Analysis of Indian news dated 23-Jul-2012
July 23, 2012
Mauritius is one of the tax haven used by big corporations and wealthy to avoid taxes. Private banks have exploited loopholes in tax legislation and stashed over $21 Trillion in these tax havens. This article reports the details of money laundering.
These tax havens are bad because they increase the gap between rich and poor. What is the solution? The solution is to ban income tax and levy a consumption tax only. So the need to store funds in offshore tax havens disappears.
India does not remove income tax because the government uses income tax raids on its opponents (e.g. Jagan) to harass them. Income tax exists for political purpose. The government can easily collect the same amount by levying consumption tax.
India has high taxes. Hence, the cost of most goods is higher in India, as compared to say China. Instead of reducing taxes, India is mulling higher customs duty to protect domestic companies. Instead of becoming come cost-effective, Indian government wants to raise the price of imports. Is not this government shamelessly corrupt?
A study on drug pricing has revealed exorbitant profit margins on 21 common drugs manufactured by Indian companies. Though pricing regulations of the National Pharmaceutical Pricing Authority say that companies can keep a profit margin of maximum 100 per cent over the cost of production of a drug, mark-ups of 200 to 500 per cent were found to be very common. The figure below shows Cost of Production (COP) of various drugs and their Maximum Retail price (MRP) (the normal selling price).
It is easy for big pharmacy companies to bribe government officials for sanctioning the price and then doctors for prescribing the costly drug. Ideally, the government should step out-of-the-way. There should be free competition among pharmacy companies to manufacture the same drug. There should be competition among chemists to provide the generic drug of lowest price. Patients should be allowed to order drugs online.
Indian rupee continues to fall.
RBI wrongly blames it on gold imports. Actually, high inflation is the main cause that people invest in gold.
RBI deputy governor says, “Gold gains in value only because of mad rush for it among speculators and the day this will end, the price will fall sharply.” He is wrong. He does not understand the basics of gold investment. Gold / silver are real money. Fiat currencies like Rupee are intrinsically worthless. Gold/Silver gain because government is printing currency. The rush for gold is not mad; the rush for rupees is mad. People who invest in gold are saving in real money; everyone else is a speculator. The rush for gold will not stop unless governments stops printing currency. Anyone, who thinks otherwise, is either economically naive or attempting to misguide others for personal gain.
State Electricity Board (SEB) are running into losses because politicians give free / subsidized power to certain vote banks like farmers.
I say, privatize power. Then alone we will have quality power at low prices.
Fraud is now a part of international banking system. If fraud is eliminated, the whole economic system will see a collapse. So governments have no choice but to turn a blind eye to these frauds and at times give banks a slap on wrist e.g. LIBOR scam manipulated interest rates downwards. If this fraud is eliminated, interest rates will spike. This will make many governments, banks and debtors bankrupt. So it is in the interest of many people to let the fraud continue.
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.
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