Do it yourself

One of the biggest hurdles to doing business in India today is not infrastructure, taxation, or talent—it is policy unpredictability. The Economic Survey 2019 reminded us that India’s own thinkers since ancient times tied prosperity to rule of law ( Dandaniti ) and protection against arbitrary rule ( Matsyanyaya ). In modern terms, this means clear rules, consistent enforcement, and contract sanctity. Investors, entrepreneurs, and global partners all look for this. Yet, over the past decade, India has repeatedly seen sudden policy shocks. These not only create losses for businesses and investors but also erode long-term trust between government and enterprise. Case Studies of Policy Uncertainty Maggi Ban (2015) FSSAI imposed a sudden nationwide ban on Nestlé’s Maggi noodles citing excessive lead/MSG. Months later, the Bombay High Court lifted the ban after independent tests cleared the product. ·          Nestlé lost sales and investor...

In July 2025, India’s consumer price inflation (CPI) hit an eight year low of 1.55% (yoy). Several factors contributed to the fall in inflation, including, a favorable base effect, lower fuel inflation, and decline in beverages and food prices. Since the inflation is much below the RBI tolerance range of 4% to 6%, it has excited the market participants about another rate cut at the RBI’s October 2025 Monetary Policy Committee (MPC) meeting. The prospect of lower Goods and Services Tax (GST) rates from November 2025, which could keep inflation subdued further, has added fuel to the speculations. However, notwithstanding what RBI does at its next meeting, we need to answer a fundamental question - Is this low inflation—or even disinflation—a desirable thing for a growing economy like India? Positive side of low inflation Boost to Consumer Spending:  Lower prices for essentials like vegetables and pulses mean more disposable income, which could spur consumption in a country where priv...

In his Independence Day speech, the prime minister announced that his government has proposed comprehensive reforms to the extant Goods and Services Tax (GST) structure. The proposals have been reportedly sent to the Group of Ministers (GoM). Two Groups of Ministers (comprising representatives of the State governments) — one on rate rationalization and another on compensation cess — will have to approve the proposals before they go to the GST Council for approval. The central government is quite confident that the GST Council members shall approve the proposals promptly, and it could be implemented before the forthcoming festival season. The stated objectives of the proposed GST reforms, focus on simplifying the tax system, reducing the tax burden, and promoting economic growth. Based on the publicly available information, the key highlights of the proposed GST reforms are as follows: Structural Reforms Correct inverted duty structures  to align input and output tax rates, reduce i...

As I mentioned in the preceding post , a narrative of “tax terrorism” is being built strongly on social media, against the incumbent regime. Many popular influencers are repeatedly alleging that the government is squeezing the middle classes too hard through “exorbitant” direct and indirect taxes. Numerous experts have opined that the high taxes are the primary reason for the decline in growth trajectory, especially the private consumption. The followers of these experts are quick to lament that poor infrastructure and civic amenities are totally incongruent with the current structures of direct and indirect taxation. There is absolutely no denying that regardless of the official claims, the civic infrastructure in most parts of the country remains of poor quality and inadequate. The civic authorities are mostly inefficient, and wastage of resources rampant. Nonetheless, accusing the current regime of coercive taxation policies may not be appropriate, in my view. The taxation structure...

The central government presently derives 63% of its resources from taxes (Direct Taxes 36% and Indirect Taxes 27%). 27% comes from borrowing and 10% from other sources. The present socio-political milieu is such that (i) the central government is becoming increasingly dependent on the regional parties, hence it is imperative that it would need to allocate more resources to the states ruled by the supporting regional parties; (ii) a larger proportion of the population is becoming increasingly dependent on the government for the basic necessities like food, shelter, education and healthcare, requiring the basic social sector spending to rise without any major improvement in the quality of life; (iii) supply side pressures are not abetting, keeping the inflation (including imported inflation) elevated, pressurizing USDINR and yields; and (iv) economic growth continues to be disproportionately dependent on government spending (both revenue and capex). Under these circumstances, the governm...

One thing that the prime minister Narendra Modi is well known for is his business friendliness. At the core of the famous Gujarat Model, that shot Mr. Modi to the national and international scene, was his claim of making Gujarat the most business-friendly state in India. He is also often accused by the opposition parties for unduly favoring the large corporate at the expense of micro and small enterprises and middle-class households. In the past ten years, the policies followed by the PM Modi led central governments have stayed true to his reputation. For example— ·          The effective tax rates of the corporate sector have been reduced. This has resulted in the aggregate tax collection from individual taxpayers to rise higher than the tax paid by corporations. ·          It is widely believed that the demonetization of high value currency notes and the implementation of GST have also adversely affe...

Last month the incumbent NDA government completed nine years in power with BJP having full majority in the Lok Sabha on its own. In the 2014 general election, it was after three decades (post the landslide win of the Congress party led by Rajiv Gandhi in 1984) that a single party (BJP) had secured over half the seats in the Lok Sabha. Obviously, the people had great hopes from the new government that has won their confidence on the promises of a corruption free regime with equal opportunities   (Sabka Saath Sabka Vikas). For the 5years (2014-2019) the Indian economy (Real GDP) grew at a CAGR of ~7.4%, slightly better than the CAGR of ~7.1% during the previous five-year term (2009-2014). In 2019, the BJP returned to power with an even larger majority. During the first four years of the current term, the Indian economy has grown at a CAGR of 3.1%, the slowest pace of growth achieved by any government in the post liberalization (1991) era. The best growth trajectory was seen during UP...

 Being the finance minister of India is arguably one of the most challenging jobs in the world. The incumbent has to deal with 28 Federal States and 8 Union territories, each having a distinct socio-economic and fiscal profile. Unlike some developed countries like the USA, the Federal States in India are not autonomous and/or self-reliant in fiscal matters. These states rely on the Union Government for financial resources. Besides, the finance minister of India is limited by the constitutional mandate of being “socialist”. To make things more complicated, implementation of GST; acceptance of the recommendations of 15 th  Finance Commission; and abolition of the planning commission have materially curtailed the powers of the union finance minister. Technically speaking, all the policies formulated and proposed to be implemented by the union finance ministry must pass the test of “socialism”, since the Constitution of India overrides all the legal provisions and policy directi...

 Notwithstanding the buoyancy in stock market, the economy has shown some clear signs of fatigues in February. The post lock down recovery from September onwards appears to be pausing, as pent up consumer demand has subsided and rise in raw material prices has dampened the sentiments. Some signs of economy pausing could be read from the following: (a)    GST payments in February (for collections in January) have declined after rising for three consecutive months. (b)    E-Way collection in February were also much below the December levels. (c)     Exports have been mostly flat for the month of January and February; while imports have declined from the December levels. (d)    Non food credit growth slowed down further in January. ·          The Industrial credit contracted -1.3% in January. The contraction was led by large industrial credit, which constitutes ~82% of industrial credit and ...

 There was this very famous soccer player. He was one of the main strikers for his country as well as club team. He won many matches for his teams. He was very popular amongst sports enthusiast, and as such attracted many corporates to become brand ambassador for their respective products. Unfortunately, one day he met with a serious accident in which many of his limbs were fractured. He remained in intensive care for many months. Doctors had to perform several surgeries to keep him alive and make him walk again. After spending two years in bed, the striker took his first step with the assistance of his wife and walking stick. The hospital management immediately broke the news to the media. The fans were ecstatic and celebrated the news by popping up champagne and ringing church bells. The doctors informed the team management and sponsors (who were keeping a close watch on the health conditions of their star striker), in confidence that their star would never be able to play agai...

  Some of the readers have found my yesterday’s post ( The best place to watch this Opera ), unnecessarily alarming and extremely hypothetical. I respect their opinion, though I may not necessarily agree with their comments. I had faced similar kind of criticism, when I found that a symmetrical fall in the market due to outbreak of pandemic may be unwarranted. I expected that the impact of COVID-19 lockdown over various sectors and businesses may be asymmetric and therefore the precipitous fall in the entire market is a big opportunity to buy the businesses that are likely to be less affected or positively impacted. ( Time to Take Big Call ) My decision to go tactically overweight on equity did not go well with many readers at that time; though I have no regrets. Moreover, I corrected my tactical equity overweight stance in late August ( Preparing for chaos – 4 ). Presently, I am maintaining my standard asset allocation of 60% Equity; 30% Debt and 10% Cash; and as stated in yeste...