[ValarMorghulis]

Originally Posted by GoBabyGo

...As per my understanding India has very high populations of poor to upper middle class. It may be 132 cr. out of 142 cr. population we have. If we assume 4 members per family than 33 cr. poor to middle class families and 2.5 cr families of Rich to Very Rich class.

Only problem I see with higher GST collection vs price of commodities since last 2/3 years that 33 cr. families are paying price beyond their easy to afford / buying capabilities as majority of items they buy are essential to live which definitely impact their saving for the future.

I may be wrong on above, but as of now I am really worried being a slightly above middle class myself and I know why I give the above statement.

I am generally averse to making statements in this forum as my macro/micro economic knowledge is quite limited compared to other members. But even a general Google search can show that your statement is rife with assumptions and factual inaccuracies.

Poor to upper middle class: This is such a wide band of population.
You say 132 out of 142 cr is in this band. Which is 93%. What is left? The high class? Do you mean to say we have 10cr high class people?
By the way, have only 3.2cr people paying taxes in this country and we have about 18lakh super rich households as per data in 202-21. Link


"33 cr. families are paying price beyond their easy to afford / buying capabilities as majority of items they buy are essential to live which definitely impact their saving for the future."
What makes you say that? If this 33cr includes middle and upper middle class (as you mentioned) then why would it be beyond their capabilities to buy majority of the items?

It's nice to be a part of the conversation but it's even better remove feelings from an economic thread.

Link-2
Link-3

[Mustang_Boss]

Originally Posted by GoBabyGo

As per my understanding India has very high populations of poor to upper middle class. It may be 132 cr. out of 142 cr. population we have. If we assume 4 members per family than 33 cr. poor to middle class families and 2.5 cr families of Rich to Very Rich class.

Only problem I see with higher GST collection vs price of commodities since last 2/3 years that 33 cr. families are paying price beyond their easy to afford / buying capabilities as majority of items they buy are essential to live which definitely impact their saving for the future.

The earlier VAT based tax system had too many loopholes and it was too convoluted. To add misery to the system, it aided in creating two tracks for all products. Product with tax paid and product with no invoice, which caused too much tax revenue erosion to the governments and built a network of no invoice products throughout our huge nation.

This needs to change. Even today, we could find products without invoice almost everywhere, except those fancy ipad's or iphones. What does it say? There are some parts of the economy which do not contribute to taxes and penalizes the ones who pay tax. This needs to change and GST was designed to target this exact problem.

We still are in the initial stages of end to end GST deployment throughout the nation and thanks to our election cycle, this is getting delayed intentionally. Wait for couple of more years and you will see more tax revenue coming in from all baskets of the economy and the government will keep adjusting the GST tax rates accordingly. But, it might take some time though. [Dont expect much rebate in Automobiles though... atleast for a decade or two]

[warrioraks]

Originally Posted by RaghuVis

We might be the only country where we cheer for higher tax collection!

As a white collar tax paying citizen, any results that show reduction in tax evasion is a good reason to cheer for.

[vamsi.kona]

Originally Posted by GoBabyGo

Only problem I see with higher GST collection vs price of commodities since last 2/3 years that 33 cr. families are paying price beyond their easy to afford / buying capabilities as majority of items they buy are essential to live which definitely impact their saving for the future.

You are not completely wrong in assuming that an indirect tax like GST would burden the lower income families more than higher income population. However, compared to the earlier tax system with multiple layers of tax, GST has made it a bit more simple.

The probable reason why people still feel it is cumbersome and complex is from the compliance angle, which is becoming stricter and closing loopholes as they are moving forward. One of the most important design in GST is input tax credit, which makes the entire chain tax compliant and creates a tax trail. While only anecdotal, I have seen some business changing their suppliers as the earlier one's weren't ready to do business under GST with proper invoicing. Once people started losing business they saw that it is better to pay some tax than lose business. People directly involved in business can throw better light on this aspect.

And from what I have read, the overall tax rate on many essential consumer goods has actually come down under GST. That is the reason we need to increase the Income Tax base. A large direct tax base can give government enough leeway to reduce burdens under indirect taxes.

[chinkara]

Originally Posted by vamsi.kona

And from what I have read, the overall tax rate on many essential consumer goods has actually come down under GST. That is the reason we need to increase the Income Tax base. A large direct tax base can give government enough leeway to reduce burdens under indirect taxes.

https://economictimes.indiatimes.com...w/59408800.cms

Remembered reading something like this - a quick google gave this link.
As you see, in most cases GST has been neutral. It has reduced in essentials like FMCGs.
In Pharma also (mentioned as increase here), the rates were later revised so that net impact (except for things like nicotine gums) have been neutral.

[longhorn]

The GST bill was initially tabled in Parliament much before 2014, with a view to simplify the tax structure and reduce leakages, thereby improving tax collection. The draft bill at the time, had just two slabs unlike the four slabs and innumerable cesses on top of those slabs that we have now. No prizes for guessing who stalled the bill. Yes, the very same people who were instrumental in stalling the bill, have implemented it now, albeit in a much watered down form. The initial few years after implementation of GST would show a lower tax collection. Later on, there would be huge improvements. This is a known and expected factor in GST implementation. 1.5 lakh crores per month is the bare minimum collection expected for the size of our economy. The budget is also set based on this assumption. Moreover, the size of our economy is expected to double every 5 to 7 years. This is a norm, unless someone in power does something utterly stupid.

[DigitalOne]

Originally Posted by longhorn

The GST bill was initially tabled in Parliament much before 2014, with a view to simplify the tax structure and reduce leakages, thereby improving tax collection.

Yes, you are right. The first GST bill was introduced in 2011 (link) and it was referred to a standing committee whose report came in Aug 2013, by which time the then government was doing fire-fighting in other areas, and probably lost its political will to push it through parliament.

Originally Posted by longhorn

The draft bill at the time, had just two slabs unlike the four slabs and innumerable cesses on top of those slabs that we have now. No prizes for guessing who stalled the bill.

No, parliamentary bills do not have proposal for slabs or rates. The 2011 bill (linked above) did not have it, and neither does the 2014 bill. Both the bills propose an establishment of a GST Council structure, and then the council will take the decisions on slabs, rates, and cesses.

[ValarMorghulis]

A video is going around on social media where a finance "influencer" seems to have found the perfect loophole for Indians banking system and returns.

According to him, Indian consumer is lazy and if only s/he managed to open multiple accounts in multiple banks (which is taxing according to him), they would get returns up to 60% on FDs. How?

Instead of opening one FD of say, 100,000@6%, in one bank, if you open 10 FDs of 10000 each@6%, you'll get returns of 60%.

Seriously

[Samurai]

This lady has a very interesting theory, backed up by non-traditional data.

China’s real GDP is less than half of what the Chinese government claims it to be...

https://www.youtube.com/watch?v=TRawl73xWBQ

[V.Narayan]

Originally Posted by Samurai

This lady has a very interesting theory, backed up by non-traditional data.

China’s real GDP is less than half of what the Chinese government claims it to be...

Very hard to judge if China's GDP data is doctored and if yes then to what extent. I have long suspected the claims of double digit GDP growth year after year. This not only puts untold strain on current infra structure and supply chains but also belies the notion that human power can be trained and upskilled to match this growth. Not to mention the massive socio-economic-cultural forces such explosive growth releases.

Coming to this video. I agree in principle that the number is stretched but this is a poorly crafted video where the conclusion was arrived at first! Both China and India import almost all the oil consumed. In 2021 India's imports were at 4.2 million barrels a day and China's at 10.3 million barrels a day. That to my mind is more accurate than lights in the sky seen from space. All things being equal that puts China at 2.5X India. Let's say 3X or ~$10 trillion. Let's give them the benefit of the doubt at 25% which gets us to $12.5 trillion or about 1/2 of the US. That to my amateur mind seems a realistic number. Uncle Xi jumping the reported GDP from 14 trillion in 2019 to 17 trillion in 2022 through the pandemic seems farfetched. And Uncle Xi like some other politicians is desperate to go down in history as the greatest Emperor ever. The speaker's contention that China's GDP could be $5.3 or $7.9 trillion sounds too much to swallow.

But as I said these are only my amateur thoughts. I am not well read in these matters nor do I have any professional background in economics.

[V.Narayan]

US Debt default Risk

Would love to hear the opinions of experts on the risk of US debt defaults and the outcomes if the inevitable were to happen.

The US Govt owes $31 trillion of debt. This is the highest it has ever been in nominal & inflation adjusted terms. Of this $ 1 trillion of principal repayments are due between 31st May and 30th June plus a further $13 bullion of interest payments are due. In comparison at the peak of World War II when US Treasury was borrowing to fund all the Allied nations US National debt, adjusted for inflation to 2022 $ was only $3.43 trillion. This number I have shared to give you a context. In recent decades in 1990 the US debt in that times $ crossed $4 trillion. In 2006 $8 trillion and in 2022 $31 trillion.

Politicians being creatures of survival will join hands from all sides to raise the debt ceiling. I doubt that will not happen on time. They need to in order for USA to borrow at least $ 1.013 trillion to fund the June dues and move ahead. If the US defaults, God forbid it will certainly shake up the world currency market and lend some weight to the slow & gradual creep towards de-dollarization that is taking place. But it is not as if a de-dollarized world will be easier or more stable or better for the Global South. One stable bully is better than 6 smaller less stable bullies!

Over the millenniums unwanted wars of ego and conquest have impoverished Empires be it The British or Aurangzeb or the Romans. So, it is with the Americans. They were already living beyond their means since the global financial crises of 2008 and then 2 simultaneous never ending wars and a defence budget bigger than the next 6 nations combined has added to their woes with non-economic consumption. Just my take, Experts will have a deeper perspective.

From CNN...

Treasury Secretary Janet Yellen warned Monday that the government may not be able to pay all of its bills in full and on time as soon as June 1. However, the forecast was uncertain, and the default date might come several weeks later, she said. The US hit its $31.4 trillion debt ceiling in January, and Treasury has been using cash and “extraordinary measures” to satisfy obligations since then.

Just what would happen if the nation defaults on its debt is unknown since it’s never actually happened before. A close call in 2011 roiled the financial markets and prompted Standard & Poor’s to downgrade the US’ credit rating to AA+ from AAA.

Yellen gave a sense of the turmoil it would cause in her letter to House Speaker Kevin McCarthy on Monday.

“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” she wrote.

[SmartCat]

Originally Posted by V.Narayan

Politicians being creatures of survival will join hands from all sides to raise the debt ceiling. I doubt that will not happen on time.

As you pointed out, debt ceiling will eventually be raised after some drama.

Till that happens, there will be fear mongering and doomsday articles in the business media. But for those who follow US business news regularly, this is just routine stuff that happens every year.

There is something called VIX index or THE FEAR INDEX.
https://www.cnbc.com/2022/03/15/how-...dex-works.html



If there is a financial crisis, it shoots up (see 2008/2020 or spikes in between). Right now, it is at average levels - meaning there is no anxiety or fear in the stock markets. So the markets are like: "US debt default? Yawn!"

I don't understand why US has the "debt ceiling" concept. It is not working as intended. Might as well get rid of the ceiling.

[dragracer567]

Originally Posted by V.Narayan

Very hard to judge if China's GDP data is doctored and if yes then to what extent. I have long suspected the claims of double digit GDP growth year after year. This not only puts untold strain on current infra structure and supply chains but also belies the notion that human power can be trained and upskilled to match this growth. Not to mention the massive socio-economic-cultural forces such explosive growth releases.

Coming to this video. I agree in principle that the number is stretched but this is a poorly crafted video where the conclusion was arrived at first! Both China and India import almost all the oil consumed. In 2021 India's imports were at 4.2 million barrels a day and China's at 10.3 million barrels a day. That to my mind is more accurate than lights in the sky seen from space. All things being equal that puts China at 2.5X India. Let's say 3X or ~$10 trillion. Let's give them the benefit of the doubt at 25% which gets us to $12.5 trillion or about 1/2 of the US. That to my amateur mind seems a realistic number. Uncle Xi jumping the reported GDP from 14 trillion in 2019 to 17 trillion in 2022 through the pandemic seems farfetched. And Uncle Xi like some other politicians is desperate to go down in history as the greatest Emperor ever. The speaker's contention that China's GDP could be $5.3 or $7.9 trillion sounds too much to swallow.

But as I said these are only my amateur thoughts. I am not well read in these matters nor do I have any professional background in economics.

+1

Also, based on what I've seen and read from neutral commentators (whom I deem neutral, might be wrong), the issue is that the China central government themselves don't seem to know the real GDP data or how much they are off by (it's not like they have the real data and then just choose to double or triple it) since a lot of the fudging happens at the local government level due to the pressure to overperform and meet certain targets. To their credit, the Chinese have tried their best to fix this somewhat. And all this said and done, the Chinese economy is almost surely the world's second-largest economy because anecdotally speaking, literally everything tangible is made there and they (of our interest) sell > 6x more cars than India per year and these cars are more expensive than the average prices in India (perhaps due to higher reliance on public transport in India which is a good thing?).

Also, their Air Force and Navy is a couple of times ours and the latter is closing in on the US (and ahead in some metrics). All this isn't possible with a small economy of the kind stated by many of these commentators.

That said, it seems unlikely that the Chinese will get ahead of the US soon as predicted recently due to a combination of imploding population, Xi's desire to be the next Mao and increased economy decoupling. This is a once-in-a-generation chance for us to catch up like we had in the early 90s!

[kiku007]

Originally Posted by kiku007

I was in search of answers to some of my questions on the stock market and I started reading, "The Intelligent Investor" by Benjamin Graham.

https://www.goodreads.com/book/show/...igent_Investor

It is a good book and I was quite enlightened and corrected my understanding on the Stock market swings and the economy.

I like Vanguard and the passive investing philosophy to wealth creation. So I followed up the above book with Robin Wigglesworth's, Trillions: How a Band of Wall Street Renegades Invented the Index Fund and Changed Finance Forever.

Goodreads Synopsis: From the Financial Times's global finance correspondent, the incredible true story of the iconoclastic geeks who defied conventional wisdom and endured Wall Street's scorn to launch the index fund revolution, democratizing investing and saving hundreds of billions of dollars in fees that would have otherwise lined fat cats' pockets.

Fifty years ago, the Manhattan Project of money management was quietly assembled in the financial industry's backwaters, unified by the heretical idea that even many of the world's finest investors couldn't beat the market in the long run.

The motley crew of nerds—including economist wunderkind Gene Fama, humiliated industry executive Jack Bogle, bull-headed and computer-obsessive John McQuown, and avuncular former WWII submariner Nate Most—succeeded beyond their wildest dreams. Passive investing now accounts for more than $20 trillion, equal to the entire gross domestic product of the US, and is today a force reshaping markets, finance and even capitalism itself in myriad subtle but pivotal ways.

Yet even some fans of index funds and ETFs are growing perturbed that their swelling heft is destabilizing markets, wrecking the investment industry and leading to an unwelcome concentration of power in fewer and fewer hands.

In Trillions , Financial Times journalist Robin Wigglesworth unveils the vivid secret history of an invention Wall Street wishes was never created, bringing to life the characters behind its birth, growth, and evolution into a world-conquering phenomenon. This engrossing narrative is essential reading for anyone who wants to understand modern finance—and one of the most pressing financial uncertainties of our time.

I now have a better understanding of index funds, and the pros and cons of active vs. passive investing. It was fascinating to know about the origins of companies like Vanguard and Blackrock and their growing clout.

For example:'Over the past decade, about 80 cents of every dollar that has gone into the US investment industry has ended up at Vanguard, State Street, and BlackRock. As a result, the combined stake in S&P 500 companies held by the Big Three has quadrupled, from about 5 percent in 1998 to north of 20 percent today.'

They've grown so much that they are now facing criticism from both ends of the political spectrum for both taking a stand (on climate change) and not doing enough on climate change.

The Guardian:
The world’s three largest money managers have built a combined $300bn fossil fuel investment portfolio using money from people’s private savings and pension contributions, the Guardian can reveal.

BlackRock, Vanguard and State Street, which together oversee assets worth more than China’s entire GDP, have continued to grow billion-dollar stakes in some of the most carbon-intensive companies since the Paris agreement, financial data shows.

The two largest asset managers, BlackRock and Vanguard, have also routinely opposed motions at fossil fuel companies that would have forced directors to take more action on climate change, the analysis reveals.

Link: https://www.theguardian.com/environm...el-investments

NY Times:
"I found myself nodding along with what is perhaps Ramaswamy’s fundamental point: that three gigantic American asset management firms — BlackRock, Vanguard and State Street — control too much of the global economy. Why is this a problem? Ramaswamy argues that the main issue is that the firms are using their heft to push companies in which they hold large investments into adopting liberal political positions — things like focusing on climate change or improving the diversity of their work force.

Link: https://www.nytimes.com/2022/05/12/o...te-street.html

P.S:
1. The book and the topic itself is more U.S.A centric and might not offer much for investors in India, unless their outlook and interests are aligned to what's happening in the U.S.A.
2. I enjoyed the book Trillions more than the first episode of the Showtime series Billions Season 7. The show was dead to me after Bobby Axelrod left. I was hoping they'll salvage the series with Axe's return to the final season but, the first episode was a letdown.

[greyhound82]

The world of financial influencers

I hope this is the correct thread. @Mods kindly delete this if it is off topic

https://youtu.be/qA1yUiu_USk