Getting Indian economy back on track

[Simple_Guy]

OROP will boost consumption and benefit the economy​

In any case, if the real issue is only the impact on central finances, there is also the counter-argument: when consumption demand in the economy is weak and business is not investing, a higher payment to ex-servicemen may be just the pep consumption demand needs.

It is an established fact that whenever public sector pay rises after the implementation of pay commission recommendations (the next pay commission's recommendations will have to be implemented from next year), consumer demand picks up and growth revives. In an economy that wants to raise its growth momentum and jobs, what can be better than an additional Rs 10,000-20,000 crore in the hands of consumers, thanks to OROP? And remember, higher demand leads to higher tax revenues from increased economic activity and hence lowers the fiscal deficit after a lag.

Moneycontrol.com

7th Pay Commission is coming​

pay increases granted by the commission can act as a stimulus to the economy by boosting the consumption leg of GDP. At last count, India employed 48 lakh Central government employees and 55 lakh pensioners and over one crore State and local government employees. The Fourteenth Finance Commission estimates that after the Sixth Pay Commission, pay and allowances to Central government employees more than doubled in a four-year period between 2007-08 and 2011-12.

Hindubusinessline

Companies salivating at the prospects of consumption growth
​

Investors expect Maruti Suzuki to get a boost from the Seventh Pay Commission's recommendations later this year that will lead to salaries of government employees rising. The Pay Commission is expected to submit its report by October and this is likely to be implemented from July 2016, likely adding to an expected double-digit growth in passenger car sales in FY17. Maruti Suzuki is expected to be the main beneficiary, analysts said. The last Pay Commission report had resulted in car sales rising 18 per cent annually between FY09 and FY11.

"The Sixth Pay Commission, which was implemented in August 2008, resulted in almost 10 times increase in Maruti's sales to government employees from FY08 to FY12," Jatin Chawla and Akshay Saxena, research analysts at Credit Suisse, wrote in a July 15 report.

"We have sold almost 200,000 vehicles to government employees in FY15," said Randhir Singh Kalsi, executive director, sales, Maruti Suzuki. "We certainly believe we can get more incremental volumes after implementation of the Seventh Pay Commission."

Economictimes

 

[Simple_Guy]

Consumption theme: A bright spot in desperate times

The seventh pay commission is reportedly readying to submit its report by the end of September. This piece of news comes at a time when India's consumption story is beginning to pick up speed. One of biggest dividends of India's demography is the domestic consumption story, which also has the ability to shield the economy from global headwinds.

At this point, the new pay commission award for government employees would be an icing on the cake, as it would trigger a sudden surge in discretionary spending. Some estimates show it would result in consumption demand worth over $100 billion over the next three years, which would eventually boost the housing sectors as well.

The same can be said for OROP. Additionally those who get lump sum amounts will be more likely to spend on better housing.

 

[Simple_Guy]

PM Modi tells India Inc to take risks and invest

Prime Minister Narendra Modi told them Tuesday “when I hear Indian companies are investing abroad and not in their own country, I am really disappointed… if you don’t take risks and invest, then will you take a management consultant’s job at a monthly salary of Rs 2 lakh.”

After listening to 27 invitees — these included industrialists, bankers and top analysts — for almost two-and-half hours at his 7, Race Course Road residence, the Prime Minister’s succinct message to Corporate India was “invest now”.

YC Deveshwar spoke on how Indian food processing companies were paying 30 per cent tax while multinationals paid just 15 per cent withholding tax.

Mukesh Ambani spoke on the textile sector where China extends six-month credit to companies, whereas in India companies struggle even for 15-day credit.

State Bank of India chairperson Arundhati Bhattacharya said the government must do something about the stressed assets.

Birla and Sanghvi pointed out that imposing safeguards or countervailing duty on imports took 15 months in India while other countries did so in less than 60 days.

At this point, the Prime Minister interjected, and asked Economic Affairs Secretary Shaktikanta Das, who was the Revenue Secretary earlier, why India could not do the same. Commerce Secretary Rita Teaotia pointed to lack of adequate data as the main reason for the delay.

The only other interjection by the Prime Minister was when GAIL chairman B C Tripathi said gas assets were not being utilised. While the government is discussing the issue of gas pooling etc for over a year now, the PM sought to know the reasons why they were under-utilised.

 

[DingDong]

Large portion of Indian economy is dependent on self-employed individuals and MSMEs. Modi's obsession with large corporate is illogical and nauseating. Instead of focusing on large businesses who are taking Indian money offshore in hope of better returns, the government must announce stimulus and tax breaks for small businesses.

 

[Simple_Guy]

List of tax exemptions to be phased out soon

“Over the next few days we will come out with a list of exemptions, which we intend to phase out in the first place. Over the next four years corporate tax will come down by 5 per cent and lot of exemptions will get phased out. Slowly we will bring taxation levels to global standards and make tax assessment and returns simpler by just eliminating a lot of exemptions,” he said.

Jaitley also clarified the government has not gone back on amendments to the Land Acquisition Act 2013 by letting the ordinance lapse, but has instead decided to move forward on an “alternative route” where in states can decide to change their respective laws. While India may be growing at 7 per cent to 7.5 per cent and be tagged as the fastest growing economy in the world, he said that there is an expectation of higher growth. “The expectations we built were logical…in adverse global situations, India must follow the reform path,” he stressed.

Arun Jaitley on Wednesday said the government may consider merger of weaker public sector banks with stronger ones, if efforts to strengthen are not successful.

 

[Kshatriya87]

Good news: Unemployment rate falls on Narendra Modi govt's rural infrastructure drive

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