5. Economic Growth Flashcards

Question

India is often considered as a political democracy but not a fiscal democracy

Answer 1

Es 2016 - india has 7 tax payers per 100 voters Tax: gdp ~ 16% , oecd - 34% 1. Tax avoidance and evasion remains the norm 2. Base erosion and profit shifting 3. Huge informal economy 4. Missing tax payers - government constantly shifting base 5. es 2016 - India’s precocious growth model - alienation of tax paying middle class 6. Complex taxation regime - 6 decade old IT act 7. Not tax the rich - corporate tax, surcharge rate on income above 5 crore 8. Tax terrorism - illegal or extralegal taxation 9. Aid curse of lsg bodies

Answer 2

Es 2016 1. Essential services 2. Corruption 3. Subsidies to the rich 4. Property taxation Akhilesh Ranjan 1. 182–> 90 days — resident criteria for tax payer 2. Ai in tax complaince 3. Taxation based on significant economical presence Ms Swaminathan Taxing the top 4% rich farmers

Answer 3

RBI launched CBDC on a pilot bases Fungible legal tender in a digital form . Retail and wholesale ( for select financial institutions 1. Monetary system - reduce cost of physical cash management ( printing, shredding etc) - push towards more digitisation 2. Alternative to crypto assets - risk free virtual currency 3. Payment infrastructure - diversified payment option especially for e-commerce - facilitate easier cross border transaction 4. Financial inclusion - unbanked and underbanked population - offline functionality

Answer 4

1. Reduced ability of bank to give loans as more people will keep money in their e- wallets rather than bank accounts 2. Some experts argue that it would give more surveillance power to RBI 3. Elevated cyber security risks- costs of protecting firewalls

Answer 5

Macroeconomic Framework Statement; Medium Term Fiscal Policy Statement and; Fiscal Policy Strategy Statement. Recently, the Ministry of Finance has conveyed its inability to release the Medium Term Expenditure Framework (MTEF) statement, mandated by the Fiscal Responsibility and Budget Management (FRBM) Act of 2003. The ministry had cited “unprecedented global uncertainties that may adversely affect medium-term projections” to justify not placing fiscal projections for 2024-25 and 2025-26 in Parliament at the time of presenting the Union Budget.

Answer 6

1. Macroeconomic stability - 2. Not compressing just switching 3. More capex --- crowd in 4. Reduced interest payment for future gen 5. Controlled inflation- no deterioration of asset value for future gen

Answer 7

2. 180 day ----- 614 days 3. Haircut taken by creditors since inception- 68% 3. Resolution plan for small assets rarely get approval 4. Dearth of qualified IP 5. liquidation instead of resolution is the norm 6. recovery rate through IBC has come down in the recent past (to 24 per cent in FY22 from 46 per cent in FY20

Answer 8

1. Eodb 2. 4.3 yrs to 400 days 3. Operational creditors in the forefront Successful resolution of binani steels, essar cement

Answer 9

RBI act 1934. 6 member committee , repo rate for inflation targeting - 4+- 6% 1. Remained successful- demand induced inflation 2. Price stability 2. Economic stabilisation during shocks - global inflation, demonisation etc 3. Investor confidence 4. Forex strengthening via OMO

Answer 10

From about 45 per cent of the population below the national poverty line in 1994, the rates have fallen to 21.9 per cent in 2011.

Answer 11

1. Yield 2. Seasonal 3. Weaponisation 4. Msp 5. Input cost 6. Diseases 7. Cob web phenomenon

Answer 12

1. India’s peculiar growth model - es 2017 India’s precocious growth model - post independence focused on capital intensive - post lpg - premature deindustrialisation 2. Human Resource - india skills report 2021 - labor union 3. Policy issues - inverted duty structure due to Fta - vocal for local failed to create quality - regulatory cholesterol - 1500 ( business today india @100 economy summit) - msme choosing to remain dwarf ( economic survey 2019)- 1mn/ 63mn in formal 4. Lack of infrastructure Logistics cost ~ 14% of gdp 5. Lack of credit availing Es 2018 - msme only 17% outstanding formal credit

Answer 13

1. Priority sectors - pharma - leather and textile ( es 2017 ) - semiconductor ( ir 4.0) 2. Network products - assemble in india for world 3. Anchor firms like ship building 4. Industry skill Dev It skill development was led by pvt players like aptech and NIIT 5. Sunset clause - dwarf 6. Factory to ship - dedicated freight corridors 7. Raghuram Rajan - facilities like certification agencies, state portal that would develop websites for msme rather than subsidies

Answer 14

1. Access to credit - es 2018 msme form 17% of outstanding formal credit 2. Policy issue - dwarfism - 1500 laws - envt clearance - multiple registrations - udyog Aadhar portal, national small industries corp, gstn etc 3. Lack of technology adoption, low value addition and thereby less integration with global supply chain ** Surjit Bhalla commitee - low firm level use of FTA. Msme not aware of fta ** 4. Skilled workforce 5. Lack of social security for the informal workforce 6. Competition from neighbors- Vietnam and Bangladesh

Answer 15

1. Sunset clause 2. Credit - psbloanin59minutes 3. Ondc platform Best practice of japans ministry of economy trade and industry- Guide business on how to best make profits. Provide market intelligence to business

Answer 16

1. Fix benchmark for haircuts 2. Vacancies for Nclt 3. Akin to institute of chartered accounts for IP 4. Flexible resolution plan, multiple companies instead on one can take over stressed assets

Answer 17

1. Not as large as China - prevents economies of scale in providing high quality common facilities 2. Sale of goods in domestic markets attract customs duty on entire product ( not just imported goods ) 3. Wto has held that Indian subsidies to sez violates rules of fair trade 4. Multiple models - nimz, costal economic zone 5. Tax regime changed multiple times - ex: mat introduction, sunset date on direct taxes 6. Land - returned to farmers in Kakinada sez