Tax sops for the rich
The article ‘Budget lets rich off the tax hook’ (February 23) made for iinteresting reading. There are two ways of looking at the tax concessions for the affluent sections of society. If they save money with financial institutions or invest in their own enterprises, there is going to be capital formation. Suppose they plan to spend the disposable income, then there will be increase in aggregate demand, income and employment to that extent. Either way is good for the economy.
This refers to ‘A year after…’ (February 23). What was assumed to be a war of short duration between superpower Russia and unequal Ukraine has now no end in sight. Another lamentable aspect is that in spite of loss of lives and disruption of economies, there is no sense of urgency to resolve the issue between the two countries.
The war has taken a curious turn in that Ukraine’s dependence on the US and the EU has reduced it to the position of a proxy for a war of egos between superpowers in which the rest of the world is confronted with challenges like inflation, low economic growth and shortages of food and energy supplies.
Support for Adani
Given the current turmoil in the Adani group, it is rather strange for the heads of public sector banks to come out publicly in support of the group. One MD went as far as to say his bank would have no worry in lending further to the group. He may not worry, but the millions of account-holders of the bank will be.
With the shares testing newer bottoms almost daily, one wonders what makes the lenders so sure of repayment by the group. It would be interesting to know what collateral has been accepted by the banks.
This refers to ‘WGC to digitise gold ecosystem’ (February 23). Imagine a day when India mainstreams accounts and standardises at least 50 per cent of the country’s estimated domestic gold stock of 25,000 tonnes. Besides fast-tracking the country’s economic growth, the overall attitude of Indians to the yellow metal will change for the better.
Providing facilities for conversion of domestic gold stock to standard gold, giving higher returns on gold deposits and increasing the component of gold in banks’ Statutory Liquidity Ratio will help reduce household gold stock and play a proactive role in giving an impetus to economic growth.
Two eminent professors who are part of the six-member Monetary Policy Committee of the RBI had voted against hiking the repo rate hike by 25 basis points to 6.50 per cent in the February 8 credit policy to curtail inflation. The reasons for disapproval by them is worth understanding. Money is essential for production, and when interest rates are hiked the cost of production would increase leading to an increase in prices that could push up inflation further.
Inflation cannot be curtailed by increase in interest rates alone. One area where a country can hopefully focus is the production trajectory, especially manufacturing sector, whereby employment generation and production are matched to create overall demand to be supported by matching supply.