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12th August 2017 Part-3: Daily News Analysis
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Crowding Out and Crowding in of Private investment.

Jatin Verma is teaching live on Unacademy Plus

Jatin Verma
Have appeared in UPSC CSE thrice. Have been taking Unacademy Plus courses Academics- Polity, Economics & Current Affairs.

Unacademy user
Good IT class...Thank you...
sir can you please continue uploading PIB analysis for August as well... they have not been updated since last week.
Can anybody explain how is the tax payers base mentioned as 25% in previous Year? Only around 1-2% of Indians Pay income Tax.
Vikas Kumar giri
2 years ago
that statement is talking about increase in taxpayers % with respect to last year not the ratio of taxpayers to total population.
Rishav Agarwal
2 years ago
Can you tell what that 25% denotes? Its the percentage of what ?
Sujeet mishra
2 years ago
I think growth is measured annualy. An increase of 25% in 2016-17 means an increase by that amount over the 2015-16 stats.
Jatin you have forgot to upload the part -1 of DNA. will you uploading it ??
Jatin Verma
2 years ago
it is there now:)
2 years ago
thank u :)
Income tax warned people against indulging in cash transaction of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.then how middle class get involve in translation and how the survey said digital transaction is increasing.
RBI: banks are not decreasing their lending rates Prices of all vegetables are increasing(say potato, tomato, onion) more than 50 % Then how inflation is around 2 %????? plasse explain....
Vikas Kumar giri
2 years ago
Its all the magic of change in base year of CPI from 2004-05 to 2011-2012.
  1. DAILY NEWS ANALYSIS from THE HINDU, TO 2TH AUGUST 2017 By JATIN VERMA Educator Unacademy For Daily The Hindu News & Editorial analysis- Visit my Unacademy profile-

  2. Page-9:System lighter by 3.5 lakh crore of cash: Economic Survey Demonetisation has reduced 3.5 lakh crore of cash from the amounts available in the system before, and digitisation has increased across the board, even among the poor. In levels, and as a share of GDP and money, there seems to have been a sharp and equilibrium decline in the use of cash: as of July, the holding of cash is about 3.5 lakh crore (20%) less than what might have been the case had pre-demonetisation trends prevailed, consistent with the calculations presented in Volume l. The report analysed the effect of demonetisation on the informal sector via two proxies: [i]demand for MGNREGA work, and [ii]two-wheeler sales -since the economic indicators collected by the government themselves do not include data from the informal sector . Growth of Taxpayers. The growth of taxpayers post-demo netisation was significantly greater than in the previous year (45% versus 25%). The addition amounted to about 5.4 lakh taxpayers or 1% of all individual taxpayers in just a few months. It is, however, interesting that the average income reported of the new taxpayers 2.7 lakh- was not far above the tax threshold of 32.5 lakh, so the immediate impact on tax collections was muted.

  3. S. Page-I 1 :The challenge is growth rebound in short term, . The Reserve Bank of Indian and the government have substantially overachieved on infation. For the last 10 months, our estimate is that we have done better than whatever target we set ourselves by about 150 basis points on an average for almost a year. . Our assessment, if you put all of this together, is that by March 2018, we would be well within the inflation target and average inflation for the year as a whole would be well below target. Even if you reach about 4% by end-March, inflation for the year as a whole,which is a more important number, that will be closer to the 3% mark. There's been an across-the-board deceleration in real activity since the first or second quarter of last year & it is quite telling that for the first time, many indicators credit growth, IIP, GVA, manufacturing, investment all point to the same direction of deceleration in growth. . A number of countries that experienced a credit boom, growth boom and then a credit and growth collapse . India didn't de-leverage at all. So it is almost premature to say that growth can rebound very quickly unless we clean up and do the de-leveraging.

  4. /Push for law to ensure transparency rules [G.S.-2&3: Governance & Ease of Doing Business] Anage citizen could easily access the latest rules and Need for Transparency of Rules Arguing that India would benefit enormously if the average citizen could easily access the latest rules and regulations in a comprehensible format, the survey suggests a Transparency of Rules Act (TORA) as a possible solution. Rationale: [i] opaque mesh, of regulations prevalent in India not only make life difficult for citizens who cannot feign ignorance of rules as a valid defence, but also act as a magnet for corruption and endless litigation [i] It is not easy for ordinary citizens [and businesses] in India to navigate the multitude of rules, regulations,forms, taxes and procedures imposed by various tiers of government. . It is solely about the ease of finding out what the citizen is expected to do, the Survey said even . 'Attempt to change': The TORA is an attempt to change in some ways the relationship between the . All forms of governance are based on citizens being expected to follow the rules. Unfortunately, in India, [ii] Moreover, these rules frequently change and sometimes contradict each other government officials struggle to keep up with 'the latest version' of complicated rules. average normal citizen and the State. very often, the rules are not so transparent.

  5. Page-l1:Survey backs U.P model on farm loan waivers The Economic Survey assumes that other States will follow Uttar Pradesh's example and waive farm loans, taking the full waiver amount to 32.2-2.7 lakh crore. The Survey's own calculations find that only a few States have the fiscal space for such waivers, and so most will have to either cut expenditure or increase taxes.The total impact of waivers could be to lower demand by as much as 0.7% of the GDP . . It is assumed that waivers will apply at the loan rather than household level, since it will be administratively difficult to aggregate loans across households. "It is also assumed that other States will follow the U.P model of waivers up to lakh for all small and marginal farmers. On this basis, an upper bound of loan waivers at the All-India level would be between 32.2 and 32.7 lakh crore . The Survey says the waivers will have four effects on aggregate demand: [ilon private consumption impact via increases in private sector net wealth, [i]public sector impact via changes in government expenditure/taxes, [ii] crowding out impact via higher borrowings by State governments,and [iv]crowding in impact via higher credit availability as bank NPAs fall. . Loan waivers will increase the net wealth of farm households. Since loan waivers are assumed to increase aggregate income by 28%, consumption is estimated to increase by 7% or about 55,000 crore

  6. . The survey estimated that for States with fiscal space, loan waivers would add about 76,350 crore to demand via the additional interest costs and for States without space, waivers could reduce demand by about? I .9 lakh crore. The Survey's calculations show that while Andhra Pradesh, U.P, Rajasthan, Himachal Pradesh, Kerala, Odisha, and Chhattisgarh have no fiscal room to waive farm loans, States such as Maharashtra, West Begal, Karnataka and Gujarat have ample space.

  7. Page 10 World News: India keen to run Sri Lanka airport [G.S. -2:Bilateral Relations] India has expressed interest to operate Sri Lanka's second international airport situated in Mattala, about 40 km from the southern town of Hambantota, where China has majority stake in a strategic port it built. The Sri Lankan government cleared Civil Aviation Minister's request for a committee to study the Indian government's proposal. India proposes to "operate, manage, maintain and develop" the airport through a joint venture, holding 70% of the equity for 40 years According to the Minister's Cabinet paper, India is to invest $205 million in the venture, while Sri Lanka would pitch in the balance $88 million The development comes less than a fortnight after Sri Lanka signed a $1.I billion deal with China, giving the state-run China Merchants Port Holdings a 70% stake in a joint venture to run the port. Additionally, Colombo also roped in China to help develop an industrial zone in the adjoining land, spanning some 15,000 acres. Chinese loans: Built in 2010 by the government of former Sri Lankan President with Chinese loans, the port was deemed commercially unviable by his successor government, which decided to sell a majority stake to service part of the $8-billion debt Sri Lanka owes China. Beijing sees the port as a useful link in its ambitious One Belt One Road initiative Amid New Delhi and Washington's known apprehension over the Hambantota agreement-given the town's strategic location on the islands southern coast Colombo tweaked the port deal last month and said no foreign naval ship could call at the port without prior clearance

  8. . Businesspagell:llPshrinks 0.1%at 4-year low Industrial activity in June contracted 0.1%,the lowest reading since June 2013, driven primarily by a 6.77%contraction in capital goods. Data for growth in the Index of Industrial Production (IIP) for May was revised to 2.8%. The fall in capital goods production was the most drastic contraction since September 2016. Manufacturing drags:Data showed manufacturing contracted by 0.41% in June, from a growth of 2.61% in the preceding month. Unsurprising factors: [il unfavourable base effect, [i] reduction in inventories ahead of the transition to the GST, and [ slide in growth of non-oil exports culminated in a marginal contraction of 0.1% in the lIP in June 2017, . . While mild, the year-on-year de-growth in June 2017 was pervasive, with 15 of the 23 sub-groups of manufacturing and four of the six use-based industries, recording a contraction in that month. A) The mining sector witnessed a slight acceleration in growth to 0.4%, from 0.2% in May. B) Growth in the electricity sector slowed drastically from May's 8.29% to 2.15% in June. C) Consumer durables also witnessed contraction of 2.13% in June, from a growth of 0.8% in previous month. Consumer durables and non durables continue to provide mixed signals regarding demand, with the former contracting by 2 1% in June 2017 and the latter rising by 4.9% in the same month, recording the best performance among the use-based groups

  9. The year-on-year contraction in capital goods output for the third consecutive month highlights the continuing sluggishness in private sector investment activity. The outlook, however, seems more optimistic with a favourable monsoon and the Seventh Pay Commission payout projected to bolster consumer demand. . Since GST has already kicked in, the restocking of inventories will take place that is likely to boost industrial output.

  10. Survey red flags telcos' rising share in bad loans . The Economic Survey has raised red flag over the telecom sector's rising share in non-performing assets (NPAs) Though the total telecom NPAs with the public sector banks had decreased to 2,335 crore in 201 6-17 from 3,465 crore in 201 5-16,the share of the NPAs in total NPAs of infrastructure sector rose 8.7% in 2016-17 from 5% in 2015-16. . An inter-ministerial panel to examine the financial woes of the telecom sector held several meetings in June with stakeholders, including telecom operators and banks. Its report is expected soorn. . 'Price war': Stiff competition, price war, reduced revenue has trapped telecom sector into highly leveraged with interest coverage ratio turning less than I since Q3 of 2016-17 The adjusted gross revenue of the top three telecom companies in India -- Bharti Airtel,Vodafone India and Idea Cellular, decreased by 7.98%, 5 14% and 491 % respectively, during Q3 of 2016-17 as compared to its previous quarter Interest Coverage Ratio: The ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) by the company's interestexpenses for the same period.

  11. O socio e secure : atin verma Searching for "jatin verma" EDUCATORs Jatin Verma Mahesh verma COURSES The Hindu Daily News Analysis July 2017 By Jatin Verma (Hind) The Hindu Daily News Analysis July 2017 ay Jatin Verma Hind) The Hindu Daily Editorial Analysis for June 2017 By Jatin Vermna The Hindu Daily News Analysis for June 2017 ay Jatin Verma The Hidu Daily Editorial Analysis for July 2017 By Jatin Verma For Daily PRESS INFORMATION BUREAU updates, Visit my Unacademy profile-