Indian Economy : News,Discussions & Updates

[noksss]

For what? Do you think companies which got battered in this crises has ample money to set up a plant asap? They will take time first to reassess. This is a long term process. I would be surprised even if 10% of companies sets up alternative supply line in other countries. Even if they do, India has to compete with Vietnam.

Media is exaggerating the news coming out of US and Japan. We have toget companies out of our own merits

Japan is investing money to move companies out of china and trump too is keen on cutting the dependency from china .


I see 2 things good things done by government now


1) The government in April reached out to more than 1,000 companies in the US and through overseas missions to offer incentives for manufacturers seeking to move out of China

2) Having a land pool and offering them to interested companies instead of them having to do this .


Lets hope india dosent miss the bus this time

India Looks To Lure More Than 1,000 US Companies Out Of China

India is seeking to lure US businesses, including medical devices giant Abbott Laboratories, to relocate from China as President Donald Trump's administration steps up efforts to blame Beijing for its role in the coronavirus pandemic.

www.ndtv.com

 

[noksss]

No, i was stating that indirect taxes have same rate of tax for someone on cycle to someone on BMW, so they take away larger chunk from the pocket of poor.

Governments resort to these easy methods for quick bucks effectively killing the purchasing power of lower strata thereby widening the already humongous gap.


Please post links to the graphics you shared, that tax contribution graphic does not state 26% of which tax. So that I can be through with my reply though it's hard on mobile.

Found that 85% subsidy on ticket yet?

The very reason why you have many GST tax bracket is to cater both end of the society , all those essential items for survival for those on cycle is either with zero or 5% bucket and all other remaining items are in either 18% or 28% bucket . Infact , we have only 200+ items in the 28% bracket now . if you want to further divide the GST tax based on income , you end up having a very complicated tax system which affects the ease of doing business .

GST Rates: Items that will continue to be expensive

Only luxury and sins goods are now only in the highest tax bracket and items of daily use are shifted to 18 per cent.

economictimes.indiatimes.com

 

[BlackOpsIndia]

all those essential items for survival for those on cycle is either with zero or 5% bucket and all other remaining items are in either 18% or 28% bucket

And those essential items are only used by those on cycle? People with BMW don't eat vegetables, rice, wheat, lentils, toothpastes, soaps? They pay same rate no? Different brands don't put them in different tax bracket.

if you want to further divide the GST tax based on income

Nobody is saying to divide GST based on income, it's not even possible. What I was saying is clearly mentioned in that post.

Indirect taxes and inflation both take out the larger portion of income from people earning less, therefore should be avoided and reduced instead they are being increased as quick fix to make some money which wont help.

Also a note - Talking about cronies or ill practices does not automatically becomes demonizing "Rich". You want to give them tax break, well and good, just don't do it at expense of others. Do it when you have extra money, not by increasing petrol prices because it sinks the purchasing power and kills the demand, something corporates need to stay rich.

 

[Ashwin]

No, i was stating that indirect taxes have same rate of tax for someone on cycle to someone on BMW, so they take away larger chunk from the pocket of poor.

What? BMW is taxed at 28% + cess.
Cycle is taxed at 12%

Reduce GST on bicycles to 5 per cent from current 12 per cent: Hero Cycles

"The budget must focus on reviving slumping demand across the country through a series of measures including re-adjusting GST slabs to put more disposable income into the hands of people," Hero Motors Company (HMC) Chairman Pankaj M Munjal said in a statement.

m.economictimes.com

Governments resort to these easy methods for quick bucks effectively killing the purchasing power of lower strata thereby widening the already humongous gap.

It's a Strawman. Give example instead of sweeping statements.

As I was saying, middle class do not contribute that much to the government revenue. All direct tax are proportional to income thus more tax will equally hurt the minority 'rich'.

These numbers are easily accessible.

 

[BlackOpsIndia]

What? BMW is taxed at 28% + cess.
Cycle is taxed at 12%

Give example instead of sweeping statements.

It's that nurse saga all over again, forcibly trying to somehow fit your argument? I mentioned the commodities specifically yet somehow you found BMW and Cycle instead of the point.

All direct tax are proportional to income thus more tax will equally hurt the minority 'rich'.

and where did I say otherwise?

Just to win argument you start creating your own narrative, your own examples. I was talking about cronies you inserted "Rich" out of nowhere, it's a amusing. Take a deep breath nobody is coming to take money of rich, atleast read before jumping the gun.

I understand Rich feed the burden of earth poor and I must never do the blasphemy of talking otherwise atleast see the context.

 

[Ashwin]

It's that nurse saga all over again, forcibly trying to somehow fit your argument? I mentioned the commodities specifically yet somehow you found BMW and Cycle instead of the point

Which point ? You gave the example of BMW and cycle.

I'm not fitting any argument. I'm asking for clarification of your argument.

This is your statement.

i was stating that indirect taxes have same rate of tax for someone on cycle to someone on BMW, so they take away larger chunk from the pocket of poor

Just to win argument you start creating your own narrative, your own examples. I was talking about cronies you inserted "Rich" out of nowhere, it's a amusing. Take a deep breath nobody is coming to take money of rich, atleast read before jumping the gun.

Cronies are not rich ? Who is a crony ? Only ambani?

You specifically mentioned 'salaried' then who else is left ? (That majority which fits in sub 10 lakh)

First clarify your statements.

How is government going to take more money from the salaried disproportionately ?

How is indirect tax same rate for the poor (ok commodities)?

Which is this quick buck scheme of government? Again asking for example.

 

[BlackOpsIndia]

Cronies are not rich ? Who is a crony ? Only ambani?

Cronies (short for crony capitalists) in Indian context is a limited group of people who influence policy of government of India by funding political parties.

Yes Ambani fit there quite nicely, there is more than enough evidence in public of their direct involvement in selecting ministers. (Radia Tapes)

You specifically mentioned 'salaried' then who else is left ? (That majority which fits in sub 10 lakh)

This sub 10Lakh limit was decided by whom? Every single graduate from my college goes above this limit, all from lower middle class. Lot of them go above 20 and 25 comfortably. How you got this limit is beyond me and depending on your own limit you dismissed middle class, just like that.

Which is this quick buck scheme of government? Again asking for example.

That scheme is indirect taxes, you increase the duty today and by the end of day you will have that collected, simple and easy.

How is indirect tax same rate for the poor (ok commodities)?

Indirect tax rate is same for everyone rich or poor. For ex- I consume services at 18% tax rate so as a daily wager and the richest one. What's so difficult here? Are you saying since he is rich he will consume more but tax rate remain same for both no?

 

[Ashwin]

Cronies (short for crony capitalists) in Indian context is a limited group of people who influence policy of government of India by funding political parties.

Yes Ambani fit there quite nicely, there is more than enough evidence in public of their direct involvement in selecting ministers. (Radia Tapes)

Good, Now how are getting left out?

This sub 10Lakh limit was decided by whom? Every single graduate from my college goes above this limit, all from lower middle class. Lot of them go above 20 and 25 comfortably. How you got this limit is beyond me and depending on your own limit you dismissed middle class, just like that.

By income tax slab!

If you are earning 20lakh+ you are 5% of the taxpaying Indian!. (Should i explain how small of a percentage they are in total population?)

Thus by Indian context, they are rich. So the term 'salaried class' shouldn't be used as liberally to describe a school teacher and software engineer with starting 10lakh+ salary.

You can't just go by Sharma Ji's beta and extrapolate to the whole taxpayers.

If these new graduates are making 20lakhs then they are definitely not working for government or PSU. Thus, for a corporate rich guy. By your definition almost all Indian big corporates are cronies. Because they fund political parties!. More reason to put them in 'rich'

Indirect tax rate is same for everyone rich or poor. For ex- I consume services at 18% tax rate so as a daily wager and the richest one. What's so difficult here? Are you saying since he is rich he will consume more but tax rate remain same for both no?

Ok, GST. This goes back to the first point. All essential commodities are in lower slab and luxury/entertainment etc in the highest slab.

That is the most you can fix on an indirect tax. What else are you proposing?

 

[BlackOpsIndia]

So the term 'salaried class' shouldn't be used as liberally to describe a school teacher and software engineer with starting 10lakh+ salary.

Not really, school teachers also make similar wages, government teacher at 4600Grade Pay they start at around 7.5 Lakh per annum, an engineer starts at half of it in Wipro TCS. They all are middle class. You are stuck some 7-8year ago.

All essential commodities are in lower slab and luxury/entertainment etc in the highest slab.

Essential commodities are used by everyone and they are taxed same. Entertainment is not in highest tax slab either.

What else are you proposing?

Lowering of indirect taxes and it's not just me proposing it. Direct tax collection should be increased not by increasing tax rates but by those who evade taxes which is again the business man because salaried ones pay their taxes at source. That is why I used salaried class because they pay tax before getting paid but businessman easily evade tax but it got derailed to rich and poor and what not.

Biggest example is ecommerce giant flipkart, even with turn over of billions they don't pay a penny in Income Tax. There are countless such tax evaders but government don't catch them instead choose easy way of increasing tax revenue which is harmful for economy.

Total number of salaried class paying taxes in Assessment year 2019 is 29 Million
Total number of people paying taxes disclosing source of income as business only - 22 Million (2.2 Crore).

Do we really have more people employed paying taxes than those doing business? A simple road trip in any city will disclose the reality and mostly in smaller cities where business is the only source of employment.

Going ahead total income reported by salaried class INR 20 Trillion.
Total income reported by business as source of Income - INR 9 Trillion.

I was antrepreneur and made decent money, when I went to CA he said you have to just show 8% (reduced to 6% now) of turn over into income and pay tax on that as income. This never attracts any problem and if you want to pay nothing you show loss, it will cost you few extra bucks but CA will cook the books for you. With some stupid sense of nationalism in me I showed real income which around 70-80% of turnover as income and paid heavy taxes on it. My friend never got carried away and paid ZERO as income tax even when he was earning more than me.

It amuses me when you present business class as some kind of messiah. I am part of that fraud community, I know the reality. Most big startups never pay a dime in income tax and neither does Lala in small cities living in multi crore houses.

This need to change, but what does government do? Increase tax on poor, and when I talk about it suddenly I am demonizing Rich.

 

[Vicky]

See US and Japan are giving money to
Their companies at ZERO PERCENT
Interest rates

So finance is not a problem for these companies

And if their respective governments want to push it really hard
Then it can be done

Now India too has to get its act together

Lol. US is giving money at 0% to all companies in US seeking loans. Moreover Trump wants companies to set-up shop inside the United States and not India or Vietnam. However his state dept team has plans for companies who cannot set plants in US due to cost factors and instead focus on counties like India , Indonesia and Vietnam.
Japan has allocated just 2.2B$ for companies wanting to relocate from China. 2.2B for Japanese is peanuts. Chino Japanese trade per year is around 650B. These are just talks. Remember during every Vibrant Gujarat or Rising TN govt talks like 10 lakh crore investment bla bla bla every 2 years. If all had materialised India should had like 30 lakh crore of investments as claimed by every state in last 10 years. Did we?

When things go to normal, companies will forget relocating. Only an increase of trade war can make them consider moving.
However it's not a negative thing the govt is doing. But it's not enough until you clear the bottlenecks of efficient logistics.

 

[Vicky]

Japan is investing money to move companies out of china and trump too is keen on cutting the dependency from china .


I see 2 things good things done by government now


1) The government in April reached out to more than 1,000 companies in the US and through overseas missions to offer incentives for manufacturers seeking to move out of China

2) Having a land pool and offering them to interested companies instead of them having to do this .


Lets hope india dosent miss the bus this time

India Looks To Lure More Than 1,000 US Companies Out Of China

India is seeking to lure US businesses, including medical devices giant Abbott Laboratories, to relocate from China as President Donald Trump's administration steps up efforts to blame Beijing for its role in the coronavirus pandemic.

www.ndtv.com

India has been missing the bus for a long time. Intel wanted to set a factory around 2006 either in Chennai or Goa. JJ didn't offer them free land. They didn't even go to other states. They went straight to Vietnam and rest is history.

Having a land pool is nothing unless it's connected to logistics network. If we have excellent network even without Covid 19 companies will move here. The GoI has been literally begging for last 3 years to set up shops here. Only mobile phone manufacturing is coming cos the govt has additional duty on imports. Any other product manufacturing is coming cos the companies plants in China is full and they don't have space for more production then they send that manufacturing project to India. I work in the field. Some projects are won in their own merits but they don't make much profits cos every foking component for manufacturing has to come from China or US. That increases the lead time and the cost.
We are starting to make some connectors now and I am seeing some made in India labels for RF connectors here in Canada. Pleasantly surprised. But we need to garner more manufacturing, not just mobiles.

US is giving impetus to move to mainland. Japan's 2.2B is very very less comparing the amount of business and companies in Chinese mainland. India has to compete and win in her own merits

 

[Ashwin]

Not really, school teachers also make similar wages, government teacher at 4600Grade Pay they start at around 7.5 Lakh per annum, an engineer starts at half of it in Wipro TCS. They all are middle class. You are stuck some 7-8year ago.

Teacher and engineer were an example on the slab. Not to be taken literally.

Essential commodities are used by everyone and they are taxed same. Entertainment is not in highest tax slab either.

Again, it is in the lowest slab (No way to fix this). Entertainment is as high as 30% including to state cess.

Lowering of indirect taxes and it's not just me proposing it. Direct tax collection should be increased not by increasing tax rates but by those who evade taxes which is again the business man because salaried ones pay their taxes at source. That is why I used salaried class because they pay tax before getting paid but businessman easily evade tax but it got derailed to rich and poor and what not.

Biggest example is ecommerce giant flipkart, even with turn over of billions they don't pay a penny in Income Tax. There are countless such tax evaders but government don't catch them instead choose easy way of increasing tax revenue which is harmful for economy.

Total number of salaried class paying taxes in Assessment year 2019 is 29 Million
Total number of people paying taxes disclosing source of income as business only - 22 Million (2.2 Crore).

Do we really have more people employed paying taxes than those doing business? A simple road trip in any city will disclose the reality and mostly in smaller cities where business is the only source of employment.

Going ahead total income reported by salaried class INR 20 Trillion.
Total income reported by business as source of Income - INR 9 Trillion.

I was antrepreneur and made decent money, when I went to CA he said you have to just show 8% (reduced to 6% now) of turn over into income and pay tax on that as income. This never attracts any problem and if you want to pay nothing you show loss, it will cost you few extra bucks but CA will cook the books for you. With some stupid sense of nationalism in me I showed real income which around 70-80% of turnover as income and paid heavy taxes on it. My friend never got carried away and paid ZERO as income tax even when he was earning more than me.

It amuses me when you present business class as some kind of messiah. I am part of that fraud community, I know the reality. Most big startups never pay a dime in income tax and neither does Lala in small cities living in multi crore houses.

This need to change, but what does government do? Increase tax on poor, and when I talk about it suddenly I am demonizing Rich.

Flipkart didn't pay what?

Tax thorns haunt Walmart-Flipkart deal, foreign shareholders want clarity

AAR is a legally constituted body whose ruling is binding on the applicant as well as government authorities

www.business-standard.com

Flipkart co-founder Sachin Bansal pays Rs 699 crore tax on gains from Flipkart-Walmart deal

Walmart deposited Rs 7,440 crore as withholding tax several months after it acquired Flipkart for $16 billion.

www.indiatoday.in

All these statups are heavily loss-making machine in the pursuit of gaining market share by burning someone else's money.

Why Is Flipkart Making Losses Despite Revenue Growth?

Amazon and Flipkart have both continued to rely on heavy discounts, spending millions to attract customers, which has piled on the losses.

inc42.com

Oyo's loss rises sevenfold but says no brakes on expansion

The hospitality firm reported widening of its consolidated net loss to $335 mn for the financial year ended March 2019, mainly on account of international expansion.Oyo’s loss in its oldest market India narrowed to 14% of revenue in the last fiscal from 24% in the year-ago period

www.livemint.com

Paytm's annual loss doubles to $549M | TechCrunch

Running a payments business in India is not cheap. Just ask Paytm. One of India’s largest payment companies reported a net loss of Rs 3959 crore ($549

techcrunch.com

Swiggy parent’s losses mount 5X to Rs 2,363 crore

Swiggy spent Rs 1,593 crore in delivery costs and Rs 423 crore on salaries and wages. The company also spent Rs 778 crore on marketing and advertising expenses to compete with Zomato. Part of Swiggys expenses can be accounted by Rs 113 crore lost in order cancellation.

economictimes.indiatimes.com

This goes to all businesses, assuming all are making a killing, and not paying anything is never correct.

Total number of salaried class paying taxes in Assessment year 2019 is 29 Million
Total number of people paying taxes disclosing source of income as business only - 22 Million (2.2 Crore).

Do we really have more people employed paying taxes than those doing business? A simple road trip in any city will disclose the reality and mostly in smaller cities where business is the only source of employment.

Going ahead total income reported by salaried class INR 20 Trillion.
Total income reported by business as source of Income - INR 9 Trillion.

These numbers are useless without more details. What is the small business and corporates break? Does these salaried class include private corporates or not.

This logic escapes me. You expect more people to be doing business than salaried? (Does 22 million include employees of the business?) That too with more than 20lakh revenue and 5lakh personal income?

Of course, there should be strict measures against tax evaders. That is true everywhere. Even in the US. We are largely a gray economy and now only it's changing. (Even your example is less plausible now because of GST introduction)

Starting a business is hard, running a profit-making business even harder. Its risky and uncertain. ( Im sure knows that if you were one.) I'm not saying a businessman is a messiah.Im saying taxing rich more is counterproductive. Im against demonizing them because a small percentage of them make envious money. Ignoring the risks he/she took or how many people he employed. Even in the case of ambani and Jio, he took a massive $35 billion risk. It could have taken him the same path as his brother.

Imagine a Narayana Murthy, who is well educated who had the option to migrate to western countries choosing to stay back and starting a business that produces massive wealth for the stakeholders and creating employments in lakh out of thin air. In my book he is a hero.

I come from a land where everything is looked through the eyes of the bourgeoisie and proletariat class struggle. Where they despise businessmen. (And they go outside work under a capitalist system). So my point of view could be extreme.

 

[_Anonymous_]

https://twitter.com/x/status/1258462616264994816

https://twitter.com/x/status/1258463405238697985

 

[Quicksilver]

If you let go of the wealth-generating big business (aka 'cronies'), how will the country survive? The 'rich' can always jump ships. The perpetual demonisation of the 'rich' and underplaying their role in the prosperity of the country will not do anyone any good.

@Ashwin I never knew I would agree with you! but this is very well put.

 

[Quicksilver]

And those essential items are only used by those on cycle? People with BMW don't eat vegetables, rice, wheat, lentils, toothpastes, soaps? They pay same rate no? Different brands don't put them in different tax bracket.

so you want the same item:
vegetable

taxed differentlt for different people:
BMW owner, ppl on cycle (Assuming this is difference in income and not choice of vehicle)

Nobody is saying to divide GST based on income, it's not even possible. What I was saying is clearly mentioned in that post.

you are conflicting your own suggestion from the same post if you wanted two people to be taxed differently for same product.

if you want them to pay differently for same product, that already exists through the concept of fair price shop (public distribution) or ration shop is based on the above. The govt still issues a ration card and the folks on the cycle can get the grocery at reduced amount - paid for by the tax paying folks (the BMW guy)

 

[BlackOpsIndia]

so you want the same item:
vegetable

taxed differentlt for different people:

No, I explained it multiple times above what I meant, please go thru it instead of making these conclusions.

 

[RISING SUN]

https://twitter.com/x/status/1258579431813087232

 

[Gautam]

Rather interesting development :

Trading at 17-year-old price, this PSU is a play on India bid to draw China factories

At Rs 23, shares of this company are trading at the lowest level since 2003.

By Amit Mudgill, ETMarkets.com | Updated: May 07, 2020, 12.44 PM IST

NEW DELHI: Global multinational companies are looking to shift value chains out of China following the coronavirus-led disruptions, and India, which has so far lagged behind, wants its share of the pie in this big shift.

To give 'Make in India' a lift, a domestic PSU firm has called for expression of interest (EOI) from foreign companies, which wish to use its currently idle factories.

At Rs 23, shares of this heavy engineering company are trading at the lowest level since 2003. This is when the company’s net cash position accounts for 70 per cent of its market-capitalisation (m-cap), and receivable book stands at nearly five times its m-cap at Rs 38,000 crore.

Analysts said if things materialise, this will be favourable for the company, whose half the land bank remained un-utilised thus far. Estimating the first such deal to take place only after 12-18 months, they expect the stock to see a re-rating soon.

The stock is BHEL (Bharat Heavy Electricals Limited). CLSA says BHEL could emerge as an engineering R&D services provider, a contract manufacturer, or a lessor of urban-area industrial land. “This could be a test case of a central public sector enterprise monetising its assets to unlock value against government divestment. Success should determine the extent of stock rerating to its asset value,” the global brokerage said.

A strategic buyer could unleash working capital efficiency, which has blocked a substantial part of BHEL’s balance sheet, it said.

“Assuming 90 per cent value of its gross block and 95 per cent recovery from its receivables, BHEL could be worth about 4.5 times the current price,” it said.

The PSU is looking to offer 16,400 acres of landbank in integrated facilities, centrally located in major cities, industrial clusters and demand centres. MNCs eyeing India face a lot of problems in securing land.

“India has so far lagged in grabbing a share of the global supply chain shift from China. One of the key reasons for this underperformance is lack of ready-made land bank, delay in approvals and fear of dealing with Indian bureaucracy,” said Emkay Global.

BHEL said it is looking for partnerships to manufacture LCD panels for TVs and mobile phones, transportation products such as rolling stock, locomotives and traction motors and heavy electrical equipment.

The move came after the US Secretary of State Mike Pompeo said on April 29 that his government was working with India, Japan, Australia, New Zealand, South Korea and Vietnam to reduce reliance on China.

Even in the most optimistic scenario, the first revenue contribution from such a partnership will materialise only after 12-18 months, Emkay said. “However, we believe the stock offers an attractive risk-reward profile.”

CLSA noted that more than 50 per cent of the land is unutilised and could be worth more than the market capitalisation of the company.

BHEL’s m-cap at present stands at roughly Rs 8,000 crore. Once a laregecap, the company has lost 93 per cent of its value in last 10 years. The firm’s order book stood at Rs 1.09 lakh crore at the end of December quarter.

The government has asked embassies abroad to identify companies scouting for options. Invest India, the government’s investment agency, has received inquiries mainly from Japan, the US, South Korea and China, expressing interest in relocating to the Asia’s third-largest economy, Bloomberg reported.

On Thursday, BHEL’s shares traded at Rs 23, with a trailing 12-month P/E multiple of 10.77 times.

“We continue to see near-term weakness with slow orders and bulging receivables. However, the steep stock price correction coupled with strong balance sheet strength and long- term potential make a case for an earning upgrade,” said Globe Capital. It has a target price of Rs 41 for the stock. .

CLSA has a 12-month target of Rs 40 on the stock while Emkay has a target of Rs 37.

stocks to buy today: Trading at 17-year-old price, this PSU is a play on India bid to draw China factories - The Economic Times

 

[Gautam]

https://twitter.com/x/status/1258386656261861377

https://twitter.com/x/status/1258657350694498305

https://twitter.com/x/status/1258380555982221314

 

[Ashwin]

Debt fueled stimulus incoming. So much for criticizing UPA stimulus during recession 08.