Analysis of Indian news dated 02-Jul-2012
July 2, 2012
Service tax in India put on more services. India has one of the highest taxes throughout the world. It is because of these taxes that manufacturing is expensive in India, in-spite of cheap labor; prices are high in India even though fuel, food, public travel, etc are subsidized by government. More taxes and more subsidies means bigger more powerful government. This system only benefits politicians and government bureaucrats. It hurts the average Indian. Industrialists are right in saying that India has one of the worst bureaucracies and hence India is not attractive for investments.
Ideally, we should have minimal taxes and minimal subsidies i.e. small government with very limited powers.
Tax protest movement is spreading. More and more people are deciding not to pay taxes. Governments steal from citizens in 3 ways:
- Income tax.
- Consumption or Excise or Service tax.
- Currency printing to devalue existing currency.
Tax protestors cannot easily avoid the last two taxes, but it is easy to not pay income tax.To protest against government tyranny, many tax protestors, across the world, have decided not to pay income tax. Let the government prosecute. Let us see how many people the government prosecutes. (More details).
ICICI Lombard, India’s largest privately-owned general insurance company is accused of swidling Indian government of crores of rupees under the RGSS-BY scheme. This scheme was meant to provide health insurance to artisans, at subsidized rates. ICICI Lombard apparently enrolled fake artisans to claim benefits.
The more subsidies we have, greater will be such losses. The lesser subsidies we have, fewer will be the losses. If the government is really interested in helping the poor, it would reduce taxes first, not increase subsidies.
Farmer suicides are rising in India. The number of suicides in some states is shown below:
| State | 2011 year | 2010 year |
|---|---|---|
| Maharashtra | 3,337 | 3,141 |
| Assam | 312 | 269 |
Each time there is hue and cry about farmer suicide, the government announces short term solutions like loan forgiveness. The government forces banks to lend to farmers. Most bad loans for banks are from farm and SME sector, where government forces banks to lend. Banks have to charge higher interest in for remaining loans to re-coup their losses. So these losses are borne by rest of the industry and tax-payers.
What is the root cause of farmer suicide? Answer) Government regulations.
The government does not let the free market determine the price of agricultural goods. The government does not allow a farmer (making losses) to sell his land to a non-farmer. The government does not allow free flow of agricultural goods throughout the country so that excess produce in one part can meet the shortage in another part. Huge amount of food grains rot in government storages, while people starve.
If the government lets the free market function in farming, the farmer suicide would reduce significantly. Other than setting import / export duties or quota, the government should have NO role in agriculture. But, Indian government is more interested in retaining power, than in permanent solutions.
There is no austerity in Euro-zone. There debt continues to rise.
They are printing currency out of thin air to postpone the problem. This will be inflationary for all countries in Euro-zone including Germany. Any country that does not allow its currency to strengthen, will also see inflation enter their country.
India has too many taxes and too many subsidies. The bigger the government, the worse off is the private sector. Hence, inflation remains high in India. Stocks give poorer returns than precious metals.
India needs a huge amount of privatization to reduce corruption and bring in more efficient. But, the Indian government with hope to gather more votes, with intent of continuing to procure bribes, with intent of continuing to grant favors, etc postpones privatization e.g. A loss making public sector firm Scooters India Ltd was supposed to be privatized. Instead, Indian government cancelled / postponed privatization and decided to invest additional Rs 202 crore of tax payer money in this loss making unit.
Maharashtra has declared tribal lands as forest sanctuary. This means, land currently being used by tribals, will now be under government control. Big resorts and hotel will be built on this land. Politicians will likely benefit because of favors given to builders. This is transfer of wealth from poor to rich.
If the government was honest, it would have transferred the land ownership to tribals. Then, hotel owners would have negotiated directly with tribals, without government intervention. So the tribals would have gained more remuneration than what is given by government. The wealth would be shared by tribals and hotel owners.
Unable to repay loan, a 32 year old man consumes poison and dies in Mumbai. India has no bankruptcy protection laws in place. So even if a person is bankrupt, he is harassed. India has little respect for dignity of its citizens. The Home Minister is more interested in anti-terrorism laws, rather than pro-poor bankruptcy laws.
USA does not want Assad to rule Syria. They want a “USA puppet” in Assad’s place. Lindsey Williams predicted, nearly 21 months ago, that USA will install “Muslim Brotherhood” in Middle Eastern nations either by hook or crook.
Buy physical gold and silver to protect yourself. If you cannot touch it, you don’t own it. Exit all paper investments including ETFs, stocks, PF, PPF, NSC, etc.
goldsilvereconomy 