Saturday, 29 October 2016

2016-17 Quiz 3 Answers

Next Monday 10 October 2016 The Nobel Memorial Prize in Economic Sciences,The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel will be announced. Let’s see how many of the previous year’s winners you can identify. State the name of the economist, the field of economics, and in one sentence state the motivation for awarding these economists with a Nobel Prize.
(1) John F. Nash Jr.
Prize motivation: "for their pioneering analysis of equilibria in the theory of non-cooperative games"
Field: game theory
 
(2) Elinor Ostrom
Prize motivation: "for her analysis of economic governance, especially the commons"
Field: economic governance
 


(3) Amartya Sen
Prize motivation: "for his contributions to welfare economics"
Field: welfare 


                                            

(4) Milton Friedman
Prize motivation: "for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy"
Field: macroeconomics

 (5) Paul Krugman
Prize motivation: "for his analysis of trade patterns and location of economic activity"
Field: international and regional economics











Submit your answers by email to profKMody@gmail.com on or before 10 October 2016.



Monday, 3 October 2016

2016-17 Quiz 3

Next Monday 10 October 2016 The Nobel Memorial Prize in Economic Sciences,The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel will be announced. Let’s see how many of the previous year’s winners you can identify. State the name of the economist, the field of economics, and in one sentence state the motivation for awarding these economists with a Nobel Prize.
(1) Name:
Prize motivation: 
Field: 
(2) Name:
Prize motivation: 







(3) Name:
Prize motivation: 
Field: 







(4) Name:
Prize motivation: 

Field: 




(5) Name:
Prize motivation: 
Field: 

Submit your answers by email to profKMody@gmail.com on or before 10 October 2016.




2016-17 Quiz 2 - Answers


  1. Who is the World bank’s new Chief Economist?   Paul Romer
  2.  What in the Indian economy is suuti?Specified Undertaking of the Unit Trust of India
  3.  Why  will Governor Rajan’s successor not have sole control over lending rates form October 2016?From October, a new six-member monetary policy committee will take over that task. 
  4. Where in the world did IMG Worlds of Adventure, the world's largest indoor theme park, open this week? Spanning 1.5m square feet, it is the first global theme park to feature Marvel and Cartoon Network brands as well as "Lost Valley", which is populated with 69 animatronic dinosaurs.   Dubai, UAE
  5. Bunol, Spain this week held its world-renowned food-fight featuring what commonly loved food ???   Tomatoes
  6. Which company is reportedly experimenting with a 30-hour work week for teams of technical workers. The teams will receive the same benefits as full-time employees and 75% of a 40-hour worker's pay.    Amazon
  7. What is Africa’s “Great Green Wall”?   It is the building of a wall of trees across the width of Africa, at the edge of the Sahara desert to solve the twin problems of land degradation and desertification.    See the link http://www.economist.com/blogs/economist-explains/2016/09/economist-explains?fsrc=permar|text3

2016-17 Quiz 1- Ans

1.         GST is also known as
A.         First point retail tax
B.         First point wholesale tax
C.         Last point wholesale tax
D.        Last point retail tax

2.         In India we will have
A.         Single GST
B.         Double GST
C.         Dual GST
D.         None of the above

3.         Which of the following rates is not decided by the Reserve Bank of India? 
A.         Bank Rate
B.         Repo Rate
C.         Reserve Repo rate
D.        Income Tax Rates

4.         What are MSMEs in the Indian economy?
Ans. Micro, Small & Medium Enterprises

5. The Planning Commission has been replaced by NITI Aayog. What does NITI stand for?
Ans: National Institution for Transforming India

6. When did RBI release the Third Bi-Monthly Monetary Policy Statement 2016-17?
Ans: 9 August 2016

7. What is Ponzi scheme? Who is it named after?
Ans: It is a form of fraud in which belief in the success of a non-existent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.
The Ponzi scheme is named after Charles Ponzi. In the 1920s, Charles Ponzi tricked thousands of people into investing in a postage stamp scheme.

At the time of his scheme, the annual interest rate for bank accounts was five percent. Ponzi promised investors a high return – 50% -- in a very short amount of time. However, there were no investments. There were no honest returns. Ponzi used incoming funds from new investors to pay the returns to the earlier investors.

Friday, 2 September 2016

2016-17 Quiz 2

       SEND YOUR ANSWERS TO profKMody@gmail.com by 07 September 2016.

     1. Who is the World bank’s new Chief Economist?

2. What in the Indian economy is suuti?

3. Why  will Governor Rajan’s successor not have sole control over lending rates fm October 2016?

4. Where in the world did IMG Worlds of Adventure, the world's largest indoor theme park, open this week? Spanning 1.5m square feet, it is the first global theme park to feature Marvel and Cartoon Network brands as well as "Lost Valley", which is populated with 69 animatronic dinosaurs.

5. Bunol, Spain this week held its world-renowned food-fight featuring what commonly loved food ???   

6. Which company is reportedly experimenting with a 30-hour work week for teams of technical workers. The teams will receive the same benefits as full-time employees and 75% of a 40-hour worker's pay.

7. What is Africa’s “Great Green Wall”?

Sunday, 21 August 2016

Enter Dr. Urjit Patel

imggallery
Prime Minister Narendra Modi appointed 52 year old, current Deputy Governor of RBI Urjit R Patel as the 24th governor of the Reserve Bank of India, ending months of speculation about the successor to the high-profile Raghuram Rajan, signalling that prudent monetary policy will continue to be the norm, thus calming investors.

Saturday, 13 August 2016

2016-17 Quiz 1

Send your answers to profKMody@gmail.com by Friday 19 August 2016.

1.         GST is also known as
A.         First point retail tax
B.         First point wholesale tax
C.         Last point wholesale tax
D.        Last point retail tax

2.         In India we will have
A.         Single GST
B.         Double GST
C.         Dual GST
D.         None of the above

3.         Which of the following rates is not decided by the Reserve Bank of India? 
A.         Bank Rate
B.         Repo Rate
C.         Reserve Repo rate
D.        Income Tax Rates

4.         What are MSMEs in the Indian economy?


5. The Planning Commission has been replaced by NITI Aayog. What does NITI stand for?


6. When did RBI release the Third Bi-Monthly Monetary Policy Statement 2016-17?


7. What is Ponzi scheme? Who is it named after?

Thursday, 4 August 2016

GST - an introduction


GST – GOODS AND SERVICE TAX

The Goods and Services Tax (Amendment) Bill — officially known as, the Constitution (122nd Amendment) (GST) Bill, 2014 — is believed to be the biggest tax reform since independence. On Wednesday, 3 August 2016, the Rajya Sabha passed the bill which was approved by the Lok Sabha in May 2015. it has become reality 10 years after it was first announced. The Finance Minister Mr. Jaitley has said he is aiming for an April 2017 rollout of GST. However, the rate and the scope of GST, a single national tax which replaces multiple indirect taxes, are yet to be defined.  

The basic philosophy behind GST is to expand the tax base and not to enhance tax burden on businesses. The Model GST law released by the Ministry of Finance captures this objective and mentions that any person with an aggregate turnover of above Rs 10 lakhs would be covered within the ambit of GST. This limit has been further lowered to Rs 5 lakhs for north eastern states. The significantly low thresholds are expected to be a game changer for the Small and Medium Enterprises ('SMEs').

GST? Source: business-standard.com
The Goods and Service Tax (GST) will be a comprehensive nationwide indirect tax on manufacture, sale and consumption of goods and services throughout India. The aim is to have one indirect tax for the whole nation, which will make India a unified common market. GST will be levied and collected at each stage of sale or purchase of goods or services based on the input tax credit method and would make not just manufacturing but also the inter-state transportation of goods more efficient.

How will GST work and what all will it subsume?
GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
At the central level, the following taxes will be subsumed: Central Excise Duty, Additional Excise Duty, Service Tax, Countervailing Duty, and Special Additional Duty of Customs.
At the State level, the following taxes will be subsumed: State Value Added Tax/Sales Tax, Entertainment Tax, Central Sales Tax, Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling.
How will GST be beneficial?
The introduction of GST would be a significant step in the reform of indirect taxation in India. Amalgamating several central and state taxes into a single tax will mitigate cascading or double taxation, facilitating a common national market. This would be hugely beneficial for consumers as the tax burden on inter-state logistics will be cheaper. A common tax would mean easy compliance and uniformity of tax rates and structures for industry and would thus contribute to ease of doing business by removing cascading costs. For central and state governments, GST is expected to lead to easier administration and enforcement. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods.
By when will it be implemented?
Assuming the Constitution Amendment Bill does pass in the Monsoon Session, GST will still not be in force before April 1, 2017. And that is putting it optimistically. Apart from the legislative process mentioned above, the states, India Inc, and industries and service providers big and small, will also have to prepare themselves for a completely new nationwide tax regime.
How would GST be administered in India?
There will be two components of GST – Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State.
The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit would be permitted.

TOP TEN BENEFITS:
1. Life gets simpler: GST will replace 17 indirect tax levies and compliance costs will fall.
2.Revenue will get a boost: Evasion set to drop; Input tax credit will encourage suppliers to pay taxes; States and Centre will have dual oversight; The number of tax exempt goods will decline.
3. A common market: It's currently fragmented along state lines, pushing costs up 20-30%.
4. Logistics, Inventory costs will fall: Checks at state borders slow movement of trucks. In India, they travel 280 km a day compared with 800 km in the US.
5. Investment boost: For many capital goods, input tax credit is not available. Full input tax credit under GST will mean a 12-14% drop in the cost of capital goods. Expected: A 6% rise in capital goods investment, 2% overall.
6. Make in India: Manufacturing will get more competitive as GST addresses cascading of tax, inter-state tax, high logistics costs and fragmented market. Increased protection from imports as GST provides for appropriate countervailing duty.
7. Less developed states get a lift: The current 2% inter-state levy means production is kept within a state. Under the GST national market, this can be dispersed, creating opportunities for others.
8. Manufactured goods could become cheaper: Lower logistics and tax costs.
9. GDP Lift: HSBC estimates an 80 basis point rise in GDP growth over 3-5 years. NCAER pegs this at 0.9-1.7% thanks to the elimination of tax cascading. That could also mean more jobs.
10. Freeing up online: State restrictions and levies have complicated ecommerce. Some sellers do not even ship to particular states. All this will end with GST.

IMPACT OF GST :From Economic Times:http://economictimes.indiatimes.com
GST will turn India into one common market, leading to greater ease of doing business and big savings in logistics costs from companies across all sectors. Some companies will gain more as the GST rate will be lower than the current tax rates they pay, others will lose as the rate will be higher than the present effective rate. While the rate of GST is yet to be decided, industry observers have assumed an 18% rate recommended by a government panel in making their impact calculations.  
The likely impact across sectors. 
TECH
Positive 
GST will eliminate multiple levies. It will also allow deeper penetration of digital services.
Negative IT companies can have several delivery centres and offices working together to service a single contract. With GST, companies might require each centre to generate a separate invoice to every contracting party. Duty on manufactured goods is going to go up from existing 14-15% to 18%, which means the cost of electronics from mobile phones to laptops- will rise. 

FMCG
Positive Companies could generate substantial savings in logistics and distribution costs as the need for multiple sales depots will be eliminated. FMCG companies pay nearly 24-25% including excise duty, VAT and entry tax. GST at 17-19% could yield significant reduction in taxes. Warehouse rationalisation and reduction of overall tax rates, is expected to generate saving which could cumulatively range between 200-300bps.  Key beneficiaries : Hindustan Unilever, Colgate, GSK, Asian Paints
Negative If the recommended 40% "sin/demerit" GST for aerated beverages and tobacco products is levied, then prices may increase by over 20%. Food companies: many see increase in effective tax as many companies enjoy concessional rate of excise.

ECOMMERCE
Positive 
GST will help create a single unified market across India and allow free movement and supply of goods in every part of the country. It will also eliminate the cascading effect of taxes on customers which will bring efficiency in product costs.
Negative The tax collection at source (TCS) guidelines in the GST regime will increase administration, documentation workload for ecommerce firms and push up costs.

TELECOM
Positive 
Handset prices likely to come down/even out across states. Manufacturers are also likely to pass on to consumers cost benefits they will get from consolidating their warehouses and efficiently managing inventory. For handset makers, GST will bring in ease of doing business as they may no longer need to set up state specific entities and transfer stocks to them and invest heavily into logistics of creating warehouses in each state across the country. 
Negative Call charges, data rates will go up if tax rate in the GST regime exceeds 15%. Tower firms won't be able to set off their input duty liabilities if petro-products continue to stay outside GST framework. Negative for Bharti Airtel, Idea and Reliance Comm.

AUTOMOBILES
Positive 
On-road price of vehicles could drop by 8%, as per a report by Motilal Oswal Securities. Lower prices can be construed as indirect stimulus to boost volumes. Key beneficiaries: Maruti Suzuki, M&M; Eicher Motors' margins may expand.
Negative Demand for commercial vehicles may be hit in the medium term. GST will subsume local taxes, reduce time at check-posts, ease logistics hurdles. With fleet productivity increasing, operators may not feel the need to expand mid-term. 

MEDIA
Positive 
DTH, film producers and multiplex players are levied service tax as well as entertainment tax, GST will bring major change and uniformity in businesses. Taxes could go down by 2-4%.  Multiplex chains will save on revenues as there will be a more uniform tax, unlike current high rate of entertainment tax levied by different states. It may lower the average ticket price, and increase the footfalls in multiplexes.
GST will be a big boon to film producers and studios that currently pay service tax on most of their cost, but cannot charge input credit on creative services (payments to artists etc) as they fall under the negative list. Under GST, they will be able to claim credit of these services also, which will help is lowering the overall cost.
Key beneficiaries : Dish TV, PVR. 

INSURANCE
Negative 
Insurance policies: life, health and motor will begin to cost more from April 2017 as taxes will go up by up to 300 basis points.

AIRLINES
Negative 
Flying to become expensive, as service tax will be replaced by GST. Service tax on fares currently range between 6% and 9% (depending on the class of travel). With GST, the rate will surpass 15%, if not 18%, effectively doubling the tax rate.

CEMENT
Positive 
The effective rate of tax for cement companies is now 25%. If GST rates are fixed at 18-20% then the overall tax incidence will be lower GST IS expected to lead to savings in transportation cost, which currently comprises up to 20-25% of total revenue. One common market will bring down the number of depots in the country. Ultratech states that its depots will come down to 100 from 550 at present.
Key beneficiaries : Pan India players such as UltraTech, ACC, Ambuja and Shree Cement. 

For a simple video on what GST means:
More on what is GST:
For more information on impact of GST:
For a snapshot on how the bill is likely to impact various sectors and stocks visit
On GST the next steps:
There is also gstindia.com




Wednesday, 27 July 2016

Women in Banking

Chairman of Bank of India: Vijayalakshmi Iyer
Chairman and Managing Director of Allahabad Bank: Shubhalakshmi Panse 
Chairperson of State Bank of India Arundhati Bhattacharya 
Chanda Kochhar (born 1961), ICICI Bank MD and CEO
Shikha Sharma (born 1960), AXIS Bank CEO.
Kalpana Morparia, CEO of South Asia and India Operations at JPMorgan Chase & Co.
Naina Lal Kidwai, Group General Manager and Country Head of HSBC India
Renu Sud Karnad, MD of HDFC
Snehlata Shrivastava, Executive Director, National Bank for Agriculture and Rural Development
Vijayalakshmi Iyer, Chairman and Managing Director, Bank of India
Zarin Daruwala,CEO of Standard Chartered Bank (India), before this she was the head of wholesale banking, ICICI Bank

Deputy governors of RBI - all retired
Kishorie Udeshi
Shymala gopinath
Usha Thorat

First woman to head a financial institution Tarjani Vakil headed EXIM Bank
Ranjana Kumar first head of a PUBLIC SECTOR BANK

  Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2021 one half to David Card University of California, Berkeley, USA...