Indian Economy News & Discussion - Aug 26 2015

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

Post by Marten »

Dipanker wrote:Formal economy too took a hit of 0.5% in the first year of demon if one goes by govt. numbers, and 0.9% if by IMF estimate.
Obviously they do not teach Math at the Commie schools -- this supposed hit is to growth, not to the economy itself. And even that projected hit of 0.5% was to the projected growth for THAT quarter, not to the year.

So how about sharing the actual numbers, Dipankar?
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Suraj »

Dipanker wrote:Formal economy too took a hit of 0.5% in the first year of demon if one goes by govt. numbers, and 0.9% if by IMF estimate.
Source please.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Suraj »

kiranA wrote:The gloom is due to informal sector hit badly by demon. The formal sector in india with the exception of export oriented IT and few large MNC is still just crony capitalism and represents bureacrat-businessman collusion. So growth in formal sector though maybe good is not celebrated that much.
The irony within your post is outstanding. You complain that the formal economy is mostly 'crony capitalism' and 'bureaucrat-businessman collusion'. And what do you think 'informal economy' is ? Every last business owner in the 'informal economy' as you call it, is a tax evader. They also ignore all worker benefit laws. No formal salary and overtime contract. No pension plan contributions. No formal severance. No DA/HRA etc. All of this by choice .

Let them eat their losses, or contribute to PMGKY. No one is entitled to avoid taxes. And no, 'too many rules and regulations' is not an excuse. If you break the rules, you better be prepared for its consequences.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by SaraLax »

Marten wrote:
Dipanker wrote:Formal economy too took a hit of 0.5% in the first year of demon if one goes by govt. numbers, and 0.9% if by IMF estimate.
Obviously they do not teach Math at the Commie schools -- this supposed hit is to growth, not to the economy itself. And even that projected hit of 0.5% was to the projected growth for THAT quarter, not to the year.

So how about sharing the actual numbers, Dipankar?
Let us teach Dipankar about a real world example of 'Economic De-growth' or so called 'Economic Depression' .. using a communist ruled country like Venezuela as example..... Shall we ?.
Remember that Venezuela has one of the largest proven reserves of oil in the world. Now go ahead and read the tyranny being caused by a mega-ego infested Communist ruler of Venezuela on his own people.

Does Dipankar know that the communist ruled 'pure socialistic policy induced victim of misery' Venezuela is in its 3rd continuous year of economic depression currently ?. In 2016 - Venezuela's economy shrunk by 18.6 % and the inflation in Venezuela is currently bordering 800%. Nearly 37 people are dead in the latest bout of ongoing protests against the Socialist Communist tyrant ruler of Venezuela - Nicolas Maduro !. Hunger, poverty, protests, daily riots are sky-rocketing since last 3 years while economy has completely collapsed due to continuing economic depression i.e de-growth since 2014. Maduro had announced a state of emergency amid chronic food shortages across Venezuela last year. The depraved foot soldiers of Maduro in the 'Supreme Court of Venezuela' dissolved the National Assembly (with lots of opposition members elected to this assembly) in March 2017 and took over its legislative powers. Maduro is yet another classic Communist tyrant ... greedily holding on to power against the protests of his own country's people suffering starvation, overriding the constitution with illegal laws, leading to large numbers of deaths among the continuously protesting common man and unable to provide any solutions for the problems of his country.

Last week - Students in Venezuela destroyed the statue of supreme comrade Hugo Chavez (the ruler before Nicolas Maduro), tore it down and dragged it on the streets because in the words of those same students .. "Chavez played an important role in destroying their future ....".

Folks need to remember that Chavez came to Kolkata in 2005 and he was celebrated like a god by the atheist communists in India & by the 'tallest' leaders of Indian communist movement like Jyoti Basu (poverty-generator & industry_de-nuder_par_excellence prince of West Bengal), Prakash Karat, the then WB CM Buddhadeb Bhattacharjee - the silent over-seer of Nandigram Massacre of the protesting common man of West Bengal !, film director Mrinal Sen and many more people of communist ilk. Maybe our Dipanker would have also been waving some communist red rag flag in that 20 KM cavalcade procession of Hugo Chavez in Kolkata !.

Surely soon enough Nicolas Maduro will either be hosted on a lamppost or will flee out of his country to some other nearby communist hell-hole like Cuba or so -- for how long can he keep killing his own fellow protesting citizens who are fighting to save their dignity and not for some other trivial reason ! . The army will turn back on Maduro and vanquish him ... one way or the other.

Even Indian companies are affected by this economic collapse in Venezuela. The Venezuelan government is unable to pay and yet to pay Dr.Reddy's pharmaceuticals a huge sum of INR 430 Crores for the generic medicines that they purchased on credit from the company. Dr.Reddy's eventually wrote-off that 430 Crores amount in last May 2016 (but still pleading to Maduro to get back this money for the supply of generic medicines to Venezuela) and its net profit for Q4 of 2016 plunged on yearly comparison basis by 80% !!!.

What a shame ... communists are a scourge wherever they are ... either spreading out poverty uniformly among the people they rule, refusing to quit even after heaping misery upon misery on the suffering common man, raping, killing protesters and using violence on them if they protest for regaining their human dignity, when they protest for food, protest to overcome even toilet paper shortages (as it happened in Venezuela).

Does the CPI(M)'s magazine - 'People's Democracy' (joke of a name !) write about how communist rulers are killing the common man of Venezuela and shredding the basic human dignity of venezuelans ?.

Folks like Dipanker & other people of that ilk - who support communist ideology need to hang their own heads in shame ... because this violent killing and put-down of common man's protests for his own dignity has repeatedly happened in many communist ruled countries over the last 50 years !.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Gus »

Shell companies used to roundtrip about 3K crore

http://mybs.in/2UVfNOK
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by kiranA »

Suraj wrote:
kiranA wrote:The gloom is due to informal sector hit badly by demon. The formal sector in india with the exception of export oriented IT and few large MNC is still just crony capitalism and represents bureacrat-businessman collusion. So growth in formal sector though maybe good is not celebrated that much.
The irony within your post is outstanding. You complain that the formal economy is mostly 'crony capitalism' and 'bureaucrat-businessman collusion'. And what do you think 'informal economy' is ? Every last business owner in the 'informal economy' as you call it, is a tax evader. They also ignore all worker benefit laws. No formal salary and overtime contract. No pension plan contributions. No formal severance. No DA/HRA etc. All of this by choice .

Let them eat their losses, or contribute to PMGKY. No one is entitled to avoid taxes. And no, 'too many rules and regulations' is not an excuse. If you break the rules, you better be prepared for its consequences.
One can have ones own view on the immorality of formal/informal sector. but i was just explaining the current poor sentiment in the economy. The vast majority of indians are employed by informal sector however immoral it may be. They are hurting so india is getting hurt and sentiment is poor. Formal sector was not hurt by demon immediately but they depend on the demand from informal sector(apart from export oriendted) and will be hurt soon. It will take a year to 2 years to restore to normalcy from demon.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by gakakkad »

apart from "poor sentiment" and other subjective parameters , is there any objective data to indicate that there is a problem and it ll take 2 years to recover? How was 2 years derived ?
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by gakakkad »

@ Suraj , you were one of the proponents of ICOR. You think the downward trend in Gross fixed capital formation and savings as a % of GDP would continue ? would we say that there has been some delinking of ICOR to growth rate in the last few years?
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by kiranA »

gakakkad wrote:apart from "poor sentiment" and other subjective parameters , is there any objective data to indicate that there is a problem and it ll take 2 years to recover? How was 2 years derived ?
Poor sentiment is not subjective. No companies are investing in capacity for private consumption. Only government demand is being met.
As of now re monetization in the desired mix of denominations is not complete. Based on the current pace I speculate about July end for money to remonetize. Now for this cash to accumulate and become capital will easily take another year. so 1-2 years seems to be fair guess.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by A_Gupta »

^^^ The trends that make for gloom about the economy precede demonetization, do they not?
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by geeth »

[quote][Every last business owner in the 'informal economy' as you call it, is a tax evader. They also ignore all worker benefit laws. No formal salary and overtime contract. No pension plan contributions. No formal severance. No DA/HRA etc. All of this by choice . quote]

That is a generalised statement, which, even if true cannot be blamed on the 'informal sector'

For the Utopian scenario to happen, where everyone complies by all rules, the Govt has to create a conducive environment for the business to flourish. Then they will comply with rules and regulations. Here is a scenario where the person who is supposed to ensure the compliance is often the one who encourages to break the law for a bribe. And many a time you get into trouble if you follow the rule and NOT bribe. More often than not, one ends up following the rule and pay a bribe too.

The state of most of the small and medium businesses are pathetic. In such a scenario, they often try to make both ends meet instead of following each and everying rule in letter and spririt.

The govt and its servants should understand that a person starts a business to make some money for himself. Collecting taxes, giving employment to few people are incidental to that cause. One may argue that when a business is started, it is undestood that it will abide by all the rules. But there are ways to get away with it and people do it. Reduce the incentives for people to break rule...viz., reduce tax rates, reduce the number of regulations, liberalised views on compliance, incentives for compliance etc. Without that, nothing is going to change. If the rules are strict and impractical, fraud will only increase.

This is my view from practical observation
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Suraj »

kiranA wrote:One can have ones own view on the immorality of formal/informal sector. but i was just explaining the current poor sentiment in the economy.
No sorry, enough with trying to make an objective situation subjective. It's not "one's own view of immorality". Every business owner in the informal sector is breaking the law. That's not a subjective view. It's an objective, legal one. You cannot even talk about "good law vs bad law", because your fellow citizens are following it. Your opinion on the supposed corruption in formal economy alone is the subjective "one's own opinion" here.
kiranA wrote:The vast majority of indians are employed by informal sector however immoral it may be. They are hurting so india is getting hurt and sentiment is poor.
Again, this is your opinion, not backed up by data. Demonetization, by every available indicator, including political results, was an outstanding success.
kiranA wrote:Formal sector was not hurt by demon immediately but they depend on the demand from informal sector(apart from export oriendted) and will be hurt soon. It will take a year to 2 years to restore to normalcy from demon.
So let it be. The entire informal sector needs to be disclosed and taxed. They need to pay back taxes, current due taxes, future taxes, potential pension contributions, severance and any other costs. Their workers may sue for them, and they need to make up for that.

Here's the thing about breaking a law by evading taxes, workforce laws, severance laws, and more: you're gambling that the cost of breaking it is less than the cost of compliance. It's a choice someone makes to run their business. But always be aware that the gamble could go wrong. When it goes wrong, you should own up to it, rather than try to win sympathy.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Suraj »

geeth wrote:That is a generalised statement, which, even if true cannot be blamed on the 'informal sector'
No, it's a cost-benefit argument. Feel free to run a business informally. Don't pay taxes. Don't pay overtime. Don't pay minimum wage. Don't pay DA/HRA equivalent. Don't pay severance. You get all those perks of not following the law. While running the business you get to use public utilities - road, water, electricity infrastructure, all paid using taxes collected solely from those who are actually paying those taxes.

But remember, when the law gains teeth, or in the case of political will, something like demonetization is done, your cost benefit calculation goes out of the window. NO ONE owes you for that calculation breaking down. Every business owner who made the informal vs formal choice should think carefully about this.
geeth wrote:This is my view from practical observation
So is mine. I'm not being idealistic at all. I'm stating that anyone who avoids taxes is making a practical decision, and that if the assumptions in that decision no longer hold, it's his own problem. As you yourself stated, the decision between formal vs informal operation is a choice. So don't look for sympathy when the decision turns out a bad one.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Singha »

http://www.ndtv.com/india-news/cbi-unea ... eststories

kolkata is reported to have some specialized CA groups who deal in this business of creating fake cos and creating a paper trail of fake expenses, invoices etc to cover up tax evasion and money diversion. good that CBI is on their tail but could run up against protection of parts of state guv are in their pay

during demo these guys were in hot demand.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by geeth »

[quote][So don't look for sympathy when the decision turns out a bad one.quote]

Do you mean those who indulge in tax evasion dont know the risks? Ofcourse they do. And they are confident they can get away with it. How many of the Jewelry shops pay the taxes? How they are able to do it?

Things will remain same as long as they can do it at get away with it. Only way forward IMO is incentivise - That is, make it more profitable to comply that not. It is going to be impractical otherwise.

The law catching up with the defaulters is a joke....particulary when (in your own words) almost all are defaulters! There is definitely something wrong with the law. Tweak it and make it compliance friendly. Till then fraud will be predominent
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Suraj »

geeth wrote:Things will remain same as long as they can do it at get away with it. Only way forward IMO is incentivise - That is, make it more profitable to comply that not. It is going to be impractical otherwise.
That is exactly what demonetization is - there's no better cost calculus than "deposit money and it will be worth something , or keep it and it's worth Rs.0" :-)
geeth wrote:The law catching up with the defaulters is a joke....particulary when (in your own words) almost all are defaulters! There is definitely something wrong with the law. Tweak it and make it compliance friendly. Till then fraud will be predominent
I agree with you but in a different way. It's not the law that's a joke. It's simply that enforcement on such a scale is not cost beneficial or viable. That's why demonetization worked so well - it simply moves the onus upon the businessman. Any regular disclosure scheme is voluntary, i.e. the businessman gets to choose whether or not to participate, and they have the option to continue to break the law if needed. Demonetization is essentially involuntary disclosure. That's the political genius of the act. Anyone could come up with it, but it takes a real political leader to execute it without getting thrown out of office. That much, we have already accomplished.

IMO, GoI doesn't literally have to chase down every tax evader. They can just act asymmetrically as they did with demonetization. I would strengthen worker severance laws and give workers the right to easily sue for lack of minimum wage, severance or other benefits. Such a law, if demonstrated to work quickly, would ensure rapid compliance from business owners.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by geeth »

[IMO, GoI doesn't literally have to chase down every tax evader. They can just act asymmetrically as they did with demonetization. I would strengthen worker severance laws and give workers the right to easily sue for lack of minimum wage, severance or other benefits. Such a law, if demonstrated to work quickly, would ensure rapid compliance from business owners.
First, the statement that demonitization worked wondefully is not true. Those who could not hide their huge cash were the ones got caught. For each one who got caught, hundreds escaped, because their cash was at 'manageable' level.
This is the same with other defaults as well. Those who are defaulters doesnt mean they completely avoid paying tax. They do pay, but manage by paying a fraction of it. They do comply with labour rules, but only on paper. Are they not complying? Hmmm yes....Do they actually?Hmm..no. This is the situation.

Make them do it (that is,compliance ) happily.
Eg., There will be certain scenarios in GST regime, whereby paying the tax will make the product cheaper than not paying it. In such case, the seller will insist on selling the goods with tax and happily remit it to the Govt, because that is more profitable to him. A win-win situation. In the long run, this only is going to work.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Suraj »

geeth wrote:First, the statement that demonitization worked wondefully is not true. Those who could not hide their huge cash were the ones got caught. For each one who got caught, hundreds escaped, because their cash was at 'manageable' level.
We are talking about ~Rs.16,00,00,00,00,000 of cash, backing economic activity approx 25x more than that . Anyone with 'cash at manageable level' is too small fry to matter. Binary statements about success or failure are made by those with no real world policymaking. Actual policymaking uses an approach similar to developing herd immunity - just get enough big fish to comply and see compliance develop down the supply chain. Sure, the average kirana guy still operates in cash and still doesn't pay taxes. He's also such a small fry that he's not a topic of importance.
geeth wrote:Those who are defaulters doesnt mean they completely avoid paying tax. They do pay, but manage by paying a fraction of it. They do comply with labour rules, but only on paper. Are they not complying? Hmmm yes....Do they actually?Hmm..no. This is the situation.

Make them do it (that is,compliance ) happily.
Or... make it such that the cost of non-compliance is immediate and total ruin, i.e. demonetization. Both carrots and sticks have a place.

PS: please stop breaking the quoting formatting :-)
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by geeth »

I disagree that those with cash at manageable levels are small fry. Individually yes, but collectively they were the bulk defaulters.

Personally I feel GoI should have closed the loopholes in the PAN card. There were too many of them floating and was too easy to get one,without any verification. The result was that most of the businesses are/were fraud. Be it income tax, salestax,tenders or anything. With such a state of affairs, the Govt is going to have a wild goose chase only. With the pan card getting linked to Aadhar,things will be better, provided SC doesnt put a spoke in the wheel.

The rule of stick is only going to take you thus far. Govt should get over the hangover that a business is being run to collect taxes for them only. Atleast that is the attitude of some of the babus. They should do everything to ensure that a conducive atmosphere is created for the business to flourish. That is not the case now.

Tax rates are arbitrary- often revised to cater for cross subsidy or meeting Govt exigencies. If the business goes kaput, they are insensitive.
If you look at all the rules in factory act and labour laws, nobody in MSME can follow it fully. So, bribe and get away.

We can go on and on...there is no end to it. All said and done, Govt has to go a longway to make things business friendly.

P.S: Pls bear with me. Trping from mobile
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Suraj »

geeth wrote:I disagree that those with cash at manageable levels are small fry. Individually yes, but collectively they were the bulk defaulters.
Bulk in terms of number of people (which sounds fine) or value of cash (which doesn't) ? Do you have data for this ?
geeth wrote:Tax rates are arbitrary- often revised to cater for cross subsidy or meeting Govt exigencies. If the business goes kaput, they are insensitive.
If you look at all the rules in factory act and labour laws, nobody in MSME can follow it fully. So, bribe and get away.
So what ? You're making an implicit argument in support of informal activity to save on costs imposed by the government. Sure, that's valid. It's equally valid that when GoI actually cracks down on informal activity to make it formalized, then there should be no complaint about that. After all, one DOES have a choice to go formal or informal, and the consequences of that choice are ones own.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Dipanker »

Suraj wrote:
Dipanker wrote:Formal economy too took a hit of 0.5% in the first year of demon if one goes by govt. numbers, and 0.9% if by IMF estimate.
Source please.
Economic Times
GDP growth at 6.7% (IMF estimates) or 7.1% (Indian government) in 2016-17.
Originally 2016-17 projection was 7.6% (?) which after demon was revised by GOI to 7.1%, that would mean a drop of 0.5%.
IMF estimate is is 6.7% meaning a drop of 7.6 - 6.7 = 0.9%.

Exact figure should be known when govt. publishes the final numbers.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by geeth »

Suraj wrote:
geeth wrote:I disagree that those with cash at manageable levels are small fry. Individually yes, but collectively they were the bulk defaulters.
Bulk in terms of number of people (which sounds fine) or value of cash (which doesn't) ? Do you have data for this ?
geeth wrote:Tax rates are arbitrary- often revised to cater for cross subsidy or meeting Govt exigencies. If the business goes kaput, they are insensitive.
If you look at all the rules in factory act and labour laws, nobody in MSME can follow it fully. So, bribe and get away.
So what ? You're making an implicit argument in support of informal activity to save on costs imposed by the government. Sure, that's valid. It's equally valid that when GoI actually cracks down on informal activity to make it formalized, then there should be no complaint about that. After all, one DOES have a choice to go formal or informal, and the consequences of that choice are ones own.
Bulk in terms of both numbers and volume. I dont have any data because it is not possible to get data on illegal activities. But I know it is true, though you may have your doubts. Govt could not capture a large part of illegal money because of loopholes, though most of the money has come back to banks. In short, true identity of the sinner could not be determined.

What I made is a statement of fact and not support for illegal activity. People who indulge in illegal activity knows the risks involved more than anybody else. Those who have a complaint like Binoy Viswam has approached the SC for legal remedies. If the SC upholds their complaint, then the Govt is wrong. I personally feel Govt is not wrong and it is within their right to correct anomalies in the system like issue of PAN card.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Suraj »

Dipanker wrote:
Suraj wrote: Source please.
Economic Times
GDP growth at 6.7% (IMF estimates) or 7.1% (Indian government) in 2016-17.
Originally 2016-17 projection was 7.6% (?) which after demon was revised by GOI to 7.1%, that would mean a drop of 0.5%.
IMF estimate is is 6.7% meaning a drop of 7.6 - 6.7 = 0.9%.

Exact figure should be known when govt. publishes the final numbers.
Projections from before demonetization don't really mean a thing. In any given year, the number gets 'revised' up and down several times, before the January of the fiscal year. Let me explain:

The CSO follows a clear calendar of GDP reporting. For everyone's benefit, I'll quote the policy from the source:
Statement on Release Calendar of Annual and Quarterly Estimates of GDP and policy of revision of Annual &Quarterly Estimates of GDP and related Macro-economic Aggregates
In summary, the annual calendar is as follows:
Jan 7: First advance estimate
Feb 28: Second advance estimate (on Budget Day, to be revised)
Provisional: 31 May
First Revised: 31 January (subsequent year)
Second Revised: 31 January (2nd year)
Third Revised: 31 January (3rd year)

There's no official GDP estimate from before demonetization at all. The first one is on January 7. Any number quoted from prior to that date has no official basis.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Suraj »

geeth wrote:Bulk in terms of both numbers and volume. I dont have any data because it is not possible to get data on illegal activities.
Fair enough, then let's agree to disagree at this point, because without additional data to support an assertion, it's not a good argument for this thread. This thread maintains its interest mostly by being 'boring' and full of useful data.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Yagnasri »

From what I have seen. There is hardly any new big time projects. Real estate in many cities and towns is down and that was because a lot of black money supply (from politicos etc) dried up even before DeMo. By down I mean there is no crazy pricings as before. RE sector yet to learn to go for the middle class market in a big way as there is no "charm' in that all are still behind "big projects" with crores of rupees price of each unit.

Most of these things like over borrowings and thereby inability borrow further and financial mess in many corporates is yet to be resolved and can not be resolved anytime soon easily. If anything the old habits are still there. Jio drama is the new one. Huge borrowings and free products at a big loss to "capture" market.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Hari Seldon »

Rob Shiller runs a house price index in the US. Wonder if there's any such for India.

A tempering or cooling down of the overheated realty market would be welcome news for all concerned (except over-leveraged builders and speculators, I guess).
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by geeth »

Suraj wrote:
geeth wrote:Bulk in terms of both numbers and volume. I dont have any data because it is not possible to get data on illegal activities.
Fair enough, then let's agree to disagree at this point, because without additional data to support an assertion, it's not a good argument for this thread. This thread maintains its interest mostly by being 'boring' and full of useful data.
My interest and subsequent posts was due to the assertion that everyone in the informal sector is a defaulter and fraudsters. Is that assertion based on some data?
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by vinod »

A take on India from a UK based investment management firm. They have just come out with a special edition on India.
http://www.hl.co.uk/funds/investing-in-india

This kind of focus on India hasn't been there for a while now. The last time it was, was much before financial crisis of 2008.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by A_Gupta »

https://www.bloomberg.com/gadfly/articl ... y-in-court
According to a study by professional services firm Alvarez & Marsal, a debt-recovery judge in India clears 360 cases a year on average, compared with 2,895 by his counterpart in a U.S. bankruptcy court. In other words, the RBI's efforts to ease strains in Indian corporate debt are likely to confront an already overburdened, ill-equipped, under-staffed, inexperienced judicial bureaucracy with a history of poor productivity.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by A_Gupta »

From 2011:
https://www.bloomberg.com/news/articles ... onal-sport

"India loses 14 trillion rupees ($314 billion) from tax evasion annually, depriving it of funds for investment in roads, ports, and power, says Arun Kumar, author of The Black Economy in India. "
hanumadu
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by hanumadu »

That would be at least 1 trillion of additional GDP in 2011. It should be 2 trillion by now.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Gus »

housing loan rates reduced for new women applicant. 25bps is ~500 rs a month. a construction boom cycle to start for lower middle class homes?

"Under the new government scheme, loans under Rs 30 lakh qualify for affordable housing in which the borrower gets an interest subsidy of Rs 2.67 lakh per annum. " -

this piece is probably for the PM awaz yojana? not clear in the report..

http://www.business-standard.com/articl ... 822_1.html
Upping the ante in the housing loan segment, State Bank of India today steeply reduced its affordable home loan rates by up to 25 basis points, offering a lower rate of 8.35 per cent to new women borrowers.

With around 26 per cent market share, the nation's largest lender is also the biggest player in the home loan segment. Even at the existing 8.60 per cent, SBI offers the lowest rate.

HDFC, the second-largest player in the space, offers loans at 8.65 per cent to women for loans up to Rs 75 lakh and 8.7 per cent for others. Similar is the minimum rate being offered by the largest private lender, ICICI Bank.

As for male borrowers, the state-owned bank said the limited period offer is valid till July 31 and the new rate for the salaried will be lower by 20 bps at 8.40 per cent.

One percentage point is 100 basis points (bps).

Under the new government scheme, loans under Rs 30 lakh qualify for affordable housing in which the borrower gets an interest subsidy of Rs 2.67 lakh per annum.

SBI Managing Director for national banking, Rajnish Kumar said the 25 bps reduction is applicable to new women borrowers who are salaried, while for the non-salaried women borrowers, the reduction is 20 bps.

Similarly, a male salaried borrower can get a new loan at 8.40 per cent, 20 bps lower than the prevailing rate, and a non-salaried male borrower can avail of a loan at 15 bps lower than the current rate, Kumar said.

"This is a huge saving for the borrower as the 25 bps reduction translates into a saving of Rs 530 per month on EMI," Kumar told PTI, adding that the new rates will be effective tomorrow.

Explaining the reason behind the move, which makes its offering the lowest in the industry, Kumar said the bank has seen a hike in home loan enquiries of late and reduction in rates will further help millions of buyers fulfil their dream of owning a home.

Also, the bank expects that the new rates will attract the fence-sitting borrowers to go in for a loan now.

"This is a giant leap to give a fillip to the affordable housing segment keeping the government vision of providing housing for all by 2022," Kumar said.

"A lot of customers are undecided on a new home as rates of the market as well as finance have been high for too long. That should hopefully change now," Kumar added.

With a home loan book of Rs 2.23 trillion, SBI leads the home mortgage segment with 25-26 per cent market share.

He, however, said the new offer may not push up its market share significantly as 45 per cent of its Rs 2.23 trillion home loan book is already under the Rs 30 lakh bracket and the rest of the credit industry is also very aggressive.

SBI is also giving a special offer for construction finance to builders for affordable housing projects.

"This will give a dual push both for construction finance and also for home finance for affordable homes, but the bank did not quantify the reduction," he said.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Suraj »

geeth wrote:My interest and subsequent posts was due to the assertion that everyone in the informal sector is a defaulter and fraudsters. Is that assertion based on some data?
When you're running a business informally, you're by definition not paying taxes, following workforce law, retrenchment laws, contributing to pension and more.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by arshyam »

Another interesting talk by SG at SASTRA from last month. He mentions that the Basel banking norms don't apply to us, as our economy is protected by 3 things: non-convertibility of the rupee, majority Indian ownership of our banking system, and govt ownership of a large part of the banking system which automatically adds a sense of stability to an economy. He makes the case that due to these factors, we should not follow Basel norms in classifying NPAs and rather use a viability test to see if an asset marked as NPA is still one, and try to recover it with some leeway. Toward the end, he mentions the steel industry as an example which has become viable after we slapped anti-dumping duties and increased taxes on imported steel - he is suggesting that instead of the 90-day non-payment test, use the viability test to see if the steel industry is still an NPA. His contention is that the NPA problem is blown out of proportion (China had a 40% NPA burden a few years which they managed), and by using a viability test we can reduce the NPA % to an extent. He didn't say by how much, but that the banks should at least calculate it and see. A lot of other quotes and facts, which regular followers have heard already. A thumbs up to the public sector banking system along with observations on what needs to be improved. QnA at the end was good.

A bit long, but worth a watch if you have the time. Regulars on this thread may please comment on the summary, or better watch it and share your thoughts :). If pressed for time, listen between 20-35 mins elapsed, and the last 15 min (QnA).



Apparently, Prof. Vaidyanathan also gave a talk in the event, will try to post that after I see it. Anyone else welcome to do so :).
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by geeth »

Suraj wrote:
geeth wrote:My interest and subsequent posts was due to the assertion that everyone in the informal sector is a defaulter and fraudsters. Is that assertion based on some data?
When you're running a business informally, you're by definition not paying taxes, following workforce law, retrenchment laws, contributing to pension and more.
That doesn't mean they are necessarily breaking the law.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Avtar Singh »

I really hope India is able to avoid this nonsense from the west;

https://www.rt.com/shows/renegade-inc/3 ... -cleansed/

There was only 1 really successful model in the west; germany founded on the "mighty Mark"
savings (and interest on said savings), investment, productivity, low inflation.
They have been dealt with by the ASEs (Anglo Saxon Elites) via the formation of the ECB.

I may be paranoid but I am sure the americans will want an East India mk2 for India..
The accountant in video posted by arshyam is 100% correct, no need to adopt western economist conventional thinking...
All those sitting in eminent chairs around harvard corner are very dangerous for India.
Suraj
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Suraj »

geeth wrote:
Suraj wrote: When you're running a business informally, you're by definition not paying taxes, following workforce law, retrenchment laws, contributing to pension and more.
That doesn't mean they are necessarily breaking the law.
You can't avoid paying taxes and not break the law. You can't even 'pay some taxes' or 'follow some labour laws'. Either the business owner follows them or he doesn't. And when he doesn't, he's breaking the law.

Every business owner trots out the same argument about how Govt is corrupt, complex laws etc etc. There's nothing in any of such an argument that some salaried person does not know or appreciate. The bottomline is that running a business is a voluntary decision, and choosing to run it informally and conceal income is also voluntary.

Those taxes being withheld hurts *everyone*, regardless of how inefficiently they are being used. The businessman uses the same roads, water and power infrastructure as any salaried person. In fact most of them use it much more. They should pay their share of income taxes, corporate and payroll taxes. It's perfectly fine to argue for low income/payroll/corporate taxes, but not paying them in the first place is breaking the law. There are no shades of grey, at all.
Gus
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by Gus »

since when did evading taxes became a birthright?

a shopowner's/businessman's argument of "govt not delivering services blah blah, I have to grease palms blah blah, therefore I have to evade taxes" cannot be an excuse.

after all, the salaried class also suffers the same govt and still pays TDS. So please stuff it about tax evasion. This is getting tiring.
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by gakakkad »

Avtar Singh wrote:I really hope India is able to avoid this nonsense from the west;

https://www.rt.com/shows/renegade-inc/3 ... -cleansed/

There was only 1 really successful model in the west; germany founded on the "mighty Mark"
savings (and interest on said savings), investment, productivity, low inflation.
They have been dealt with by the ASEs (Anglo Saxon Elites) via the formation of the ECB.

I may be paranoid but I am sure the americans will want an East India mk2 for India..
The accountant in video posted by arshyam is 100% correct, no need to adopt western economist conventional thinking...
All those sitting in eminent chairs around harvard corner are very dangerous for India.

true...flawed theories based on flawed math...
geeth
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Re: Indian Economy News & Discussion - Aug 26 2015

Post by geeth »

Suraj wrote:
geeth wrote: That doesn't mean they are necessarily breaking the law.
You can't avoid paying taxes and not break the law. You can't even 'pay some taxes' or 'follow some labour laws'. Either the business owner follows them or he doesn't. And when he doesn't, he's breaking the law.

Every business owner trots out the same argument about how Govt is corrupt, complex laws etc etc. There's nothing in any of such an argument that some salaried person does not know or appreciate. The bottomline is that running a business is a voluntary decision, and choosing to run it informally and conceal income is also voluntary.

Those taxes being withheld hurts *everyone*, regardless of how inefficiently they are being used. The businessman uses the same roads, water and power infrastructure as any salaried person. In fact most of them use it much more. They should pay their share of income taxes, corporate and payroll taxes. It's perfectly fine to argue for low income/payroll/corporate taxes, but not paying them in the first place is breaking the law. There are no shades of grey, at all.

A business having a turnover of less than 10 lakhs per annum need not have salestax registration
Establishments employing less tha 10 people need not contribute to ESI
Establishments employing less than 20 people need not contribute to PF
Less than 1.5 crore turnover, no excise duty

The list is long. These are some of the examples.

Mind you, these people who are not required to pay taxes or contribute to labour welfare are allowed to use the road /rail and other infrastructure legally.
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