What is New Insolvency & Bankruptcy Bill ?

December 8, 2015 · Filed Under / · Comment 

The core law that is guides the rescue and rehabilitation procedure in India is the Sick Industrial Companies (Special Provisions) Act of 1985 (SICA). Under SICA, a specialised Board of Industrial and Financial Reconstruction (BIFR) assesses the viability of the industrial company. Once it has been assessed to be unviable, BIFR refers the company to the High Court for liquidation. The problem lies in the fact that the spirit of this law is focussed on the revival of industries via the BIFR often irrespective of the viability of the unit thereby resulting in the continuation of operations of an unviable business. This system creates two sets of problems namely, Read more

Indian Monsoon – Shortfall hits IMD’s forecast

September 1, 2015 · Filed Under / · Comment 

Rainfall conditions deteriorated last week and now are tracking IMD’s seasonal forecast of a 12% shortfall. Cumulative rainfall between 1 June and 27 August was 12% below normal, down from a 9% shortfall last week. The geographic distribution remains similar, with 21 out of 36 regions reporting normal rainfall conditions (22 last week), and another 7 close to normal levels. After a poor July, rainfall in August has also been weak, currently running ~24% below normal.

With almost 80% monsoon season is over, the deficit in rainfall is unlikely to be filled, and even if remaining weeks have normal rainfall, the deficit is likely to remain close to 9%. The Indian Meteorological Department (IMD) has maintained its forecast Read more

Implications of Passing GST Bill in Special Session

August 20, 2015 · Filed Under / · Comment 

Cross-country evidence suggests that the introduction of GST has no correlation with GDP growth. Although the introduction of a single GST limits inefficiencies created by a heterogeneous taxation system, there is little evidence that it helps boost economic activity. However, the introduction of GST helps in reducing inflation by removing the problem of dual taxation and thereby reducing the cost of doing business. It also helps in boosting the tax:GDP ratio, provided the GST is introduced at a high enough rate i.e., higher than the revenue neutral rate (RNR), which in India seems to around 18%.

Whilst the introduction of GST will undoubtedly Read more

1 Year of Modi Government – Score 7/10

May 20, 2015 · Filed Under / · Comment 

We had a look at the Narendra Modi government performance over the last 1 year. While meeting sky high expectations following the election results was always a tall task. The new government is a significant improvement and would rate their first year a 8/10.

Fiscal reforms (9/10) – Subsidy has been cut by hiking petrol/diesel price, implementing Direct Benefit Transfer and avoiding populist dole outs. GST hill could also get approved by July and would broaden the tax base.

Business (7/10) – no more crony capitalism, most of Read more

Critical Bihar Polls May Steer NaMo Govt Policies

May 5, 2015 · Filed Under / · Comment 

The Indian rural story is unraveling amidst poor output, weak prices and slump in wages. It is partly a fall out of the Modi government’s virtuous and successful attempt to tackle food inflation, but exogenous factors—collapse in international food prices and inclement weather—too have played a role. Unfortunately, forecast of sub-par 2015 monsoon, if it pans out, will only worsen the woes. In this interplay of virtue and misfortune, the Modi government is facing its first formidable political challenge. The turn of events assumes significance as Bihar, with ~90% rural population, is gearing for assembly polls during Read more

NaMo Ensures Most Productive Parliament Session

March 28, 2015 · Filed Under / · Comment 

Following a landmark election verdict, investors and corporate India had expected to see a faster transition towards banner reforms in governance, processes and factor markets. This progress had been slower than anticipated, despite the government’s strong intent, which was reflected through promulgating ordinances. Contrary to perception, the first half of the ongoing budget session emerged as one the most productive parliament sessions in many years. The Lok Sabha (lower house of parliament, where the government has a majority) passed 14 Bills while the Rajya Sabha cleared 7 and both the Houses passed a set of 7 Bills. The Lok Sabha registered a 123%, productivity while Rajya Sabha too worked for 107% of the scheduled time.

With private sector investment momentum Read more

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