The good thing about GST and other links

Good to know that cars would be more expensive after GST rates were announced. One should welcome it. A country like India cannot be encouraging personalised mode of transportation. It is a small step to making both producers and buyers pay for the externalities of hydrocarbon based travel in India.

India’s 5-star hotels are already quite expensive, given the overall level of purchasing power in the country. They have a plethora of taxes. But, now they will become even more expensive.  That is not a good thing. May be, I am wrong.

Revenue Secretary Hasmukh Adhia has said that GST would lower the inflation rate by 2%. I am not sure if there is any mileage to be had in saying that. The margin for error is huge and second, international experience is that there is an initial jump in the inflation rate as businesses round off prices to the next higher level. It will be quite likely to happen in India.

Aparna Iyer had a good story on SBI 4Q results. Has the problem of NPA peaked? She is not sure. Neither am I. Notice how the GST rates would raise mobile phone tariff and prices for devices too at a time when the sector is facing a huge wave of competition from Reliance Jio.

Her earlier articles on the credit culture (or, its lack thereof, to be more precise) of companies in India are worth following. This is a classic understatement:

Corporates need to vastly improve their credit culture. [Link]

In the second part of her series on credit culture, Aparna Iyer argues that companies have been biggest beneficiaries of the culture of loan forbearance in India than farmers. One should not be surprised. Most Indian professed policy goals are mostly symbolic in nature – pro-poor, pro-farmer. In reality, they are not helped but hurt, both short and medium term.

But, the problem with such stories is that they would be used to argue the case for loan waivers but not against forbearance in general. Further, providing cash support to farmers to repay loans and waiving loans are two different things. The optics matters a lot.

In the third and final part of her series on credit culture, she again makes the point that banks have been far more lenient towards companies. Obviously, a lot remains unsaid. It is about unholy nexus and second, it is about the ethical foundations of corporate promoters.

Tadit Kundu has a good article on the Investment Proposals turning into actual investments in India. This is based on DIPP data. Actually, I track it regularly. The pick-up in ‘Implemented Investments’ in 2016 could be deemed ‘green shoots’ for manufacturing. Or not.

It was good that the Prime Minister has called for better data on the labour market. Not a day too soon. But, this government by Pronob Sen bears repetition:

“NSSO has a capacity of 3,200 people and its Chinese counterpart has 29,000 people. How will you conduct comprehensive employment data collection with this?,” he asked .

“We had demanded an increase in the headcount to around 5000 and also that the jobs survey should be expanded and made comprehensive. But the then government (the previous UPA government) did not agree. We need comprehensive jobs data,” Sen added. [Link]

Good to see that NASA will be collaborating with ISRO – an organisation that was on America’s banned list. Times, they do change.

Bibek Debroy has a good interview with Business Line. He does make a good case for taxing agricultural income. I endorse it:

The Centre has no plans to tax agricultural income. Constitutionally, it is a State subject. About seven States tax certain kinds of agriculture. I do think agriculture income should be taxed, in a way similar to personal income taxation, based on a threshold. In his taskforce on direct taxes, Vijay Kelkar had computed that given the levels then, 95 per cent would be below the threshold. Agricultural income is subject to year-to-year variations but you can do an average of three-four years and tax on the basis of that. [Link]


The iron laws of public policy are…

… that the road to hell is paved with good intentions and that the law of unintended consequences always applies.

Read this:

April 20, 2005, President George W. Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act, which reformed the rules overseeing bankruptcy , especially personal bankruptcy.

At its inception , the nation had to borrow heavily from England , and thus the protection of debtors was in the national interest.

The debate over the 2005 reform was completely dominated by the credit lobby and organized by the National Consumer Bankruptcy Coalition . In the words of one legal scholar : “ Never before in our history has such a well – organized , well – orchestrated , and well – financed campaign been run to change the balance of power between creditors and debtors.”

In the pre-bankruptcy – reform world , distressed homeowners would have filed for personal bankruptcy , which would have allowed them to discharge their credit – card debt , making it easier to hold on to their houses. Under the new law , this option was no longer open . According to calculations based on a recent study, the 2005 reform increased the number of people defaulting on their mortgages by almost half a million; and when a mortgage holder defaults and the house is auctioned off , on average it loses 27 percent in value.  If we apply this loss to the average price of a house sold in 2005 ( $ 290,000 ), we can estimate that the financial industry lost $ 39 billion as a result of bankruptcy reform.

Source: Zingales, Luigi. A Capitalism for the People: Recapturing the Lost Genius of American Prosperity (p. 68). Basic Books. Kindle Edition.

AFPSA and the Indian corporates

These are my thoughts on reading the article by Somasekhar Sundaresan on the topic above and I had posted it on the Business Standard site under the article.

The article has multiple targets and it hits them all well. The Army, the Union government, the Indian corporate sector, a popular singer and even concepts like moral equivalence, etc. It does not even spare the public that sides with the Army or the Union government. Space constraints must have come in the way of commenting on the role of the militants, their external sponsors, anti-India outfits in Kashmir, the role of the political parties in the State, the legacy, etc.

I suppose moral clarity, moral certitude and moral outrage are possible only if one manages to see one side of things and does not complicate oneself with abstract notions like objectivity, history, context, multiple perspectives, etc.

Admission bias in Ivy League

More than two weeks ago, this article appeared in the Wall Street Journal accusing Ivy League institutions in the US as practising discrimination – leaving out Asian students – and casting the attempt by Princeton University attempts to block the government’s release of document that could ‘show discrimination’ in a negative light.  Well, I am not persuaded.

Any Club has the right to decide on whom it would admit as its members. All those who are not admitted can claim discrimination. Any subjective decision can be termed arbitrary. There is a fine line.

If Ivy League Schools decided that they would try to lower the percentage of Asian students in their campuses, that is their prerogative.

An educationist whom I know very well and who does not live in the U.S. wrote me this:

Admissions decisions are inherently subjective when raw data between candidates is broadly equal.  Global admissions data patterns are naturally subject to external economic, social, political and legal considerations.  None of that is defined or definable because those sands are shifting continually.

Total transparency is not possible or even desirable in admissions.  Every decision can be questioned on some grounds or other, but schools need some autonomy to make decisions, within the bounds of reason, ethics and the law of the land.  Wise students learn soon enough that their Destiny cannot be mapped.


Well, this emphasis on foisting diversity (hard to beat that for an oxymoron) is a manifestation of the virulent and toxic and often ridiculous political correctness that is sweeping through American campuses, reminiscent of the 1960s and 1970s – or is it far worse now?

Read this interview by Jonathan Haidt with Wall Street Journal to figure out what he thinks is driving it.

It is up to you to read this story before or after you read the interview – a free speech area in Los Angeles! Bizarre.


It is really atrocious to publicise this. A friend forwarded it to me. First of all, it serves no useful public purpose. Two, it concerns the privacy of the individuals in question. They do not have to tell the world as to where they are looking for their next jobs, etc.

What would be important from a public interest angle is if the government violated any of the conditions for appointment and pre-qualification criteria in appointing Mr. Acharya. If that is the case, some of the rejected applicants might have sought remedy and a revisit of the entire recruitment process.

When that is not the case, this news-story is unnecessary and an unwanted intrusion of privacy and abuse of the ‘Right to Information’.

The newspaper should be embarrassed if not ashamed of what it has done.