Never miss a story

Get subscribed to our newsletter


×

By Gaurav Sharma

The world economy is at crossroads. Hit hard by the yuan depreciation and the slowdown of growth in China, the world currencies have pummeled under the fear of currency wars being waged to boost the domestic export market.


Vietnam and Kazakhstan have already loosened the grip on exchange rates. Russian rouble has declined between 4-7 per cent while the Indian rupee has fallen more than 3 per cent in the last two weeks.

Economists’ take on it:

However, economists have warned against such a move while pointing out that the Great Depression of 1930’s, a period during which economies raised import tariffs and cut currency rates through competitive devaluation of currencies further exacerbated the slowdown in growth.


Experts say that such tactics are a zero-sum game, which would lead to a race to the bottom. This is due to the fact that in any market situation, exports must be equal to imports, and therefore, cutting imports and boosting exports would be a futile gambit in the global scenario.

What does this mean in India?

In the Indian context, economists such as C Rangarajan, Prachi Mishra, Jehangir Aziz and Sajjid Chinoy have clarified the fact that the Indian export is not driven by exchange rate but is rather influenced by global growth.

Furthermore, the apparent devaluation of global currencies is more due to the strengthening of the dollar against other currencies rather than a deliberate devaluation by central banks.

Instead of succumbing to such a desperate measure, the country should smoothen out the kinks in its tax structure. But the failure to pass through the much-anticipated Goods and Service Tax (GST) Bill in the Parliament has prevented that eventuality from taking place.

The passage of the bill could have boosted the investor sentiment and would have given a fillip to growth in the country. Moreover, the development would have had the effect of erasing the haunting memory of retrospective tax levied on firms such as Vodafone, an image makeover which would have cemented Narendra Modi led BJP government’s commitment to a stable and fair tax regime.

If GST could not have been passed due to certain contentious clauses in the bill and the blockade by the opposition, another relief has been announced by the finance minister Arun Jaitley in the form of scrapping of the minimum alternate tax (MAT) retrospectively.


Jaitley had earlier exempted capital gains made by FPI’s from the levy of 20 per cent MAT from the current year but not retrospectively.

Foreign companies had come under the MAT bracket when the Authority for Advance Ruling in 2012 stated that the Income Tax law did not make a distinction between Indian and foreign companies and therefore, MAT applied to them as well.

The ruling meant that the tax authorities started chasing foreign investors, demanding taxes on capital gains from the sale of securities.

Mauritius-based Castleton Investment Limited was subsequently asked to pay MAT, a decision whose validity will be tested in the Supreme Court in late September this year.

Is the government doing anything?

Now, with the government likely to accept the AP Shah panel’s recommendations, the Foreign portfolio investors (FPI) will likely be saved from paying the tax even before April 1, 2015 and not just after the date mentioned in the next budget, by amending the tax law.

“The government should quickly issue a circular stating that MAT should not be applied to FPI’s from the period prior to April 1, 2015 as well”, said Suresh Swamy, partner, PwC while speaking to ET on the need for removing arbitrariness in the tax regime.


Along with the clarity on tax structure which will reduce red-tapism in the country, the fall in global fuel prices will bring much cheer to the Indian economy. New shale gas discoveries in the US, record volume production of oil by OPEC and lifting of sanctions on Iran has meant that Indian oil imports (almost 75 percent of the domestic demand) would be lower in dollar value.

The current account deficit (difference between imports and exports) would fall and therefore, fuel (transport) and other prices would also decline, cooling down rising inflation which has brought much tears to the aam aadmi.

A $1 fall in global crude prices means India’s import bill falls by Rs 6,700 crores. This, coupled with the shift to direct benefit transfer (DBT) of LPG subsidy and deregulation of diesel price would rekindle the fortunes of oil marketing companies (OMC) such as OIL, ONGC, Reliance and Essar by overturning their under-recoveries.

It has been reported that the under-recoveries of OMC’s have been slashed by Rs 139,869 crores in 2013-14 to Rs 72,314 crores last financial year due to the above measures.

So, the big picture is that the Indian economy is on the right track. The hidden problem of burgeoning import dependence can be further ameliorated by removing bottlenecks such as bureaucratic sloth and complex regulatory processes.

Obliterating MAT for foreign portfolio investors is a step in that direction.


Popular

Wikimedia Commons

"Malgudi is where we all belong, and where we wish we lived."

Malgudi, a small fictional town in South India has been part of the childhood of most Indians. It is an old, shabby, and peaceful town that is unruffled by politics. The stories set in this small town ring the sense of belongingness in the hearts of its readers. The familiar feeling that feels like home resonates with their soul. And teaches important life lessons to the readers through simple tales. Malgudi Days is one of the books that every Indian child should read. The book is a compilation of 32 short stories that paint a beautiful picture of small-town in India around the '60s and '70s

R. K. Narayan, one of the most well-known and popular writers within India and outside India is the creator of this town and the occurrences of this town. The stories follow the characters Swami and his friends through their everyday lives. Be it the story of fake astrologers who scam and loot the people by his cleverness, or the story of a blind beggar and his dog where the money blinded the man with greed; each story has a lesson to learn, morals and values hidden in it. As the stories are simple, easy to understand yet heart-touching it makes it easy for the kids to connect with each character and imagine the story as if the reader themselves were the protagonist of the story. In simple words, we can say that R.K. Narayan simply told stories of ordinary people trying to live their simple lives in a changing world.

Keep Reading Show less
Photo by Flickr

It is believed that when a woman goes through her menstrual cycle, she goes through the different lunar energies.

Well, if you'll notice then the moon takes twenty-nine days to complete its lunar cycle, whereas women's menstrual cycle is generally 28 days! Coincidence? I think, not.

It is believed that when a woman goes through her menstrual cycle, she goes through the different lunar energies. In fact, in ancient times it was said that the natural rhythm of women was to menstruate under a new moon and ovulate under a full moon.

Keep Reading Show less
Photo by Wikimedia Commons

Hugs, caress scenes, extramarital affairs, vulgar and bold dressing, bed scenes and intimacy of married couples are being glamourised in utter disregard to Islamic teachings and culture of Pakistani society," PEMRA stated

The Pakistan Electronic Media Regulatory Authority (PEMRA) has directed Pak TV channels to stop airing what it calls indecency and intimacy in dramas, Samaa TV reported.

A notification issued by the authority states that it has been receiving numerous complaints from viewers who believe that the content being depicted in dramas does not represent the "true picture of Pakistani society".

"PEMRA finally got something right: Intimacy and affection between married couples isn't 'true depiction of Pakistani society and must not be 'glamourized'. Our 'culture' is control, abuse, and violence, which we must jealously guard against the imposition of such alien values," said Reema Omer, Legal Advisor, South Asia, International Commission of Jurists.

"Hugs, caress scenes, extramarital affairs, vulgar and bold dressing, bed scenes and intimacy of married couples are being glamourized in utter disregard to Islamic teachings and culture of Pakistani society," PEMRA stated, as per the report.

The authority added that it has directed channels time and again to review content with "indecent dressing, controversial and objectionable plots, bed scenes and unnecessary detailing of events".

Most complaints received by the PEMRA Call Centre during September concern drama serial "Juda Huay Kuch is Tarah", which created quite a storm on social media for showing an unwitting married couple as foster siblings in a teaser for an upcoming episode. However, it only turned out to be a family scheme after the full episode aired, but by that time criticism had mounted on HUM TV for using the themes of incest to drive the plot, the report said. (IANS/JB)

Keywords: Pakistan, Islam, Serials, Dramas, Culture, Teachings.