Archive for Uncategorized

Some Concerns about GST …..

We are all quite aware about the rapid rate at which GST collections are rising . It certainly is a good sign . But, I have some issues which I feel need to be addressed
1… The entire working of GST collection is quite digitally managed . Now as we know, the MSME and rural businessmen have to face a huge challenge while complying with the strict time bound requirements of GST compliance due to being less organised and non e savvy culture yet . This leads to huge unclaimed credits of ITC which to my mind is UNDUE ENRICHMENT , which enriches the government coffers .

2… GST is an indirect Tax . It hits the rich and the poors equally . This is despite the basic intentions of the government, not to tax the poor . .
Even a person below the poverty lines lands up paying his share of GST on whatever little taxable goods or services that he spends on .
Keeping this in mind, should there not be a method to refund a fixed sum to the BPL people , based upon a reliable data about the average share of GST of a common BPL family ?

Stitching Unanimity

Over a long long time, I have been noticing that not only in the corporate world but also in political circles, almost all decisions are taken unanimously. Even a note or reference to dissent expressed by a member is tried to be avoided in the proceedings, if and when they are minuted.

That is fantastic isn’t it ? But we all know that in reality the situations are quite different. I tend to believe that to disagree or to have another point of view is always seen as a dissent. There is therefore a constant effort to avoid conflict within a group as far as it is possible. Unanimity is seen as democratic and not dictatorial, quite surprisingly .

Unanimity is somehow brought about as a face saver after many hidden stitches which are bound to break at the first opportunity.

Why such a psychology or mind set ? This is becoming a typical stand, to avoid conflicts even where they are inevitable. The well known Kalinga ( Ashok’s preachings thereafter ) effect has become a way of life. The preaching of Ashoka to maintain peace and harmony are certainly laudable but it does not mean that healthy differences should be overruled. One of the outcomes of overruling the opposite view is that the differing / overruled party / persons resort to non co-operation which is a fatal tool to be used against enemies and Gandhiji used it effectively against Britishers. But within a society or within an organization, it is detriment to its growth and development.

In short, the art of obtaining genuine unanimity lies in recognizing the beauty of diversity and actively embracing different views and opinions. Somehow, at any cost, the efforts to get unanimity leads to dictatorial regime rather than democratic regime. Stitch unanimity by thinking by open mind, transparent behavior and mutual trust. It is dangerous to resort to double standards and lack of transparency. At the same time, the differing parties also should not pre-plan, backstabbing, non-cooperation and turncoat approach.

 

Middle class in middle of GST

It is the fact, worth being proud of, that the collection of GST in India is consistently crossing the expected levels. In fact, it is being looked upon as a major source of funds for the economy.

But the fact remains that it is an indirect tax. It hits each one of us. A toothpaste bought by a common man will have the same element of GST as the GST element which the richest individual will bear. This causes an area of concern.

I wonder as to whether there can be any method by which the lower middle class and poor people can be refunded the GST which they have to bear. In fact, they belong to a class which is not intended to be taxed and even income tax is also not levied on them.

If one goes to a developed country, they have the system of returning the VAT which a tourist had to pay during his stay in that country by producing the vouchers at the departure hall at the airport.

I am sure that with a commendable spread of digitization, it is not a task which is impossible to administer provided there is a will to do so.

Rating The Candidates !

It is a fact that ultimately we vote for a candidate and we are supposed to consider various factors before casting our votes.
but how much attention we give towards knowing the candidate who is supposed to represent our constituency ? Whether he has been of help and assistance and is concerned about the well being of his voters ? Should a voter not Rate the candidates , in some systematic manner before knowing who is a more deserving candidate ?In fact various factors will have to be kept in mind while rating , to name a few
1.. his age , qualification
2. his cast and religion ( though controversial, it is a fact that this aspect is an aspect that is kept in mind
3, the political party that he /she belongs to
4. If elected , is he/she be able to play an effective role ?
5.. is he personally known and approachable in case of need ?
6.. His/her track record as a politician ( a turn coat?, facing various charges, etc ?
7.. his general image as an honest and committed leader .
8… and the list can be extended

A list like this should than be given weightage for each criterian and each voter can give his own marks .
A result will at least give a fair enough guidance to the voter .

There are many rating agencies and NGOs active in this field around and someone can take such an idea forward.

Mind you, our average citizen is quite intelligent and he has proved this time and again in the past . A similar exercise would . I am sure will equip him to a good extent to cast his vote more intelligently. He may or may not vote for the highest mark getting candidate but in case he does not, he will at least know the opportunity loss / cost . He/she will be less volnurable to media attcks, false promises , emotional and social pressures etc .
If rating is so critical in commercial world, why not here ? …

Tackling COVID in India : An Overview

Everyone is aware about the catastrophically spread of COVID in India in its Second Phase. Much is said, written and shown  by the media and public, to the extent that we are literally made to believe that we are the worst performers as far as combating CORONA is concerned  .  Everyday, such views are floated with improved editing and  stronger flavor.

I do not wish to indulge into that regime of criticism and its debate , which many a times takes political colors.But I would like to state that we should appreciate that India is a huge,highly populated poor country. World over, many advanced countries are also finding the task of tackling COVID to be herculean. India is no exception.

It is time now that we  realise that we can not defeat COVID, but the best we can do is to tackle it in a way that it does least harm to the citizens and the economy as a whole .

 

A     How scary are the numbers, really ?


To my mind, in absolute terms, the numbers are really scary. But speaking in terms of ratios, it is not as scary as the media and experts make it out to be. But the fact remains that the issue is very serious and the recent spread of the virus in the rural sector will make the issue worse and virtually unmanagable with limited resources and skills .

Taking the position as of now, say, at the current level of nearly 3.5 lakh new patients each day , it amounts to 1 patient per 40,000 person per day.

The mortality rate of the patients is at most 2 % ( currently in India it is nearing 1.3 % )

So the mortality will be 1 person per 200,000 persons per day

So, nearly 360 persons p.a. per 200,000 persons will not survive the decease .

This equates to a death rate of 1.8 persons per thousand p.a , as against the average death rate of 7.2 in India .

And, remember, this is at a near peak time situation that prevails today and at very high mortality assumption.

Looking to the population of India the numbers are not as large and the recovery rate and mortality is also not worse than many developed nations .

Than, the question is, why such a huge chaos and fear that prevails in the entire country.

To my mind,the current crisis is quite a man made crisis created due to a sheer mismanagement, improper and ill prepared handling of the pandemic and irresponsible behavior and actions of the so called leaders .

It is this managerial mess up that has accelerated the fear spreading that has picked up at a faster rate. But let us also know that the situation , the world over, is quite similar. Despite the lack of resources , large , illiterate and poverty ridden population, India is giving a commendable fight against COVID.

But this should not absolve us from many lapses and blunders that we have made.

 

B     The situation would have been much better if……


1.. if the election commission had at least bothered to either postpone or at least control the rallies during campaigns

2..  if the high courts and supreme court had activated themselves  a couple of months earlier to give serious warnings while taking stock of the situation that prevailed and likely to prevail if sufficient steps are not taken in time.

3…  if the bureaucrats had realized the seriousness of the likely second phase by taking clues from the European experience, where the second phase had already started. At least enough stocking of oxygen , ventilators, critical medicines, creation of temporary make shift facilities to treat not so serious  patients etc was certainly expected from them . They could have created these facilities during a near slow down period of the pandemic .

4,,, if the vaccines supply had been planned better had the government resisted itself from being penny wise

5..  if the politicians had shown retrain in their campaigns,by not allowing Melas and matches,etc,looking to the infectious nature of the virus and seriousness of the situation

6 ..  if the Disaster Management Authorities had played  their proactive role of establishing disaster mitigation preparedness, as required by their own charters

7.. if media and the all time critics had behaved a bit with restraint in not spreading fear and rumors just to win a race of TRPs. Their role in creating a confusion and fear is not to be taken lightly .

8.. if the traders and fast buck chasers had not rushed to corner essential medicines and oxygen , the situation for the common man would have been much better and even mortality would not have shot us as steeply as it did . Such persons should not be spared either .

9… if we had taken care to establish primary centers for not so serious patients by creating such facilities in Hostels, Halls and open grounds well in advance, more not so critical patients could have been accommodated and hospitals would have faced lesser pressure

and the list will go on and on  ..

Yes,these are bygones and more of after thoughts, but they are certainly quite serious and missing out on taking proper precautions are errors which are unpardonable.

A third wave is also being expected and India should do well to correct the grievous errors once committed  .

 

C… Impact of the Second Phase on the Indian Economy


My attempt here is to understand the  impact of COVID and the measures being taken during the Second Phase of COVID on the average citizen and the economy .

1.. A good part of the Second Phase is that the governments have not preferred to declare a complete lock down as done during during 2020, The employments, therefore will be hit a bit less. Though the impact on the sectors which are under lock down during 2021 and the sectors which are crumbling due to the fear psychoses that has engulfed us all can not be overlooked , Sectors like restaurants, street vendors, miscellaneous shop keepers, malls, travel and tourism , miscellaneous business service providers etc will be hit at least as severely as during 2020. These  unorganized/semi organised / MSME sectors contribute a large part of our GDP , cover large population and provide huge employment. Their slow down will have substantial dampening effect on the GDP and economy as a whole.

2… The Government does not appear to be in any mood to declare any SOPs / concessions this time . Even timeline for compliance , moratoriums/ relaxations in Interest and repayments are not even under consideration so far.

3… Taking a clue from the above, it appears that the public and the businesses at large, are expected  to handle the crisis by themselves . The government machinery have their hands full in barely managing the pandemic spread and chaos that gets created.The large expenditures involved will not leave much room for hem to announce any further relaxations/ reliefs. On the contrary there will be a pressure towards resource mobilization.

4…   The pressure on resources of the government will be felt due to increasing expenses along with reducing tax collection along with rising expectations from the masses.  Though the uproar will pick up a little later, but with rising prices due to shortages and black marketing many industrial units will find it hard to keep going. The industries where the workers have voluntarily returned to their villages, will find it very tough to continue their operations and  restart after there is a bit of respite from the pandemic. The restart cost and the labour costs are bound to go up, giving a further fuel to inflationary trends.

 

D … So what do we expect ?


1..  There will be a slow down for sure .GDP will not drop as much as 2020( 23%) but will certainly drop to  near 0 to  – 4 % in the second and also third quarter of 2021.The slow down will be all pervasive since the public and the business community has already started feeling  dejected and helpless .

This  GDP estimate presupposes and is based upon an optimism that though late, the desperate measures being taken now will start yielding results soon by end of the second  quarter of 2021 itself. As a result, for the entire year 2021,the downfall will not be as steep as seen in the 2020 .Non declaration of Complete Lock Down, despite strong demand for the same, is a welcome step as far as economic impact is concerned

2..  For the Government, the expenses will skyrocket and the revenues will be taking a dip for sure. This will give rise to deficits which will fuel inflation . Inflation, coupled with crumbling MSME and small services sectors, will be a major issue to tackle for the Government.The citizens, already deprived of income, will be hard hit .

3… The Government will have to address the issue of the disparity of income, which has worsened after COVID . The sporadic rise in the wealth of a few is eye catching . One can easily predict the reinstatement of Wealth Tax and Estate duty with some modifications .

4.. The new concepts of WFH and On Line Education will gain further popularity . The decades to come will clearly belong to those who are Tech Savvy . This will make it difficult to impart a comparable level of education and provide jobs to the under privileged class. The real impact of this will soon start becoming visible.

5… And for the stock market, it will continue to be bullish, not only because India will somehow pass through the tough times but also because a bullish market will make disinvestment task a lot more easier for the Government.

6… As citizens and as a country as a whole, we need to firstly accept that COVID is there to stay and we will have to learn to live with it . Meaning thereby, that the precautions will have to be continued . The Mantra,” Prevention is Better Than cure” will have to be really implemented not only in individual capacity but also for the economy as a whole .

7..Adaption of a new life style will be essential . Certain industries/ sectors like pharma, IT ,On Line education, DTH services will flourish as being seen and sectors like restaurants, travels , tourism, etc will have to evolve a new business model to survive. One sees many closures / amalgamation /mergers /insolvencies /rise in NPAs in near future .

After all this, as we eventually come out, the economy is bound to get back to its track and start moving. But,  the prime thing now is to somehow swim through and survive the crisis.

E… Conclusion

1… The current anxiety and crisis like situation is quite man made crisis . It is a managerial failure which has been over hyped by the media , including international media without considering the population pressure and poverty factors so unique for India . In international comparison also our actual performance is not as bad as it is being projected .

2… There are certain glaring errors which must be taken seriously and at any cost should not be repeated when the third phase begins soon . Disaster mitigation steps towards such health disasters must be identified and implemented asap . Remember chemical disaster and reputation of such health disasters are quite likely again in years to come

3… By not declaring complete lock down even during such huge sufferings has protected the economy well , but  impact of the wide spread decease and partial lockdoen on MSME, small entrepreneurs, salaried class is bound to be felt.

4… Inflation and unemployment is looming large at least in the short run. A common man will be hit hard in the quarters to come. Black marketing, hoarding and corruption will add fuel to the sufferings unless dealt with stronger arm.

5…  There will be palpable increase in inequality since the pandemic has brought in significant changes in the consumer preference and way of conducting business.

6 … Expecting any direct support from Government appears to be a piped dream. Increase in taxes for the rich class, introduction of Wealth Tax, death duty,  on the contrary are likely.

7…. The stock market will flourish since there are sectors which will gain a lot , e.g. pharma, Infrastructure, banking and IT .

7… But the situation is not too grim and within a short time, it is possible to come back to the growth path .The confidence in India story will be reestablished if we pass through this crisis.