Friday, June 30, 2017

GST -- what it means for consumers

Tonight India ushers in a landmark reform in indirect tax regime by rolling out the GST (Goods and Services Tax).

In fact, the whole process of reforming our tax structure had begun many many years ago; and whenever any government moved forward in this direction, all political parties "played politics". And today, we have politics in full action, many opposition parties are boycotting the special parliament session.

My understanding is that in the long run GST is going to do good for our economy: one, evading taxes will become more difficult; two, taxes won't be a taxing thing. There are many more advantages that GST will ring in. At the same time, any initiative is bound to have its flipside. I feel it's our call to see and leverage the positives, rather than harp on the negatives.

For a vast country like India with multiple laws governing goods and services in different states, this transition to a common tax regimen, isn't by any means going to be easy. But I am sure we will get used to this in a few months, if not earlier.

Here below is a very easy-to-understand table compiled by KPMG, which explains how GST will impact us, consumers, in terms of prices.



SOME QUICK FACTS ON GST (COMPILED BY KPMG)

Tax %
Goods
Services
No tax – 0%
  • Jute, fresh meat, fish chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, Cereal grains hulled, Palmyra jaggery, flour, besan, bread, prasad, salt – all types
  • Bindi, sindoor, bangles, kajal, handlooms
  • Stamps, judicial papers, printed books, newspapers,
  • Bones and horn cores, bone grist, bone meal, hoof meal, horn meal
  • Children's' picture, drawing or colouring books, human hair
  • Hotels and lodges with tariff below Rs 1,000, Grandfathering service has been exempted under GST.
  • Rough precious and semi-precious stones will attract GST rate of 0.25 per cent

5%
  • Fish fillet, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, Cashew nut, Cashew nut in shell, Raisin, Ice and snow
  • Apparel below Rs 1,000, packaged food items, footwear below Rs 500,
  • Medicines, stent, Insulin, lifeboats
  • Kerosene, coal, bio gas, agarbatti, kites
  • Postage or revenue stamps, stamp-post marks, first-day covers
  • Transport services (Railways, air transport) - because their main input is petroleum, which is outside GST ambit
  • Small restaurants


12%
  • Apparel above Rs 1000, frozen meat products , butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, bhujia, namkeen, ketchup & sauces,
  • Ayurvedic medicines
  • Tooth powder, agarbatti
  • Colouring books, picture books, exercise books and note books umbrella, sewing machine, cellphones
  • All diagnostic kits and reagents, Spoons, forks, ladles, skimmers, cake servers, fish knives, tongs
  • State-run lotteries
  • Non-AC hotels, business class air ticket
  • Fertilizers
  • Work Contracts
                          
18%
  • Footwear costing more than Rs 500
  • Bidi Patta
  • Biscuits (All catogories), flavoured refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes
  • Mineral water, tissues, envelopes
  • Tampons
  • Note books
  • Steel products
  • Printed circuits
  • Camera, speakers and monitors
  • Kajal pencil sticks
  • Headgear
  • AC hotels that serve liquor
  • Telecom and IT services
  • Branded garments
  • Financial services
  • Room tariffs between Rs 2,500 and Rs 7,500
  • Restaurants inside five-star hotels

28%
  • Bidis, chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with chocolate, pan masala
  • Aerated water
  • Paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen
  • Wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine
  • ATM, vending machines, vacuum cleaner, shavers, hair clippers, automobiles, motorcycles, aircraft for personal use
  • Private-run lotteries authorised by the states
  • Hotels with room tariffs above Rs 7,500
  • 5-star hotels
  • Race club betting
  • Cinema
Key Facts about GST
  • 81% items to be taxed below 18% tax slabs
  • The GST would be applicable on the supply of goods or services as against the present concept of tax on the manufacture or sale of goods or provision of services
  • The GST would apply to all goods other than alcoholic liquor for human consumption and five petroleum products, viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel
At the Central level, the following taxes are being subsumed:
  • Central Excise Duty,
  • Additional Excise Duty,
  • Service Tax,
  • Additional Customs Duty commonly known as Countervailing Duty, and
  • Special Additional Duty of Customs
At the State level, the following taxes are being subsumed:
  • Subsuming of State Value Added Tax/Sales Tax
  • Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States)
  • Octroi and Entry tax
  • Purchase Tax
  • Luxury tax, and
  • Taxes on lottery, betting and gambling



FACTOIDS – WHAT’S UP, WHAT’S DOWN (COMPILED BY KPMG)

Sector
What’s got costlier
What’s got cheaper
What saw no change
AUTOMOBILES
28% GST + CESS

  • Small cars
  • Luxury cars/SUVs
  • 2 Wheelers
  • Mid size cars
HOME APPLIANCES
GST: 28%

  • ACs, TVs & Washing machines


TRAVEL  SERVICES

  • AC Train Travel
  • Business Class Airfare
  • Economy airfare
  • Uber/Ila
  • Metro/Suburban rides

GOLD JEWELLERY
GST: 3%

  • Gold - Opens window for cheap jewellery imports from Indonesia & South Korea


TELECOM & CONSUMER TECHNOLOGY
  • Mobile Phones
  • Wi-fi services
  • Telecom services


SERVICES
  • Life Insurance premiums
  • Banking services
  • Investment management services
  • Online bookings
  • Business Class airfare
  • DTH services
  • Courier services
  • Wi-fi services

  • Watching movies
  • Ola, Uber services
  • Metro travel
  • Suburban train travel
  • Economy airfare
  • Religious travel


WHAT GST MEANS FOR YOU
WHAT’S COSTLIER?

  • Small cars
  • Tea/coffee/masalas
  • Shampoos/Deos
  • Gambling/betting
  • Metals/cement
  • Aerated drinks
  • Tobacco
  • Courier services
  • Insurance premiums
  • Banking charges

WHO GETS TAXED WHAT?

  • GST has 4 basic tax rates
  • 5%, 12%, 18% & 28%
  • Basic staples (foodgrain, milk, veg) are tax exempt
  • No tax on services like education & health

GST: WHAT’S THE CHANGE?

  • Pre-GST: 17+ state and central taxes on goods and services
  • GST: Single tax with 4 basic rates
  • Pre-GST: Multiple taxes at different rates
  • GST: Single tax at point of consumption

The GST CLUB and ANALYSIS across countries/continents
THE GST CLUB

  • 160 countries have GST
  • India’s rate among the highest (28% the top slab)
  • Scandinavian countries have highest single rate of 25%
  • Uruguay & Argentina follow with 22% and 21%


GST COMPARISON

  • Global VAT/GST rates:
  • South East Asia: 7%
  • Asia:       12.8%
  • Europe & CIS: 19.8%
  • Africa: 16.8%
  • Latin America: 15.7%




Monday, June 26, 2017

Book review: Shadows of the Past by Jeena R. Papaadi

Shadows of the Past
There are different reasons why you pick a particular book to read. I selected this one because of the theme that ties different short stories together: coincidences.

The introduction says: ... Sometimes these coincidences stop us on our tracks and make us wonder, “Was that really just a coincidence – or did the hand of Destiny strike ever so gently?” We call them ‘eerie’ or ‘uncanny’, or ‘a miracle’ or ‘a stroke of luck’ or ‘fate’.

In my personal life too, I have had many experiences which have led me to think: was that a coincidence or was some force at work?

The author, Jeena, has weaved together a good number of incidents, and each of the stories has an interesting twist. Though in a couple of stories the narration drags a bit, the author has been able to hold the plot well, and keep me engrossed, awaiting the twist. The language is very simple, the book is small and easy to read.

Jeena says, "Shadows of the Past” takes you to the crossroads where coincidence meets luck, miracle meets destiny, on the thin line between the strange and the eerie. Maybe those incidents are indeed mere coincidences, and there is nothing inexplicable about them. I leave you to judge.

I wouldn't delve into the stories, lest I be a spoilsport!

Friday, May 12, 2017

James Comey: a tumultuous career ends

James Comey
It was an early morning shocker today: President Trump fires FBI Director James Comey,

Only yesterday former acting Attorney General Sally Yates and former Director of National Intelligence James Clapper were testifying before the Senate on the Russian involvement in the US presidential poll. The Senate hearing brought the Russian story more into focus.

James Comey has had a tumultuous tenure, not just as FBI director, but before that too.

In 2002, he led a probe into the pardoning of Marc Rich, an affluent global financier, by Bill Clinton on his last day as the President in 2001. Interestingly, one of the cases of Comey 15 years earlier as an attorney, was the successful prosecution of Rich for tax evasion. According to Time, "Despite evidence that several pardon recipients, including Rich, had connections to donations to Bill Clinton’s presidential library and Hillary Clinton’s 2000 Senate campaign, Comey found no criminal wrongdoing."

Then, in 2004, Comey, who was Acting Attorney General, had refused to sign some crucial papers sanctioning the NSA's domestic wiretapping programme. His signature was required for the programme to continue. Bush had to intervene to lift the hurdle.

Barack Obama brought him as FBI Director for a 10-year term in 2013. That was the time when wiretapping by was back in news, and Obama had backed the plan, saying only generic data was collected. But the fact that Comey, had once opposed wiretapping, didn't go unnoticed. But then, he said post 2004 Madrid blasts he has had a change of mind.

His most recent tryst with controversy was in the run-up to the US presidential elections. He was leading probe into the use of private servers by Hillary Clinton while she was the secretary of State. In 2016, he declared that though Clinton was careless, there was no criminal charges against her.

Quite expectedly the Trump campaign was critical of Comey.

Then came the dramatic turning point. In October, it was revealed that sleuths looking into the alleged sexting between Anthony Weiner had found on his computer emails between Hillary Clinton and his wife and Clinton aid Huma Abedin. He went public that the email controversy was being reopened.

Trump's view of Comey changed. He praised him.

It is widely believed that Comey's latest move might have cost Clinton the White House bid.

After Trump assumed charge, the focus shifted to Russian involvement in US poll. Though Trump cited poor progress into Clinton email probe, it's said that Comey sacking had much to do with increasing focus and progress in the probe into Trump's proximity to Russians in the poll campaign. Comey was getting too close for comfort.

Very interesting days for US politics in the coming days. I really doubt if this is going to die down. It will only get more intense, and probe will only widen and deepen.

Sunday, May 7, 2017

Emmanuel Macron is new President of France

(This was a live page)

0055
Marine Le Pen supporters are saying this is not a defeat. But another landmark in the march of their party. At the very start of Front National, it got around 0.4% votes. In 2002 they got around 17% and today it's around 35%. They say they will continue to move ahead.
Le Pen said the party will get a revamp. Already the present FN is far diluted version of the party her father founded in 1972. Is the original FN dead? Now how will the new FN look like?

0040
Emmanuel Macron makes a short and sober speech. Thanks voters. Assures the people that he would protect the country and keep it united.
0030
France is at a turning point. Beginning of a new chapter in its political, economic and social life. We will await who Macron's Prime Minister will be. Macron will also need support in Parliament to rule; and remember all the major parties were rejected by the people in this election. The National Assembly election comes up in January, that will give a clearer picture what lies ahead for France in the four to five years from now.

0010
En Marche is the party that Macron belongs to. And that party is just one year old. Imagine such a party winning the Presidential election of a country like France, quite historic, a world record of sorts. Just shows the sort of polity that exists in France. I guess, many people would have voted for Macron to be on the safe side, in order to not make matters worse by voting for Le Pen.

0005
Nearly a third of voters cast blank ballots.. apparently the highest. .. That's the protest vote.

2345
Marine Le Pen concedes defeat
2335
2331
According to the BBC Emmanuel Macron is the new President of France with 65.5% of votes

2328
Opinion polls have been putting Macron ahead of Le Pen... Let us see who the people have actually voted for. ... We will know in a few minutes.

2325
Polls will close in another five minutes; and in a few minutes we will get to know who the next President of France.


Sunday, April 30, 2017

Don't be surprised if Le Pen wins on May 7

Marine Le Pen (Photo: CNBC)
Today, it's a week since the first round of French elections took place. Very much like what the opinion polls predicted, centrist Emmanuel Macron and far-right Marine Le Pen came on top.

Today, it's one week to go for the second and final round. After many years, we have a very tightly contested race for the next occupant of Palais de l'Élysée (Elysee Palace), the official residence of the President of France.

It's widely speculated that Macron will defeat Le Pen. But as the poll date nears, there are increasing indications that it will not be a cake walk for him. An Odoxa survey, a few days ago showed that the gap between the two had narrowed, and Macron's share of vote could be 59%, down four points. Marine Le Pen stands at 41%, up four points from earlier in the week.

Another poll by Harris Interactive, said that Macron will win: 61% to 39%. But he has lost ground in the past week to Le Pen: six percentage points.

Why the going might be difficult for Macron

On May 23rd, Le Pen got just 5% votes in Paris, but in five adjoining regions -- Grand Est, Hauts-de-France, Normandie, Centre-Val de Loire and Bourgogne-Franche-Comté -- she was the winner.
Emmanuel Macron (Photo: New Statesman)

There is a lot of support for far right views among the youth. The flood of immigrants and the changes that is bringing about in the society isn't to everyone's liking. Extreme right is seeking exit of not just refugees but even people of non-European and sometimes even non-French origin. Le Pen's FN party is no longer extreme right-wing, but many who are right and beyond are likely to back Le Pen rather than Macron.

She has support from not just youth of 18 to 24 years, but also among the working class and lower middle class. And these are not demographic bands that get widely represented in urban media. A good example of this was when she engineered a publicity coup by meeting striking workers of the Whirlpool factory at the picket gate of their factory in Amiens, while Macron was holding talks with union officials in the comforts of the building. The factory is facing closure after a number of jobs were outsourced to Poland. She said she will not let the factory close.

There is massive unemployment. It's around 10%. While it is 4% in Germany, and 5% in the UK. And this has been agitating the youth. In Round 1 on April 23, she won in areas that had high unemployment and low wages.

Similarity to Trump

There is an unmistakable similarity to what played out in the US in the runup to the November poll in the US. Everyone predicted Hillary will win, but Trump kept gaining steadily in opinion polls, which the media largely didn't take seriously. Le Pen too is gaining steadily.

Trump appealed to a vast number of blue-collar workers. So is Le Pen. And that is a good number in France too.

Many people think Macron will be indecisive in these times when tough decisions would have to be taken. They think he would just be another of those business-class elite would just go with the not-too-well-working system.

And now we have reports that Russian hackers have broken into Macron's campaign, much like what we heard about the Democratic campaign in the US.

The quiet voters

What might prove crucial is how supporters of left and far-left would vote. Its leader Jean-Luc Mélenchon who secured 19% votes last week, hasn't endorsed Macron. May 7 result will be affected if many his supporters decide to support Le Pen or even abstain, without voting for either.

Macron may have won Round 1, and all parties (except the Socialists) might be uniting behind him to prevent FN from coming to power. But does that imply that people too would unite similarly?

In other words, many voters who might theoretically be against Le Pen could support her. But since that's going to be "very politically incorrect" for them, they might not talk about it.

How ironic it would be, if most of Left abstains, and that catapults Marine Le Pen to Palais de l'Élysée.


References:

All the ways Emmanuel Macron could still lose the French election - Quartz, April 28, 2017

Le Pen GAINS ground as Macron support drops ahead of final vote -  Sunday Express,  Apr 28, 2017

Marine Le Pen closes the gap with Emmanuel Macron - Daily Mail, April 28, 2017

Macron heckled by pro-Le Pen workers - BBC, 26 April 2017

'Death of the French left': why voters are hesitating over MacronThe Guardian, 26 April 2017

Russian hackers 'target' presidential candidate Macron - BBC, 25 April 2017

Marine Le Pen wins just 5% of Paris vote while rural FN support surges - Independent, April 24, 2017

How the Election Split France - New York Times, April 23, 2017

'The real misery is in the countryside': support for Le Pen surges in rural France - The Guardian, April 21, 2017

Why does Le Pen get so much support from young voters? - Al Jazeera, April 20, 2017

Marine Le Pen’s surprise supporters - Politico, Jan 23, 2017

France unemployment rate - Countryeconomy.com

Thursday, April 27, 2017

What can Arvind Kejriwal do to stop his and AAP's downslide

Yesterday, right from day break, all major news channels were showing results of the Delhi municipal corporation elections. Anyone could be pardoned for mistaking it be the results of national elections or something of such magnitude!

Source: News18/PTI
Focus was a shade greater on the loser (Aam Aadmi Party and its national convener Arvind Kejriwal) than on the winner (Bharatiya Janata Party). For BJP, this is the third consecutive victory. So it wasn't a big deal, in a sense. Imagine if AAP, the ruling party in Delhi Assembly, was able to win. That surely was the aim of Kejriwal. But that was not to be.

After the glorious victory in the Delhi Assembly elections in 2015, AAP contested in assembly elections in Goa and Punjab this year. They lost badly. And now the Delhi municipal corporation. The fact that AAP has been on a losing streak must be giving Kejriwal and its supporters the jitters.

Noble objectives

In 2012, when Kejriwal broke ranks with his mentor Anna Hazare, and joined politics to fight the system from within, he gained a lot of appreciation. That was most evident in the manner in which AAP emerged on top in the Delhi Assembly elections just one year later.

It was the single largest party with 28 seats in the House of 70. Kejriwal formed a minority government with Congress support. Then over the issue of passing the Jan Lok Pal Bill, for which he didn't get support from any major political party, he resigned after being in power for just 49 days.

Elections were held again in 2015; and this time, the people gave him a very clear mandate. AAP won 67 seats, the BJP the rest and Congress was wiped out.

Blinding glare of victory

In retrospect, the massive victory, ironically, proved to be the Achilles heel. Kejriwal misunderstood the verdict to be a green signal to carry on his fight against the system. But actually, what people wanted him to do was to start fixing the broken system.

Unfortunately, Kejriwal, probably, blinded by the glare of victory, just got carried away, as if by inertia, and couldn't simply give up his confrontational approach. He didn't realise that the ease of campaigning had turned into hard grind of governance. He took on the system from within. The system proved to be too gigantic and the problems too hard for him to handle or fix.

One major issue for him was the constitutional structure of the Delhi's administration, which gives a role to the Union government as well, since the city is also the capital of the country. In fact, Delhi isn't a full fledged state and is officially called National Capital Territory of Delhi.

Kejriwal kept fighting with the Lt Governor and attacked the Prime Minister relentlessly. Though he had said he won't contest Lok Sabha elections in 2014, he changed mind, and fought against Modi in Varanasi and lost by over 3 lakh votes. AAP, effectively a regional party in Delhi, contested 432 seats nationwide for the Lok Sabha and won just four. But, the resounding victory he still managed a year later in Delhi assembly elections was a clear message from the people for him to stick to Delhi first.

But, Kejriwal forgot that he was the chief minister of a Union territory. He should have focused on fixing what is wrong in Delhi with the powers he and his party have. Instead he wanted greater powers; and worse, he didn't abandon his confrontational approach. An administrator or a manager can't make much headway if he or she is constantly whining and taking on everyone with whom he or she has work with.

What can he do

The mark of an administrator with the finesse of getting things done, is his ability to move forward through available channels rather get bogged down before obstacles. One rule of thumb often quoted is, when you have ten issues to solve, and you get stuck with three, move ahead with the seven and come back to the three later. But Kejriwal chose to get stuck with the three. And probably he is still paying the price for that.

Kejriwal is meeting his team to discuss what went wrong and how the party can connect back with the people. My few suggestions for him would be:
  • Stop complaining and finding fault with everyone and everything around you
  • Realise that as a chief minister, you are also an enabler and not an obstructor
  • Focus on Delhi and turn it into a model union territory
  • Use the powers you have effectively before craving for more
  • Good to aim high, but not if nothing much gets done
  • Better to lower the aim, get things done; and then raise the level
  • Show you can work effectively even with people whom you don't like and still deliver results
It is still not late for Kejriwal and Aam Aadmi Party, to realise many, if not all the goals it had set for itself when it entered the political arena.

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Tuesday, April 25, 2017

Young lady at the ticket counter

I was now reading an article about currency shortage and the problem of "small change" like one, two or three rupees. And, a small personal anecdote came to my mind.

I was at a Metro Rail station. Since I had forgotten my prepaid smart card at home, I had to purchase a token. At the booking counter, the official asked me if I had a change of Rs 2.

But I had only a coin of Rs 5, and he didn't have Rs 3 to give me in return.

There was a brief interlude.

Noticing that there were others waiting in the queue, and not wanting to prolong the agony, I told the official, "It's ok. I will give you Rs 5 and you can keep the change of Rs 3."

He looked surprised; but seemed to agree to the deal.

Just then,  a young lady, standing next to me in the queue, moved forward, took out her wallet, and said, "I have a Rs 2 coin. You can give this. ... "

It took a moment for me to realise what was happening. And I said, "O no, it's fine. It's just three rupees. It comes and goes". Only the other day the vegetable vendor had waived Rs 3 I owed him.

Pushing the Rs 2 coin forward, she said, "Precisely. Two rupees also comes and goes. That's ok. I have been in such situations before."

She in fact pushed that Rs 2 coin through the opening on the ticket counter window. Probably assuming that she and I were known to each other, the ticketing official took that Rs 2 coin. He gave me the token, and turned his attention to that lady.

In the meantime, I thanked that unknown young woman. It also left me a wondering why did she do that, though it was all about just Rs 2. Maybe someone had earlier similarly helped her with change; and she just wanted to keep that chain going.

While she was getting her smart card recharged, I told her. "Thank you, for your kindness," and I headed to the platform to take the Metro. I didn't see her after that.