Indian Economy - News & Discussion 27 May 2012

vina
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Re: Indian Economy - News & Discussion 27 May 2012

Postby vina » 19 Sep 2013 10:33

The thundering herds of Wildbeest that make up the market were ambushed yesterday in the Mara and Grannet rivers by a swarm of giant crocodiles led by a particularly big one called Ben Bernanke ! The herds had convinced themselves that it was a "short" one way trip down from Masai Mara to the Serengeti because all the "strategists" aka.. (soothsaying buffoons, who have never risked single dollar of their own money in the markets and would lose their shirts in a minute if put behind a trading desk , the talking head parasites in the investment banks) had decided that the rains were going to fall in the Serengeti and the "short" migration had to be done.

Bernanke and his school of crocodiles lay in wait in the rivers as the gargantuan herds lined up to cross the rivers and as the van of the herds entered the water, the crocodiles tore into them , ripping them to shreds and not a single beast could cross the water , with every beast in the water butchered , torn into giant pieces and gulped down. Seeing this, the remaining part of the herds are stuck at the waters edge.

Now all the "Bull" Lions of Masai Mara have congregated behind the herd which is now trapped between steep valleys with the river with Ben Bernanke Crocodile school ahead.Multiple prides of hungry lions are tearing into them from the rear. There is a giant slaughter going on with entire herds being eliminated and other smaller predators like Hyenas also joining in the slaughter. The entire valley floor is soaked knee deep the with blood of the slaughtered and the vultures are circling above to clean out the carcasses.

As some who has nothing but total contempt for these "strategists" and being the lone wolf that avoids herding, all I can do is shake my head at the stupidity of the Wildebeests, while putting my profits away in the bank!

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Arjun » 19 Sep 2013 11:38

Hmmm, maybe we need a separate thread on financial markets. TamBrams and others with propensity for tooting their own horn on every minor market move can indulge themselves freely there... :wink:

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Re: Indian Economy - News & Discussion 27 May 2012

Postby kmkraoind » 19 Sep 2013 11:53

X posting.

BJP looks at a tax-free regime - Deccan Chronicle

New Delhi: In a so-called “bid to transform the current Indian socio-economic scenario” and “provide relief to the middle class while boosting the industrial sector”, the BJP is looking at a “revolutionary” five-point proposal to abolish all direct and indirect taxes (except customs duty to protect domestic markets), including sales tax, income-tax, excise duties, service tax, VAT and corporate tax, among others.

A think-tank, Arthakranti, had a series of meetings with the top BJP leadership, including L.K. Advani and Narendra Modi, to discuss the proposal. Even RSS chief Mohan Bhagwat has been briefed about the proposal. Instead of direct and indirect taxes, the think-tank has proposed to impose a tax of “say two per cent” on every banking transaction.

While the BJP leadership, which is preparing its “visi-on document”, is debating the proposal, the national spokesman of the think-tank, Deepak Karanjikar, claimed that “it will generate a revenue of `15 lakh crore” for the government. The proposal, incidentally, will take at least three years for implementation if accepted by the ruling party at the Centre. A draft parliamentary bill has also been prepared for the “new taxation system” by the think-tank.
Some in the BJP are, however, sceptical about the proposal.

New tax proposal aims to reduce graft

As per the thinktank Arthakranti’s proposal to BJP leaders, the transaction tax on credit accounts will be shared by the Centre, states, local authorities and the transacting bank. High denomination currency above Rs 50 is proposed to be abolished. “Some 58 per cent of the population pays Rs 20 a day so they will not be affected by this,” said Mr Karanjikar.

Under the proposal, currency transactions will not attract any transaction tax. But, it is proposed, cash transactions above a level, say Rs 2,000, will be deemed illegal.

“If you buy anything, like a camera, above this limit in cash and if there is some problem with the product, you will not be able to enforce the warranty on it as the transaction will be considered illegal,” said Karanjikar.


The thinktank said that its proposal will bring more transparency and tackle the issue of black money.


Expecting some Economic gurus to do number crunching and to say whether its feasible to prop up money on just 2% tax on every transaction.

If feasible, yep its another gift from India to global economic system. Our forefathers were masters in every known science.
Last edited by kmkraoind on 19 Sep 2013 12:04, edited 2 times in total.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby sum » 19 Sep 2013 11:54

^^ Could someone please decipher what it means/ Couldnt understand it.

Whatever it is, i like the different concepts which atleast BJP comes up with compared to the usual divide and rule and mindless opposition to everything of the other parties.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby krishnan » 19 Sep 2013 12:14

not gonna happen, looks like they want to reduce their chances of coming to power with these ideas. How many can offered to buy products costing above 2000 without cash ????

How many buy 2k+ mobiles using non cash methods ???

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Christopher Sidor » 19 Sep 2013 12:59

The chickens will come home to roost soon. If not in the near future then definitely in the next 1-2 years. Our government is still spending way beyond what it earns. The slide of the rupee has been stymied but not reversed. It is still lower than the Rs 40-45 to a dollar than it was during and after the financial crisis. All of this is due to the fact that US Fed has declared that the stimulus will continue. What the recent slide in Rupee value has reiterated has been our economic weakness.

Let us pray that the breathing room that has been given, not more than a few months or 1-2 years, is utilized to set our house in order. US Fed will eventually stop the stimulus program. Ben will step down as the Fed Chairman very soon. US Fed will start to tighten the money supply after that. Just as the last round of tightening eventually led to the Lehman collapse, the next round of tightening will be an environment where the US Government Budget Deficit is 120% of its GDP. This will make the tightening and withdrawal of the stimulus worse. It is possible that US Government will have to retrench its spending.

Pray our political rulers have heard the siren of warning in the recent turmoil.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby panduranghari » 19 Sep 2013 13:04

Under the proposal, currency transactions will not attract any transaction tax. But, it is proposed, cash transactions above a level, say Rs 2,000, will be deemed illegal.

“If you buy anything, like a camera, above this limit in cash and if there is some problem with the product, you will not be able to enforce the warranty on it as the transaction will be considered illegal,” said Karanjikar.


I believe Swamy G asked somewhere else how the currency crisis will affect common man. Here is a proof of it. Cash transactions becoming illegal. I think this is as idiotic as it gets. Banning cash transactions is the first step in currency controls. Seems Indian economy is in dire straits if anyone is even remotely suggesting this.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby vina » 19 Sep 2013 13:09

Arjun wrote:Hmmm, maybe we need a separate thread on financial markets. TamBrams and others with propensity for tooting their own horn on every minor market move can indulge themselves freely there... :wink:

:lol: :lol: . Cold cash is very comforting and putting it away after vanquishing all the other retarded Wildebeests in the market who were ranged against you gives you some quiet satisfaction , something that deserves a toast. Revenge after all is a dish that is best served cold.

This quiet triumph gives you a warm fuzzy feeling. I'll take it any day. :mrgreen:

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Arjun » 19 Sep 2013 18:03

vina wrote: :lol: :lol: . Cold cash is very comforting and putting it away after vanquishing all the other retarded Wildebeests in the market who were ranged against you gives you some quiet satisfaction , something that deserves a toast. Revenge after all is a dish that is best served cold.

This quiet triumph gives you a warm fuzzy feeling. I'll take it any day. :mrgreen:

Know that feeling :wink:. Trading on your own account does tend to get lonesome - it helps to imagine oneself jousting with the big swingers on the other side of the trade...but unless you are in the George Soros league its really between you and the markets at the end of the day.

Markets are fickle creatures. Anyone able to consistently make money and beat the indices over a sustained period would have either joined or started a hedge fund....Don't know that there is really much to distinguish between any of us non-hedge fund plebeians...

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Christopher Sidor » 19 Sep 2013 18:18

Fed Can't Taper Over India's Cracks --- Wall Street Journal Dated 19-Sept-2013

Emerging markets were hammered after the Federal Reserve chairman hinted on May 22 he would scale back the central bank's bond purchases. Investors homed in on India and Indonesia, economies with fundamental issues like low savings and high inflation, and heavy reliance on foreign capital inflows.
....
....
That wouldn't solve India's underlying problem of high inflation and low savings. Consumer-price inflation has averaged more than 9% for the last five years—it clocked 9.5% in August. That compares with an average of less than 5% between 2003 and 2007, according to World Bank data.
....
....
Without higher rates and other structural reforms, India will remain exposed to any eventual policy tightening from the Fed. Mr. Bernanke says the Fed will scale back its bond-buying once economic data shows improvement. The RBI could get ahead of this by starting its own tightening later this year.

I find it odd the part which says "low savings and high inflation" and also the claim that CPI was an average of 5% between 2003 and 2007. It was much higher than that.

But what I agree is that we need to set our house in order now. We already missed the opportunity between 2008 and now. Let us not squander this opportunity too. We do not have much time. Otherwise a rupee to dollar exchange rate of Rs 70 would not seem far fetched.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby vina » 19 Sep 2013 18:59

Arjun wrote:Know that feeling :wink:. Trading on your own account does tend to get lonesome -

. Anyone able to consistently make money and beat the indices over a sustained period would have either ........ started a hedge fund....


:wink: :rotfl: .

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Theo_Fidel » 19 Sep 2013 19:53

Christopher Sidor wrote:But what I agree is that we need to set our house in order now. We already missed the opportunity between 2008 and now. Let us not squander this opportunity too. We do not have much time. Otherwise a rupee to dollar exchange rate of Rs 70 would not seem far fetched.


It would say that is inevitable. Capital short countries desperately playing the catch up game inevitably run inflation. Right now the inflation mismatch between $ & Rupee is 3% per year. So somewhere in the Rs55-Rs60 band is fair value for the rupee. At a 3% mismatch my prediction is 2017-2018 will see Rs 70 to the dollar and Rs 80 to the dollar by 2021 or so. Growth in Rupee terms will remain at 15%-20% per year.

So by 2021, Rupee GDP will be 400% greater than today.

Adjusted for inflation $ GDP will be somewhere near $4-$5 Trillion.

We should remember Japan & Korea. The yen has traded as low as 200 to the Dollar and the Korean won is in 1100 to the dollar type range. As a similar in being capital poor country that desperately needs to export I think similar numbers for Indian Rupee are inevitable in the long term.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Arjun » 19 Sep 2013 19:55

vina wrote: :wink: :rotfl: .

:shock: :eek: Didn't think there was any offshore hedge fund managed from Bangalore... What kind of fund is it ?

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Re: Indian Economy - News & Discussion 27 May 2012

Postby vera_k » 19 Sep 2013 20:07

Christopher Sidor wrote:I find it odd the part which says "low savings and high inflation" and also the claim that CPI was an average of 5% between 2003 and 2007. It was much higher than that.


CPI inflation was lower than 5% up until 2006. 2006 is when the first warnings were sounded that rising inflation would hurt savings and that interest rates are lower than they should be.

India - consumer prices

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Suraj » 20 Sep 2013 00:05

sum wrote:^^ Could someone please decipher what it means/ Couldnt understand it.

Whatever it is, i like the different concepts which atleast BJP comes up with compared to the usual divide and rule and mindless opposition to everything of the other parties.

BJP doesn't need to resort to such radical ideas from outside. Just state a position continuing or enhancing prior NDA policies - focus on fiscal management, devolution of fiscal independence to states, investment in infrastructure and low interest rates. Such a position would align the interests of internal and external capital with them. The point is, they don't need radical gimmicks to gain attention, either from the masses or the businesses.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Suraj » 20 Sep 2013 02:31

Image
Indian exports set to grow 24% in the four months to December: FIEO report
Outbound shipments of goods are projected to grow nearly 24% in the four months to December, and by about 16% during the entire 2013-14 fiscal, helped by a recovery in developed countries and newfound competitiveness because of nearly 15% rupee depreciation in the current financial year.

The Federation of Indian Export Organisations (FIEO), a government-backed industry grouping, has estimated exports at $121 billion in the last four months of the calendar year, versus $97.6 billion in the same period last year. FIEO's numbers are based on order book estimates until December. The commerce department had asked it for an on-the-ground report.

"Seventy percent of the projection is only based on the order books of the exporters till December. Measures announced in the revised FTP (foreign trade policy), and rupee fall will yield a positive result. The low base of last year will also contribute to high growth," said Ajay Sahai, CEO and director general, FIEO. Exports rose 11.6% in July and 13% in August, helping to narrow the trade deficit to a less worrying $12 billion a month from $20 billion earlier. Last year's $196-billion record trade deficit pushed the current account deficit to a high of 4.8% of GDP, dragging the rupee all the way down to 68.81 to the dollar.

The Indian currency has been strengthening over the past two weeks and ended at 63.48 to the dollar on Friday.

"We are happy. Exports may actually touch $335 billion, growing at the current pace," said a commerce department official. India's exports traditionally rise in the September-December period because of Christmas, spring and summer demand in the US and Europe, markets that together account for India's 30% of exports. Weak demand from those regions led to exports declining 4.7% last year. But that's likely to turn around with the US economy growing 2.5% in the quarter ended June, better than the 1.7% growth initially estimated. The euro zone emerged from recession after nearly two years, growing 0.3% in the second quarter of 2013.

Engineering has led the rise. India's third-biggest export sector that contracted in July when overall exports rose 11.6%. Engineering exports are expected to rise a cumulative 22% in the four months starting September to $21.5 billion against $17.1 billion last fiscal. These exports, which don't benefit much from rupee depreciation because of the high import content, rose 2% in August.

The industry is divided about prospects in the coming months. "We are expecting a growth of about 10% only," said Aman Chadha, chairman, Engineering Export Promotion Council. Steel, which contributes about 60% to engineering exports, now costs 8% more, he pointed out. Sanjay Budhia, MD of the Patton Group, is more optimistic.

So the current projection for exports this year is $335 billion.

The RBI Handbook of Statistics on the Indian Economy has been updated.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Prem » 20 Sep 2013 02:50

Suraj wrote:b]So the current projection for exports this year is $335 billion.[/b]The RBI Handbook of Statistics on the Indian Economy has been updated.


With Invisisbles, annual inflow will be close to Half a Trillion. Onlee if they spend it wise and not wate or steal it.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Suraj » 20 Sep 2013 04:14

Very much so. Actually the total was over $500 billion two years ago. Invisibles (i.e. services trade) data is in the handbook in Table 144.

The last few lines provide the Invisibles Net (I to IV) data, which is the invisibles trade balance, showing $224 billion receipts, and $116 billion payments, for a balance of +$108 billion. For 2012-13, merchandise exports were $303 billion and invisibles receipts were $224 billion, for a total of $527 billion. Assuming invisibles receipts this year of $230 billion, and exports of $335 billion, that is $565 billion in gross inflows.

The primary problem is the -$190 billion merchandise trade deficit. The +$110 billion on the invisibles front does not compensate for that fully. The good news on the trade front is that the monthly merchandize trade deficit is down to ~$12 billion/month from $20 billion. Strengthening exports and maintaining the merchandise trade deficit at $125 billion or so (i.e. $10 billion deficit/month) will address the BoP pressure.

Exports of $335 billion should bring us near the list of top 15 exporting countries. We're currently #19 on the 2012 list.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby vina » 20 Sep 2013 13:22

Hmm. Sensible no nonsense policy from Raghuram Rajan the new RBI Guv. A sharp focus on inflation with a clear warning shot to the Dilli Baboons and Mantris to reign in the fiscal deficit by the 25bps repo rate hike and while easing up on the emergency liquidity tightening on the short end of the yield curve, with an attempt to get the steeply downward sloping yield curve (which most folks reading bond markets will read as the market predicting a recession), to a normal upward sloping yield curve .

The commentary was pretty straight forward. We will see how things evolve with the fiscal steps and the structural reforms that the govt needs to undertake, including he said Diesel prices , if they aren't forthcoming, we will bang the interest hammer down hard , do Dilli Baboons get your act together and get the interest rate hikes (Rajan talked about inflation remaining higher than expected as the hitherto suppressed inflation is let out via the diesel price hikes).

Market of course being the thundering herd of wildbeests panicked and went into a sooside mode as the report of a hike in repo rate hit , but I guess will sort of recover when the "analysts" and the "strategist" monkeys get their act together and get their wits around them.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Theo_Fidel » 20 Sep 2013 19:18

^^^
None of this will matter, and no magical person can fix anything as long as our savings rate remains at 30%. It needs to get to 40%. As always it is about what we can save and invest. All else is maya….

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Re: Indian Economy - News & Discussion 27 May 2012

Postby vera_k » 20 Sep 2013 19:48

Inflation needs to be brought down so savings can increase. So the interest rate hike helps in that respect. It will also support the rupee.

Theo_Fidel

Re: Indian Economy - News & Discussion 27 May 2012

Postby Theo_Fidel » 20 Sep 2013 20:26

Those things may help marginally. But a 10% swing in savings will take a lot more. A low inflation rate will also mean a low interest payout. A low interest means more borrowing less saving. I don't think it is clear one leads to the other.
Last edited by Theo_Fidel on 20 Sep 2013 20:30, edited 1 time in total.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby vishvak » 20 Sep 2013 20:29

Saving in face of mismanagement and inflation- isn't there a lot wrong with the picture. More inflation will mean more mismanagement and less value of savings.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Suraj » 20 Sep 2013 21:26

The problem with Rajan's, or for that matter his predecessor Subbarao's, policies is that it takes two hands to clap. The government has not shown much willingness to resort to prudence. He can attempt to vigorously talk and place some public pressure on GoI, but I don't see that having any effect when it comes to prudent policymaking in an election year.

Once the honeymoon period of Rajan's stint wears off, he's likely to face the same hurdles Subbarao struggled valiantly against - a spendthrift government unwilling to recognize the need to invest productively, depending on topline growth to generate revenues that papered over problems. With revenue growth at a mere 7-8% so far this quarter - and those are nominal figures - there's really not much headroom for spending largesse in the face of an existing fiscal deficit burden.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Prasad » 20 Sep 2013 21:53

Like another farm loan waiver scheme right before the lok sabha elections next year you mean?

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Vayutuvan » 21 Sep 2013 01:23

Theo_Fidel wrote:^^^
None of this will matter, and no magical person can fix anything as long as our savings rate remains at 30%. It needs to get to 40%. As always it is about what we can save and invest. All else is maya….

Even that is maya. Without any increase (at least non-decrease) in productivity and efficiency - both industrial and market - all else goes "mAyam" (disappears).

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Re: Indian Economy - News & Discussion 27 May 2012

Postby vina » 21 Sep 2013 05:43

Theo Fidel wrote:Those things may help marginally. But a 10% swing in savings will take a lot more. A low inflation rate will also mean a low interest payout. A low interest means more borrowing less saving. I don't think it is clear one leads to the other.


Not true. What matters, is that inflation expectations are right now unhinged, and that discourages savings. For eg, why would you put money in a bank which pays 8.75% (and pay a 30% tax on interest), when the inflation is running at 9.5% at CPI levels. So, you have NEGATIVE real interest rates right now, which is a big disincentive to savings.

What Raghu is trying to do and said very clearly, the focus is on the Internal Value of the Rupee , in Inglees, it means,
"Dilli Mantri and Baboons, get the friggin fiscal deficit down and dont expect me to print notes for your profligacy. If you don't I will significantly increase the cost of your borrowings and kick you in the gonads"
.

Now, with Raghu clearly anchoring the inflation to low levels, you will see real positive interest rates and that will see savings shoot up and kick start the virtuous investment cycle . He is clearly focused on doing all the right things, like getting the SLR down,so that the banking system doesn't finance the govt bonds (and hence can lend to the public), and of course, Treasury Indexed Notes (indexed to CPI ) are going to be issued soon, and that will mean , that the RBI has to focus absolutely on inflation, because, the govt cannot any longer, inflate it's way out of debt obligations and screw the savers in pursuit of doling out "welfare" to fetch votes via profligacy .

India's problem in the last 5 years has fundamentally been inflation that has been stoked by the fiscal profligacy of the UPA. This is a classic textbook case of what will happen if you have unsustainable deficits. A clear response to the loony nutcases like Karat, Yechury and other CPI-M and JNU ding-dongs who campaigned against the FRBM act and wanted it to be breached. Well, the Congress did exactly that , and you see what happened with the Macro economic stability.

Now of course the CPI-M and JNU ding dongs will scream that they meant that they should collect more taxes while spending away to kingdom come , but fact remains they pushed for higher deficit spending, it is on record.

Another example of the broken leftist/socialist/communist JNU Jholawala kind of policies that brought ruin. A note.. If there is anyone with any connection to the noxious politics of Bengal, JNU, DSE/ISI jholwalas within a mile of the finance/economics ministries , take your money and run.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Suraj » 21 Sep 2013 12:07

There's nothing unique about what Rajan is doing. Subbarao was also an inflation targeter. The problem does not lie at the RBI's end, but that of the government. While the RBI is nominally independent, but GoI can make their life difficult by being unwilling to resort to fiscal prudence. There's no history of such behavior on their part in the last 9 years. A war between RBI and FinMin would be very negative for the economy, and RBI will not have any political backing; Rajan can just as easily be dismissed and demonized as some western stooge then, as GoI pushes back against RBI's efforts to impose fiscal discipline. I fear this is what will happen.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Atri » 21 Sep 2013 20:17


SwamyG
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Re: Indian Economy - News & Discussion 27 May 2012

Postby SwamyG » 21 Sep 2013 22:15

Questions to gurus of economics, is it really possible to do away with "Income Tax" like Swamy suggests?

Theo_Fidel

Re: Indian Economy - News & Discussion 27 May 2012

Postby Theo_Fidel » 21 Sep 2013 23:43

Ok. Here is the RBI charted inflation rate over the years. The recent years are missing but undoubtedly high.
The peak for household savings share came in 1998-2000 it looks like.

Image

Here is the savings rate, again from RBI going back to 1951! Note the rising rate through all the inflation spikes and the economic turbulence. Note the recent dip, esp. in PSU savings. These dinosaurs dominate large chunks of our economy, binding our hands.

Look at the extreme run up in household savings from 1991-2004.
The period when folks were quite nervous about the economy and saved every rupee they could.

There is no easy direct correlation between inflation and savings.
My suspicion is just lowering inflation alone may not get us to 40% savings rate. And charts bear out the complex nature of savings.

Image

Here is fiscal defict. Again from RBI.

Image
Last edited by Theo_Fidel on 22 Sep 2013 22:35, edited 1 time in total.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby vera_k » 22 Sep 2013 02:59

What was the bank rate, and therefore the deposit rates during that period?

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Re: Indian Economy - News & Discussion 27 May 2012

Postby ArmenT » 22 Sep 2013 03:11

SwamyG wrote:Questions to gurus of economics, is it really possible to do away with "Income Tax" like Swamy suggests?

Yes, provided there are other ways to gather revenue. For instance, there are quite a few states in the US that don't have income taxes. Among them are Alaska, Nevada, Florida, Texas and New Hampshire (maybe 3 or 4 more as well). However, they make it up in other ways. For instance, Alaska charges the oil companies heavy taxes to run pipelines across the state, Nevada taxes the casinos and brothels, Texas and New Hampshire have very high property tax rates etc. Some other states charge higher fuel tax, sales tax etc. to make up the difference.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby Gus » 22 Sep 2013 03:19

well we don't have state income taxes in india for any state.

my understanding is, income taxes are collected centrally and gets pooled in with other funds coming out of states and then gets apportioned. better governed states subsidize pooly governed states and states have not much say in these things.

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Re: Indian Economy - News & Discussion 27 May 2012

Postby SwamyG » 22 Sep 2013 06:21

ArmenT wrote:
SwamyG wrote:Questions to gurus of economics, is it really possible to do away with "Income Tax" like Swamy suggests?

Yes, provided there are other ways to gather revenue. For instance, there are quite a few states in the US that don't have income taxes. Among them are Alaska, Nevada, Florida, Texas and New Hampshire (maybe 3 or 4 more as well). However, they make it up in other ways. For instance, Alaska charges the oil companies heavy taxes to run pipelines across the state, Nevada taxes the casinos and brothels, Texas and New Hampshire have very high property tax rates etc. Some other states charge higher fuel tax, sales tax etc. to make up the difference.

Saar, there is always federal taxes. I am wondering about the feasibility. And, really how many pay the taxes?
Last edited by SwamyG on 22 Sep 2013 10:51, edited 1 time in total.

gakakkad
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Re: Indian Economy - News & Discussion 27 May 2012

Postby gakakkad » 22 Sep 2013 08:29

i have not yet seen swamy's video ...but it is feasible to do away with personal IT for the time being at least...only 10-12% of indian population pay IT..Those who don't are either too poor , or are rich people with too clever accountants...the personal IT revenues were about 2 lakh crore (USD 25-30 BILLION)...peanuts anyway...if we do away with NREGA and FSB we don't even need to find an alternate revenue source if we do away with personal IT..

it has a possibility to flare up inflation as you might have more liquid money in the market... so if u do away with taxes u must ensure that it increases the household savings rate and not household consumption...

IMHO what can be done is to start a compulsory household saving's scheme ...a person will need to save the money in a government bond of value equal to the Income tax instead of paying the tax...eg if guy has an annual income of INR 20 lakh and his IT comes to 4 lakh INR,instead of paying 4 lakh INR as IT , he ll have to invest it in an government approved long term investment scheme ...(like the provident fund)..that can re-direct IT money to household savings,rather than increase in market liquidity...


IMHO BJP need not indulge in any gimmick of this sort...there fiscal performance from 1998-2004 was excellent... decently management of public finances would get em through...


ADDED later..a decent idea would be compulsory investment in infra bonds..all the tax money would be converted to long term infra bonds...the government compulsorily uses it for infra building onlee..it would however convert what is presently tax revenue ,into an internal debt of sorts...but al least it would assure that it is used wisely...
Last edited by gakakkad on 22 Sep 2013 08:39, edited 1 time in total.

Theo_Fidel

Re: Indian Economy - News & Discussion 27 May 2012

Postby Theo_Fidel » 22 Sep 2013 08:32

Income tax is the only progressive tax out there. I find it odd to eliminate it when only about 3% of India pays income tax. So who exactly would benefit. And what would be the benefit if any. One suspects as usual SS has not thought it through and and is supplying talking points he heard from some where.

Edit 2.77% according to this article.

http://www.deccanherald.com/content/187 ... ation.html

Suraj
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Re: Indian Economy - News & Discussion 27 May 2012

Postby Suraj » 22 Sep 2013 08:53

A proposal to eliminate income tax sounds... absurd. Sure, maybe a small proportion of the population pays it, and the revenues may only equal the expenditure on a few well known welfare programs. But we've run a budget deficit almost every year, throughout history! Eliminating a source of revenues strikes me as at best a rhetorical or ideological matter. The most practical public policy debate in this matter today ought to be balancing the budget and running a surplus, NOT fancy proposals on eliminating income or some other tax. If GoI had been running a budget surplus for a few years such a proposal might be an interesting policy debate. But not right now, and political parties have no business wasting their time on such fantasies.

Theo_Fidel

Re: Indian Economy - News & Discussion 27 May 2012

Postby Theo_Fidel » 22 Sep 2013 09:27

vera_k wrote:What was the bank rate, and therefore the deposit rates during that period?


Vera,

That would be an interesting data point.

Please post if you find it.

Vayutuvan
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Re: Indian Economy - News & Discussion 27 May 2012

Postby Vayutuvan » 22 Sep 2013 10:00

vina wrote: leftist/socialist/communist JNU Jholawala kind of policies that brought ruin. A note.. If there is anyone with any connection to the noxious politics of Bengal, JNU, DSE/ISI jholwalas within a mile of the finance/economics ministries , take your money and run.

CPI-M blahnk blank JNU DingDongs Blah
Is this thread turning into a political economy one or what? But then moi is not an admin. Chalo dekhenge humre Raghu kya karega.


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