Indian Economy : News,Discussions & Updates
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Mihir sharma (who has well known dull axe to grind) brings up a few good points (conceptually) here in the inner article part (once you get past the intro and conclusion stuff that is same ole same ole), but he does not back it up with evidence (as usual).
What are the "subsidy" amounts being given to "labour intensive" (capital transfer friendly + efficient) versus "labour non intensive" (capital transfer unfriendly + inefficient)?
If the charge is one of "throwing at all and over the place" it needs some numbers to back it up.
Did he do a basic analysis of the breakdown of the FDI India got in last fiscal for example (84 billion USD or so) and what the composition changes are from say a decade ago (that will take a similar decade to play out).
Only then can we move on to the root issue that propels differences..... the very different legislative and political environment between China in the 80s in the Deng era compared to India in the 90s and today....that dictate (given prioritisation sequence) in huge measure what the basic contours are for corporates (and MSMEs supplying them) to work with. Along with moving into discussion of friendliness and efficiency of the labour intensive argument itself.
Insinuating that "subsidies" + "protectionism" are failed concepts in and of itself.... reeks of the most vile neo-lib post-industrial complex copy pasted from sunset coterie in the West (funded by certain finance industries and hedge funds in the end).
East Asia (be it Japan, Taiwan and South Korea during cold war) or China (80s cold war and then post cold war) certainly did not eschew subsidies and protectionism. They targetted and prioritised it (giving starting inertia and initial rolling friction involved) according to the demand pull and supply push of the day that they could harness the most.
Mihir Sharma like many of his ilk has done zero analysis of what China's forex pile even is to begin with (if he is treating it as some first principle for India's case selectively)....its a subsidy pile literally the size of India's yearly output at this point.
Why Modi's India can't repeat the 1991 reforms miracle of Narasimha Rao & Manmohan Singh
PM Modi's popularity remains unmatched, as does his flair for dramatic gesture. But his govt and Indian bureaucracy aren’t set up to develop a consensus behind liberalising reforms.
theprint.in
Given the FX reserves of PRC are accumulated by running current account surplus:
In effect its level (3 trillion dollars) represents what PRC (by various CCP policies but also underlying economic conservatism in society) underprices its labour by....at least the part of iceberg that sticks out above surface for it (USD being a foreign currency not issued by PRC govt).
It is effectively a subsidy (the CCP portion of it compared to where CCP policies w.r.t housing investment monoliths and other investment monoliths) as it is consumption from the world that PRC is effectively holding off on (which if allowed to happen would provide more man hours for labour in other countries to address it....a more "free market" level playing field if you will for purpose of this exercise).
i.e right now it is situation of we will not buy back (from you) amounts that you buy from us (specifically the man hours involved behind them) to this degree (3 Trillion)....
.....rather we would rather hold bonds and securities (natural since you want the forex to inflation track with source USD). This in effect shores up the demand pull from the importing countries as well when they run govt budget deficits (issuing such bonds in first place).
This distorts the exchange rate (when you compare blue collar worker to blue collar worker and their consumption profiles available to them) and can be argued to be a subsidy transfer (since its a govt allocation lever policy) on the forex accumulator side...as to the level its govt is involved in it.
Essentially its a big (ongoing) subsidy towards the raw Chinese labour man hour supply.
This is what is meant by all the articles talking about CCP and PRC being mercantile in nature rather than free market (when it comes to trade and overall economic policy).
Here's a list of Indian exports in 2021........
Exports Imports Deficit
January - $27.5 Bn $42 Bn $14.5 Bn
February - $28 Bn $40.5 Bn $12.5 Bn
March - $34.5 Bn $48.4 Bn $14 Bn
April - $30.6 Bn $45.7 Bn $15 Bn
May - $32.3 Bn $38.5 Bn $6.2 Bn
June - $32.5 Bn $42 Bn $9.5 Bn
*All these are merchandise exports.
@randomradio, @_Anonymous_, @Nilgiri, @Gautam, @Hydra, @Ashwin
Exports Imports Deficit
January - $27.5 Bn $42 Bn $14.5 Bn
February - $28 Bn $40.5 Bn $12.5 Bn
March - $34.5 Bn $48.4 Bn $14 Bn
April - $30.6 Bn $45.7 Bn $15 Bn
May - $32.3 Bn $38.5 Bn $6.2 Bn
June - $32.5 Bn $42 Bn $9.5 Bn
*All these are merchandise exports.
@randomradio, @_Anonymous_, @Nilgiri, @Gautam, @Hydra, @Ashwin
Also, are services exports counted in the annual figures?
Not if such figure is listed as goods/merchandise exports.
They would be included in total exports (Goods + Services) or similar.
Generally you can tell what it is by the rough volume when talking in annual terms
India scores on average in last few years in these range:
300+ billion range for goods
200+ billion for services
500+ billion for total
Gross Foreign Remittance which is not included in these (but is part of current account like them) is generally in the 70+, 80+ billion range now I believe.
Venture capital firms turn to India with China’s tech crackdown - Times of India
India Business News: Venture capital investors have a new favorite developing market. The value of venture deals in India surged to $7.9 billion in July, while China inves
timesofindia.indiatimes.com
Basically an offline version of digital currency to expand digital transactions in remote areas.
Ex-banker gets her turn as billionaire startup CEO in Nykaa IPO
If the IPO goes as planned, Nykaa will be Indias first women-led unicorn to go public.
So finally our Bureaucracy had to give up its Ego and accept its mistake
World confused over what India has achieved through retrospective taxation: Investment law expert Prabhash Ranjan
The retrospective tax amendment should never have been introduced by the government in the first place, given that it has achieved precious little in nearly a decade, Prabhash Ranjan, Senior Assistant Professor at South Asian University’s Faculty of Legal Studies, told Moneycontrol. However, the move will still assure global investors of predictability in India’s tax policy, he stressed.Ranjan, who is the author of ‘India and BITs’, also spoke about what to expect from India’s trade negotiations, many of which are stuck over bilateral investment treaties (BITs). Edited Excerpts:
Q. What kind of impact will India’s reputation face globally, having lost successive domestic and international rulings and then changing tax rules?
A. While doing away with retrospective taxation is a significant development that the investor community would surely welcome, it leaves the world confused about what India ultimately achieved in these nine long years. The law should not have been amended retrospectively in the first place. The NDA government should have corrected the blunder of the UPA government as soon as it took office in 2014 instead of waiting for these disputes to play out.
Q. Will the decision help in ending the hostility between Vodafone, Cairn and the government on the retrospective taxation issue if the companies agree to the government's terms?
A. It depends on whether Vodafone and Cairn Energy accept the conditions given in the Bill. If both are happy getting back the principal amount without interest and waiving their right to bring claims then it might bring the disputes to an end. However, if they would also like the government to pay the interest and other costs as ordered by the two ISDS tribunals, then the disputes will continue. This is especially true for Cairn Energy because they stand to lose around $0.5 billion — the additional amount they could have got as per the arbitration tribunal's order, in the form of interest and other costs.
Q. Does the latest decision still leave the government open to legal action by other corporates on related matters?
A. Unlikely unless foreign investors would like to claim interest on taxes already paid, due to the retrospective taxation.
Q. Given how India is currently focused on pulling in investments and global value chains, especially from China, what impact do you see this having on investment flows?
A. This move will definitely lift investor sentiment. But whether it would result in greater investment inflows is difficult to answer because investment inflows do not depend on just one factor/law.
Q. Will the latest decision require a change in India’s model BIT framework?
A. No. India’s model BIT excludes taxation measures from the purview of the investment treaty. So, India can continue with the same provision if it is convinced that taxation matters should not be arbitrated before investment treaty arbitration tribunals.
Q. What impact do you think the latest move will have on ongoing free trade agreement negotiations, such as the ones with the EU, UK and US? All of these remain hamstrung over India’s insistence on keeping the BIT model as the basis of investment rules... foreign nations are protesting India prioritising domestic arbitration over international ones.
A. It would have a positive impact in terms of sending out a signal that India is serious in offering a certain and predictable legal and taxation framework to foreign investors. I do not think India’s stand on taxation in BITs is going to change due to this amendment. So, the question of taxation in the investment treaty negotiations will continue to be an important issue.
Interview | World confused over what India has achieved through retrospective taxation: Investment law expert Prabhash Ranjan
While the government’s move to do away with the controversial retrospective taxation amendments has been late in coming, it will nonetheless signal policy stability to foreign investors, says senior international investment and tax law expert Prabhash Ranjan
Indian economy shows signs of rebound: Here’s data showing green shoots
The Indian economy is showing signs of a strong rebound from the Covid-19 second wave lows. CNBC-TV18’s Latha Venkatesh has the fine print. There are green shoots, but they're not really grown into trees yet, she says.Export Data
The latest data we have is a superb number. It is the highest data and it is certainly a multiyear high, maybe an all-time high, definitely much higher than the long-term average.
Import Data
Imports, again at $46 billion is a near-term high. Looking at the non-oil non-gold imports, which really matters for growth, there as you can see, it's not that good. A lot of metals, chemicals and manufacturing items have been imported. So Indian economy is recovering enough for imports to grow. But the non-oil and non-gold imports are not quite there just yet.
Manufacturing PMI
This has shown a fairly decent recovery from 48 to 55. We have seen a 55 to 60 almost from last September to up until this March. So we are nowhere near pre-Covid enthusiasm.
Auto sales
Bajaj Auto is the only one which showed in terms of two-wheelers, a very good number, almost their usual average and that's because the exports are doing well. If you look at Hero MotoCorp it is still struggling. Hero, in 2018-19 used to average six to seven lakh vehicles a month. So they are a distance from normalcy. Maruti again, it's an improvement from perhaps the terrible numbers in May. But it's quite a distance from the three-year-ago level, showing that the performance is not all that good.
GST collections
It is an excellent number at 1.16 lakh crore, considering the manufacturing and services are not working to capacity. So, this is a smarter collection. The government is using data mining, interfacing database data sets, and therefore it doesn't show growth as much as it shows good tax implementation. The point is it is a seven percent two-year CAGR and not comparing to last year because last year was terrible 33 percent above last year, but seven percent above that is a two years CAGR of seven percent clearly shows they're getting it right in implementation it is higher than pre-COVID-19 level.
Direct Taxes
Award for the best performance clearly goes to direct taxes, especially corporate taxes. Total tax mop-up by the Centre at 4.13 lakh crore in the first quarter. It is three times what it was last year, same time. And the important part is what is it as a percentage of the full year, it is 27 percent of a full year. In any normal year, we would have done only half of that. So that's the most important point 26 percent of full-year tax collections in the first three months is a record, we normally do about 15 percent.
So excellent corporate profits mean excellent growth. And if you look at the CAGR over two years, it is a 37 percent CAGR. If you only want to compare it to last year, it is a 129 percent growth. And if you're comparing it over two years, it is a 77 percent growth. And you know, 2019 was a normal year. So clearly, corporates are doing very well. But maybe that is already reflected in the mid-cap index. That one is up 35 percent since January, the small-cap index is up 50 percent since January.
Indian economy shows signs of rebound: Here’s data showing green shoots - CNBC TV18
Business News: Get the latest Business News, Live Share & Stock Market Updates, Top News from India and across world. Read Top Business News and updates on financial, economic and banking news on CNBCTV18.
India's equity mutual funds show record inflows in July
MUMBAI, Aug 9 (Reuters) - Inflows into India's equity mutual funds hit a record high last month, industry data showed, as ebbing COVID-19 infections, a soaring stock market and low interest rates drove confidence among investors despite warnings of a potential third wave.Mutual funds that invest in equities showed a net inflow of 225.83 billion rupees ($3.04 billion) in July compared with an inflow of 59.88 billion rupees in June, data published by the Association of Mutual Funds in India (AMFI) showed.
"The decline of the second wave, strong recent returns from equities, and the stability of the markets despite the second wave have added to investor comfort and confidence," said Arun Kumar, head of research at online investment platform FundsIndia.
Last year, a nationwide lockdown to prevent the spread of the coronavirus and its economic impact spooked investors. Many booked profits and chose to stay away as stock markets recovered from the crash, leading to the first outflows in four years from equity funds in July 2020.
That has changed.
"A lot of investors who have accumulated higher savings in the last year due to lower spending and were staying on the sidelines are getting back," Kumar said.
India's stock markets scaled record highs last week as a slew of companies reported strong earnings and certain economic indicators led to expectation of a demand recovery. The exuberance also led to a number of new fund launches that in turn have driven flows into equity funds.
Systematic Investment Plans (SIPs), popular among retail investors for allowing investment of a fixed amount regularly in schemes, also rose to a record 96.09 billion rupees in July from 91.55 billion rupees in June.
Daily coronavirus cases in India have dipped to 30,000 to 40,000 from a high of 400,000 at the peak of the second wave. But the government has warned that the danger has not yet abated with the more infectious Delta variant straining healthcare systems in some countries.
India's equity mutual funds show record inflows in July
Inflows into India's equity mutual funds hit a record high last month, industry data showed, as ebbing COVID-19 infections, a soaring stock market and low interest rates drove confidence among investors despite warnings of a potential third wave.
India’s business resumption hits record high: Nomura
“The Nomura India Business Resumption Index rose to a record high of 99.4 for the week ended August 8, from 94.0 last week, near the pre-pandemic level (100), and surpassing the pre-second wave peak (of 99.3 in mid-Feb). This suggests that the swifter-than-expected recovery from the second wave...
India's retail inflation for July at 5.59%
Consumer prices rose 5.59% in July from the same month last year, lower than June's 6.26% annual inflation rate and below a Reuters poll forecast of 5.78%, data released by Ministry of Statistics showed on Thursday.
India's sugar exports touch 5.11 mn tonnes so far this year: AISTA
Sugar mills have exported 5.11 million tonnes of the sweetener so far in the ongoing 2020-21 marketing year ending September, with maximum shipments to Indonesia, trade body AISTA said on Thursday