand hit its highest level since December 2014 and output grew at its fastest pace in over seven and a half years, pushing manufacturers to hire at the strongest rate since August 2012.

Meanwhile, both input costs and output prices rose at a slower pace, indicating overall inflation may have eased after hitting a more than five year high of 7.35% in December, although probably not below the Reserve Bank of India's medium-term target of 4%.


Considering that 50% of Indian manufacturing is autos, this probably reflects auto demand picking up. Consistent with numbers reported by Maruti-Suzuki.
2020 should be a year of recovery, I think especially June onwards we should see decent econ. prints.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Rony » 03 Feb 2020 20:21

Anything and everything is now weaponized to bash BJP. Look at this headline

Southern states biggest losers in new tax-sharing formula

and the reality inside in two sentences

Through the new mix of parameters, the 15th Finance Commission has sought to address concerns that some of the states that had managed to control the pace of population expansion were being ‘penalised’ for this achievement.



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