Recent Measures By FM- Good Or Bad – Free PDF Download

GVA VS GDP

• These are the 2 ways through which CSO estimates economic growth.
• GVA is the calculation from SUPLLY side.
• Whereas the GDP calculation is from the DEMAND side.

IMPACT OF TAX RATE CUT

• First, It increases the profitability of companies in India, leaving them with extra cash to invest.
• Second (very important) it creates a feel-good sentiment.
• Hence the tax cut in corporate sector will certainly help the Supply Side problem.

BUT SOME QUESTION ALSO ARISES?

• Whether corporates choose to utilise the surplus earnings for
• Reinvestment in business or High shareholder returns.

WHAT ABOUT DEMAND SIDE PROBLEM?

• All the measures taken in last one month does not address the immediate problems of demand revival.
• AD = C + I + G + Nx

WHAT MORE COULD BE DONE?

• Higher infrastructure spending, which has a better multiplier effect.
• Or a sharp cut in indirect taxes, which gives even the last person on the queue the benefit of lower prices. (Diwali)
• Capital is one of the three main factors of production, which are critical to the growth of a commercial entity, the other two being land and labour.
• But capital is only a necessary, not sufficient, condition.

CONCLUSION

• The recent measures will certainly help companies deleverage their books.
• If companies are able to increase output & provide more jobs, then it will also address the demand side issues.

Latest Burning Issues | Free PDF

Sharing is caring!