Thought for the day
” If anything is
certain, it is that I myself am not a Marxist.”
-
Karl Marx (German, 1818-1883)
Word for the day
Hypocorism (n)
The practice of using
a pet name.
(Source:
Dictionary.com)
Teaser for the day
Acche Din (Good days)
means - more compliance and less corruption; less controls and more supplies.
Match stricter compliance with good governance
Participating in a couple of discussions on Union Budget for
FY15 yesterday, disillusioned me a little further. I could see a rather stark
expectation mismatch amongst participants from various fields.
Nonetheless the national agenda was on no one's mind. While
everyone tried reading and interpreting the budget proposal from their myopic
vested interest view points, none appeared concerned about the impact on the
large section of the population that suffers most from inadequate social and
economic infrastructure and higher price levels.
I could decipher the following key reasons for displeasure and
disappointment amongst participants from financial markets:
(a) Failure of the
Finance Minister in proposing anything that will induce a bubble in the asset
prices, especially listed equities and real estate.
(b) Tax proposals
indicating that the tax department is closely examining all investment schemes
and other transactions that are primarily designed for tax avoidance purposes
and do not serve any other useful purpose, e.g., Fixed Maturity Plans (FMP) of
mutual funds that have bank CDs as only underlying; forfeiture of advance
against property that has been rampantly used as money laundering;
clarification on inclusion of 35AD deduction in calculations of MAT; grossing
up of the dividend amount for the purposes of calculating DDT and exclusion of
CSR in calculating PBT, etc.,
(c) Refusal of the
finance minister in engaging into avoidable controversies through unprepared
and ill-considered stand on contentious issues like GAAR, GST, DTC, MAT on
units located in SEZs etc.
(d) Disregard of
expert opinions, in particular global economists and columnists.
I found most of this criticism frivolous and misplaced.
I believe inducing asset price bubble at this stage of economic
cycle (domestic and global) could be disastrous. The global economy looks more
fragile today than it was in 2008.
Multiple rounds of monetary injections have not been successful
in reviving the economic activity even to pre 2008 sub optimal levels. The
public debt levels have also risen sharply in past couple of years as yields in
many European countries have fallen to pre Lehman levels. The conventional
monetary policy tools stand exhausted and unconventional means are yet to pass
the test of stemming a collapse (though these have been very successful in protecting
the bottom).
Insofar as higher utility prices and stricter compliance are
concerned, in view these are conspicuous signs of Achhe Din (good days). The
only thing we need to wait and see is that it is matched in equal proportion by
good governance!
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