Bharat Rakshak

RoyG wrote:How do you guys feel about the Arthakranthi taxation regime? Looks interesting.

http://www.arthakranti.org/proposal/benefits

http://www.arthakranti.org/proposal/individual-benefits

dhruvM wrote:^ AFAIK, Satoshi Nakamoto is rumored to have a big cache of bitcoins as he was the guy who wrote the initial mining and blockchain code. Subsequently this Satoshi guy disappeared (smart bugger) and the open source code is now maintained by the bitcoin foundation.

There are 2 big threats though -

1. Bitcoin exchanges (where you'd convert BTC to USD/INR etc) are still controlled by central banks, hence vulnerable.

2. There are apprehensions that the bitcoin miners (people who devote resources to authenticate the blockchain, in turn acting as payment processors) can gang up and if 50% or more start acting in concert, the currency will lose its decentralized quality.

The current bull-run in bitcoins has been extremely interesting to follow. I discovered the existence of these around 2 yrs back when some yahoos in college informed us unwashed abduls of this new way to buy zam-zam cola online called Silk Road. If only I had the money that time, and the doordrishti, could have made more than 100x profits. Such is life.

EDIT: panduranghari ji, the biggest difference seems to be the fact that there will never be more than 21 million bitcoins in circulation. Hence it is fundamentally different from fiat. Also, the guys who initially wrote and promoted the code deserve the returns IMO.

I feel bitcoins are the best refuge of the scoundrels. All the drug/terrorism/cayman-island-corruption money types. Bet the hawala networks have already started using this.

Net direct tax collection in April-November increased by 14.6 per cent to Rs 3,10,317 crore, compared with Rs 2,70,771 crore in the corresponding months of the previous financial year. The growth has picked up in the recent months reflecting an uptick in the economy. However, it is still lower than the 19 per cent increase projected in direct tax collections for the entire year.

Gross direct tax collection (before payment of income tax refunds) during April-November this year went up by 13.18 per cent to Rs 3,68,655 crore, against Rs 3,25,736 crore in the year-ago period.

Gross collection of corporation tax showed an increase of 9.66 per cent to Rs 2,25,124 crore in the eight-month period this year, compared with Rs 2,05,291 crore in the same period of 2012-13. Gross collection of personal income tax was up by 19.60 per cent to Rs 1,39,763 crore, against Rs 1,16,862 crore in the same months last year, the ministry said on Thursday.

Collection of Securities Transaction Tax stood at Rs 3,053 crore, showing a growth of 4.73 per cent. Revenue from the levy of wealth tax posted a growth of 13.38 per cent to Rs 712 crore, against Rs 628 crore in the corresponding period of 2012-13.

The government has set a direct tax collection target of Rs 6,68,108 crore for 2013-14, against Rs 5,65,835 crore in 2012-13. The collections had fallen short of the target by about Rs 5,000 crore last year.

Direct tax collections had increased by 13.33 per cent to Rs 2,84,339 crore in April-September this year. Finance ministry officials say though there has been a pick-up in tax collections, meeting the Budget target would still be difficult considering a slower-than-expected growth in the economy.

The deal slashes red tape at customs around the world, gives improved terms of trade to the poorest countries, and allows developing countries to skirt the normal rules on farm subsidies if they are trying to feed the poor. India's concerns that the Bali deal would give only a temporary shield to its food stockpile plan were resolved with wording that promised a search for a more permanent solution.

"The food security fix is something out of 1984, George Orwell would be proud," said Simon Evenett, professor of international trade at the Swiss University of St Gallen.

"The food security text is so contradictory that there must be an informal understanding among the big players as to what it really means."

India was under pressure to accept an eventual compromise, because failure of the Bali package would leave its food subsidy programme exposed to trade disputes that could lead to billions of dollars in trade sanctions.

The meat of the Bali deal is an agreement known in WTO jargon as "trade facilitation": streamlining and standardising customs and port procedures to speed trade globally.

Arjun wrote:Wonder how the markets will react to the Assembly results...

While the 4-0 victory margin for Modi would ordinarily have tended to push the markets up....I think a new wrinkle has been introduced by the AAP's debut. So the market probably has to consider that the results next year may be more bipolar than earlier thought. While clearly the likelihood of the Congress getting routed next year has dramatically increased - there is also now a small chance that the spoils will be shared with the AAP rather than by swept by Modi alone. AAP by all accounts will be a far more anarchist and socialist-oriented force than a growth-oriented one - assuming that the party has even given any thought to the economy which I have not seen any evidence of so far. Overall this sudden emergence of the AAP is certainly not good news from the market's standpoint.

Economic policy according to AAP/Kejriwal should be as follows (obtained from interviews, manifestos, etc). “GDP growth should be directly related to the lives of the people, but such growth affects very few people … AAP opposes privatisation, wants government into oil extraction (and much else), recommends an increase in effective taxes on the middle class and supports increases in fuel and electricity subsidies. AAP would take measures to ensure basic facilities; e.g. electricity expense reduction of 50% and 700 litres of free water. Further, AAP believes in government provision of high quality education and health, regulation of fees of private schools, implementation of minimum wages etc.”

The AAP may signal the birth of honest politics (I believe it does) but it most likely signals the birth of Luddite and extremely dishonest economics. Until I read the AAP manifesto, I believed that it was a close race between Ms Sonia Gandhi and Mr Hugo Chavez of Venezuela for the title of Populist of the Century. In her spurt over the last five years, the close race is no more—Ms Gandhi is the champion. But I believe the title should go to Mr Kejriwal as revealed by his economic views as quoted above.

Theo_Fidel wrote: I don’t oppose the cheap electricity and cheap water bit if the same access is provided to industry, manufacturing, etc. Definitely China has gone this route of providing cheap subsidized energy to companies and people and within limits it has worked out. Just guaranteeing 700 liters to every human being will have huge benefits, economic and human. Our work force will be healthier, more productive and less distracted by mundane things.

Taxing the middle class sounds like a bad idea.

Theo_Fidel wrote:- Eliminate most scrubbing, pollution control.
...
Now you can argue about the morality of some of these things but economic benefits of low cost electricity to the economy is undeniable.

Theo_Fidel wrote:It can be done without heavy taxation in principle. Look at how China did it.
- Zero royalty on coal.
- Sell coal deposits at zero cost to private sector / mine bosses.
- 0% loans to power plants.
- Eliminate most scrubbing, pollution control.
- Zero cost land
- Swipe IP as needed.
- Subsidize heavily, railway, taxes, transmission, etc.

Theo_Fidel wrote:It can be done without heavy taxation in principle. Look at how China did it.
- Zero royalty on coal.
- Sell coal deposits at zero cost to private sector / mine bosses.
- 0% loans to power plants.
- Eliminate most scrubbing, pollution control.
- Zero cost land
- Swipe IP as needed.
- Subsidize heavily, railway, taxes, transmission, etc.

The key is to do it for every one including manufacturing, industry and business. Somehow one feels the AAP is not on the same page here.

Now you can argue about the morality of some of these things but economic benefits of low cost electricity to the economy is undeniable.

The government has finally set up a pair of credit guarantee funds that will underwrite up to 75% of the value of loans extended to students—a move it expects will make banks shed their reluctance to offer educational loans.The education credit guarantee fund has a corpus of Rs.3,500 crore and the skill education credit guarantee fund has been endowed with Rs.1,000 crore, three government officials said on condition of anonymity. They will start offering guarantees for student loans starting in January.There is also a stipulation that the interest rate charged by banks for education loan cannot be more than 2% over the existing base rate of the bank.

For underwriting a loan, the credit guarantee fund can charge the banks a fee up to a maximum of 1% of the loan amount, said a second government official. While all higher education loans of up to Rs.7.5 lakh will be eligible for the guarantee, skill education loans upto Rs.1.5 lakh will be underwritten.

nachiket wrote:^^Unfortunately, this also goes to show how many educated Indians, even in a city like Delhi fall for this populist socialist crap. AAP needs to be given a chance to implement their model in Delhi so as to disabuse the people of their terrible understanding of basic economics and their love affair with socialism.

India’s exports slipped to $24.61 billion in November from $27.27 billion in October. The performance was 5.86 per cent better than November 2012, though.

The government’s stringent gold import curbs restricted overall imports during said month to a two-and-a-half year low of $33.83 billion or 16.37 per cent lower compared to the same month last year. As a result, the trade deficit narrowed to $9.22 billion, according to the official data released here on Wednesday.

“Three-product categories in the export basket (petroleum goods, gems and jewellery and pharmaceuticals) have pulled down our exports,” Commerce Secretary S. R. Rao told reporters after the trade data was released.

Gold and silver imports were down 80.49 per cent to $1.05 billion in November compared to a year earlier, according to the release.

While India has never been your standard Asian export powerhouse, it is one of the world’s largest exporters of one commodity: Dirty money.The total amount of dirty money India exported in the decade ended in 2011, came to a whopping $344 billion, making the South Asian country the world’s fifth largest developing country exporter of illicit cash after China, Russia, Mexico and Malaysia, according to a report this week by Global Financial Integrity, a Washington DC-based research and advocacy organization.
The illicit outflows from crime, corruption and tax evasion grew more than 10-fold during those 10 years to reach $85 billion in 2011, the report said, as corruption in the south Asian nation grew at a faster pace than even the impressive expansion of the economy. For comparison, India’s exports for 2011 came to about $300 billion.“The organization uses data from the International Monetary Fund, the World Bank and official data from each country to calculate illicit fund flows. It looks at the differences between the declared value of exports when they leave a country and the value declared when they land somewhere else as imports.India and other developing countries need to create new policies and better monitor trade and financial flows to keep this black money at home, Global Finance Integrity said.“Poor countries hemorrhaged nearly a trillion dollars from their economies in 2011 that could have been invested in local businesses, healthcare, education, or infrastructure,” said GFI junior economist Brian LeBlanc, the other author of the report. “This is nearly a trillion dollars that could have been used to help pull people out of poverty and save lives. Without concrete action, the drain on the developing world is only going to grow larger,” he added.

Driven by surging food prices, wholesale price index-based inflation rose to a 14-month high of 7.52 per cent in November from 7 per cent in the previous month, official data showed on Monday. The development makes a repo rate hike by the Reserve Bank of India (RBI) on Wednesday appear a foregone conclusion.

Inflation numbers for two earlier months have also been restated — both revised upwards. The September figure was revised to 7.05 per cent on Monday from the earlier estimate of 6.46 per cent. The figure for August had been revised last month to 6.99 per cent from the 6.10 per cent announced initially.

This is the last set of data before the monetary policy review on Wednesday. Last week, official data showed that consumer price index-based inflation accelerated to an all-time high of 11.24 per cent in November compared to 10.17 per cent in October.

Experts are predicting that the central bank will opt for a 25-basis point hike in the repo rate. “We expect the RBI to raise the repo rate by 25 bps in the mid-quarter review to guard against further hardening of inflationary expectations and generalisation of food inflation,” said Aditi Nayar, senior economist at rating agency ICRA. Ghosh agreed that a hike of 25 bps was on the cards.

Industry chambers urged the central bank to take a contrarian call and hold rates if a cut was not possible. Assocham said data suggested that inflation was largely caused by a steep rise in food prices.

“We hope the RBI will take due cognisance of the fact that growth is still feeble and needs support,” said Ficci.

Prices of manufactured items also moved up in November, a trend seen since August. Inflation for manufactured products stood at 2.64 per cent in November from 2.5 per cent a month ago. Core inflation, which refers to manufactured items excluding food articles, stood at 2.7 per cent, a slight increase over 2.6 per cent a month ago. Core inflation is thought to be a crucial factor in monetary policy.

Narendra Modi should think small during 2014. If the Bharatiya Janata Party (BJP) does win next year's general election in India - as political pundits increasingly believe it will - the future prime minister should resist the temptation to immediately unveil a grand economic strategy. In the interim, he should focus on quick and effective repair jobs in the banking, electricity and textile sectors.

Such a limited agenda sounds counterintuitive. Indians are impatient for an end to the double whammy of economic stagnation and high inflation. Financial markets are already pricing in a victory for Mr Modi. Moreover, resistance to unpopular decisions is usually at its lowest when politicians are still enjoying the first flush of victory.

But a dose of realism is needed. By the time Mr Modi and his Cabinet are ready for business, the first quarter of India's next financial year will be over. A hurried reform agenda will be either too squeamish or too ambitious and impractical. In either case, investors will end up disappointed.

The Union Budget in February 2015 will be the first real opportunity for Mr Modi's finance minister to present a well-conceived strategy for economic reconstruction. In the meantime, the new government should focus on repair work - the kind that will pay quick dividends but won't require messy legislation.

Three tasks that can help build investor confidence and prepare the ground for deeper reforms stand out: recapitalising banks, giving more electricity to villages and increasing the interest rate subsidy for textile industry loans.

A bold recapitalisation of government-run banks will revive stalled credit flow. Indian banks rated by Moody's Investors Service could need up to $6 billion (Rs 36,000 crore) in fresh capital next year. Most of the shortfall will be in state-run lenders. At two per cent of the federal government's annual expenditure, recapitalisation will be an expensive proposition, but not prohibitively so. Just the top 11 state-owned banks have received $7 billion from the government over the past four years. Besides, since shares in many of these banks are changing hands for less than their book value, a recovery in credit will see the government make a paper profit on its investment once the bad loan problem eases.

In exchange for writing the cheque, though, Mr Modi should insist on merging the 26 state lenders into, say, 10 larger, better-managed banks over time. When Palaniappan Chidambaram, the current finance minister, mooted the idea of consolidation eight years ago, about one million bank workers protested. But the lenders' woeful finances present an opportunity for Mr Modi to restart the project. The new government doesn't need to immediately embark on a privatisation drive - although that is where consolidation will eventually lead once there's political appetite for it.

Another of Mr Modi's immediate repair jobs should be to contain rampant losses in the power sector. India's power distribution utilities lose 1.5 per cent of gross domestic product (GDP) annually. That's partly because of theft. But mostly, it's because of farmers. They guzzle power but hardly pay anything for it. The state-owned distribution utilities lose money and cannot repay working capital loans to state-run banks. Last year, the government had to step in and restructure $35 billion (Rs 2 lakh crore) of the utilities' debts.

The distribution companies' attempts to manage the problem make it worse. They provide very little electricity to villages, and enforce debilitating power cuts in cities. This crushes productivity. A permanent solution is perhaps still many years away. But a good interim fix will be to separate the feeder cables that supply electricity to farms for irrigation from those that carry it to the rest of the village.

A World Bank study of a small area in Mr Modi's home state of Gujarat where such separation of lines has been implemented showed a 22 per cent jump in villagers' real incomes, compared with a smaller 13 per cent escalation in their real energy expenses. The distribution company still may have to supply as much free or nearly free power for irrigation as before, but it benefits by recouping the full cost of electricity from village households and small industries. Healthier distribution companies will increase the attractiveness of India's power business to investors. India's infrastructure for generating, transmitting and distributing electricity will need $1 trillion (Rs 61 lakh crore) in investment over 20 years, according to consulting firm Bain.

The solution is also easy to execute. The per-kilometre cost of separate cables is about $4,000 (Rs 2.4 lakh). Rather than dangle the carrot of federal assistance to states that commit to lowering their power distribution losses, Mr Modi should make an immediate, non-conditional grant to cover the expense. Productivity gains alone will pay for the investment in a short period.

Raising productivity in the textile industry will be harder. India is the world's second-largest cotton producer after China. But while China imports cotton to make clothes for the world, India will this year export about one-fourth of its production. This should alarm Mr Modi. After all, the country could create more jobs by turning cotton into fabric and garments for exports. But unlike its rivals in Bangladesh and Pakistan, the Indian textile industry doesn't enjoy much preferential access to developed countries. Besides, the current government has massively increased guaranteed minimum prices for cotton farmers, crimping manufacturers' profitability.

The government has offered some help: textile manufacturers enjoy a three percentage point interest subsidy on export credit. However, Mr Modi should increase it to five per cent for five years. That might seem like making an industry that's beginning to benefit from a weaker rupee more dependent on handouts. But it's better to give money to companies that can create hundreds of thousands of new jobs than waste it on subsidising cereal consumption in a nation where the real nutritional shortage is in protein.

The Reserve Bank of India (RBI) on Wednesday surprised the market by maintaining the status quo on interest rates in the mid-quarter review of its monetary policy. It, however, warned of a possible rate increase in the coming months if inflation did not come down. Markets, which had factored in a 25-basis-point repo rate increase, cheered the move but some experts said the central bank was in denial mode and might have to do a ‘catch-up’ job.

The repo rate was kept unchanged at 7.75 per cent and the cash reserve ratio — the proportion of deposits banks must park with RBI in cash — remains four per cent.

Following the RBI move, the BSE Sensex snapped a six-day losing streak to gain 240 points, or 1.2 per cent, over its previous close. Rate-sensitive stocks, such as those from the automobile, realty and banking sectors, outperformed the broader index.

Rahul M wrote:Suraj, what's your opinion on the tax abolition proposal from bjp ?

Austin wrote:Guess Rupee is already shivering with this small taper announcement

Rupee slips to 62.40 per dollar after Fed's taper decision

After agonising investors for months, the Fed decided on Wednesday to trim its bond buying by $10 billion to $75 billion a month as a modest step and one the U.S. economy could well withstand. Crucially, the U.S. central bank softened the blow by making its forward guidance even more dovish.

"(The) government is of the view that the markets had already factored in the U.S. Federal Reserve's decision and therefore is not likely to be surprised by these moderate changes," Chidambaram said in a written statement released by his office.

Worries over the Fed's possible tapering had triggered massive capital outflows between May and September from emerging markets.

Saddled with hefty current account and fiscal deficits, India looked the most vulnerable. The rupee went in a free fall, losing as much as 20 per cent against the dollar before recovering. This prompted India to unleash a slew of measures to bolster its forex reserves and rein in the current account gap.

Chidambaram also spoke to Reserve Bank of India Governor Raghuram Rajan on Thursday morning to discuss the Fed tapering, the statement added.

Rahul M wrote:Suraj, what's your opinion on the tax abolition proposal from bjp ?

Suraj wrote:They're wasting their time coming up with grandiose ideas like that. Sounds great on paper. Tell me how they'll overcome all the inertia around the existing system to implement it - and how much it will cost to do so and how they justify that cost - and it would be worth looking at seriously. Their PM nominee is a hands-on get it done type of guy. They don't need these kinds of imaginative stunts, but just to emphasize repeatedly upon the need for effective and meaningful governance that delivers. We don't have a shortage of ideas, we have a massive deficit when it comes to effectiveness of implementation. There's a huge amount of low hanging fruit that involves just getting different ministries to work together in harmony to effectively enable capital to be deployed into investments, and to drive growth. Modi has alerady demonstrated he can do that pretty well at the state level, and if elected, should focus on scaling that up at the federal level.

Rahul Mehta wrote:Suraj,

Lets keep politics aside. Lets say all administrative infrastructure is there. Then is it good idea from economics point of view to cancel all taxes and have ONLY transaction tax of x% on all bank transactions?