Indian economy - How the heck do we fix this mega mess ?

[Jaykay767]

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Indian economy - How the heck do we fix this mega mess ?

Now we are starring at another budget, and people are debating what can be done to fix the bank npa, nbfcs and economic slow down.

There are 2 approaches and solutions to kick starting the economy -

1. Incremental Steps - Continue to recap the bank, push additional funding to nbfcs, and sops for sectors that are in crisis. Recap any further collapses like ilfs, IDBI, Dewan housing, etc..as and when it comes. Keep absolutely tight fiscal targets, ensure the macro economic stability. Minimal to No stimulus funding for economy, as this would mean, fiscal targets will not be met. Continue w IBC and NCLTs to reduce NPAs, etc..

OR

2. Radical reforms - The only sure shot option at this time, would be to "abolish individual income tax across the board", right from pensioners, to working class, to traders, executives, to businessmen to all. This will uniformly remonetise the economy and immediately lead to a massive boom across all sectors in the country. The problem with UBI - universal basic income or Kisan schemes are they take a long time to get implemented and impact the economy meaningfully. And depending on states, the impact will be at best patchy.

3. Streamline GST - Elimination of GST would be even better, but politically this will be harakiri, so streamline streamline the GST, on war footing, reduce tax rates, and make it easier to business. And replacing GST with another tax or going back to sales tax is not workable and time consuming leading to massive uncertainty for years.

4. Agri sector - Privatise the agri sector completely. Allow private players to come in, and "lease agri lands" from farmers and take over the farming business. Ensure the farmer gets paid for land lease and also provide jobs.

5. Revenue shortfall - Constrain all unnecessary govt spending, remove all subsidies except agri sector, privatise psu's, increase fuel prices to stem any shortfall. Defocus on the other schemes like Ujwala, housing, etc..till the economy picks steam.

The govt (bureaucrats and also political leadership) is totally demoralised after demo and GST and hence my bet is they will stick to point 1 with lots of sops to different sectors, so we will end up talking about all these small great measures which will not lead to any major economy fill up.

And the economy recovery will be painfully slow, no jobs growth, no stimulus to economy, and another 5 yrs will be lost.

Or will they surprise us with bold positive and well thought out reforms ??

Let's see how this budget spans out,

 

[Jaykay767]

Just to reiterate. I have zero tolerance policies for name calling, abuses, crack pot comments, or provoking jokes, statements. Any such comments, will be responded with similar or more measures. Nobody likes to be abused, I am sure you will not too. So let's keep it civil.

As you can see, if no one derails the thread with such comments, we can have good and meaningful dicussins,

 

[Jaykay767]

On the GST, it is high time, we do away with the entire invoice marching and refund process. This simply does not work for india, it is extremely cumbersome, and delayed refunds impact business cash flow negatively.

Let's say, the input tax is 10% and the output tax is 28%. Basically the traders gets the input tax of 10% back from govt as refund. So net tax approx - 28% - 10% = 18%. ( gross generalisation, keeping aside the incoming price will be lower than the much higher final sale price post manufacturing )

Instead of refunding the input tax post the end customer sale, just reduce both of them to 9% and don't bother about refunds,

So input tax - 9% output tax - 9%, so total of 18%.

Now this will obviously deviate from the Core GST principles, but doesn't matter, many other benefits of single tax, abolishment of octroi, check posts, Multi state taxes, etc..all will help accelerate the economy !!

 

[Janaki Jambunathan]

Women have been FM in our homes and good at that - Wait till 11AM - Dhanalakshmi budget to unfold - I see Shakthi emerging Victor - Jayalakshmi or Vijayalakshmi !

 

[Janaki Jambunathan]

Nari to Narayani !

 

[Jaykay767]

As expected, no radical reforms, so we are going to muddle through the economy !!

And another huge mandate is wasted !

 

[kudandhai Srini]

It is the choice of majority....democracy... choice of the public...to elect their leader. Trust him and his Government. They believe that the Government is doing its best in discharging its social, political and economic responsibilities. They know that this Government is committed to uplift the lives of under privileged.

They also know better..... how to support good governance and how to punish a corrupt Government.

It may be a mess for few... but majority trust that it may prove a boost

 

[krish44]

The most awaited budget has proved to be a big disappointment .

Jaykay ji you are correct.

The incremental steps you have mentioned in earlier post above is being adopted.

Just minor fiddling with funding the nationalised banks, intent to sell stakes in govt PSUs including Air India,

Making minor gestures to revive rural economy,increasing diesel,petrol prices ,some surcharge on gold.

Absolutely nothing that would enthuse the public.

Stock market gave a thumbs down due to increasing retail participation to 35% from 25%.

All shares are likely to go down further. No retail investor will buy mid and low end shares. Large caps may find

buyers.But MNCs may prefer to delist from the market.

 

[Janaki Jambunathan]

As expected, no radical reforms, so we are going to muddle through the economy !!
And another huge mandate is wasted !

No NAYA? No radical reforms !

 

[kudandhai Srini]

We had Finance Minister who tried to reform the economy but ended up only to ensure that he involved in scams and the poor become more poorer and the rich become more richest. What is visionary…..!!

 

[Jaykay767]

The most awaited budget has proved to be a big disappointment .

Jaykay ji you are correct.

The incremental steps you have mentioned in earlier post above is being adopted.

Just minor fiddling with funding the nationalised banks, intent to sell stakes in govt PSUs including Air India,

Making minor gestures to revive rural economy,increasing diesel,petrol prices ,some surcharge on gold.

Absolutely nothing that would enthuse the public.

Stock market gave a thumbs down due to increasing retail participation to 35% from 25%.

All shares are likely to go down further. No retail investor will buy mid and low end shares. Large caps may find

buyers.But MNCs may prefer to delist from the market.

Absolutely agree ! This is the tragedy of all these mega majority govts, none of them were / are able to deliver big ticket reforms that can meaningfully changes the lives of the vast sections of our country !!

Minority and coalition govts have done much better on reforms. So we are going to keep cribbing about this for the next 5 years.

 

[Jaykay767]

Clearly they have lost all appetite after the demo and GST disasters. And they want to tinker and hope that the economy will recover before doing anything major.

Unfortunately the mess of demo and GST is so large, unless they do big ticket reform, the economy will not recover,

 

[krish44]

I agree that economic recovery is not going to be easy.

However indian economy has a momentum of its own.

Irrespective of the govt in power, it will chug along with a not enviable growth rate. Industry will perform at a

rate it may not be proud of and yet meeting consumer needs of goods and services. Agriculture will deliver 4%

traditional growth.

Small scale industries and MSME will continue to feel stifled by large MNCs.

Farmers will continue to crib about power, water availabilty and minimum support price.Farmer suicides will

continue.

PSUs and govt banks will languish and more will opt for VRS.

It is only external factors-oil prices, that will have an effect on the economy and contribute to

fiscal deficit.

Govt and governance does not matter much and they can only make a marginal difference.

Our institutions like RBI,Judiciary,banks have lost their autonomy and are devalued.

Political class can only make more noises and not deliver much.

It does not matter much which party rules the country

 

[vrkmmol]

Indian economy - How the heck do we fix this mega mess ?

Now we are starring at another budget, and people are debating what can be done to fix the bank npa, nbfcs and economic slow down.

There are 2 approaches and solutions to kick starting the economy -

1. Incremental Steps - Continue to recap the bank, push additional funding to nbfcs, and sops for sectors that are in crisis. Recap any further collapses like ilfs, IDBI, Dewan housing, etc..as and when it comes. Keep absolutely tight fiscal targets, ensure the macro economic stability. Minimal to No stimulus funding for economy, as this would mean, fiscal targets will not be met. Continue w IBC and NCLTs to reduce NPAs, etc..

OR

2. Radical reforms - The only sure shot option at this time, would be to "abolish individual income tax across the board", right from pensioners, to working class, to traders, executives, to businessmen to all. This will uniformly remonetise the economy and immediately lead to a massive boom across all sectors in the country. The problem with UBI - universal basic income or Kisan schemes are they take a long time to get implemented and impact the economy meaningfully. And depending on states, the impact will be at best patchy.

3. Streamline GST - Elimination of GST would be even better, but politically this will be harakiri, so streamline streamline the GST, on war footing, reduce tax rates, and make it easier to business. And replacing GST with another tax or going back to sales tax is not workable and time consuming leading to massive uncertainty for years.

4. Agri sector - Privatise the agri sector completely. Allow private players to come in, and "lease agri lands" from farmers and take over the farming business. Ensure the farmer gets paid for land lease and also provide jobs.

5. Revenue shortfall - Constrain all unnecessary govt spending, remove all subsidies except agri sector, privatise psu's, increase fuel prices to stem any shortfall. Defocus on the other schemes like Ujwala, housing, etc..till the economy picks steam.

The govt (bureaucrats and also political leadership) is totally demoralised after demo and GST and hence my bet is they will stick to point 1 with lots of sops to different sectors, so we will end up talking about all these small great measures which will not lead to any major economy fill up.

And the economy recovery will be painfully slow, no jobs growth, no stimulus to economy, and another 5 yrs will be lost.

Or will they surprise us with bold positive and well thought out reforms ??

Let's see how this budget spans out,

Indians are always addicted to cinema /drama in essence theatrics.
After the massive mandate for Modi's theatrics,we have reached a stage where the Govt doesn't have a clue.
Peter Principle--
The cover of The Peter Principle(1970 Pan Books edition)
The Peter principle is a concept in management developed by Laurence J. Peter, which observes that people in a hierarchy tend to rise to their "level of incompetence". In other words, an employee is promoted based on their success in previous jobs until they reach a level at which they are no longer competent, as skills in one job do not necessarily translate to another. Like a CM becoming a PM without a knowledge of the wisdom required to run a country. Running a state is different from running a country-(Modiji pl understand)

 

[Jaykay767]

Indians are always addicted to cinema /drama in essence theatrics.
After the massive mandate for Modi's theatrics,we have reached a stage where the Govt doesn't have a clue.
Peter Principle--
The cover of The Peter Principle(1970 Pan Books edition)
The Peter principle is a concept in management developed by Laurence J. Peter, which observes that people in a hierarchy tend to rise to their "level of incompetence". In other words, an employee is promoted based on their success in previous jobs until they reach a level at which they are no longer competent, as skills in one job do not necessarily translate to another. Like a CM becoming a PM without a knowledge of the wisdom required to run a country. Running a state is different from running a country-(Modiji pl understand)

Hopefully from all these discussions, the right wing supporters realise and start holding this govts accountable for results, results, results !!!