Business Today 04 December 2016

We live in interesting times. First, Prime Minister Narendra Modi pressed the button on demonetisation of `500 and `1,000 (high-denomination notes) on Tuesday, November 9, in an 8 pm speech, effectively rendering the old currency useless from midnight the same day. He said the step would deal a death blow to black market operations in the country and also the forged notes in circulation. The second might be true – given that any forger would need time to copy the new high-denomination notes, which are still in short supply. On the effectiveness of the step in eradicating the black money in the country, though, there is a question. The demonetisation will either bring out – or effectively kill – the unaccounted income held in cash in these currencies. It is,…

Gleefully Anointed, But Furtively Dethroned This refers to your cover story on the Tata Group (The Exit….and After, November 20). It was a deep analysis of the tumultuous developments and commotion at Tata’s corporate house. No business organisation can take exception to ups and downs in its operative channels. Upheavals are not uncommon at any point of time as they are induced by domestic factors and global trends. It has been experienced through Lehman Brothers’ bankruptcy and Brexit impact. When Russi Mody refused to step down as MD of Tata Steel, J.R.D. Tata diplomatically tackled the isuue and normalcy was restored harmoniously. Nani A. Palkhivala ended the stalemate with the implementation of age ceiling of 75 for directors on the Board of Tata Group. The unceremonious removal of Cyrus Mistry…

QUOTE “Trump’s victory is not good for the world markets” ADDING MUSCLE Sachin Bansal, co-founder and Executive Chairman of Flipkart, is in talks with many Indian entrepreneurs and investors to create a group that would represent the interests of Indian Internet start-ups and lobby with the government for favourable laws LENDERS CUT RATES After the RBI cut key policy rates, SBI, ICICI Bank, HDFC Bank and Kotak Mahindra Bank have cut home loan interest rates by up to 15 basis points to prop up their lending portfolios, which have growing slowly in 2016/17 KID STATES LEAD Andhra Pradesh and Telangana topped the ease of doing business rankings among Indian states, according to the World Bank and Department of Industrial Policy and Promotion report, while Gujarat dropped to No. 3.…

21 BOND LEAD WHAT: Bond Market: India’s New Financial Order WHEN: November 21, Mumbai WHAT TO LOOK FOR: The ASSOCHAM event will deliberate to understand, learn and provide recommendations to fast-track the development of the bond market in India, given its immense potential in raising funds and supporting infrastructure development 24 PICK OF THE CROP WHAT: on Linking Farmers With Market WHEN: November 24, New Delhi WHAT TO LOOK FOR: ASSOCHAM will bring central and state government officials, policy makers and market forces to devise ways for a smooth roll out and functioning of e-NAM (national agriculture market), create awareness among farmers and to study the impact of future trading on e-NAM LUXE ALL THE WAY WHAT: 4th INDIA LUXURY SUMMIT WHEN: November 25, New Delhi WHAT TO LOOK…

If the government has shown amazing determination in clamping down on the cash, or black money economy by first demonetising 500 and 1,000 notes, and then systematically plugging all loopholes, it has perhaps not shown equal determination in simplifying taxes. The final GST, or what it is likely to be, is far from the original one-nation-one-tax concept, with at best, a couple of slabs, and no exceptions. The new tax system, in fact, will have four slabs – 5 per cent, 12 per cent, 18 per cent and 28 per cent. Some goods will be exempt from taxes. And finally, a cess on luxury and “sin” goods will be levied over and above the highest tax rate. In other words, it will have a minimum of six different rates at…

SIX GST RATES: WILL THEY WORK? THE 14TH FINANCE COMMISSION HAD CALLED FOR THE CREATION OF AN AUTONOMOUS AND INDEPENDENT GST COMPENSATION FUND THROUGH LEGISLATIVE ACTION It’s an irony of sorts that the powerful GST Council, chaired by the Union Finance Minister comprising representatives of all 29 state governments, will have to depend on a cess on sin goods, such as tobacco, and luxury products to compensate states for the revenues loss when India implements a nationwide, uniform, four-slab tax rate regime from April 1, 2017. A cess is a tax that is levied to raise funds for a specific purpose and has forever been a no-go area for states because the entire amount collected goes to the central exchequer. However, the use of such funds has always been suspect.…