Monday, 10 June 2013

Ideas about the budget and a few suggestions to boost the economy -- As written on 4th Feb 2013

I am having a diesel car for my own use but I do not mind if you increase the price of diesel to the extent that the companies who produce diesel at least do not make a loss. But besides a rise in inflation that would influence the decision to raise diesel prices, the decision should not burden a class of society that depend on it, raising interference from your allies. Alternatively, I can suggest that you increase the excise duty on diesel cars to compensate for the one lakh crore subsidy presently being paid by the government on diesel. Although lobby of diesel car manufacturing companies would not leave any stone unturned to stop you.

 My wife is very happy that the LPG cylinder that she uses is in fact 70% cheaper than its actual cost. I don’t mind if you tax her by raising LPG prices to the extent that LPG producing companies make a reasonable profit. I am certainly in favor of making LPG available to below middle class at a cheaper rate. You have to find out a solution for this. Just like you have put a cap of 6 cylinders per year per family, similarly LPG can be made available through ration shops at a cheaper rate.

 For the last 5 years Gold across the globe has been mis-marketed as a hedge against currency or country. I don’t know the real statistics behind it. But I know it has become the major culprit in economical growth of my country. As per Mr. C. Rangrajan  current account deficit has risen to 4.6 % in first half of current fiscal due to massive imports of Gold. It is a non productive investment. Thus you must raise import duty on Gold as huge budgetary deficit has become a major hindrance in growth.

 I got to know that out of our total population of 125 crore people there are only 3.25 crore tax payers. Out of this only 12 lakh people fall in the category of Rs.10 to 20 lakhs Income per year and just 3.5 lakh people in the bracket of the above Rs.20 lakhs Income per year category. These numbers of tax payers are less than 27.33 lakhs population of your very posh neighbourhood South Delhi alone. In 2000-2001, 2.5 crore people paid taxes. This number exceed nominally to just 3.24 crore tax payers in 2010/2011. Also our per capita GDP grew to USD 2000 last year compared to USD 450 in 2001. Therefore, widening your tax net would be a wise move. 45% of USA citizens pay taxes as opposed to only 3% in India.

 I am as fearful as you are citing the chances of our ratings being downgraded to Junk status by International Rating Agency. But I, probably like you, am masking a brave face but praying that it does not happen.  Therefore you need to kick start the investment cycle once again and do its fiscal consolidation soon.

External Debt has skyrocketed. Our foreign exchange reserves cover 80 % of our debt presently as against 110% just three years ago. You need to encourage exports by leaps and bounds.Faster implementation DTC AND GST would be a boon to the country. It is understood that Implementation of GST alone will add 1 % to GDP.

Since you do not provide any social security to retired people thus you should raise deduction under 80cc to 3 lakhs against 1 lakh now.Capital gain tax in shares has been a bone of contention between assessing officer and assesse. You should clarify short and long term capital gain tax. It will stop undue litigation and corruption.

 As written on 4th Feb 2013

Thursday, 30 May 2013

Three Wheelers VS Four Wheelers (Small commercial and passenger Vehicles)

1.25 lacs – 1.50 lacs
2 lacs – 4 lacs
35 Km/Lit
28-20 Km/Lit
20 Ps/Km
2 Rs/Km

Three Wheelers way ahead:

·        3W’s have a much better access than 4W’s in India. The roads in the small towns, small cities, rural and semi rural areas very narrow but the 3W’s can roam easily without any problems.

·     Three Wheelers are even better for their service. Good technology is used in the 3W’s which is so simple that the driver can service it himself. The driver can become a half engineer on the spot thus saving his time and earning some more livelihood. Whereas 4W’s have to be taken to the service centers. The drivers have to pay for their maintenance, fees and also their time. The maintenance cost in 3W’s is negligible compared to the maintenance of a 4W. Hence more losses are incurred with 4W’s.

·         The Re-sale value of the 3W’s is considerably better than the 4W’s.

·    The dealer margin in 3W’s is also more than that of 4W’s. The small 4W’s are dependent mostly on the spare part sales and servicing.

PS: Written on 23rd April 2013