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Macro Economy
Jettison Dogmas to Resolve India’s Complex Economic Woes
- Published on 19 September 2019
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(Image Courtesy: taxindiaonline.com)
“If I were to say that on the strength of these conversations, many and long, I pretend to know all about India, I should be foolish. I do not dogmatise. The man who dogmatises at all is not, I suspect, the wisest of men. But the man who dogmatises about India — and I throw this out for this afternoon's discussion—is a pure simpleton”, stated Lord John Morley.
Lord Morley said this as Secretary of State for India while presenting Indian Budget for 1906 in the House of Commons. His speech is relevant to existing Indian economic slowdown. This is because Modi Government’s dogmatic reiteration of ‘Strong Fundamentals’ as its defence against any economic criticism has contributed to the situation.
Reiteration of this mantra became more emphatic since 2017 when many stakeholders talked of adverse impact created by demonetisation. And ‘Strong Fundamentals’ were invoked by Minister for Information & Broadcasting Prakash Javadekar last week while releasing report card on 100 days of Modi Government’s 2nd tenure.
Lord Morley’s wisdom require more recall as he presented a surplus budget. In that he proposed further cut in salt tax to enhance purchasing power of citizens. He admitted cost of governance was high when he talked about “fiscal reforms”. Yes, he used the term ‘fiscal reforms’ for colonized India way back in 1906!
The key to resolving present economic crisis thus lies in first defining it comprehensively by invoking Lord Morley’s speech. He said: “I have heard a thousand times that India is an insoluble problem. Well, the man who runs away from problems called ‘insoluble’ is not fit for politics. I have generally found that what is called an insoluble problem is after all a problem wrongly stated”.
The first step in grappling with economic slowdown and resulting jobs losses is to admit that a grave problem exists. It is certainly not a temporary one as claimed by Prime Minister Narendra Modi. Unemployment & layoffs won’t disappear with Labour Minister Santosh Gangwar’s claim that there is no jobs crisis.
Gauge Twin Shocks of Demonetization & GST Through Corporate Eye
- Published on 03 May 2019
- Hits: 4040
(Image Courtesy: BJP)
Modi Government “has been able to take many decisions which are historic and has ushered in a comprehensive and fundamental transformation”. Such decisions include Demonetisation and GST, according to BJP Manifesto for Lok Sabha polls.
Prime Minister Narendra Modi himself continues to defend twin disruptive decisions. He rubbishes reports of their negative impact in his speeches & interviews.
The Opposition, on the other hand continues to bemoan the problems resulting from these decisions. The Opposition stance is aptly reflected in a recent headline: “Rahul Gandhi says NYAY (minimum income guarantee scheme for poor) will revive the economy hit by demonetisation, GST”.
Amidst these contrasting positions, how do citizens capture apolitical picture of impact of twin decisions on economy? Leave aside independent studies, reports of multilateral institutions & credit rating agencies and authoritative opinion of experts?
The answer lies in researching and analyzing what companies think about it quietly. The companies share their perceptions about economic outlook forthrightly before the international investors. They do so miserly before domestic investors, taking advantage of weak disclosure requirements in India.
A glance through corporate disclosures to foreign investors in 2019 show that companies are indeed worried about the negative impact of both demonetization and goods and service tax (GST).
They have also voiced concern over uncertainty about likely impact of income tax-related General Anti-Avoidance Rules (GAAR), retrospective taxation and other taxation risks.
Drumming Strong Fundamentals with ‘Missing Fundamentals’
- Published on 08 July 2018
- Hits: 4219
(Image courtesy: narendramodi.in)
“India’s macro fundamentals strong, asserts Modi at AIIB meet”. “India’s macroeconomic fundamentals remain strong: Arun Jaitley”.
Should such headlines be accepted at the face value? No. Put chest-thumping claims through prism of multi-dimensionalism. And one would see patches of opacity and blur for want of clarity on fundamentals.
This jarring image is due to the fact that definitions, that form basis of flaunted statistics, are either missing or are outdated/nebulous.It is a fundamental problem with Government’s fundamental claims.
It exists in several domains extending from lack of definition of black money to shell companies. ‘Poverty’ and ‘out of school children’ (OOSC) also suffer from want of functional/standard definitions. Similar is the case with certain other aspects of economy such as varying definitions of formal worker followed by official agencies.
Add to this limitation the fact that Government does not collect statistics on certain aspects of economy such as how citizens’ use time. This is important indicator for unemployment, underemployment and ease of living in certain countries notably the United States.
Reckon also the fact that certain data are mere calculations/estimates made on paper work with certain assumptions.
Focus on Domestic Taxation for SDGs Shouldn’t Sustain ODA Laxity
- Published on 04 March 2018
- Hits: 6059
(Image Courtesy: The United Nations)
The governments’ urge to shore up tax revenues is universal. And this desire gets universal endorsement from multilateral development institutions (MDIs) when it comes to raising domestic resources for eliminating poverty & inequality on the earth.
But when the tax-raising objective gets subsumed into OECD’s 15-Action Points Base Erosion and Profit Shifting (BEPS) project & related tax reforms, the world should take a hard look at the means to achieve inclusive development agenda.
Four MDIs have lately been goading developing countries especially the poorest ones to pull their taxation socks to achieve United Nations (UN)-mandated Sustainable Development Goals (SDGs) by 2030.
The four MDIs are the UN, the World Bank, International Monetary Fund and Organisation for Economic Cooperation and Development (OECD).
Is the focus on taxation a smokescreen to implement BEPS project from the standpoint of developed nations that want MNC investments and their tax revenue back home?
Is focus on domestic tax revenue as financier for SDGs a ploy to divert attention from the West’s failure to comply with minimum level of official development assistance (ODA) that was globally agreed decades back?
Why quartet can’t hammer out a global agreement on levying global, innovative taxes as a new avenue for funding SDGs?
Macro Economy