Archives  >  2019  >  December  >  4th

The Woes of India’s Economy

1. What’s the story?

In unsurprising news (that 6 Things has covered here and here before), India’s economy has been on a downward spiral, with no signs of improvements anytime soon. And now, even the Government is feeling the pinch — courtesy falling tax revenues. 

Tell me more.

According to new reports, tax revenue has seen a sharp decline due to the overall economic spiral — sparking worries for the Government

“Given that taxation is a core part of its capabilities of any government, this is a troubling sign for India. This is doubly worrying for a poor country such as India, where state spending is key to lifting people out of poverty.

India has a long-standing problem of not collecting enough taxes given the size of its gross domestic product. Not only is it much lower than developed countries with comparable GDP sizes, it is below even comparable developing countries. India’s tax-to-GDP ration lags behind even Nepal.

Falling tax revenues has had a number of repercussions. For one, the Modi government is squeezing the states. 

Last week, five states West Bengal, Kerala, Delhi, Rajasthan, and Punjab complained in a joint statement that the Union government was withholding substantial amounts of GST-related dues over the past three months.

The Modi government is also focussing on the point of collection, with the pressure on tax officials to meet targets so high that there has been a spate of resignations over the past year, according to the Income Tax Gazetted Officers Association.”

Slowdown in tax collection has also meant that the Government has seriously started exploring other options for money. Announcements have been made that Air India and Bharat Petroleum Corporation are up for sale next year. 

Manufacturing industries have also had a dismal year. In Jamshedpur, also known as the hub of industries, the situation is quite dire.

“Bikash Mukherjee, Chairman of Auto Profile Limited, said, “The condition of the entire industrial area is that 80 thousand people have laid off.”

Further, talking about the company’s condition, he said: “Our turnover has come to a halt at 15%. There is a loss worth crores. Our turnover was around 600 crores before last year. Now, there’s a doubt about whether we’ll be able to have a turnover of even Rs 100 crores this time.”
Tata company has auto and steel plants in Jamshedpur. Bikash Mukherjee explained, “Tata Motors has a capacity to produce 12 to 14 thousand vehicles. 10-12 thousand vehicles were produced in normal days. Lucknow had a capacity for 6-7 thousand vehicles. Right now, 2,000 cars are being made in Jamshedpur and 1,600-1,700 in Lucknow.”

So, what now?

The situation, quite frankly, does not look good. The Government has an uphill battle ahead if it has to turn this ship around.

Keep your eyes on this space. We’ll keep you updated.

2. Where else should I be keeping my eyes on?

Maharashtra, that’s where. As 6 Things had earlier covered here, Maharashtra has a brand new Chief Minister. And the first thing on his plate? Well, if his allies have their say, he will be spending some time looking into the withdrawal of cases against the accused in the Bhima Koregaon incident. (Quick recap: The 2018 Bhima Koregaon case refers to an incident during an annual celebratory gathering at Bhima Koregaon that turned violent. The gathering was originally to celebrate the 200th year of the Battle of Bhima Koregaon victory — a 19th Century battle fought between the British East India company and Maratha Peshwas.)

“Joining the growing chorus among Maha Vikas Aghadi allies, NCP leader Dhananjay Munde wrote to Maharashtra Chief Minister Uddhav Thackeray on Tuesday, seeking withdrawal of cases filed against activists and others in connection with the Koregaon Bhima violence.

He was the third leader in the last 12 hours to seek Thackeray’s intervention in the matter after Congress minister Nitin Raut and NCP MLC Prakash Gajbhiye. In his letter to Thackeray, Munde accused the previous Devendra Fadnavis government of slapping “false” cases against social activists.

Munde alleged that the BJP-led government had “harassed” intellectuals, activists, social workers and ordinary citizens, and had labelled several of them as “urban Naxals”.

Asked about the demand to withdraw criminal cases related to the Koregaon-Bhima violence, Thackeray said, “The earlier government has already issued orders to withdraw the cases against persons facing minor criminal charges related to the Koregaon-Bhima caste riot.

“I am finding out how many cases have been actually withdrawn.” “

We’re keeping tabs on this case.

3. What more?

In an astonishing feat, a young Indian tiger has travelled over 1300 Km over the past few months — across seven districts and two wildlife sanctuaries — turning our previous assumptions about tiger habitats and habits on their head. 

“…Bilal Habib, senior biologist with the Wildlife Institute of India, said that this is the longest walk ever taken by a tiger in India and they know this because the animal was radio-collared.

“It’s clear that with shrinking space, we need to redraft policy to ensure safety of tigers like C1. A tiger needs three things to become stable at any place – space, food and mate. Dnyanganga has space and enough prey base, though if (C1) doesn’t find a mate, it might keep walking further,” Habib said.”

The tiger began his walk towards the end of June this year, and travelled through seven different districts in Maharashtra before going to Telangana and re-entering Maharashtra.
According to an Indian Express article, throughout his journey, C1 had one encounter with human beings but it was accidental. Ravikiran Govekar director of Pench Tiger Reserve Field and supervisor to Tipeshwar said, “There, it was involved in a conflict with humans, when he attacked a group of men, injuring one. That was the only instance of conflict in his journey.” ”

4. Anything else?

India’s largest home-grown startup is on its way to become a publicly owned company. As Ola preps for an initial public offering (IPO), though, experts warn that its drivers may become the first casualty in this battle to become a unicorn startup. (Quick recap: Initial public offering or stock market launch is a type of public offering in which shares of a company are sold to institutional investors and usually also retail investors.)

“When India’s two biggest ride-hailing companies came onto the scene—Ola in 2011 and Uber two years later—they had promised high salaries and impressive rewards programmes. But soon, driver incentives started fading away and Uber and Ola’s commissions got steeper, nearing 30%.

“Ola had given Rs500 per trip incentive at its peak and now it is just giving Rs500 per week to accomplish 50 rides,” Jaspal Singh, co-founder of research and advisory firm Valoriser Consultants, told Quartz.

So as their incentives are taken away, it’s only natural that drivers are unhappy.

Uber debuted on the New York Stock Exchange (NYSE) in May this year. The much-hyped IPO tanked on day one, posting the biggest first-day dollar loss in US IPO history. Even now, seven months later, it has turned out to be a dud because investors still can’t see a clear path to profitability, experts say.

Meanwhile, Ola is “absolute focussed” on going public within the next two years, co-founder and CEO Bhavish Aggarwal said in October this year. But let’s not forget that it, too, has been burning cash for years while raising billions from marquee investors like Japan’s Softbank and Chinese internet giant Tencent.” 

5. Is that all?

In horrific news emerging from China, it looks like Beijing is going all out in its persecution of its Uighur Muslim minorities.

“ In a dusty city in the Xinjiang region on China’s western frontier, the authorities are testing the rules of science.

With a million or more ethnic Uighurs and others from predominantly Muslim minority groups swept up in detentions across Xinjiang, officials in Tumxuk have gathered blood samples from hundreds of Uighurs — part of a mass DNA collection effort dogged by questions about consent and how the data will be used.

In Tumxuk, at least, there is a partial answer: Chinese scientists are trying to find a way to use a DNA sample to create an image of a person’s face.

The technology, which is also being developed in the United States and elsewhere, is in the early stages of development and can produce rough pictures good enough only to narrow a manhunt or perhaps eliminate suspects. But given the crackdown in Xinjiang, experts on ethics in science worry that China is building a tool that could be used to justify and intensify racial profiling and other state discrimination against Uighurs.”

6. Before you leave…

Take a look at how Elon Musk’s next venture might just be a mind-machine meld.

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