[Samurai]

Originally Posted by ashokrajagopal

Well, you chose an example with a very weird price elasticity in India, so expect more comments from others too.

Well, we are a car forum.. so I thought of using a car example.

To understand a concept, extreme cases are very useful because they contrast well. At least I didn't pick a Giffen good.

[vroom_vroom]

Originally Posted by karan0009

PF amount is deducted from my own salary. The same amount is paid by the employer also as PF contribution. If my PF is reduced by 2% (12% - 10%), the employer will also contribute 2% less PF in my PF account, which by the way is my own money. Just trying to figure out how this 2% reduction in pf is beneficial for me

As per my understanding, the employee will get that 2% as part of take-home salary while the organization will save their part of 2% and increase their cash reserves. As per the government, this is a win-win situation for both the employee and the employer.

More importantly, I am sure there are some fingerprints that we are not aware of. Is this applicable to me? My wife just enquired with the finance department in her organization and she was told that this does not apply to her.

I think we will have to wait and watch on this unless some expert from this elite BHP'ian community can shed some light on this.

[Fordlover88]

Originally Posted by sunnsood

ET is saying that the reduction on Employer contribution may not be passed onto the employees.

This is just going bad to worse for salaried class.

If this is true then no way it's beneficial for middle class salaried people. Can't really understand how this thing is termed as Relief Package?

[AMG Power]

20 Lakh Crore Relief Package summarized🥵:

A farmer announced to his flock of sheep - from tomorrow all of you are going to get a sweater to protect you from the cold.

All sheep were very happy till one sheep asked, "From where is he going to get the wool?".

[Thermodynamics]

Originally Posted by Samurai

To understand a concept, extreme cases are very useful because they contrast well. At least I didn't pick a Giffen good.

That was hilarious. I don't think it was unreasonable example either. For example in B1 segment cars (right in the range of your example), a midvariant can easily sell 2 times that of top variants and the price difference would be similar.

Actually we don't have to defend the numbers, the gist of the argument is "tax stimulus works". It is a proven time tested strategy that works.

[Fordlover88]

Highlights from today's press conference.

[werfish]

Originally Posted by Fordlover88

If this is true then no way it's beneficial for middle class salaried people. Can't really understand how this thing is termed as Relief Package?

Government first day steps were aimed at providing relief to job creators. The IT crowd in this forum hasn't had any salary impact due to Covid i assume but are looking forward to IT rate reduction as always.

[V.Narayan]

I am not a student of economics nor do I understand much of it. From a business investor's point of view {I can no longer call myself a businessman} for Part-1 ie Liquidity that has been announced the devil will be in the fine print and after that in the execution. I would rather wait for that before drawing conclusions. And then there are three more parts - Law, Labour, Land. Let's see what the full deal is keeping in perspective the nation as a whole. Too soon to draw conclusions for better or worse.

Even Manmohan Singh's liberalization unfolded in stages across 1991 and 1994. The 'Rs 20 lakh crore' title is the sales and marketing pitch. A little over the top but a PM or President in whichever country needs simple sales phrases that can communicate the message to all layers of his country's society. Even Franklin Roosevelt called it the 'New Deal' in 1933 - reality - it took up to 1939 to have a real visible impact

[saisree]

Time and again every stimulus package ignores diligent tax payers and this stimulus is no different. 2% reduction in PF contribution is nothing and I can live with out buying that 3 ltrs of Milk. Lowering Personal Income tax slab rates and lowering the price of commodities by reducing the GST rates will help the middle class to run their families and substantiate the loss. .

Originally Posted by sunnsood

This is just going bad to worse for salaried class.

Salaried class with a precise CTC will not loose their money as it becomes employers obligation to add it to the basic or some part of the salary. But, again, you pay tax to that amount as per the current slabs.

Extract from the same ET article

Saraswathi Kasturirangan, Partner, Deloitte India says, "There is a question on whether the reduction in PF contribution rates from 12% to 10% will benefit the employer or the employee. This would depend on the employment contract terms. Where the CTC is agreed with the employee and this includes statutory PF contribution, the employee will have higher take home as the differential in employer contribution is likely to be paid out as taxable allowance. However if the terms of employment indicate that the company is responsible to pay the statutory contribution without it being linked to a predetermined amount, the employer cost is likely to reduce. Employer may need to look at the contracts to determine how they would want to process the payroll for the next three months

[giri1.8]

I don't have much knowledge on how the economics in our country works, but can someone explain if or how this "stimulus pack" reach the common man? If common man is not going to get/save any money directly then how would our economy recover quickly?

[theMandarin]

Originally Posted by werfish

Government first day steps were aimed at providing relief to job creators. The IT crowd in this forum hasn't had any salary impact due to Covid i assume but are looking forward to IT rate reduction as always.

This assumption is wrong. Allow me to elaborate for the benefit of anyone reading it:

• Some IT employees would've definitely lost their jobs. Smaller companies whose entire operations can in some cases hinge on a handful of clients may not have the necessary funds to keep people idle and pay them when the revenues dry up and may remain dry for sometime
• Those who have not lost their jobs so far, may have faced salary cuts
• Those who have not faced salary cuts, have had to forego their annual appraisals or bonuses
• Those who's appraisals have also gone through still have an impact on their career progression via cancelled/deferred promotions and a subdued job market
• Freelancers may also need to compete among others for a reduced pool of tasks and clients

All of these is likely to motivate people to defer many non-essential purchase decisions. They will buy milk, but they might not buy that car which was contingent on getting promoted or switching jobs.

People who are relatively stable may be more inclined to cash-in on any short term benefits, e.g. waving of car registration charges for purchases made in a defined time-frame.

So in such a scenario, a direct benefit by reducing taxes of the individual or the goods may not be the worst thing in the world.

[V.Narayan]

Here are the key highlights of today’s announcements:

1. Free food grain supply for two months for those migrants that are neither covered under National Food Security Act, 2013 or hold a state beneficiary card.
   
2. Technology systems being put into place to enable usage of ration cards for procuring food at any fair price shop in India.
   
3. Will launch a scheme for providing affordable rental housing for migrant labourers and urban poor.
   
4. Interest subvention of 2 percent for 12 months on MUDRA-Shishu loans—that are below Rs 50,000.
   
5. Special loans of up to Rs 10,000 to provide working capital for street vendors to restart business.
   
6. Extending credit-linked subsidy scheme—that subsidizes interest rates on affordable home loans—for middle-income families till March 2021.
   
7. Government will use CAMPA funds of Rs 6,000 crore to push employment.
   
8. Additional Rs 30,000 crore to be provided for crop loans through NABARD.
   
9. Concessional credit of up to Rs 2 lakh crore for Kisan Credit Card holders.

Numbers #1, #3 and #5 look hard to implement in my eyes.. #7's success will depend on the fine print. Given the Govt's track record on DBT it is quite likely that #1, #2, #4, #6, #8 and #9 within some tolerance limits of error will get implemented.

Many in my circle, as on this forum have expressed bitter criticism to what was announced yesterday. I said, look I'm no expert, but why don't you spell out what package would constitute a "great stimulus" in your opinion. And sadly none, in my circle, has anything meaningful to say and all are cribbing only about 'my income tax rate' or 'GST on goods I produce' or similar very narrow points affecting only their lives or companies. A Govt, regardless of its colour, has to address the farmer & the industrialist; the employee & the employer; the poor & the rich {all of us} and balance a thousand other conflicting points of economics, society and politics.

It is the Labour and Land reforms that I am most keenly awaiting.

[bluevolt]

Originally Posted by werfish

Government first day steps were aimed at providing relief to job creators. The IT crowd in this forum hasn't had any salary impact due to Covid i assume but are looking forward to IT rate reduction as always.

IT crowd does have salary impact -

• A large number of companies have cancelled appraisal cycles.
• A large number of clients have trimmed their IT spends.
• A big number of renewals have been either cancelled or postponed.
• A huge number of upcoming contracts have been shelved.
• A pool of resources has been shifted to the 'resource pool'.
• Salary structure has been altered - fixed pay has been converted into variable pay which is applicable only if a person is on billing.
• Salaries have been reduced for the next 6 months by at least 20-30%.
• Onsite proposals have been cancelled for people even with their visa application in process.
• Promotions have been cancelled for those who were slogging all these year and were assured of the reward this year.
• Small IT startups already are laying off without a second thought.
• People who were looking to switch and dream of an increased pay to meet their life's commitment are struggling to survive current job.
• Earned leaves of employees are rendered useless and being reset to Zero.
• Those who are not on the bench are working 12-14 hours a day, working on a salary they were 4 years back!
• There are many other points that I can mention but it will lead to an unnecessarily long post.
• Only if the media is not highlighting that doesn't mean IT crowd in this forum or any other forum hasn't had any salary impact due to Covid.

[revmaxx]

I am struggling to even count the zeros after 2 of this big so called stimulus package. By offering companies to borrow more you are pushing them into more debt. Wish some releif was passed on with waiver of interest or income tax measures so that a common man has more money to spent.

[lapis_lazuli]

Originally Posted by V.Narayan

A Govt, regardless of its colour, has to address the farmer & the industrialist; the employee & the employer; the poor & the rich {all of us} and balance a thousand other conflicting points of economics, society and politics.

The legislature, washing its hands off, eh? How exactly, does the benefit percolate down to the (ex)street vendor, now reduced to being a beggar, "within one month"? That elusive 10000/- that madam promised for 50 lakh street vendors? Till what time, will the EXECUTIVE decide to implement all of this? There is no incentive for them to be efficient at this...ever! Just like you said, look at the local politician behind....

The migrants are busy walking. Midway, in a different state, it is not easy for them to find out the "local" PDS shop, get the grains and move on! Ration card or not!

Not just justice, even real help (stimulii?) delayed, is as good as denied!