MoneyVedam

Every article written on this topic has put forth tapering of QE (Quantitative easing) by US Fed, widening of India's CAD (current account deficit), a stubbornly high inflation and fiscal profligacy (the act of splurging budget money) by the Indian government as reasons for the rupee decline. A deeper look at the situation reveals that these are only symptoms and not cause(s) behind the rupee decline. Fundamentally there are two sides to this problem - an external & an internal side. External factors include state of the global economy, policy changes of major trading partners and direction of major currencies in the world. Internal factors to look at are domestic policies, economic reforms, local consumption pattern and value of domestic assets. It helps to focus on the downhill period of the Indian economy from 2007 to 2013. What happened globally between 2007 and now (Aug-2013)? Lehman brothers collapse in Oct 2008 leading to a major Financial crisis World over gov...

The Rupee has lost 27% since May 2013 (Rs.54), 14.6% since 1 Aug 2013 (Rs.60) and is @Rs.68.80 at the time of publishing this blog. Some analysts have a target of Rs.72 while others Rs.100 by the end of the year. We need to look back to see what has happened to the Incredible India that it was once. Ever since the post-liberalisation of economic reforms in 1991, India has been on a steady growth path attaining its peak growth rate of 9% GDP between 2005-2007. Few facts on the Indian currency: Rupee depreciated by 37.5% from 1991 (Rs.32) to 2007 (Rs.44), i.e @2% CAGR From 2007 to 2011, it was stable at around Rs.45 From 2011-2013 it depreciated by 53% to Rs.68.8! How does the Rupee decline affect an Individual? Loss of stocks and mutual funds portfolio (30-60% down) Higher price for all consumables, leading to higher cost of living expenses High inflation @10% p.a, leading to erosion of personal savings and wealth Decline in domestic savings rate from a peak of 36.8% (2007)...

Total tax revenue as a percentage of India's GDP is 9.48% (@Rs.10.77 Lac crores). To understand where your tax money goes, it helps to first know how the government derives its income. Any amount going to the Government is called "Receipts". Two types of receipts are in place - Revenue receipts and Capital receipts. Revenue receipts include interest and dividend income from government's investments and direct and indirect taxes collected. Capital receipts include external assistance, market loans, small savings and provident funds. Any amount going out is called Expenditure which is also of two types - Plan and Non-Plan expenditure. Plan expenditures are those that are required for the functioning of the government, buying of fixed assets like land, building, machinery & equipment and loans and advances. Non-Plan expenditure includes interest payments, debt repayment, defense, subsidies, police, pension, Loans to PSUs, state & union territories and to forei...

Most salaried people pay taxes via TDS (Tax Deduction at Source) and file refund claims through the returns filing in July of every year. In the recent past, a lot has improved in this arena with the introduction of online e-Filing of returns and processing of refund claims through CPC (Central Processing Cell) in Bangalore. Although most people that fall under the formal sector of employment pay taxes on the salaries they earn, people in informal sector pay taxes on their income from a variety of sources such as income from house property, business/profession income, capital gains from real assets and financial assets and interest income(s). Who makes up the Indian workforce? Total worforce in India: 487 million (~40% of population) Informal Sector: 453 million (93% of workforce) Formal sector: 34 million (7% of workforce) Government employees: 21 million (61% of formal workforce) Non-Gov employees: 14 million (39% of formal workforce) IT/ITES/BPO employees: 3.5 million Ot...

Come July, Indian tax payers are reminded of tax and tax returns. Indians pay tax on a variety of income sources and the tax rates in India are progressive, i.e, lower income earners pay less tax and higher income earners pay higher tax. While salaried employees get their income after deduction of tax, non-salaried income earners pay advance tax after self-assessment. TDS is also applicable to other payments such as interest income, contract payments, professional charges, insurance commission etc. What are the various income heads? There are 5 heads under which income is charged to income tax. They are: Income u/h salary Income u/h house property Income u/h capital gains Income u/h business profession Income u/h other sources Depending on the sources of income, assesses would have to use appropriate tax forms (ITR forms) to consolidate their income and file returns. There are provisions in the IT Act to set-off and/or carry-forward losses under one head against another so...