Daily Financial News Analysis – 10th Dec’19

Table of Contents

Maldives-India-China

Maldives’ Parliament speaker Mohamed Nasheed on Monday met Vice President Venkaiah Naidu.
Nasheed conveyed that his country is keen to disentangle from China’s debt trap.
Maldives is undertaking an assessment of assets created through debt funding from China.

China’s funding is costly and Maldives is keen to know the extent of actual investment flows from China into his country.
Nasheed also said that the previous government of his country, unfortunately, did not get along well with India.
New Delhi could help the people of his country, who are hungry for constitutional democracy.
Both the countries have similar views on the serious issue of climate change.
India’s ‘Neighbourhood First‘ policy
Lok Sabha Speaker Om Birla: emphasised that the two countries should increase their cooperation not only in the economic fields and employment but also in the social sectors.

GST evasion

GST authorities are concerned about lower reported online sales.
Several firms that sell goods on e-commerce portals like Amazon and Flipkart.
Online sales reported is much lower than such sales computed from the tax collected at source (TCS) data furnished by the marketplaces.
West Bengal’s Amit Mitra + many analysts: GST evasion is much more rampant and large-scale than officially acknowledged.
Amit Mitra: This is one of the principal reasons for the decline in collections apart from the slowdown in consumption.
Online sales are more traceable due to the organised nature of the marketplaces.
Under the GST system
1. Sellers on e-commerce platforms, are required to register on the GST Network
2. Even if their turnover fall below the GST threshold of Rs 40 lakh per annum
3. e-commerce portals are required to deduct 1% of the taxable sales
4. Services suppliers are exempted
The sellers can use the TCS as credit at the time of filing returns and paying taxes.
1. GST administration has been struggling to plug tax evasion since its inception.
Many such sellers also operate offline.
Officials estimate that tax frauds of as much as Rs 90,000 crore a year could be taking place.
GST system is able to detect about only 10-15%.

Foreign Computer

Within 3 years: China has ordered that all foreign computer equipment and software be removed from government offices and public institutions.
The government directive is likely to be a blow to US multinational companies.
From trade war to tech cold war.
The Trump administration banned US companies from doing business with the Chinese telecoms company Huawei this year
Google, Intel and Qualcomm announced they would freeze cooperation with Huawei.
The real battle is about which of the two economic superpowers has the technological edge for the next 2 decades.

Farm Wages

Wage growth for rural agricultural labourers slipped to a four-quarter low of 4% in the third quarter of the current fiscal.
Revival of the demand in the economy is getting delayed.
Rural agri wages is a significant proxy for consumption demand.
Nomura: After 2016, there has been hardly any growth in rural wages

Human Development Index

2019 Human Development Index by the United Nations Development Programme (UNDP).
India inched up one spot to rank 129th out of 189 countries.
Inequality and deprivation continue to be high in India.
India’s development initiatives are crucial in ensuring that we meet our promise to leave no one behind.
India managed to lift 27.1 crore people out of poverty from 2005-06 to 2015-16
The steady progress was due to nearly three decades of rapid development, which had seen a dramatic reduction in absolute poverty, along with gains in life expectancy, education, and access to health care.
South Asia was the fastest growing region witnessing 46% growth during 1990-2018, followed by East Asia and the Pacific at 43%.

Imran Khan on India Diaspora

Pakistan Prime Minister Imran Khan on Monday urged the Pakistani diaspora to emulate overseas Indians and Chinese.
They have invested heavily in their motherland.
Pak PM assured Pakistani Diaspora a corruption-free environment to boost the cash-strapped country’s economy.
Imran Khan said that Pakistan was facing an existential threat due to rampant corruption.
The money that we had to spend on the education of youth, research and higher education, has been spent to make palaces across the seas and fill hefty bank accounts.
The contributions of the Non-Resident Indians in the growth of the Indian economy has been significant.
Last year, the World Bank estimated India’s remittances to be the highest in the world, standing at $79 billion, followed by China and Mexico at $67 billion and $36 billion respectively.
Imran Khan said that major infrastructure projects like the metro were built not for the people but to take commission and kickbacks.

Q1 As per recent Crisil Infrastructure Advisor report, India to spend _______ on infrastructure over the coming decade to return economic growth rates to more than 7.5%?