Indian Economy News & Discussion - Nov 27 2017

csaurabh · Post by **csaurabh** » 12 Aug 2020 14:54

Yeah they can be alternately sourced, but the cost?
A typical industrial camera from China would cost 1/4th to 1/10th that of a typical western product.
That is why we are buying from China in the first place!

pankajs · Post by **pankajs** » 12 Aug 2020 15:24

The equations are not so simple ....

If it is a major ingredient that contributes 20% of the price of the final product, a 50% increase in cost from an alternate source is going to jack up the price by 10% [80 + 30 (20 x 1.5) / 100 = 110/100]

OTOH, if it is a equipment that is used to produce a million units of an item and contributes 1% of the final price, a 10x increase in cost from an alternate source is going to jack up the price by 9% [99 + 10 (1 x 10) / 100 = 109 / 100]

Therefore, in the above scenario, a 50% increase in cost of a major ingredient is more impactful than a 1000% increase in cost of an equipment whose direct price impact per unit is not much.

bharathp · Post by **bharathp** » 14 Aug 2020 20:13

https://www.indiatvnews.com/business/ne ... y21-642075
The RBI Board on Friday approved the transfer of Rs 57,128 crore as surplus to the central government for the accounting year 2019-20, the central bank said in a statement.

something cookng with the govt? thats a lot of money (7.610 billion USD as of aug 14)

Vamsee · Post by **Vamsee** » 14 Aug 2020 20:20

1. Indian forex reserves are up by another $3.6B and are at an all time high of $538.191B Link

2. Foreign trade details for the month of July 2020 are out Link

Apr-Jul 2020
==========

Merchandise Exports : $74.96 B
Merchandise Imports: $88.91 B
----------------------------------------
Merchandise Deficit: $13.95 B
----------------------------------------

Services Exports : $66.86 B
Services Imports: $38.85 B
----------------------------------------
Services Surplus : $28.01 B
----------------------------------------

Total Exports : $141.82 B
Total Imports: $127.76 B
----------------------------------------
Total Surplus : $14.06 B
----------------------------------------

--Vamsee

nandakumar · Post by **nandakumar** » 14 Aug 2020 20:50

bharathp wrote:https://www.indiatvnews.com/business/ne ... y21-642075
The RBI Board on Friday approved the transfer of Rs 57,128 crore as surplus to the central government for the accounting year 2019-20, the central bank said in a statement.

something cookng with the govt? thats a lot of money (7.610 billion USD as of aug 14)

The RBI closes its books on June 30th. The accounts must have been finalised and surplus transferred, I guess.

vijayk · Post by **vijayk** » 14 Aug 2020 22:49

https://economictimes.indiatimes.com/in ... s?from=mdr
China’s Huawei, ZTE set to be shut out of India’s 5G trials

Suraj · Post by **Suraj** » 16 Aug 2020 12:46

I've mentioned this before - one of the benefits of PMJDY is that it gives the government and RBI a picture of wealth held by the poor. During times of economic crisis, they will deplete their bank accounts - their only formal investing and banking engagement. Growth in the deposit base indicates stabilization after crisis:
Signs of revival: Deposits in Jan Dhan accounts exceed pre-Covid lockdown level

Deposits in the no-frills Jan Dhan accounts have exceeded the pre-lockdown level by a decent margin week after week. This lends some credence to the notion that concerns about wide-spread rural distress during the pandemic may have been exaggerated.

As of August 5, as many as 40.21 crore Jan Dhan accounts had a total balance of Rs 1,29,720 crore, higher than that of Rs 1,18,434 crore on March 25, when the Covid-induced lockdown was imposed or Rs 1,18,106 crore a week before that, official data show. Of course, the net deposits have been easing, albeit at a slow pace, since hitting a peak of Rs 1,35,978 crore on June 10, by when the transfer of the last instalment of the government assistance was almost over.

Two factors have obviously contributed to the rise.

First, as part of a relief package to cope with the Covid impact, finance minister Nirmala Sitharaman had announced the transfer of Rs 500 a month to 20.4 crore women Jan Dhan account holders for three months starting April. Secondly, banks have opened 1.9 crore more accounts since the lockdown was imposed. However, despite accounting for these factors, the net balance still remains higher than expected.

While conceding that rural distress is not as widespread as is touted to be in some quarters, some analysts, however, caution against euphoria over the Jan Dhan balance. The net deposits, they say, may also have been influenced by at least two factors — discretionary spending has been hit, leading to low withdrawal of money from the banks; the harvesting of the rabi crops from April has boosted farmers’ earnings.

The Jan Dhan accounts — originally intended to spur financial inclusion by making banking facility available to the poor — were used by the government to swiftly transfer funds for immediate relief.

vijayk · Post by **vijayk** » 16 Aug 2020 20:35

https://www.business-standard.com/artic ... 927_1.html
Apple decides to take the plunge by making India alternative exports hub
Making the country an alternative export hub to China makes sense for the US giant but competition in the domestic market could be intense

Suraj · Post by **Suraj** » 17 Aug 2020 00:16

I'm going to make it a point to regularly update the current Jal Jeevan Mission graph and overall status. Here's the one on I-Day:

A 2 percent improvement from 25% since I last looked at the webpage in July 2020.

KL Dubey · Post by **KL Dubey** » 17 Aug 2020 00:48

^^And for comparison, the success of the household electrification mission over the last 4-5 years...practically every household now has an individual electricity connection.

https://saubhagya.gov.in/

The next step, needless to say, is to ensure the reliability/quality of the power delivered.

Suraj · Post by **Suraj** » 17 Aug 2020 00:55

Yes, I admit I failed to keep track of Saubhagya and the Swacch Bharat Mission updates regularly. They both ramped up dramatically between 2014 to 2019, and most of the urban and upper class never saw just how much it benefited large swathes of India. Similarly, piped water is a killer app that I don't want to make the mistake of not keeping up with. Already, progress is quite significant - Bihar has been at the unexpected forefront in the north, getting close to the 50% mark faster than its Gangetic heartland peers.

I prefer to keep the discussion on politics to the strat forum thread, but the implications of that map showing mostly green around 2024 are very easy to contemplate.

ManuJ · Post by **ManuJ** » 17 Aug 2020 06:55

We might also want to track ODF-II (or ODF Plus), which is crucial as it is meant to reinforce the ODF behavior and make it sustainable.

csaurabh · Post by **csaurabh** » 17 Aug 2020 11:45

Telangana seems to be unusually high on that list. Bihar as well - its usually in the last position.

Suraj · Post by **Suraj** » 17 Aug 2020 19:53

Bihar isn’t unusually high - it has been the location of a lot of JJMs initial activity; lots of news stories about JJM are about work in Bihar. The live dashboard shows two maps - what things looked like at the beginning of JJM in April 2019, and the latest map.

Like Swacch Bharat and Saubhagya missions, this is one of those things that start out looking poor - under 20 percent of homes having piped water - but develops rapidly in 5 years. Already it’s jumped from 25% the last time I looked in July 2020, to 27% now.

Vamsee · Post by **Vamsee** » 17 Aug 2020 21:43

China’s Loss May Be India’s Gain in Shifting Supply Chains

India’s latest set of incentives to entice businesses moving away from China seem to be working, with companies from Samsung Electronics Co. to Apple Inc.’s assembly partners showing interest in investing in the South Asian nation. India has also extended similar incentives to pharmaceutical businesses, and plans to cover more sectors, which may include automobiles, textiles, and food processing under the program.

Samsung plans to make $40 billion worth of smartphones in India and may shift a major part of its production from Vietnam and other countries, the Economic Times reported

Suraj · Post by **Suraj** » 17 Aug 2020 22:49

ManuJ wrote:We might also want to track ODF-II (or ODF Plus), which is crucial as it is meant to reinforce the ODF behavior and make it sustainable.

I'll take that as your volunteering to do that regularly for the next 5 years

vijayk · Post by **vijayk** » 17 Aug 2020 22:54

https://www.bloomberg.com/news/articles ... ple-demand
Technology
China’s Days as World’s Factory Are Over, IPhone Maker Says

I wonder if this is the reason why China has been so aggressive in trying to occupy Ladhak and AP. May be they want to create war scenario to scare away investors and prevent alternate supply chains from going to India. I wonder if 20-30% of Chinese production can go to India in the next 5 years.

nachiket · Post by **nachiket** » 18 Aug 2020 03:36

Suraj wrote: Like Swacch Bharat and Saubhagya missions, this is one of those things that start out looking poor - under 20 percent of homes having piped water - but develops rapidly in 5 years. Already it’s jumped from 25% the last time I looked in July 2020, to 27% now.

The JJM mission I believe is even more important than the previous ones simply because of the scale of the problem. The issue with lack of toilets and electricity disproportionately affected the rural areas of poorer states like UP, Bihar etc. and those states saw the maximum benefit from the successful implementation. But the lack of piped water severely affects even supposedly "rich" states like MH. And I'm not even talking about the perennially water scarce regions like Marathwada and it affects the poor and middle class/rich alike. It doesn't matter how much money you have if there are simply no pipelines or reservoirs nearby. I have personally experienced this in a part of the usually water rich Konkan region where my parents have a second house. The whole neighborhood is filled with nicely built houses owned by fairly well-off people who either own land and fruit/vegetable orchards nearby or have built the homes as a getaway from the city. None have piped water. It is simply not an option. Nor is the possibility of getting piped water anywhere on the horizon. Luckily the groundwater levels in the area are usually good enough (for most of the year) that each house owner can dig their own borewell and get access to water which is what everyone has done.

It is not a rural-only problem either with several areas in our biggest cities still dependent on tanker trucks for their water. I'm not sure if these will be covered by JJM since those areas technically do have water connections, it's just that no water ever flows through them.

I remain skeptical just because of the sheer size of the problem that has to be surmounted but if the govt. is able to do this it will truly be a revolution. And looking at the delivery of the previous schemes if anyone in India can do this it is the current administration.

vimal · Post by **vimal** » 18 Aug 2020 05:48

vijayk wrote:https://www.bloomberg.com/news/articles ... ple-demand
Technology
China’s Days as World’s Factory Are Over, IPhone Maker Says
...

OT here but is it really about moving the production lines for all the parts or just reassembly? Thats the game that Chins have been very good at playing where the second tier nations like Viets just screwdriver the existing boards and put their name on the finished good. Chins retails complete control of every other component like basic electronic items like transistors, timers and millions of low value but critical parts.

Suraj · Post by **Suraj** » 18 Aug 2020 07:55

The article is about a high level statement of intent about future investment plans and you’ve gone off in another direction . Wait and see. No one’s in a position to offer answers to such questions right now.

Suraj · Post by **Suraj** » 18 Aug 2020 08:56

nachiket: yes, water is a whole other creature from other utilities. I’ve mentioned this before when Modi first announced the JJM last year - unlike toilets and electricity, the quality of water matters , together with quantity and distribution.

However the other side of this argument is that most of the country does not have any sort of access to water at home, other than what’s brought in a pitcher or something. At least the homes you mentioned can pump ground water into Sintex tanks on the roof.

Even localized distribution systems fed from local aquifers, reservoirs or any other source like rivers, to villages would be paradigm shifting for the inhabitants. The baseline here is 0. Even saving the woman the trouble of getting up at 4-5 am to go stand in line at the handful of village wells or hand pumps would be a dramatic improvement for them.

Don’t make the mistake of seeing this through our privileged middle class eyes, because if we do, we are repeating the same mistakes made earlier in not appreciating the magnitude of lifestyle improvement just from not having to answer nature’s call at the local field.

Of course it’s right to be skeptical about assuming a western style system in 5 years, but I don’t think that’s the goal here at all. A far more basic infrastructure can be implemented that generates enormous quality of life improvement immediately, while giving enough to build a more sophisticated system upon in future. It’s the same as with toilets - it was literally just that, not a full fledged sewage and treatment system. Same with water.

vijayk · Post by **vijayk** » 18 Aug 2020 17:17

https://telecom.economictimes.indiatime ... n/77583228

SAamsung aims to make devices worth $40B

Raveen · Post by **Raveen** » 18 Aug 2020 20:59

Suraj wrote:nachiket: yes, water is a whole other creature from other utilities. I’ve mentioned this before when Modi first announced the JJM last year - unlike toilets and electricity, the quality of water matters , together with quantity and distribution.

However the other side of this argument is that most of the country does not have any sort of access to water at home, other than what’s brought in a pitcher or something. At least the homes you mentioned can pump ground water into Sintex tanks on the roof.

Even localized distribution systems fed from local aquifers, reservoirs or any other source like rivers, to villages would be paradigm shifting for the inhabitants. The baseline here is 0. Even saving the woman the trouble of getting up at 4-5 am to go stand in line at the handful of village wells or hand pumps would be a dramatic improvement for them.

Don’t make the mistake of seeing this through our privileged middle class eyes, because if we do, we are repeating the same mistakes made earlier in not appreciating the magnitude of lifestyle improvement just from not having to answer nature’s call at the local field.

Of course it’s right to be skeptical about assuming a western style system in 5 years, but I don’t think that’s the goal here at all. A far more basic infrastructure can be implemented that generates enormous quality of life improvement immediately, while giving enough to build a more sophisticated system upon in future. It’s the same as with toilets - it was literally just that, not a full fledged sewage and treatment system. Same with water.

Could not agree more - easy to miss the forest for the trees

Vamsee · Post by **Vamsee** » 18 Aug 2020 23:50

India's farm exports rise 23.24% in March-June 2020 despite pandemic

“We have sharpened our focus in exporting value added products and healthcare food products. We also want to deepen our penetration in Gulf countries, which is already a strong market for India, though presently India caters to only 10-12% share of their total imports,” said a senior agriculture ministry official.

“Agricultural exports as a percentage of India’s agricultural GDP has increased from 9.4% in 2017-18 to 9.9% in 2018-19. While the agricultural imports as a percentage of India’s agricultural GDP has declined from 5.7% to 4.9% indicating exportable surplus and decreased dependence on import of agricultural products in India,” he said.

WTO’s trade statistics show that share of India’s agricultural exports and imports in the world agriculture trade in 2017 was 2.27% and 1.90%, respectively

We need to export a lot of food items particularly to middle east. We should export at least as much in food products as our oil imports from that region.

--Vamsee

yensoy · Post by **yensoy** » 19 Aug 2020 01:14

Food exports don't come for free. A huge amount of water is used in the cultivation of food, and as a water scarce nation we need to be very careful about what we export and what we don't.
1. We should absolutely stay away from exporting commodity items like sugar which can be grown just about anywhere and where prices are determined by world market.
2. We may export rice and wheat where specific types grown locally have an edge in the market like Basmati, and can command a price premium.
3. We may promote organic varieties of rice and other staples which both benefit our farms/soil conditions and command a premium.
4. We should emphasize on processed foods where raw input costs are low but processing is a big value add and can give more revenue.
5. We should promote Indian food brands which benefit the Indian economy (even if some portion of their international sales are sourced from other countries).

It's not just grains. It is pulses, oil/oilseeds/oilcake, fruits/vegetables/flowers, honey, milk/milk products, meat/fish/eggs, coffee/tea and all their branded & packaged derivatives. A holistic approach is needed to promote sectors that have a net benefit for us, and not indiscriminately use our highly subsidized farm inputs (free electricity, limitless pumping out of groundwater, cheap urea, blind eye to crop burning & pollution) to subsidize exports. That will be a big mistake.

Suraj · Post by **Suraj** » 19 Aug 2020 08:55

Apple’s upcoming flagship iPhone 12 to made in India, contract manufacturer Wistron plans Rs.2900 cr investment

Apple's upcoming flagship smartphone the iPhone 12 will be Made in India and Taiwanese contract manufacturer Wistron has planned an investment of Rs 2,900 crore to ramp up its Bengaluru facility, Economic Times has reported.

Wistron has also started hiring the required people for manufacturing the iPhones and has also commenced manufacturing trials. It is aiming to send the smartphone to stores by mid 2021.

iPhone 12 will be the seventh Apple smartphone to be manufactured in India after iPhone SE (first and second), iPhone 6S, iPhone 7, iPhone XR, and iPhone 11.

Apple is reportedly planning to hold its iPhone 12 event in the second week of October, with pre-orders to take place later that week and shipments to start the week after that.

vijayk · Post by **vijayk** » 20 Aug 2020 01:05

https://economictimes.indiatimes.com/ne ... 624852.cms
India-Japan-Australia supply chain in the works to counter China

ndia, Japan and Australia have begun discussions on launching a trilateral Supply Chain Resilience Initiative (SCRI) to reduce dependency on China, necessitated by Beijing’s aggressive political and military behaviour.

The initiative, first proposed by Japan, is now taking shape, ET has learnt. Dates are being worked out to hold the first meeting of the commerce and trade ministers of the three countries by next week.

Suraj · Post by **Suraj** » 20 Aug 2020 01:54

yensoy wrote:Food exports don't come for free. A huge amount of water is used in the cultivation of food, and as a water scarce nation we need to be very careful about what we export and what we don't.
1. We should absolutely stay away from exporting commodity items like sugar which can be grown just about anywhere and where prices are determined by world market.
2. We may export rice and wheat where specific types grown locally have an edge in the market like Basmati, and can command a price premium.
3. We may promote organic varieties of rice and other staples which both benefit our farms/soil conditions and command a premium.
4. We should emphasize on processed foods where raw input costs are low but processing is a big value add and can give more revenue.
5. We should promote Indian food brands which benefit the Indian economy (even if some portion of their international sales are sourced from other countries).

It's not just grains. It is pulses, oil/oilseeds/oilcake, fruits/vegetables/flowers, honey, milk/milk products, meat/fish/eggs, coffee/tea and all their branded & packaged derivatives. A holistic approach is needed to promote sectors that have a net benefit for us, and not indiscriminately use our highly subsidized farm inputs (free electricity, limitless pumping out of groundwater, cheap urea, blind eye to crop burning & pollution) to subsidize exports. That will be a big mistake.

India also needs a robust Geographical Indications framework for products that are unique to certain regions and retain their cachet because of the fame of where they originate. However, copycats can devalue this or even entirely dismantle the uniqueness, e.g. the Basmati vs the cyborg 'Texmati' IP fight. Europe takes this very seriously, and increasingly China plays this game too. You can't call any sparkling wine as 'champagne' for example - it has to be from a certain part of France for that name to be legal.

Of course this is a two way issue - those who own the GI rights can't sit back and enjoy the monopoly status of origin - they have to continuously maintain high standards to attract a premium. The government itself will have no role in setting a minimum support price or anything like that.

darshan · Post by **darshan** » 20 Aug 2020 18:23

UPI, RuPay Cards To Go Global; NPCI Launches International Subsidiary To Expand Reach
https://swarajyamag.com/insta/upi-rupay ... pand-reach
India's famed digital payments champion, United Payments Interface (UPI) is now set to go global with its parent National Payments Corporation of India (NPCI) instituting a new subsidiary NPCI International Payments limited (NIPL) to take the business beyond Indian shores, reports Business Standard.

With the launch of NIPL, NPCI is aiming to take UPI and the Government-backed RuPay Card global, and also to help other nations in establishment of a real-time payment system, or a domestic card scheme. This comes as several nations in Africa and the Middle East have evinced interest in these systems, inspired by their successful implementation in India.

Vamsee · Post by **Vamsee** » 30 Aug 2020 05:00

What Indian states export to rest of the world

One item that fetches maximum foreign currency by a single state is cut and polished diamonds exported by Maharashtra to 77 countries valued at $23 billion followed by high speed diesel ($10.4 billion) exported by Gujarat to 48 countries.

Rishirishi · Post by **Rishirishi** » 31 Aug 2020 05:38

yensoy wrote:Food exports don't come for free. A huge amount of water is used in the cultivation of food, and as a water scarce nation we need to be very careful about what we export and what we don't.
1. We should absolutely stay away from exporting commodity items like sugar which can be grown just about anywhere and where prices are determined by world market.
2. We may export rice and wheat where specific types grown locally have an edge in the market like Basmati, and can command a price premium.
3. We may promote organic varieties of rice and other staples which both benefit our farms/soil conditions and command a premium.
4. We should emphasize on processed foods where raw input costs are low but processing is a big value add and can give more revenue.
5. We should promote Indian food brands which benefit the Indian economy (even if some portion of their international sales are sourced from other countries).

It's not just grains. It is pulses, oil/oilseeds/oilcake, fruits/vegetables/flowers, honey, milk/milk products, meat/fish/eggs, coffee/tea and all their branded & packaged derivatives. A holistic approach is needed to promote sectors that have a net benefit for us, and not indiscriminately use our highly subsidized farm inputs (free electricity, limitless pumping out of groundwater, cheap urea, blind eye to crop burning & pollution) to subsidize exports. That will be a big mistake.

The greatest advantage of food exports is the extra production capacity, which can be diverted to home market, if required. But overall i agree with your points. Exports on crops like rice must be avoided, because they require a lot of water. The pollution problem in Punjab (burning of crops) originate from Rice crops.

Kamran Husain · Post by **Kamran Husain** » 31 Aug 2020 14:31

To all the gurus in the forum, I have a noob query related to GST.

Why can't the GST directly be paid to the states? Why it has to go to the center and then it goes to the state.

If I am a business in Rajasthan, and I pay my SGST, why can't it directly go to the state government? Can't the software be updated so that payments made by businesses go directly to the state governments?

Answer will be appreciated.

Aditya_V · Post by **Aditya_V** » 31 Aug 2020 16:57

Kamran Husain wrote:To all the gurus in the forum, I have a noob query related to GST.

Why can't the GST directly be paid to the states? Why it has to go to the center and then it goes to the state.

If I am a business in Rajasthan, and I pay my SGST, why can't it directly go to the state government? Can't the software be updated so that payments made by businesses go directly to the state governments?

Answer will be appreciated.

It is not GST here- GST compensation, Center was to compensate GST in case a certain % of growth in GST collection did not occur unless there was an ACT of GOD, Center invoked the Act of GOD clause.

Then there is the question states portion of IGST Sales which gets routed through Center, States also If I am get 42% share of Centre's collection of taxes. These 3 are the dispute points.

KJo · Post by **KJo** » 31 Aug 2020 18:36

Suraj · Post by **Suraj** » 31 Aug 2020 20:09

Not too bad considering the economy was near totally shut down for at least half of the April-June period . A quick read of the numbers:

* The drop is driven by services and real estate/construction business, and to a lesser extent manufacturing.
* Agricultural output actually grew, and did not contract.
* Q1 is numerically the smallest quarter of the year in terms of actual monetary value of output. The typical case is Q3 > Q4 > Q2 > Q1 , with Q1 being typically 85% the size of Q3 or Q4 . This is a result of cyclical economic activity.

The drop is entirely on account of the world's most stringent lockdown. However, other attributes are generally very positive:
* Best monsoon in decades, with forecast for record food production.
* Forex reserves are up to $538 billion. They were $458 billion at the end of Dec 2019.
* Trade figures - at least total export drop numbers - are roughly tracking quarterly GDP numbers: July 2020 and April-July 2020 data. If you look closely, July merchandise numbers are just -10% , and services just -2%, i.e. almost back to recovery.
* July is the first month of Q1 (July-Sept) . The trade figures in the first month are looking very positive.
* A succession of big ticket FDI announcements in the past 2 months due to popular production linked incentive (PLI) reform policy that has brought all of the Apple contract manufacturers to India, for example. For the first time, the next gen iPhone will also be made in India, as opposed to just the current or previous generation model.
* FPI investments hit lifetime high in August 2020, with $6.5 billion inflows in the month so far.

Essentially, the external economy and investor sentiment are diametrically opposite of the data on the ground , which everyone sees as the consequence of the lockdown. Q2 will give an early indicator of how swift recovery is.

In my opinion, the government has taken a calculated gamble that by basically shutting down the economy, it can rebuild it in a more formal and organized manner. Q2 and Q3 will offer a better picture of this.

Rishirishi · Post by **Rishirishi** » 31 Aug 2020 22:54

Kamran Husain wrote:To all the gurus in the forum, I have a noob query related to GST.

Why can't the GST directly be paid to the states? Why it has to go to the center and then it goes to the state.

If I am a business in Rajasthan, and I pay my SGST, why can't it directly go to the state government? Can't the software be updated so that payments made by businesses go directly to the state governments?

Answer will be appreciated.

Say you are sitting in Mumbai and have a plant in UP that sells to someone in Tamil Nadu. Who gets the GST? TN, UP or MA ?

With a central authority it is possible to ensure a more fair distribution of taxes.

Kamran Husain · Post by **Kamran Husain** » 01 Sep 2020 05:57

Say you are sitting in Mumbai and have a plant in UP that sells to someone in Tamil Nadu. Who gets the GST? TN, UP or MA ?

With a central authority it is possible to ensure a more fair distribution of taxes.[/quote]

Ok, but what about states when they say they are not being paid their fair share of GST, and this was before lockdown and corona crisis.

What should be the solution for that?

Only a few options left for states now to raise money, including additional tax petrol and alcohol sales, and raise stamp duty.

In the end, it's the common man who is going to suffer the most.

One good thing the GOI had done was to keep inflation in check. But now, it is bound to increase to UPA levels.

Let's see what happens in the future.

Mukesh.Kumar · Post by **Mukesh.Kumar** » 01 Sep 2020 06:33

Rishirishi wrote:
Kamran Husain wrote:To all the gurus in the forum, I have a noob query related to GST.

Why can't the GST directly be paid to the states? Why it has to go to the center and then it goes to the state.

If I am a business in Rajasthan, and I pay my SGST, why can't it directly go to the state government? Can't the software be updated so that payments made by businesses go directly to the state governments?

Answer will be appreciated.
Say you are sitting in Mumbai and have a plant in UP that sells to someone in Tamil Nadu. Who gets the GST? TN, UP or MA ?

With a central authority it is possible to ensure a more fair distribution of taxes.

GST has two scenarios and in both cases it's collected by State where consumption happens:
1. Production within state and condition within state. Here GST = CGST + SGST. Borne by purchaser. Collected by State Govt. CGST passed to Center. Simple
2. Production in State X, conducted in State Y. Here GST = IGST. Same slab % as before. IGST passed on to Center.

Net, net the consumer pays the tax and is enjoyed by the place where the consumption happens. To allay fears of Net Product states the Central government agreed to disburse funds to overcome this ( already situation pre GST where majority of funds came from Center) . In fact currently as against expected 42% of GST accruing to Center the fact is its short.

You will find this article on GST with examples insightful.

Let us consider that goods worth Rs. 10,000 are sold by manufacturer A from Maharashtra to Dealer B in Maharashtra.

Dealer B resells them to Trader C in Rajasthan for Rs. 17,500.

Trader C finally sells to end user D in Rajasthan for Rs. 30,000.

Suppose the applicable tax rates for the goods sold are CGST= 9%, SGST=9%, and IGST=9+9=18%

Since A is selling this to B in Maharashtra itself, it is an intra-state sale and so, CGST@9% and SGST@9% will apply.

Dealer B (Maharashtra) is selling to Trader C (Rajasthan). Hence, this is an interstate sale, with IGST@18%.

Trader C (Rajasthan) is selling to end user D also in Rajasthan. Once again it is an intra-state sale and hence, CGST@9% and SGST@9% will apply.

Mukesh.Kumar · Post by **Mukesh.Kumar** » 01 Sep 2020 06:45

Kamran Husain wrote:Say you are sitting in Mumbai and have a plant in UP that sells to someone in Tamil Nadu. Who gets the GST? TN, UP or MA ?

With a central authority it is possible to ensure a more fair distribution of taxes.

Ok, but what about states when they say they are not being paid their fair share of GST, and this was before lockdown and corona crisis.

What should be the solution for that?

Only a few options left for states now to raise money, including additional tax petrol and alcohol sales, and raise stamp duty.

In the end, it's the common man who is going to suffer the most.

One good thing the GOI had done was to keep inflation in check. But now, it is bound to increase to UPA levels.

Let's see what happens in the future.

Kamran you have a valid point. Needs further investigation.

Business Today article from January clearly cited issues.

However it is not a situation of the sky falling down. India needs more taxes to develop. Out Tax to GDP ratio is still too low. Yes we're need taxation reforms. But also true is that the solution is not taxing petrol as you make it. States and Center both need to streamline governance and have Fiscal reforms to cut flab.
This point about runaway inflation is not a logical conclusion.

Cyrano · Post by **Cyrano** » 01 Sep 2020 16:24

Suraj wrote:
yensoy wrote:Food exports don't come for free. A huge amount of water is used in the cultivation of food, and as a water scarce nation we need to be very careful about what we export and what we don't.
1. We should absolutely stay away from exporting commodity items like sugar which can be grown just about anywhere and where prices are determined by world market.
2. We may export rice and wheat where specific types grown locally have an edge in the market like Basmati, and can command a price premium.
3. We may promote organic varieties of rice and other staples which both benefit our farms/soil conditions and command a premium.
4. We should emphasize on processed foods where raw input costs are low but processing is a big value add and can give more revenue.
5. We should promote Indian food brands which benefit the Indian economy (even if some portion of their international sales are sourced from other countries).

It's not just grains. It is pulses, oil/oilseeds/oilcake, fruits/vegetables/flowers, honey, milk/milk products, meat/fish/eggs, coffee/tea and all their branded & packaged derivatives. A holistic approach is needed to promote sectors that have a net benefit for us, and not indiscriminately use our highly subsidized farm inputs (free electricity, limitless pumping out of groundwater, cheap urea, blind eye to crop burning & pollution) to subsidize exports. That will be a big mistake.
India also needs a robust Geographical Indications framework for products that are unique to certain regions and retain their cachet because of the fame of where they originate. However, copycats can devalue this or even entirely dismantle the uniqueness, e.g. the Basmati vs the cyborg 'Texmati' IP fight. Europe takes this very seriously, and increasingly China plays this game too. You can't call any sparkling wine as 'champagne' for example - it has to be from a certain part of France for that name to be legal.

Of course this is a two way issue - those who own the GI rights can't sit back and enjoy the monopoly status of origin - they have to continuously maintain high standards to attract a premium. The government itself will have no role in setting a minimum support price or anything like that.

Couldn't agree more. The Govt should come up with a 3-5 year export license sunset policy for most raw/non branded/no value add exports. Else we are going back to colonial times.

Given our strong relations with France, GoI should actively harness French Govt & industries' experience & expertise in Origin based branding & IP protection (appellation d'origne controllée etc) which focuses on:
1. setting/ensuring quality standards that make a product unique and the brand noteworthy
2. Projecting and protecting the brand and its IP internationally and actively fighting counterfeits.