Indian Economy: News and Discussion

[IndianHawk]

Well, it depends on how do you define the growth. If you believe that GDP rise is the growth than I disagree with it. If growth means the rise in standard of living of marginalized people, than I agree with you. Imagine a scenario in which reliance will double its production and sale. Amabani will grow rich and few employment will be generated.

Now imagine a scenario if India’s agriculture sector is grown by 3.5 lakh crore. An unimaginable happiness and upliftment of masses will happen. Millions of farmers will have money in their hand to spend which will boost the economy because of redistribution of Income.

One cancer drug is sold in India for some 170 bn USD which is sold in US at some 65000 USD. When this drug is sold in US, its economy rises by 65000 usd while same drugs if sold in India will boost Indian economy by 170 USD. So GDP is subjective as well. If a car crash in accident, Economy rises because of sell of new parts and medical expense.

Yoga is some 84 bn USD industries in US. More yoga is done and practiced in India almost free. So I have lost faith in this measurement of GDP as the growth criterion and I feel a strong need to measure growth by some other index. I have seen people living very happily in 4 figure income than people with Income in 5 figures.

Modi has rightly said that there are two communities in india. One which needs the help and other, which can help them.

Once Vajpayee ji told that he will be more happy if he Can do grass root work for the upliftment of people with even moderate growth rate of around 5%. Vajapayee ji’s period of 6 years was a golden period of Indian economy inspite of very moderate growth rate of just 5%. INR appreciated against USD in last 2-3 years of his tenure. 6 Crore jobs were generated. Trade surplus happened by a huge margin of 20 bn USD. India exported huge amount of food grains which were rotten.

Nitin gadkari had rightly said that instead of spending Rs 60 K crore on refinery, if we spend same amount on methanol production, we can change the fate of india’s farming sector. We need to work on grassroot level and spend money there to ensure that wealth so generated out of investment reaches to bottom most people of wealth pyramid rather than same going into the vollets of few people.


I explored some rural area very intensively in last one year. What I saw there was thought provoking. I have begun my work on a small scale which I plan to expand inspite the opposition from family who always insist to enjoy the life with whatever god has given which is way more than my requirement. I will continue to share my experiences and what I have seen. My few effort can bring a big change in the life of people. I have bought the change in the life of one family at least.

That is true. We should be more focused on skills of people. Skilled people make a prosperous nation.

That is the true strength of western world. Highly skilled , highly educated , highly innovative workforce. That is the formula followed by Japan and South Korea on way to prosperity.

We need education reform. Divide the entire higher education into two parts.

Research and innovation and engineering medicine for the most intelligent only via national merit exam .

For the rest 90 % students vocational courses with emphasis on different skills like mechanics , solar equipment , agriculture equipment , food processing etc.

No more useless ba ,ma or bsc in duplicitous subjects. Let's creat a nation of actual practical skills not useless paper degrees.

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[Haldiram]

Condensed form of RBI's statements today :

On interest rates :


— Rate increase is off the table

— There is no proposal for a CRR (cash reserve ratio) cut at present

— Linking interest rate to an external benchmark is still under discussion


On the unconventional 35 basis points cut :


— There was nothing sacred about multiples of 0.25 percentage point cuts

— The decision has not been taken on gut feel but on hard data

— Cutting repo rate by 25 bps was inadequate, while a 50 bps cut would have been excessive

— Too much should not be read into it, it is a judgement call which the MPC has taken


On growth and inflation :


— The growth slowdown is not structural but cyclical

— This is not the time to look at real inflation, but to fill the output gap

— Confident of credit demand picking up and growth reviving


On banks and NBFCs :


— We expect higher transmission of policy rates by banks in the coming weeks

— The system is ‘flushed’ with liquidity and hence the cycle of transmission by banks has begun

— RBI cannot tell banks who to lend to, but the banking regulator will ensure a good credit flow

— There is no cartelisation by banks in holding on to higher lending rates

— RBI’s endeavour is that none of the large non-banking lenders collapses

--------------------------------------------------------------------------------------------------------------------------------------

The structurally significant thing here is that they are trying to benchmark the RBI repo rates to an external factor (i.e US FED rates). Linking rates to an external factor is the second phase of economic liberalization after 1991's moves to open up the market.

 

[IndianHawk]

Condensed form of RBI's statements today :

On interest rates :


— Rate increase is off the table

— There is no proposal for a CRR (cash reserve ratio) cut at present

— Linking interest rate to an external benchmark is still under discussion


On the unconventional 35 basis points cut :


— There was nothing sacred about multiples of 0.25 percentage point cuts

— The decision has not been taken on gut feel but on hard data

— Cutting repo rate by 25 bps was inadequate, while a 50 bps cut would have been excessive

— Too much should not be read into it, it is a judgement call which the MPC has taken


On growth and inflation :


— The growth slowdown is not structural but cyclical

— This is not the time to look at real inflation, but to fill the output gap

— Confident of credit demand picking up and growth reviving


On banks and NBFCs :


— We expect higher transmission of policy rates by banks in the coming weeks

— The system is ‘flushed’ with liquidity and hence the cycle of transmission by banks has begun

— RBI cannot tell banks who to lend to, but the banking regulator will ensure a good credit flow

— There is no cartelisation by banks in holding on to higher lending rates

— RBI’s endeavour is that none of the large non-banking lenders collapses

--------------------------------------------------------------------------------------------------------------------------------------

The structurally significant thing here is that they are trying to benchmark the RBI repo rates to an external factor (i.e US FED rates). Linking rates to an external factor is the second phase of economic liberalization after 1991's moves to open up the market.

In a global economy it is necessary to include external factors. Flow of huge FDI into India forces rbi to print more rupee which could be inflationary.

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[IndianHawk]

https://m.economictimes.com/tech/ha...n-us-china-trade-war/articleshow/70563440.cms

Handset companies Lava, Micromax win in US-China trade war

In a first, US cos AT&T, T-Mobile and Sprint place orders worth ?2,500 cr; Lava and Micromax to de-risk their business

The 4G phones being sourced will be under the sub-$200 category which is about 25% of the global $460 billion smartphone market globally.

NEW DELHI: India appears to have already started to benefit from the USChina trade war. US telco major AT&T along with rivals T-Mobile and Sprint have placed smartphone orders worth around Rs 2,500 crore for under-$200 devices with Indian brands Lava and Micromax, in a bid to derisk their business as Sino-US trade tensions show no signs of abating, people familiar with the matter said.

The orders by the three telcos—a bulk of which are from AT&T-—marks the first time the US companies, which operate mainly on the handset bundling model and source devices from China, will use devices made by Indian manufacturers. The order offers some revenue relief to both Lava and Micromax as well, whose smartphone assembly plants are under-utilised with the combined share of Indian players having slumped to around 3%—from over a combined 40% at their peak mid-2015

So under 200$$ device in USA will be supplied by Micromax and lava. Indian govt should follow uncle Sam and kick out Chinese mobile companies.

 

[IndianHawk]

https://www.business-standard.com/a...each-in-india-s-niif-fund-119080600670_1.html


[https://bsmedia-business--standard-com]

[https://bsmedia-business--standard-com]

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› Economy Policy

AustralianSuper, Ontario Teachers to invest $1 bn each in India's NIIF fund

By Raghavendra Kamath | Mumbai | Last Updated at August 06 2019 15:47 IST



[https://wap-business--standard-com]

[https://bsmedia-business--standard-com]

AustralianSuper, Australia's largest superannuation fund, and Ontario Teachers' Pension Plan, Canada's largest single-profession pension plan, have signed agreements to invest up to $1 billion each in the NIIF Master Fund, said the National Investment and Infrastructure Fund (NIIF) on Tuesday.


The two fund managers committed $250 million each in the Master Fund and co-investment rights of up to $750 million each in future opportunities alongside the NIIF Fund.



I posted before that India is new darling of pension funds due to long terms stable growth .

2 billion USD more incoming for infrastructure.


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[IndianHawk]

https://m.timesofindia.com/business...facturing-unit-in-up/articleshow/70574248.cms

Vivo will invest 4000 crore for new facility .

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[Aaj ka hero]

Well, it depends on how do you define the growth. If you believe that GDP rise is the growth than I disagree with it. If growth means the rise in standard of living of marginalized people, than I agree with you. Imagine a scenario in which reliance will double its production and sale. Amabani will grow rich and few employment will be generated.

Now imagine a scenario if India’s agriculture sector is grown by 3.5 lakh crore. An unimaginable happiness and upliftment of masses will happen. Millions of farmers will have money in their hand to spend which will boost the economy because of redistribution of Income.

One cancer drug is sold in India for some 170 bn USD which is sold in US at some 65000 USD. When this drug is sold in US, its economy rises by 65000 usd while same drugs if sold in India will boost Indian economy by 170 USD. So GDP is subjective as well. If a car crash in accident, Economy rises because of sell of new parts and medical expense.

Yoga is some 84 bn USD industries in US. More yoga is done and practiced in India almost free. So I have lost faith in this measurement of GDP as the growth criterion and I feel a strong need to measure growth by some other index. I have seen people living very happily in 4 figure income than people with Income in 5 figures.

Modi has rightly said that there are two communities in india. One which needs the help and other, which can help them.

Once Vajpayee ji told that he will be more happy if he Can do grass root work for the upliftment of people with even moderate growth rate of around 5%. Vajapayee ji’s period of 6 years was a golden period of Indian economy inspite of very moderate growth rate of just 5%. INR appreciated against USD in last 2-3 years of his tenure. 6 Crore jobs were generated. Trade surplus happened by a huge margin of 20 bn USD. India exported huge amount of food grains which were rotten.

Nitin gadkari had rightly said that instead of spending Rs 60 K crore on refinery, if we spend same amount on methanol production, we can change the fate of india’s farming sector. We need to work on grassroot level and spend money there to ensure that wealth so generated out of investment reaches to bottom most people of wealth pyramid rather than same going into the vollets of few people.


I explored some rural area very intensively in last one year. What I saw there was thought provoking. I have begun my work on a small scale which I plan to expand inspite the opposition from family who always insist to enjoy the life with whatever god has given which is way more than my requirement. I will continue to share my experiences and what I have seen. My few effort can bring a big change in the life of people. I have bought the change in the life of one family at least.

Sir, I will join too in this noble cause,
Will definitely do something from my side too.
Right now I am searching ways of making more money(of course legally).

 

[Aaj ka hero]

RBI cuts repo rate by 35 basis points.

What will be the benefits sir? can you list them please.

 

[HariPrasad-1]

Sir, I will join too in this noble cause,
Will definitely do something from my side too.
Right now I am searching ways of making more money(of course legally).

Where do you live? I suggest you to invest in agriculture sector. I am investing in agriculture sector. I want to invest in animal husbandry now. I want to build a stable where I will be able to employ some 2 to 4 guys. It will be a profitable venture with Return on investment of 1 year.

 

[Gaurav Rai]

Where do you live? I suggest you to invest in agriculture sector. I am investing in agriculture sector. I want to invest in animal husbandry now. I want to build a stable where I will be able to employ some 2 to 4 guys. It will be a profitable venture with Return on investment of 1 year.

I think there should be 100% fdi in all agricultural spectrum, free the goddamn market and cutting edge skill development programs sponsored by government as well as corporates will ever change the face of agriculture scenario in India.

 

[HariPrasad-1]

I think there should be 100% fdi in all agricultural spectrum, free the goddamn market and cutting edge skill development programs sponsored by government as well as corporates will ever change the face of agriculture scenario in India.

No FDI but govt should allow enterpreneuers to invest in agriculture ion leased land or on partnership basis.

 

[Aaj ka hero]

Where do you live? I suggest you to invest in agriculture sector. I am investing in agriculture sector. I want to invest in animal husbandry now. I want to build a stable where I will be able to employ some 2 to 4 guys. It will be a profitable venture with Return on investment of 1 year.

I live in megacity sir.
Just started working in a big company, I have dreams I want to fulfill, some of them are important like yours.
I think INDIA HAS DONE MORE WORK ON SPACE THAN ON INNOVATIONS THAT CAN HAPPEN IN INDIA AGRICULTURAL SECTOR.
One foreigner said India has the capacity to become bread basket for the world.
Similarly somebody in india northeast said "NORTH East can provide all of india food needs".
So many things are there that we are not looking into.

 

[Haldiram]

What will be the benefits sir? can you list them please.

Rate of interest on loans has been lowered for whoever wants to borrow money from the bank. That includes big companies and normal citizens (home loan, education loan will get cheaper). The big companies will benefit from low-interest cash flow. The normal citizens who had postponed the purchase of things (leth machines, farm equipment, tractors, motors, fertilizers) can now borrow money on lower interest and start working.

I am fairly certain, they will increase inflation now (Sitharaman had already hinted). The long term inflation target was 4%, but they've kept it much below 4% for 5 years now, out of consideration for the citizens. That's why we didn't feel the pinch of the trade war as much. Now it's payback time. Money will become cheaper to borrow, and things are going to get costly to buy.

It's like a mini spending-stimulus package. The government will sweeten the deal by going on a massive shopping spree themselves. Most of India doesn't have housing and uninterrupted power supply, and the government wants to put this issue behind them in the next 10 years. They'll buy transformers, power supply lines, steel, cement for their 'Housing For All 2022' mission, and all of that jazz. It's a discount coupon for everyone to go and shop. Those who refuse to shop will be beaten. #NotKidding. 'Savers' are the new enemy, and the administration will use inflation to punish those who park money in FD. They don't want lenders, they want spenders.

The positive impact is that the economy will start showing spurts of revival as people start buying things, and company profit sheets will improve, and companies will start hiring again. The negative impact as an investor is that you will get low returns on your bank FD and Bonds purchased henceforth, therefore saving as an instrument of middle class discipline will be replaced by spending. Most of the reputed banks are giving barely 3% interest, only Yes bank was giving more than 6% and it has collapsed now. If inflation moves to its 20 year average (7%) and banks are giving 3%, that's essentially negative returns in real terms. Some cunning cats will now try to move over to 'investing' but bonds have already rallied so there's no point taking a position in richly valued bonds now, and by the time this reality sinks in, stocks will have rallied as well.

We're moving from a low inflation - high interest system (a saver's dream) into a high inflation - low interest system (an investor's dream). Align your spending-saving-investing habits accordingly.

 

[Haldiram]

Rate of interest on loans has been lowered for whoever wants to borrow money from the bank. That includes big companies and normal citizens (home loan, education loan will get cheaper). The big companies will benefit from low-interest cash flow. The normal citizens who had postponed the purchase of things (leth machines, farm equipment, tractors, motors, fertilizers) can now borrow money on lower interest and start working.

I am fairly certain, they will increase inflation now (Sitharaman had already hinted). The long term inflation target was 4%, but they've kept it much below 4% for 5 years now, out of consideration for the citizens. That's why we didn't feel the pinch of the trade war as much. Now it's payback time. Money will become cheaper to borrow, and things are going to get costly to buy.

It's like a mini spending-stimulus package. The government will sweeten the deal by going on a massive shopping spree themselves. Most of India doesn't have housing and uninterrupted power supply, and the government wants to put this issue behind them in the next 10 years. They'll buy transformers, power supply lines, steel, cement for their 'Housing For All 2022' mission, and all of that jazz. It's a discount coupon for everyone to go and shop. Those who refuse to shop will be beaten. #NotKidding. 'Savers' are the new enemy, and the administration will use inflation to punish those who park money in FD. They don't want lenders, they want spenders.

The positive impact is that the economy will start showing spurts of revival as people start buying things, and company profit sheets will improve, and companies will start hiring again. The negative impact as an investor is that you will get low returns on your bank FD and Bonds purchased henceforth, therefore saving as an instrument of middle class discipline will be replaced by spending. Most of the reputed banks are giving less than 3% interest, only Yes bank was giving more than 6% and it has collapsed now. If inflation moves to its 20 year average (7%) and banks are giving 3%, that's essentially negative returns in real terms. Some cunning cats will now try to move over to 'investing' but bonds have already rallied so there's no point taking a position in richly valued bonds now, and by the time this reality sinks in, stocks will have rallied as well.

We're moving from a low inflation - high interest system (a saver's dream) into a high inflation - low interest system (an investor's dream). Align your spending-saving-investing habits accordingly.

2.65% interest rate. It has started.

So, they'll offer you [existing RBI rate minus - 2.75%] when you give your money to them and charge you [existing RBI rate + 2.65%] when they give their money to you (i.e 8.05%).

People were complaining "consumption slowdown..GDP growth down...why doesn't the gormint fix the economy". That is what fixing looks like.

 

[HariPrasad-1]

I live in megacity sir.
Just started working in a big company, I have dreams I want to fulfill, some of them are important like yours.
I think INDIA HAS DONE MORE WORK ON SPACE THAN ON INNOVATIONS THAT CAN HAPPEN IN INDIA AGRICULTURAL SECTOR.
One foreigner said India has the capacity to become bread basket for the world.
Similarly somebody in india northeast said "NORTH East can provide all of india food needs".
So many things are there that we are not looking into.

Not only that but it should be the quality food without chemicals. This is the time to go for fully natural or organic farming. This will not only increase the production but will reduce water consumption to half or even less. It will be able to sustain drought. these are some brief benefits. There are many more.

I with my friend is also planning to develop jungle by buying the barane land. For all this financial resources are required. Currently, I am doing this from my salary. I want to develop an alternate financial resource which can be further invested in making this planet better. I have some very good friends in this area whose doors are always open for me and whosoever comes with me. I can take as many guys with me as I wish to.My cousin came once with me. He lives in Bombay. He too fell in love with this area. He came twice thereafter. He is coming today as well. I will go tomorrow to do some deals of land. I have become a reasonably well known person in this area. Since I pay them very generously, many guys want to deal with me only. I hope to finalize a deal of some 43k Sq land totally road touch. I want to build a stable with few bufallows and gir cows there. This is a difficult job particularly managing from 200 km away. It requires trusted and trained people. If you live in Bombay, you can come on one week end. We shall go there through via sulpaneshwar wild life sanctuary. That will rejuvenate you from core. There is a lot to explore there. come one day. We shall enjoy. I went there for 8 consecutive week ends before I broke my leg. I am planning to go there tomorrow either with brother or by taking a driver with me. Statue of unity will be on the way.

 

[Aaj ka hero]

Not only that but it should be the quality food without chemicals. This is the time to go for fully natural or organic farming. This will not only increase the production but will reduce water consumption to half or even less. It will be able to sustain drought. these are some brief benefits. There are many more.

I with my friend is also planning to develop jungle by buying the barane land. For all this financial resources are required. Currently, I am doing this from my salary. I want to develop an alternate financial resource which can be further invested in making this planet better. I have some very good friends in this area whose doors are always open for me and whosoever comes with me. I can take as many guys with me as I wish to.My cousin came once with me. He lives in Bombay. He too fell in love with this area. He came twice thereafter. He is coming today as well. I will go tomorrow to do some deals of land. I have become a reasonably well known person in this area. Since I pay them very generously, many guys want to deal with me only. I hope to finalize a deal of some 43k Sq land totally road touch. I want to build a stable with few bufallows and gir cows there. This is a difficult job particularly managing from 200 km away. It requires trusted and trained people. If you live in Bombay, you can come on one week end. We shall go there through via sulpaneshwar wild life sanctuary. That will rejuvenate you from core. There is a lot to explore there. come one day. We shall enjoy. I went there for 8 consecutive week ends before I broke my leg. I am planning to go there tomorrow either with brother or by taking a driver with me. Statue of unity will be on the way.

Will certainly contact you sir in the NEAR future FROM HERE, right now I am in NEW DELHI and planning to go to Japan for ONLY few years(ya, biggest growth is here but I think japs got something I need NOW).
Got offer from there, let's see what happens.... 50/50 chance BUT FOR AN OTAKU LIKE ME, can't miss this.

 

[HariPrasad-1]

Will certainly contact you sir in the NEAR future FROM HERE, right now I am in NEW DELHI and planning to go to Japan for ONLY few years(ya, biggest growth is here but I think japs got something I need NOW).
Got offer from there, let's see what happens.... 50/50 chance BUT FOR AN OTAKU LIKE ME, can't miss this.

Best of luck. Go and learn and innovate.
What I have observed here is that in India, it is more of evolving and less of research. I have seen many examples where our art, science etc have evolved. You will see many amazing things in architecture, farming techniques , music etc but you will never find any mention of who researched it. As I see the things, I get more and more fascinated. As I have explored more, I see a totally new world existing right beside us about which we do not know anything.
My nephew who is a M.Tech from IIT Chennai has settled in an tribal village and does NGO work. I visited his house and what I saw and listen totally fascinated me. Their customs, their food preservation methods, their marriage rituals, their justice systems are beyond imaginations. No single FIR is ever registered in these villages in their history. They worship nature such as rivers and mountains. Any dispute is settled by Punch which takes care that no party is insulted or humiliated like our prevailing judicial system. The way they have preserved the nature is beyond the imaginations. If you dig 10 ft deep, you get water. They have their markets known as hat. There is no traders there. Those who makes the goods such as utensils from soil or from bamboo directly sells to end user.
Girl and boy of same village can not do love marriage. If they do, punch decides the penalty which boy's father need to pay to girls father as girl's father is insulted. In other ares, boys and girls choose their partners in hat and girl goes with boy and marriage happens. The only restriction is that they should not be from same village.

 

[Haldiram]

Best of luck. Go and learn and innovate.
Any dispute is settled by Punch which takes care that no party is insulted or humiliated like our prevailing judicial system.

Japan sounds a lot like Delhi. Even here disputes are settled with a punch.

 

[Prashant12]

Govt likely to withdraw higher surcharge for FPIs; Sensex rallies 700 points
The government had proposed to increase surcharge on the super rich in Budget 2019.

NEW DELHI: The government is likely to announce a slew of market-friendly changes including withdraw of higher surcharge for foreign portfolio investors (FPIs), and is considering withdrawing long-term capital gains (LTCG) tax after a three-year period and easing dividend distribution (DDT) tax, ET NOW reported on Thursday, quoting government sources.

The report pushed the BSE Sensex 634 points higher and helped the NSE Nifty top 11,000-mark at the close.

The Centre may keep surcharge on the super rich intact, sources said.

“The government may withdraw higher surcharge for FPIs via notification or ordinance,” the report added.

In the case of the government opting for ordinance, Parliament nod will be taken in the next session.

The decision was taken by the finance ministry after a meeting with Prime Minister Office.

“Revenue forgone due to removal of higher surcharge will be only Rs 400 crore,” the report said.

The decision on FPIs is expected after Law Ministry whets the proposal, sources told ET NOW.

Another report by ET Now suggested that the Finanace Ministry is working on confidence booster package for the capital markets including a relook at long-term capital gains tax (LTCG).

The Finance Ministry is studying the impact of withdrawing LTCG after a three-year holding period, ET NOW reported quoting sources as saying. LTCG was introduced in Budget2018.

Earlier, the government had proposed to increase surcharge on super rich in Budget presented by Finance Minister Nirmala Sitharaman.

However, this surcharge also increased the tax burden on FPIs as most are organised as non-corporate entities such as trusts and association where taxation is similar as for individuals.

As a result, the benchmark equity indices has witnessed severe selling pressure since July.

Market capitalization of the BSE-listed firms tanked from Rs 151.35 lakh crore on the Budget day to Rs 138.82 lakh crore on August 7, wiping out Rs 12.53 lakh crore.

A large part of the selling can be attributed to foreign institutional investors (FIIs). The FPIs have also been net sellers of over Rs 20,000 crore worth of stocks in the capital market segment on the BSE, NSE and MSEI since July 1, according to PTI.

The benchmark BSE Sensex rallied over 700 points after the news report, while the 50-share Nifty index reclaimed the 11,000-mark.

https://economictimes.indiatimes.co...r-surcharge-for-fpis/articleshow/70585946.cms

 

[Haldiram]

Govt likely to withdraw higher surcharge for FPIs; Sensex rallies 700 points
The government had proposed to increase surcharge on the super rich in Budget 2019.

NEW DELHI: The government is likely to announce a slew of market-friendly changes including withdraw of higher surcharge for foreign portfolio investors (FPIs), and is considering withdrawing long-term capital gains (LTCG) tax after a three-year period and easing dividend distribution (DDT) tax, ET NOW reported on Thursday, quoting government sources.

The report pushed the BSE Sensex 634 points higher and helped the NSE Nifty top 11,000-mark at the close.

The Centre may keep surcharge on the super rich intact, sources said.

“The government may withdraw higher surcharge for FPIs via notification or ordinance,” the report added.

In the case of the government opting for ordinance, Parliament nod will be taken in the next session.

The decision was taken by the finance ministry after a meeting with Prime Minister Office.

“Revenue forgone due to removal of higher surcharge will be only Rs 400 crore,” the report said.

The decision on FPIs is expected after Law Ministry whets the proposal, sources told ET NOW.

Another report by ET Now suggested that the Finanace Ministry is working on confidence booster package for the capital markets including a relook at long-term capital gains tax (LTCG).

The Finance Ministry is studying the impact of withdrawing LTCG after a three-year holding period, ET NOW reported quoting sources as saying. LTCG was introduced in Budget2018.

Earlier, the government had proposed to increase surcharge on super rich in Budget presented by Finance Minister Nirmala Sitharaman.

However, this surcharge also increased the tax burden on FPIs as most are organised as non-corporate entities such as trusts and association where taxation is similar as for individuals.

As a result, the benchmark equity indices has witnessed severe selling pressure since July.

Market capitalization of the BSE-listed firms tanked from Rs 151.35 lakh crore on the Budget day to Rs 138.82 lakh crore on August 7, wiping out Rs 12.53 lakh crore.

A large part of the selling can be attributed to foreign institutional investors (FIIs). The FPIs have also been net sellers of over Rs 20,000 crore worth of stocks in the capital market segment on the BSE, NSE and MSEI since July 1, according to PTI.

The benchmark BSE Sensex rallied over 700 points after the news report, while the 50-share Nifty index reclaimed the 11,000-mark.

https://economictimes.indiatimes.co...r-surcharge-for-fpis/articleshow/70585946.cms

Me had predicted. Gib Nobel Prize.

That seems to be the case. Logon ko itna dara doge toh paisa withdraw karne lagenge. The FPI guys requested twice to review the new taxation law because it's a double whammy for them. First LTCG and then the surcharge, that makes the LTCG equivalent to 14%, on top of that the rupee has plunged so foreigners are at the brink of their patience. Ek toh profit barely 3% to 4% ho raha hai, aur uss chote profit ka bhi 14% hissa LTCG me dena pad raha hai unko. FM even refused to entertain them. 40% of the money in Indian markets is foreign money. If they decide one day to pull it out, the whole market will deflate like a balloon. The inkling of this major withdrawal made the smaller FPIs withdraw earlier (Singapore and Gulf investment hedge funds).

Expect the gormint to issue some relief or some cosmetic relief-building statement this week. Bank liquidity has dried up. The only place a company can look to raise funds is the markit. If the stock prices are stunted, even that source dries up and puts pressure on the gormint.