[tsk1979]

Originally Posted by Jeroen

Some perspective and interesting data on worldwide entrepreneurship. India outperforms the USA by a very good margin. Go India!

Attachment 2125629

Source: https://thebossmagazine.com/top-10-e...urial-nations/

So what does this score mean. Does it mean Chile have the biggest startup ecosystem?
From the same article

The US takes the crown with the most financial support for new businesses and entrepreneurs, with an index score of 15 out of 15. This means that the US is the best country for providing financial resources‚ such as equity, credit, subsidies and grants, to small and medium enterprises (SMEs).

And the metrics smell of BS.

all about innovation and entrepreneurial intentions

What is "intention" and "innovation". So if a business owner says their product is innovative, innovation score goes up?

Sorry, but metrics like these are totally useless. More useful metrics would be businesses started/1 million individuals or whatever. The intention to start business, innovation score etc., look like weird made up metrics not grounded in reality

Sure, a higher percentage of Indians want to own and start a business. But does that make India a better place to start a business than Singapore...?

Chile takes the top spot as the world’s most entrepreneurial nation with an overall score of 76 out of 100. The narrow country that stretches along the Pacific Coast of South America is all about innovation and entrepreneurial intentions when it comes to start-up businesses, scoring 40 out of 40 for innovation, with 48% of entrepreneurs saying that their product or service is new to at least some customers, and few to no businesses offer the same product. The country also scored 6 out of 10 for entrepreneurial intentions, with 49 percent of 18-64 year-olds saying they intend to start a business in the next three years. Nevertheless, finance, education and training available to entrepreneurs are much less than in other countries, in fact, the index has shown that Chile came fourth from the bottom for offering basic school entrepreneurial education.

India takes second place with an overall score of 69 out of 100. Interestingly, India is the fifth most fearful country with half (50%) of its residents admitting fear of failure would prevent them from starting a business. Despite this, India comes in third place for innovation, with 47% of business owners and managers saying that their product or service is new to at least some customers and that few or no businesses offer the same product.

[Gsynch]

The GST collection in Feb stood at Rs 1.13 lakh crore.

This is the fifth straight month of the GST collection exceeding the Rs 1 lakh crore mark.

The current mop-up is an increase of 7% over the February collection last year.

It is been a straight 5 month run on 1+ Lakh Crore, seems like a new reality!

[V.Narayan]

Originally Posted by Gsynch

The GST collection in Feb stood at Rs 1.13 lakh crore.
This is the fifth straight month of the GST collection exceeding the Rs 1 lakh crore mark.
The current mop-up is an increase of 7% over the February collection last year. It is been a straight 5 month run on 1+ Lakh Crore, seems like a new reality!

Good point. May be to early to say. We will really know only with the April 21 data in a while. This last quarter is witnessing a lot of reconciliation catch up thanks to Covid and cross tally of GST returns with a company's final assessment of its final sales and income tax return preparations. But for sake of the economy I hope this uptick is sustainable. Our Govt's sagging deficit needs it.

[Gsynch]

Originally Posted by V.Narayan

May be to early to say. We will really know only with the April 21 data in a while. This last quarter is witnessing a lot of reconciliation catch up thanks to Covid and cross tally of GST returns with a company's final assessment of its final sales and income tax return preparations. But for sake of the economy I hope this uptick is sustainable. Our Govt's sagging deficit needs it.

That's true sir, maybe it is too early to spot a definitive trend here and should wait couple more months.

Agree on Govt deficit, while growth in GST collections is surely helpful in that direction, excise duty of Fuel (Petrol, Diesel, cooking gas....) is out of this ambit and am certain that's an extra top-up govt is getting.

[sdp1975]

What do folks think of RBIs decision to print money in the latest monetary policy review ? Long term impacts ?

https://www.livemint.com/industry/ba...936927966.html

[SmartCat]

Originally Posted by sdp1975

What do folks think of RBIs decision to print money in the latest monetary policy review ? Long term impacts ?

This is not money printing like UPA II regime's move (large fiscal deficit due to excess Govt spending). Bond buying by RBI (a bit similar to Fed's Quantitative Easing) might not be inflationary. What RBI bond buying will do is keep interest rates (artificially) low. Govt can borrow more at lower interest rates and hence afford to spend more.

However, this is not without consequences:

1) INR will depreciate against USD. That's because traders used to indulge in "carry trade" as mentioned in the Bloomberg article. Borrow in USD and invest in INR bonds and earn interest. This will slow down. But Govt/RBI is probably not that worried INR depreciation because it can be desirable too (if inflation is under control, and Govt wants to boost exports)

2) If Govt bond rates fall, so will FD rates. As a consequence, real interest rates (bank FD rates minus inflation rate) will fall affecting the savers and senior citizens. But on the flipside, loan rates will fall too - hopefully boosting demand.

[V.Narayan]

Originally Posted by SmartCat

This is not money printing like UPA II regime's move (large fiscal deficit due to excess Govt spending). Bond buying by RBI (a bit similar to Fed's Quantitative Easing) will not be inflationary. What RBI bond buying will do is keep interest rates (artificially) low. Govt can borrow more at lower interest rates and hence afford to spend more.

Pardon my ignorance. One question. When the RBI says it will buy bonds who is issuing them - the Central Govt? What mechanics causes it to keep interest rates low. Thanks in advance.

[SmartCat]

Originally Posted by V.Narayan

Pardon my ignorance. One question. When the RBI says it will buy bonds who is issuing them - the Central Govt? What mechanics causes it to keep interest rates low. Thanks in advance.

Both Central Govt and State Govt issue these bonds. And these bonds are bought by banks, NBFCs, insurance companies, EPF/PPF, mutual funds and even retail folks.
https://www.team-bhp.com/forum/shift...-deposits.html (Government Bonds - Safer than even Fixed Deposits)

If you look at the portfolio of certain debt mutual funds, you will find that they too have bought these bonds:



Rajasthan has raised money at 8.31%, Gujarat has raised money at 6.58%, GoI has raised money at 6.68% and so on. States with strong fiscal policy will be able to raise money at lower rates (and vice versa).

Now what this RBI policy will do is mess with market economics. Previously, since commercial entitites were buying bonds, Government was forced to offer "market rates". But now, they will be able to offer bonds at lower than market rates because now they know that RBI has promised to buy Rs. X amount of bonds per month.

[vrprabhu]

Originally Posted by SmartCat

.. on the flipside, loan rates will fall too - hopefully boosting demand.

If interest rates was or is the main factor that was suppressing demand, then the above is true. BUT, in the current situation is it so?

Originally Posted by SmartCat

Now what this RBI policy will do is mess with market economics. Previously, since commercial entitites were buying bonds, Government was forced to offer "market rates". But now, they will be able to offer bonds at lower than market rates because now they know that RBI has promised to buy Rs. X amount of bonds per month.

Market was already messed - low interest rates were prevailing due to surplus liquidity (low credit growth, even though numbers show there is a year-on-year credit expansion). All of a sudden, interest rates on Govt. Securities started moving upwards last month (one reason attributed for this being Govt. borrowing on a large scale during 2021-22, with few takers for these papers, resulting in offering of higher interest to attract investors so as to raise the money).

Now, it appears, the intent is to ensure that the rates don't go up but continue to drop lower....

All said and done, interest paid by Banks on deposits is still lower than the interest paid by Government on its borrowings and looks like the scenario isn't going to change overnight.

[SmartCat]

Originally Posted by vrprabhu

If interest rates was or is the main factor that was suppressing demand, then the above is true. BUT, in the current situation is it so?

In theory, lower interest rates will boost infrastructure building and consumer spending and blah blah. In reality, lower and lower interest rates will force depositors into the stock & real estate markets causing bubbles

All said and done, interest paid by Banks on deposits is still lower than the interest paid by Government on its borrowings

This is not correct. You probably got misled because published Govt bond rates are of 10 yr duration, while FD duration is usually 1 to 5 yr. If you look at similar duration, you will notice that Govt will always pay lower interest than banks:



Also, this comparison is with SBI (which is considered as quasi-sovereign entity). Smaller banks will obviously pay more interest to depositors.

[saket77]

Originally Posted by SmartCat

In theory, lower interest rates will boost infrastructure building and consumer spending and blah blah. In reality, lower and lower interest rates will force depositors into the stock & real estate markets causing bubbles

A statement worth its weight in *GOLD*.

It is not that spending habit of a population will change overnight just because the deposits are fetching lower rates. In fact, it forces them to choose riskier assets, create stock market and real estate bubbles, look for alternate investments etc.

In fact, this can also reduce the income of a lot of people, esp. those living on interest income. One cannot expect someone to spend more while their income is actually decreasing. This is even more applicable to India because we are conservative people by nature and have an embedded habit of saving & investing the traditional way in fixed income assets like FDs. Lower interest rates have affected our income, even if we are not 'living-off' on the interest income which has affected our financial plans.

Also, in an uncertain situation like the one prevailing, people will obviously look to save more & spend less anyway as they don't have assurance of income if things dwindle further. That also means that people will not borrow only because cheaper loans are available because of negative consumer confidence.

Even on the macro level, in an economic scenario like that of today, not too many companies would be eager to expand, thereby incurring huge capital expenditure with not much hope of increase in demand in visible future. They would rather be saving to see off the uncertain time.

In fact, quite a tough time to choose assets to invest today.

[V.Narayan]

Originally Posted by saket77

A statement worth its weight in *GOLD*.

+1. You know what his handle is

In fact, this can also reduce the income of a lot of people, esp. those living on interest income. One cannot expect someone to spend more while their income is actually decreasing. This is even more applicable to India because we are conservative people by nature and have an embedded habit of saving & investing the traditional way in fixed income assets like FDs. Lower interest rates have affected our income, even if we are not 'living-off' on the interest income which has affected our financial plans.

A very real problem for middle income pensioners.

Also, in an uncertain situation like the one prevailing, people will obviously look to save more & spend less anyway as they don't have assurance of income if things dwindle further. That also means that people will not borrow only because cheaper loans are available because of negative consumer confidence.

+1

Even on the macro level, in an economic scenario like that of today, not too many companies would be eager to expand, thereby incurring huge capital expenditure with not much hope of increase in demand in visible future. They would rather be saving to see off the uncertain time.

Manufacturing is certainly focused on getting more productivity out of existing assets than investing in expansion till the cultural & economic climate clears somewhat.

In fact, quite a tough time to choose assets to invest today.

When in doubt and if you have a long term perspective a small investment in gold always pays. It has for me since 1988. But I'll confess I've never sold so I don't know what happens when you actually go to sell gold.

On another topic if the Govt is really serious about stoking the economy instead of once again twiddling with the methods of calculating GDP & its growth they should get down to releasing payments worth literally tens of thousands of crores and more owed to vendors, contractors, suppliers of every kind who did work on Govt projects. The number of businesses large and small that have been hit or gone belly up because of payments being held back for months and years is a very sad joke.

[Chetan_Rao]

Cheaper debt can significantly increase someone's borrowing capacity, not their repayment capacity. Return on Investment is not linear.

Grossly simplified example: Just because a bank is willing to finance my luxury car purchase or a swanky apartment well outside my means, doesn't mean my employer is willing to up my pay to match the repayment burden. If your bank doubles your credit card spending limit, that doesn't mean your actual spending capacity is doubled. The bill still comes due end of the month, and it's horrendously expensive to shift repayment to the future.

Laymen have neither the variety of levers to generate income like a government or large enterprise does, nor do they have the options to move around their debts at scale, like a government or large enterprise can.

All it does, in reality, is make laymen speculate in risky investments they can't afford, to either satisfy their greed (to have more) or desperation (to repay unaffordable credit), and that NEVER ends well.

One can't trust enterprises or large financial entities to act in consumer interest either, or even just responsibly. Have we forgotten what precipitated the 2008 crisis?

[V.Narayan]

Originally Posted by Chetan_Rao

Grossly simplified example: Just because a bank is willing to finance my luxury car purchase or a swanky apartment well outside my means, doesn't mean my employer is willing to up my pay to match the repayment burden. If your bank doubles your credit card spending limit, that doesn't mean your actual spending capacity is doubled. The bill still comes due end of the month, and it's horrendously expensive to shift repayment to the future.

+1

All it does, in reality, is make laymen speculate in risky investments they can't afford, to either satisfy their greed (to have more) or desperation (to repay unaffordable credit), and that NEVER ends well.

While not directly related to interest rates or liquidity my observation has been that by and large a persons income/wealth is inversely proportional to his real savvy of financial instruments, investment assets, risks and how the markets work. So the middle income family most in need for an extra leg up on income is the least equipped to handle the confusing swirl. I'm sure there are exceptions, just as there are rich folks who drown themselves, but this has been at least my repeated observation.

[Gansan]

Every six months my credit card company offers to up my credit limit. My bank offers me attractive car loans. But the loans are meaningless unless I have the capability and income to repay them. I never avail them. They are potential risks for people to get into debt traps.

There are two concepts in economics. Demand and effective demand. The first one is understandable to all. The second one is the most important. Effective demand means demand backed by purchasing power.

A lot of people may desire a Mercedes. But how many of those actually have the wherewithal to buy it defines effective demand, and that is what manufacturers will take into consideration.