India’s mutating crisis over economic reforms seems no end. The virus intrigued in Indian markets and economy is creating havoc all around. India is in dire need of its Avengers who can rescue it and revive the growth curve. The catastrophe in economic indexes is churning very swiftly be it FDI , Direct or Indirect Tax, Inflation rate , fiscal deficit or depreciation in rupee.
FDI : Foreign Direct Investment seems sluggish as it dips 8% this year. In recent time, investors are losing fidelity and have pulled out their funds from India as a part of “flight to safety” and are either holding cash or parked in safer bets such as US Treasury Bonds or even gold. As a result, rupee has emerged as the worst –performing Asian currency and is also at the bottom of the heap in the global sweepstakes.
With the govt. resorting to retrospective amendments to tax laws and planning to invoke general anti-avoidance rules (GAAR) from next April, the overall investment climate is seen to be more hostile towards international investors.
DIRECT TAX: The term direct tax generally means a tax paid directly to the government by the persons on whom it is imposed. It can be in the form of income tax, house tax, property tax, commercial activity tax
INDIRECT TAX such as a sales tax or a value added tax (VAT) are imposed only when a taxable transaction occurs.
Direct tax collection has been shabby with first quarter advance tax showing a marginal growth of 5% over the April-June period last year. Poor performance of direct tax collection has forced the govt. to defer income tax refunds. The low tax collection is a major concern for income tax department as it needs to register at least 15% growth to meet the budget target of 5.70 lakh crore.
INFLATION: The imbalance in supply and demands gives rise to what we call –inflation. Inflation is majorly due to high circulation of money in the market or increase in buying potential of individual or improved standard of living.
As we know that India is a supply constrained economy and have a per capita income much below $1500 ,so we need to grow faster to bridge the income gap and to sustain the healthy relationship between demand and supply. Price levels continues to be above accepted level in last few months touching 9%. Food inflation was majorly driven by protein products where price rises by 15%.Continuos hike in petrol prices have added fuel to de-regulating inflation rate.
RUPEE DEPRECIATION : The deteriorating status of rupee is hard to conceal. 19.3% depreciation of rupee since August 2011 has dented every economic sector. The demand for oil remains inelastic and import of gold has triggered loss of large foreign exchange . Thus current account deficit has been higher due to demand pressure.
Since other BRIC countries are resource-rich exporting countries, they are probably celebrating the depreciation. But India is an importer and suffer a great loss for rupee depreciation. For single rupee fall oil company loses 8k crore rupees annually.
I just hope India get its saviors (avengers) at the right spot within time before India turned into a junk BRIC nation.
FDI : Foreign Direct Investment seems sluggish as it dips 8% this year. In recent time, investors are losing fidelity and have pulled out their funds from India as a part of “flight to safety” and are either holding cash or parked in safer bets such as US Treasury Bonds or even gold. As a result, rupee has emerged as the worst –performing Asian currency and is also at the bottom of the heap in the global sweepstakes.
With the govt. resorting to retrospective amendments to tax laws and planning to invoke general anti-avoidance rules (GAAR) from next April, the overall investment climate is seen to be more hostile towards international investors.
DIRECT TAX: The term direct tax generally means a tax paid directly to the government by the persons on whom it is imposed. It can be in the form of income tax, house tax, property tax, commercial activity tax
INDIRECT TAX such as a sales tax or a value added tax (VAT) are imposed only when a taxable transaction occurs.
Direct tax collection has been shabby with first quarter advance tax showing a marginal growth of 5% over the April-June period last year. Poor performance of direct tax collection has forced the govt. to defer income tax refunds. The low tax collection is a major concern for income tax department as it needs to register at least 15% growth to meet the budget target of 5.70 lakh crore.
INFLATION: The imbalance in supply and demands gives rise to what we call –inflation. Inflation is majorly due to high circulation of money in the market or increase in buying potential of individual or improved standard of living.
As we know that India is a supply constrained economy and have a per capita income much below $1500 ,so we need to grow faster to bridge the income gap and to sustain the healthy relationship between demand and supply. Price levels continues to be above accepted level in last few months touching 9%. Food inflation was majorly driven by protein products where price rises by 15%.Continuos hike in petrol prices have added fuel to de-regulating inflation rate.
RUPEE DEPRECIATION : The deteriorating status of rupee is hard to conceal. 19.3% depreciation of rupee since August 2011 has dented every economic sector. The demand for oil remains inelastic and import of gold has triggered loss of large foreign exchange . Thus current account deficit has been higher due to demand pressure.
Since other BRIC countries are resource-rich exporting countries, they are probably celebrating the depreciation. But India is an importer and suffer a great loss for rupee depreciation. For single rupee fall oil company loses 8k crore rupees annually.
I just hope India get its saviors (avengers) at the right spot within time before India turned into a junk BRIC nation.
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