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Tax on equities: A calculated gamble— Deccan Chronicle--04.02.2018

Explore the implications of multiple taxes on capital in India hindering investment, along with the government's budget allocations and measures to stimulate economic growth and job creation.

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Tax on equities: A calculated gamble— Deccan Chronicle--04.02.2018

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  1. Tax on equities: A calculated gamble—Deccan Chronicle--04.02.2018

  2. LTCG

  3. The ratio of gross fixed capital formation to GDP—RBI Governor’s views

  4. The ratio of gross fixed capital formation to GDP—RBI Governor’s views

  5. Why Investment to GDP ratio is inadequate ? • RBI Governor feels that capital in the country was taxed at five different stages, • Which hinders investments.

  6. Taxation on Capital in India is from several sources • We have • corporate tax • dividend distribution tax • dividend income above ₹10 lakh the marginal tax • securities transaction tax and • capital gains tax. • So, five taxes on capital.

  7. Such taxes on capital impacts investment and savings decisions adversely

  8. RBI feels fiscal slippage can cost us the economy a lot

  9. Agrarian crisis—Budget addressed part of this—the farm crisis---in the most direct way possible • by promising returns of 50% over the cost of production (by increasing the minimum support price, or the price at which the government picks up grain from farmers). • It has also announced a spend of Rs 14 lakh crore on rural infrastructure • which, it hopes, will set off a virtuous cycle that will, among other outcomes, create jobs (back of the envelope calculations show a full year of work for around 10 million people being created).

  10. It provides a safety net in a country that was once considered too large (in terms of population) for safety nets.

  11. It isn’t clear where money for the increased minimum support price for crops or the health insurance scheme will come from or whether states will pitch in

  12. Much of the spend on rural infrastructure is to come from so-called extra budgetary resources but this could mean state-owned corporations borrowing from the market, effectively crowding out private borrowers.

  13. MSMEs –slew of measures to boost the sector

  14. The budget also allocated Rs 3,794 crore to MSME sector for giving credit support, capital and interest subsidy for innovations.

  15. According to the Economic Survey 2018, MSMEs accounted for Rs 65,800 crore or 11.8% of the total bad debt of state-run banks.

  16. To make doing business easier for MSMEs the Budget proposed e-assessment of income tax and pre-notice for indirect tax.

  17. It is not possible to double farmers’ income by 2022 until the agricultural growth is 12 percent—says Ex PM Mr. Manmohan Singh

  18. [a] Lack ofgood quality jobs [b] the poor quality of health [c] and education provision is not just an economic problem: Professor JNU

  19. Total Central government expenditure next year is budgeted to increase by 10 per cent —

  20. Agriculturalists are being promised procurement prices 50 per cent higher than the cost of production for the kharif harvest.

  21. There was a lot of talk about women in the Economic Survey and in the Budget Speech

  22. Unequivocal focus on economic growth & even recovery benefits - The Economic Times—CEO Yes Bank

  23. The government has attempted to push forward social inclusion on three fronts...

  24. Infrastructure:

  25. MSME

  26. Efforts to spur job growth in the formal secondary sector, • the government has committed to a 12% contribution of wages for new employees in EPF • for all sectors and • extended the facility of fixed-term employment to all sectors. • It also seeks to nurture • specific labour-intensive sectors • like food processing, • leather and footwear, textiles, • horticulture, animal husbandry • for tapping the demographic dividend.

  27. How Budget 2018 takes from the wealthy and urban consumers and gives to the poor Indians - The Economic Times-

  28. Gas connection, electricity and a toilet for the poor Implementation will help the poor improve their life

  29. The finance minister has tried to remove these apprehensions

  30. The question is whether the government would deliver this.

  31. The government of India has not been able to fulfil the 3% target

  32. Revenue Projections are very optimistic

  33. Though in recent years, the buoyancy has increased— • the projections are truly optimistic

  34. The main focus of the Budget speech is on expenditures

  35. Total expenditures in 2018-19 are expected to rise by 10% over revised estimates.

  36. In fact, the fall in growth rate is directly related to fall in Gross Fixed Capital Formation rate.

  37. The outlays are meant to please rating agencies and analysts who look at the size of the fiscal deficit.

  38. The government has budgeted for a rise in direct and indirect taxes faster than GDP growth.

  39. Cesses are not shareable.

  40. LTCG seems to be more political signalling –than an actual revenue source in the short run, ---given that it applies to gains from the level attained as of January 31, 2018.

  41. Higher MSP for farm produce are no panacea.

  42. Let’s applaud Modi for the health scheme--Deccan Chronicle--04.02.2018

  43. The 4 lakh crore spend on defence does not include

  44. While the Narendra Modi government has not cut defence spending

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