Friday, 30 June 2017

7 Less Crowded Nearby Alternatives To Popular Hill Stations In India

7 More Beautiful And Less Crowded Nearby Alternatives To Popular Hill Stations In India

7 More Beautiful And Less Crowded Nearby Alternatives To Popular Hill Stations In India
Originally Published On
Tripoto | 1 day ago

Narkanda is just 60km ahead of Shimla!

Isn't it completely frustrating when weeks of planning and hours of travelling lands you at a place which is even more crowded than your hometown? It happens a lot more often these days since everyone tends to travel to the same tried and tested hill stations during vacations. What entails is hordes of smoke-spewing vehicles concentrated on a small land area polluting the serenity and atmosphere of an erstwhile pure hill station. This and traffic jams, time wastage and the booking out of good hotels at these destinations.

In order to do away with your worries and actually go on a vacation, you can easily take a detour to visit their more beautiful and less crowded alternatives instead. I've listed down the top seven options in our country with the best properties to stay in, below:
1. Narkanda, instead of Shimla

Being the most popular hill station in India has its disadvantages. Shimla is full of people, irrespective of the time of the year. Hence, Narkanda, nearby is a terrific option if you wish to stay in the Himalayas of Himachal, without being disturbed by the hustle & bustle of Shimla.
Himalayan Orchard Farm Stay is a gorgeous apple orchard house located in Narkanda, which can host up to 11 people. It's perfect for couples and small families looking for a quiet time away. You can book it right away for the upcoming weekend.

Price per night for 2: Rs. 5,168

Distance & time from Shimla: 62.8km, 1 hour 56 mins

2. Barog, instead of Kasauli

The last time I travelled to Kasauli from Delhi, it took me more than nine hours to reach the "closest hill station to the capital". That's when I took a pledge to never visit this place on the weekend. What I ended up discovering though was a beautiful little hill station called Barog nearby that had all the charms of Kasauli, if not more. I would strongly suggest staying at the majestic
Rambling Rose, which is a secluded cottage off the Kalka-Shimla highway. The stay provides stunning panoramic views of the Himalayas and is absolutely perfect for a weekend getaway. You should book it in advance because it's always in high demand.

Price per night for 2: Rs. 4,638
Distance & time from Kasauli: 17.7km, 43 mins

3. Chail, instead of Kufri

Widely known as the alternative to Shimla, Kufri has slowly become just like the former thanks to overcrowded lanes and lack of good hotels around the area. So what I recommend is driving another hour and staying in quaint Chail instead. The magnificent
Villa Ekam there is a destination in itself because it is constructed over a slope that oversees a sea of pine, deodar and apricot trees before the next human civilisation can be seen. This stay can host a huge gang of up to 14 people and is equipped sufficiently in terms of food and breathtaking scenery so you won't need to worry about anything else while here. If you're looking for a vacation full of tranquility, book this villa before anyone else does!

Price per night for 2: Rs. 34,000
Distance & time from Kufri: 31.8km, 1 hour 8 mins

4. Ramgarh, instead of Nainital

What a beautiful hill station Nainital is! And what a pity that one never finds it quiet enough to enjoy its beauty nowadays. If you wish to avoid the long queues in Nainital, drive down to the dreamy little town of Ramgarh instead, which is just an hour away. The ravishing
Frozen Woods promises you a stay like nowhere else since it is actually located in the middle of nowhere! Book a stay at this cabin in the woods for the upcoming weekend.

Price per night for 2: Rs. 3,060
Distance & time from Nainital: 35.1km, 1 hour 10 mins

5. Palampur, instead of Dharamsala

Cometh the weekend and all pseudo-hippies run off to either McLeod Ganj, Dharamsala or Triund in the hope of attaining some sort of nirvana. These three places are filled up to the brim and hence the only wise decision is to go to the nearby Palampur village instead, which is blessed with enviable natural scenary and old world charm. What will heighten your experience is staying at the
Barot Cottage, which puts together the best of both primitive as well as modern times by being a fully-equipped modern resort in the guise of a village cottage. It's one of the most stunning places you'll ever stay at, and hence you must book it right now!

Price per night for 2: Rs. 6,185
Distance & time from Dharamsala: 35.8km, 1 hr 8 mins

6. Coonoor, instead of Ooty

Whenever you ask any IT professional working down south about his weekend plans, they will most probably tell you that they're going to visit Ooty as it's the most popular hill station in the region. And when you visit Ooty, you see tens of thousands of other frustrated IT professionals cramped up there as well. To prevent more frustration by such visuals, you should opt to stay in Coonoor instead, which is surprisingly less than an hour away.
O'Land Plantation is quite simply the best stay in the whole of Coonoor. It's an internationally-acclaimed tea & coffee plantation which doubles up as a mammoth estate welcoming guests that want out-of-the-box vacations. Being 120-acres large, the beautiful O'Land will ensure that you will never have to step out of the property for any aesthetic and worldly satisfaction. Book it now to experience the good life out of your cubicle.

Price per night for 2: Rs. 4,638
Distance & time from Ooty: 20.7km, 46 mins

7. Chamba, instead of Dalhousie

Finally, my personal favourite stay from amongst all others listed. And it helps that it is situated in the verdant surroundings of Chamba. Since Dalhousie is extremely popular amongst honeymooning couples, it's always full of them. If you really wish to have the time of your life with your beloved,
book a stay at the magical H2O House in Chamba. It's a sublime self-sustaining property which is constructed by a pristine river whose perennially mellifluous sound always reminds you that there's nothing to worry about while you're there. Visit it to believe it.

Price per night for 2: Rs. 3,000
Distance & time from Dalhousie: 53.4 km, 1 hour 48 mins

So on your next mountain vacation, think out of the ordinary and go the extra mile to reap sweeter fruits. If you've already been to any of the above-mentioned destinations, do
share us your unique experience on Tripoto to make the other 25 million travellers in the community believe that there is ample beauty beyond the beaten paths.

GST Midnight Special

GST ready to roll under Modi Govt.

As India implements its Goods & Services Tax (
GST) from the midnight of June 30, 2017; we start from a point where unorganised or informal economic activities account for nearly an incredible 92% of the country’s employment and make up an astounding 50% of its GDP!

The fundamental reform that the Modi government promised is well and truly going to start from midnight tonight. The essence of Modi Government's thrust has been  to bring 'accountability' to the unorganized unaccountable Indian!
A recent World Bank Enterprises Survey noted that about half of the Indian firms believed that they were competing against informal firms, while malpractices of the informal sector were seen next only to obstacles such as corruption, power shortage and high levels of taxes. 

The GST as an idea has existed from the time of Rajiv Gandhi. In 2000, the Vajpayee Government started a discussion on GST by setting up an empowered committee, headed by Asim Dasgupta, (Finance Minister, Government of West Bengal). The committee was given the task of designing the GST model and overseeing the IT back-end preparedness for its rollout. However, after all these years, it took a determined Modi Government to actually be able to implement it.

It is said that Mr.Modi as Chief Minister of Gujarat opposed the GST proposed by the then UPA government. But it has to be noted that Mr. Modi did not oppose the UPA II GST because it was against his or the BJP’s ideology. At the relevant Committee meeting in October 2013, Mr. Modi expressed his Government’s view through a Cabinet Minister of his. “The issues listed by him were revenue neutral rate, place of supply rules for goods and services, dual control, exemption, compensation, among others.”

And now that his NDA Government’s Bill had included all his views, he pursued its conversion into a law that is now in our statute books.

The GST is considered the most important milestone for the Modi government. It signals to investors the government's ability to deliver on its reform agenda. Once the GST is fully operational, it will be ground breaking and significantly change India's business environment since independence in 1947.A shift from unorganised to organised sector is thus seen as an major emerging theme for the stock market under the GST. The new tax regime will replaces 17 taxes such as central excise duty, service tax, value-added tax, and 23 cesses.

Analysts said the unorganised sector accounts of 50-70 per cent of
market. No wonder, India is one big unorganized place.

Unorganised players hold market
shares of
# 40-45 per cent in plastic and packaging sectors;
# 25-40 per cent in the electric equipment segments such as fans, lights, pumps, batteries and switchgears;
# 78 per cent of the dairy industry;
# 70 per cent of apparels;
# 75 per cent of jewellery and as high as
# 85 per cent in the diagnostic space.

Many of these players are engaged in malpractices where they claim input credit based on fake invoices, non-payment of taxes collected from customers and incorrect classification of goods in order to evade taxes.
GST being a structural reform will alter the traditional unorganized business practices.

While the new tax regime will result in an increased shift from the unorganised to the formal
economy, there will be uncertainty over the short term. The consumer segments (FMCG) are likely to have a near term impact.

Even as corporates are well-prepared with the IT systems, wholesalers and retailers are yet to transition to the new GST system. These channel partners could take 1-2 quarters to migrate to the new regime.

GST implementation will broadly usher in two major changes:
# either the unorganised sector will become organised and come under the tax net or
# companies that operate on thin margins will go out of business.

GST would be a huge positive for the stock market. The rates announced have been either a tad below existing levels or as per expectations, except for a few sectors.

The biggest beneficiaries of GST would be FMCG and retail, where rates have come down from existing levels. At the same time, availability of input credit will help companies lower effective tax rates significantly. They would also benefit from the shift from unorganised to organised sectors under the GST regime.

It will be a game changer for consumer staples, jewellery, paints, auto parts, pharma, hospitals diagnostics and agrochemicals sectors. Most of these sectors are already seeing a shift towards the organised sector, translating into larger market shares for the organised sector. 

The country's biggest tax reform since independence is promising to bring millions of firms who don't pay any tax, into the tax net, boosting government revenues and India's sovereign credit profile.

The new tax will require firms to upload their invoices every month to a portal that will match them with those of their suppliers or vendors.
Because a tax number is needed for a firm to claim a credit on the cost of its inputs, many companies are refusing to buy from unregistered businesses. Those who don't sign up risk losing any customer who has.

Improved tax compliance should shore up public finances, augmenting resources for welfare and development spending and giving a lift to the $2 trillion economy. India currently has one of the worst tax-to-GDP ratios among major economies at 16.6 per cent, less the half the 34 per cent average for the members of the OECD and also below many emerging economies.

While there is no official estimate of the potential fiscal gain, some tax experts say the measure, after the initial teething trouble, would lift the tax-to-GDP ratio by as much as 4 percentage points as the
number of tax filers is estimated to more than treble to 30 million.

The unorganised sector of India's economy is vast, providing employment to a shocking 9 out of 10 workers.

While staying outside the GST regime risks losing business, joining it will necessitate an overhaul of firms' accounting systems and an investment in technology.
How will the GST rates—from 5% to 28% affect various sectors of the Indian Economy. A look at some of these sectors and how GST will impact them.

The passenger car segment is expected to see an overall reduction in tax outgo, with bigger cars and sport utility vehicles (SUV) benefiting from lower tax rates.
CEMENT: A marginal tax relief
Contrary to expectations of cement firms, which were hoping for an 18% GST rate, the sector has been categorised in the 28% slab. Despite that, cement makers will see some relief in tax payout as the effective tax rate for packaged cement is anyway 29-31%.
CONSTRUCTION, REAL STATE: Input cost credit to offset higher rate
So far, the construction sector, including real estate, has had an effective tax outgo of between 11% and 18%. Under GST, the entire works contract is charged 18% tax. However, the sector is likely to gain from the input tax credit that is available under GST rules.
CONSUMER GOODS: Anti-profiteering measures to keep a lid on gains
Packaged consumer goods makers’ sales growth will be hit in the near term as trade channels have cut purchases in the run-up to GST. Overall impact is seen as neutral as rates have been cut on mass consumption items and hiked on higher-end products.
JEWELLERS: No dent to demand
The GST rate on gold jewellery has been fixed at 3%, lower than expectations of a 5% rate. The new rate is close to the current 2%. Hence, it should not affect consumer buying dramatically.
LUXURY HOTELS: High-end chains will pay more
From a pre-GST tax rate that varied between 18% and 25% based on state levies, GST classifies hotels into four buckets based on room tariffs. Those with room rates below Rs1,000 will be tax-exempt, although the rest will be taxed at 5%, 12%, 18% and 28%.
MULTIPLEXES: Input tax credit will bring benefits
Multiplexes are expected to benefit, primarily owing to input tax credit on fixed costs such as rent and common area maintenance. The GST rate has been fixed at 28% for tickets costing over Rs100.
TELECOM: Hit by higher tax burden
Telecom companies, already weighed down by high taxes and levies, now need to contend with an additional 3% tax with the shift to GST. A service tax of 15% applied to telecom services earlier.
VALUE FASHION: Gets a leg-up
The 5% GST rate on apparel priced below Rs1,000 is expected give a fillip to the value fashion business. Post GST, the entire value chain—raw material to the finished product—will come under the tax net.

There are some products whose prices will remain unchanged.

According to PTI, “The rates are in line with those finalised for goods.With this, rates of all items except a handful including gold, have been decided ahead of the roll out of the Goods and Services Tax (GST) regime from July 1.” The below list may undergo changes as it is subject to further vetting. GST rates for certain goods like textiles, footwear and precious metals are yet to be decided by the GST Council.

Live animals:
Live horses – 12% GST
GST exemption:
All goods other than live horses, such as live asses, mules and hinnies, live bovine animals, live swine, live sheep and goats, live poultry, that is to say, fowls of the species Gallus domesticus, ducks, geese, turkeys and guinea fowls. Other live animal such as mammals, birds and Insects.

Meat and edible meat offal:
GST of 12% on: All goods in frozen state and put up in unit containers, including, meat of swine, fresh or chilled, meat of sheep or goats, fresh or chilled; meat of horses, asses, mules or hinnies, fresh or chilled; edible offal of bovine animals, swine, sheep, goats, horses, asses, mules or hinnies, fresh or chilled; meat and edible offal, of the poultry of heading; other meat and edible meat offal, fresh or chilled; pig fat, free of lean meat, and poultry fat, not rendered or otherwise extracted, fresh, chilled.
Pig fat, free of lean meat, and poultry fat, not rendered or otherwise extracted, salted, in brine, dried or smoked put up in unit containers.
Meat and edible meat offal, salted, in brine, dried or smoked; edible flours and meals of meat or meat offal put up in unit containers
GST exemption:
All goods other than in frozen state and put up in unit containers. Meat of bovine animals, fresh and chilled. Meat of swine, fresh or chilled. Meat of sheep or goats, fresh or chilled. Meat of horses, asses, mules or hinnies, fresh or chilled. Edible offal of bovine animals, swine, sheep, goats, horses, asses, mules or hinnies, fresh or chilled. Meat and edible offal, of the poultry of heading, fresh or chilled. Other meat and edible meat offal, fresh or chilled. Pig fat, free of lean meat, and poultry fat, not rendered or otherwise extracted, fresh, chilled.

Fish, crustaceans, molluscs & other aquatic invertebrates:
Fish seeds, prawn / shrimp seeds whether or not processed, cured or in frozen state; all goods, other than processed, cured or in frozen state; live fish.
Fish, fresh or chilled, excluding fish fillets and other fish meat, fish fillets and other fish meat (whether or not minced), fresh or chilled; crustaceans, whether in shell or not, live, fresh or chilled; crustaceans, in shell, cooked by steaming or by boiling in water, chilled; molluscs, whether in shell or not, live, fresh, chilled; aquatic invertebrates other than crustaceans and molluscs, live, fresh, chilled; aquatic invertebrates other than crustaceans and molluscs, live, fresh or chilled;
5% GST: All goods (other than fish seeds, prawn/shrimp seed) processed, cured or in frozen state.

Dairy produce, bird’s eggs, natural honey, edible products of animal origin, not elsewhere specified:
5% GST: Ultra High Temperature (UHT) milk; Milk and cream, concentrated or containing added sugar or other sweetening matter including skimmed milk powder, milk food for babies, excluding condensed milk; Cream, yogurt, kephir and other fermented or acidified milk and cream, whether or not concentrated or containing added sugar or other sweetening matter or flavoured or containing added fruit, nuts or cocoa.

Whey, whether or not concentrated or containing added sugar or other sweetening matter; Products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included. Chena or paneer put up in unit container and bearing a registered brand name. Birds’ eggs, not in shell, and egg yolks, fresh, dried, cooked by steaming or by boiling in water, moulded, frozen or otherwise reserved, whether or not containing added sugar or other sweetening matter; Natural honey, put up in unit container and bearing a registered brand name; Edible products of animal origin, not elsewhere specified or included.
12% GST: Butter and other fats (ghee, butter oil, etc.) and oils derived from milk, dairy spreads, cheese.
GST exemption
Fresh milk and pasteurised milk, including separated milk, milk and cream, not concentrated nor containing added sugar or other sweetening matter, excluding Ultra High Temperature (UHT) milk; eggs, birds’ eggs, in shell, fresh, preserved or cooked, curd, lassi, butter milk, chena or panneer other than put up in unit containers and bearing a registered brand name; Natural honey, other than put up in unit container and bearing a registered brand name.

Products of animal origin, not elsewhere specified or included:
GST exemption:
Human hair, unworked, whether or not washed or scoured, waste of human hair. Semen including frozen semen.
5% GST: Pigs’, hogs’ or boars’ bristles and hair; badger hair and other brush making hair; waste of such bristles or hair. Guts, bladders and stomachs of animals, (other than fish), whole and pieces thereof, fresh, chilled, frozen, salted, in brine, dried or smoked.

Skins and other parts of birds, with their feathers or down, feathers and parts of feathers (whether or not with trimmed edges) and down, not further worked than cleaned, disinfected or treated for preservation; powder and waste of feathers or parts of feathers.
Bones and horn-cores, unworked, defatted, simply prepared (but not cut to shape), treated with acid or gelatinised; powder and waste of these products.
Ivory, tortoise-shell, whalebone and whalebone hair, horns, antlers, hooves, nails, claws and beaks, unworked or simply prepared but not cut to shape; powder and waste of these products.
Coral and similar materials, unworked or simply prepared but not otherwise worked; shells of molluscs, crustaceans or echinoderms and cuttle-bone, unworked or simply prepared but not cut to shape, powder and waste thereof.
Ambergris, castoreum, civet and musk; cantharides; bile, whether or not dried; glands and other animal products used in the preparation of pharmaceutical products, fresh, chilled, frozen or otherwise provisionally preserved.
Animal products not elsewhere specified or included; dead animals of Chapter 1 or 3, unfit for human consumption, other than semen including frozen semen.

Live trees and other plants, bulbs, roots and the like; cut flowers and ornamental foliage:
GST exemption:
All goods.

Edible vegetables, roots and tubers:
GST exemption: Fresh vegetables, roots and tubers other than those in frozen or preserved state. Dried leguminous vegetables, shelled, whether or not skinned or split.
5% GST:
Herb, bark, dry plant, dry root, commonly known as jari booti and dry flower; Vegetables (uncooked or cooked by steaming or boiling in water), frozen. Vegetables provisionally preserved (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), but unsuitable in that state for immediate consumption.
Manioc, arrowroot, salep, Jerusalem artichokes, sweet potatoes and similar roots and tubers with high starch or inulin content, frozen or dried, whether or not sliced or in the form of pellets.

Edible fruit and nuts; peel of citrus fruit or melons:
GST exemption: Fresh fruits other than in frozen state or preserved
5% GST: Dried areca nuts, whether or not shelled or peeled. All goods, other than dry fruits, in frozen state or preserved.
12% GST: Dry fruits

Coffee, tea, mate and spices. Mate a bitter infusion of the leaves of a South American shrub.
GST exemption: All goods of seed quality. Coffee beans, not roasted. Unprocessed green leaves of tea. Fresh ginger and fresh turmeric other than in processed form.
5% GST: Coffee, whether or not roasted or decaffeinated; coffee husks and skins; coffee substitutes containing coffee in any proportion, other than coffee beans not roasted. Tea, whether or not flavoured, other than unprocessed green leaves of tea. Maté. Pepper of the genus Piper; dried or crushed or ground fruits of the genus Capsicum or of the genus Pimenta. Vanilla.
Cinnamon and cinnamon-tree flowers. Cloves (whole fruit, cloves and stems). Nutmeg, mace and cardamoms. Seeds of anise, badian, fennel, coriander, cumin or caraway; juniper berries, other than of seed quality. Ginger other than fresh ginger, saffron, turmeric (curcuma) other than fresh turmeric, thyme, bay leaves, curry and other spices.

GST exemption: All goods (other than those put up in unit container and bearing a registered brand name).

Products of milling industry; malt; starches; inulin; wheat gluten.
GST exemption: Flour (aata, maida, besan etc. – other than those put up in unit container and bearing a registered brand name)
Wheat or meslin flour. Cereal flours other than of wheat or meslin, that is, maize (corn) flour, Rye flour, etc. Cereal groats, meal and pellets, other than those put up in unit container and bearing a registered brand name. Flour, of potatoes. Flour, of the dried leguminous vegetables of heading (pulses), of sago or of roots or tubers of heading or of the products of Chapter 8, that is, of tamarind, of singoda, mango flour.
5% GST: Cereal groats, meal and pellets, put up in unit container and bearing a registered brand name. Cereal grains otherwise worked (for example, hulled, rolled, flaked, pearled, sliced or kibbled), except rice of heading; germ of cereals, whole, rolled, flaked or ground [that is, of oats, maize or other cereals]; Meal, powder, flakes, granules and pellets of potatoes.
Meal and powder of the dried leguminous vegetables of heading (pulses), of sago or of roots or tubers of heading or of the products of Chapter 8 ,that is, of tamarind, of singoda, etc. Wheat gluten, whether or not dried.
12% GST: Starches; inulin.
18% GST: Malt, whether or not roasted.

Know what could get cheaper now Eatables
1. Milk powder
2. Curd
3. Butter milk
4. Unbranded natural honey
5. Dairy spreads
6. Cheese
7. Spices

8. Tea
9. Wheat
10. Rice
11. Flour
12. Spices
13. Groundnut oil
14. Palm oil
15. Sunflower oil
16. Coconut oil
17. Mustard oil
18. Sugar
19. Jaggery
20. Sugar confectionery
21. Pasta
22. Spaghetti
23. Macaroni
24. Noodles
25. Fruit and vegetables
26. Pickle
27. Murabba
28. Chutney
29. Sweetmeats 
30. Ketchup
31. Sauces
32. Toppings and spreads
33. Instant food mixes
34. Mineral water
35. ice
36. Sugar
37. Khandsari
38. Biscuits
39. Raisins and gum
40. Baking powder
41. Margarine
42. Cashew nuts  
Items of daily use
1. Bathing soap
2. Hair oil
3. Detergent powder
4. Soap
5. Tissue papers
6. Napkins
7. Matchsticks
8. Candles
9. Coal
10. Kerosene
11. LPG domestic
12. Spoons
13. Forks
14. Ladles
15. Skimmers
16. Cake servers
17. Fish knives
18. Tongs
19. Agarbatti
20. Toothpaste 
21. Tooth powder
22. Hair oil
23. Kajal
24. LPG stove
25. Plastic tarpaulin   

1. Notebooks
2. Pens
3. All types of paper
4. Graph paper
5. School bag
6. Exercise books
7. Picture, drawing and colouring books
8. Parchment paper
9. Carbon paper
10. Printers

1. Insulin
2. X-ray films for medical use
3. Diagnostic kits
4. Glasses for corrective spectacles
5. Medicines for diabetes, cancer  
1. Silk
2. Woollen fabrics
3. Khadi yarn
4. Gandhi topi
5. Footwear below Rs 500
6. Apparel up to Rs 1,000  
1. Diesel engines of power not exceeding 15HP
2. Tractor rear tyres and tubes
3. Weighing machinery
4. Static converters (UPS)
5. Electric transformers
6. Winding wires
7. Helmet
8. Crackers and explosives
9. Lubricants
10. Bikes
11. Movie tickets less than Rs 100
12. Kites
13. Luxury cars
14. Motorcycles
15. Scooters   
16. Economy-class air tickets
17. Hotels with tariff below Rs 7,500
18. Cement
19. Fly ash bricks and blocks

Thursday, 29 June 2017

Indians' money in Swiss banks hit record low in 2016

Indians' money in Swiss banks hit record low of 676 million francs in 2016
By PTI |

Money parked by Indians in Switzerland's banks nearly halved to 676 million Swiss francs (about Rs 4,500 crore) in 2016 to hit a record low amid a continuing clampdown on the suspected black money stashed behind their famed secrecy walls.
In comparison, the total funds held by all foreign clients of Swiss banks somewhat rose to CHF 1.42 trillion or about Rs 96 lakh crore (from CHF 1.41 trillion a year ago).

The total funds held by Indians directly with Swiss banks stood at CHF 664.8 million at the end of 2016, while the same held through fiduciaries was nearly $11 million, as per the latest data published today by the country's central banking authority SNB (Swiss National Bank).

The total money of Indians fell by 45 per cent during 2016 to CHF 675.75 million, marking the biggest ever yearly decline in such funds.
This included nearly CHF 377 million in form of customer deposits, about CHF 98 million owed to Indians through other banks and CHF 190 million in form of other 'liabilities'.

The figures fell sharply across all categories last year, the SNB data showed.

This is the lowest amount of funds held by Indians in the Swiss banks ever since the Alpine nation began making the data public in 1987 and marks the third straight year of decline.

The funds held through fiduciaries or
wealth managers alone used to be in billions till 2007 but has been falling amid fears of regulatory crackdown.

The funds held by Indians with Swiss banks stood at a record high of CHF 6.5 billion (Rs 23,000 crore) at 2006-end, but has now come down to nearly one-tenth of that level in about a decade.

The quantum of these funds has been falling since then, except for in 2011 and in 2013 when Indians' money had risen by over 12 per cent and 42 per cent, respectively.   As per the available data since 1987, the earlier lowest ever figure was recorded in 1995 at CHF 723 million.

The latest data from Zurich-based SNB comes ahead of a new framework for automatic exchange of information between Switzerland and India to help check the black money menace.

While Switzerland has already begun sharing foreign client details on evidence of wrongdoing provided by India and some other countries, it has agreed to further expand its cooperation on India's fight against black money with a new pact for automatic information exchange from next year.

There have been several rounds of discussions between Indian and Swiss government officials on the new framework and also for expediting the pending information requests about suspected illicit accounts of Indians in Swiss banks.

The funds, described by SNB as 'liabilities' of Swiss banks or 'amounts due to' their clients, are the official figures disclosed by the Swiss authorities and do not indicate to the quantum of the much-debated alleged black money held by Indians in the safe havens of Switzerland.

SNB's official figures also do not include the money that Indians, NRIs or others might have in Swiss banks in the names of entities from different countries.

There is a view that the Indians alleged to have parked their illicit money in Swiss banks in the past may have shifted the funds to other locations after a global clampdown began on the mighty banking secrecy practices in Switzerland.

On directions of the Supreme Court, India has also constituted a Special Investigation Team (SIT) to probe cases of alleged black money of Indians, including funds stashed abroad in places like Switzerland.

A number of strategies have been deployed by the government to combat the stash-funds menace, in both overseas and domestic domain, which include enactment of a new law to tackle stashing of black money abroad, amendments in the anti-money laundering Act and compliance windows for people to declare their hidden assets.

The Income Tax department had also detected over Rs 13,000 crore black money post investigations on global leaks about Indians stashing funds abroad and has launched prosecution against hundreds of entities, including those with accounts in Geneva branch of HSBC.

The taxmen had detected Rs 8,186 crore of undisclosed income against those whose names figured in the HSBC list that was obtained by India in 2011 through the French government.

Enforcement Directorate (ED) has also begun taking action, including seizure of properties, of those named in the HSBC list under a new clause in the the Foreign Exchange Management Act (FEMA).

Earlier this month, Switzerland ratified automatic exchange of financial account information with India and 40 other jurisdictions to facilitate immediate sharing of details about suspected black money even as it sought strict adherence to confidentiality and data security.

Adopting the dispatch on introduction of the AEOI, a global convention for automatic information exchange on tax matters, the Swiss Federal Council said on June 16 that the implementation is planned for 2018 and the first set of data should be exchanged in 2019.

The council, which is the top governing body of the European nation, will soon notify the Indian government about the exact date from which the automatic exchange would begin.

As per the draft notification approved by the council, the decision is not subject to any referendum -- which means there should be no further procedural delay in its implementation.

The issue of black money has been a matter of big debate in India and Switzerland has been long perceived as one of the safest havens for the illicit wealth allegedly stashed abroad by Indians.

Earlier in 2015, the money held by Indians in Swiss banks had fallen by nearly one-third to CHF 1,217.6 million (over Rs 8,000 crore).

At the end of 2015, the total funds held in Swiss banks by Indians directly stood at CHF 1,206.71 million (down from CHF 1,776 million a year ago), while the money held through 'fiduciaries' or wealth managers was down at CHF 10.89 million (from CHF 37.92 million at 2014-end). The total stood at CHF 1,814 million at the end of 2014.

The 'other liabilities' of Swiss banks towards Indian clients, which include funds held through securities etc, declined from CHF 510.4 million to CHF 190 million.

As per the SNB data, the total money held in Swiss banks by all their foreign clients from across the world however rose from CHF 1.41 trillion (USD 1.45 trillion or about Rs 98 lakh crore) to CHF 1.42 trillion (USD 1.48 trillion) in 2016.

The total assets of Swiss banks in India fell from CHF 4.8 billion in 2015 to CHF 3.9 billion in 2016. This does not include any tangible assets like
real estate and properties, while the amount due to Swiss banks from their customers stood at about CHF 407 million (down from CHF 570 million in 2015).

Tuesday, 27 June 2017

'Wake up, the most important PM of world is coming' The world needs more leaders like Modi

'Wake up, the most important PM of world is coming' - Israeli Daily's description of Narendra Modi's forthcoming visit

Jerusalem: "Wake up - the most important PM of the world is coming", is how Prime Minister Narendra Modi's forthcoming visit to Israel, the first by an Indian PM, is described in an article in one of the leading Israeli business daily.

Business daily 'The Marker' in a feature story in its Hebrew edition discussing Indo-Israel ties says that Israelis had set up huge expectations from US President Donald Trump's visit to the Jewish state but "he didn't say much" while PM Modi, a leader of 1.25 billion people enjoying massive popularity and representing one of the fastest growing economies of the world deserves a lot of attention.

Other local newspapers and news portals have also given a lot of attention to the much-publicised three day trip of PM Modi with The Jerusalem Post even creating a separate link, "Modi's Visit", where it has put up stories related to India.

Most of the local commentators have emphasised on Modi "skipping Ramallah" and it being a standalone visit focussing only on India's ties with Israel.

"Unlike most world leaders, however, Modi, who governs the world's largest democracy and second largest nation, apparently is refusing to visit Ramallah during his Israel trip, and will not schedule meetings with Palestinian Authority (PA) chief Mahmoud Abbas or other PA leaders", Arutz Sheva said in a report.

PM Modi met Abbas during the PA leader's trip to India in May, and senior Indian officials have visited Abbas at his Ramallah residence during their trips to Israel, it added.

India related activities in Israel have also attracted far more attention in view of PM Modi's visit than ever before.

International Yoga Day celebrations in Israel saw massive coverage by the Israeli media with some commentators talking about the "soft diplomatic power it arms New Delhi with".

Israel's Prime Minister Benjamin Netanyahu hailed his Indian counterpart's visit to Israel last Sunday during his opening remarks at the weekly cabinet meeting as a "very significant step" in strengthening bilateral relations that are on a "constant upswing".

"Next week, the Indian Prime Minister, my friend, Narendra Modi will arrive in Israel. This is a historic visit to Israel. In the 70 years of the country's existence, no Indian Prime Minister has ever visited and this is further expression of the state of Israel's military, economic and diplomatic strength," Netanyahu stressed.
"This is a very significant step in strengthening relations between the two countries," he added.

India is a huge country with over 1.25 billion people and is one of the world's largest, growing economies. Ties between Israel and India are on a "constant upswing", the Israeli Premier said.

PM Modi's three day visit starting July 4 is aimed at commemorating 25 years of establishment of diplomatic ties between the two countries. The Indian PM is scheduled to have dinner with Netanyahu following his arrival to Israel on July 4. He would be meeting the Israeli Premier again for discussions the following day.

PM Modi would also call upon Israel's President Reuven Rivlin on July 5 and the leader of opposition, Isaac Herzog. Around 4,000 people of Indian origin would be attending an address by Modi in the evening of July 5 in Tel Aviv. The Israeli cabinet on Sunday approved major decisions to deepen Indo-Israel ties.

Among the measures proposed include the establishment of a USD 40 million joint fund to encourage Israeli and Indian business cooperation, agreements permitting and extending incentives to Bollywood filmmakers looking to shoot in Israel, efforts to promote growth in tourism, and a joint government project in the fields of water and agriculture.

Netanyahu and PM Modi have already met twice on foreign soil on the sidelines of UN-related events and are said to be constantly in touch with each other over the phone.

The defence ties between India and Israel have often drawn worldwide attention and acquired strategic dimensions.

It is believed that PM Modi's visit would further solidify security ties as Israeli defence industries have shown greater inclination towards participating in joint ventures to give a boost to NDA government's 'Make in India' campaign.

Prime Minister Modi's visit has been preceded by several other high-profile visits, including the trip of National Security Adviser Ajit Doval, several senior secretaries, Minister of State for Agriculture S S Ahluwalia-led 11 member multi-party parliamentary delegation and Navy Chief Admiral Sunil Lanba's five-day visit earlier this month.

All these visits have laid the ground work for several MoUs that are likely to be signed during PM Modi's visit.

In 2014 the Jerusalem Post covered Modi's election victory in detail and also pointed out the hypocrisy of some of the world media preceding Modi's victory.

Indian leader Narendra Modi, the prime ministerial candidate for India’s Bharatiya Janata Party (BJP).. (photo credit:REUTERS)
Indian leader Narendra Modi, the prime ministerial candidate for India’s Bharatiya Janata Party           

Terra Incognita: Why Modi matters

Seth J. Frantzman  The Jerusalem Post | | 2014-05-18T21:57Z

As it became clear that Narendra Modi of the opposition Bharatiya Janata Party (BJP) was going to win big in India’s massive national elections commentators began to read the tea leaves. Some looked to Israel. “Israel’s best friend in South Asia,” Palash Ghosh at International Business Times declared.

Noting that the countries only established relations in 1991, he argued that the BJP had been an architect of warmer Israel ties in the early 2000s and pointed to Israeli business relationships that Modi had cultivated in Gujarat, where he was state governor since 2001. But outside of the realm of practical economic and political ties, the real reason Modi matters, in terms of Israel and other countries, are shared affinities for preserving uniqueness in a globalized multi-cultural world. Both India and Israel are nation states emphasizing a national and ancient religion.
The BJP and Modi are often derided in the media as “hardline.” The BBC, for instance, claimed that “the Hindu hardline party’s poster boy is often called the BJP’s brightest star.” The party is described as “Hindu nationalist” and “right wing.” This is in order to separate it from the party the media, in India and abroad, has adored; the Congress party that has been run by the Nehru-Gandhi (no relation to Mahatma Gandhi) family since independence.

In essence this royal dynasty of Nehru Gandhi (prime minister 1947-64), his daughter Indira Gandhi (prime minister 1966-77, 1980-84), her son Rajiv Gandhi (prime minister 1984-87), his Italian wife Sonia Gandhi and her son Rahul Gandhi have sought to turn India into a personal fiefdom.

Indira Gandhi was not averse to using all the powers of the state to enforce her rule through a “state of emergency” declared from 1975-77 in which India basically became a one-party dictatorship; tossing opposition politicians into prison through “administrative detention.” During that time the government rolled out a “family planning” sterilization program that affected millions and was criticized as semi-compulsory for how it targeted the poor.

Under Congress India pursued ill-thought-out “five year plans,” along the lines of typical socialist experiments, that led to economic failure, chronic corruption and economic stagnation. Mass unrest also plagued the country; Indira Gandhi ordered the military to raid the Sikh Golden Temple at Amritsar in Operation Blue Star in 1984, in revenge for which her Sikh bodyguards murdered her. Rajiv Gandhi’s involvement in the Sri Lankan civil war also resulted in his assassination by Tamil extremists.

In comparison the BJP party, which was founded in 1980, sought to provide India a mooring in its ancient and gloried Hindu history. In an article in The Nation, the author, Bob Dreyfus, claims we should “worry about the election of Modi” because he was once a member of the Rashtriya Swayamsevak Sangh (RSS), a massive volunteer society, sometimes called “paramilitary,” which claims five million active members and runs 27,000 schools. The organization claims that, “the RSS is a pro-Hindu organization, and being pro-Hindu doesn’t mean it is anti-Muslim or anti-Christian. In fact the basic founding principle of the RSS is ‘Vasudhaiva Kutumbakam’ – the vision of the whole world as one family. The guiding principles towards this vision are voluntary service to the nation for socio-economic welfare and development.”

The BBC has a different take: “[I]t was founded in the 1920s with a clear objective to make India a Hindu nation, [and] functions as an ideological fountainhead to a host of hardline Hindu groups.”

The ideological underpinning of Modi’s origins and the RSS are the concept of Hinduvta (“Hinduness”).

When Modi went to Varanasi, a Hindu holy city, in April, he placed a garland around a statue of Swami Vivekananda, a Hindu monk who led a national awakening in the late 19th century. One author writes that he “sought to place Hinduism within the context of resurgent nationalism’ and emerged ‘as a proponent of a strong, virile and militant ideal of the Hindu nation.”

Alongside Vivekananda’s more humanistic nationalism, there emerged thinkers who articulated a tougher stance. Madhav Sadashiv Golwalker claimed: “We were the good, the enlightened people. We were the people who knew about the laws of nature and the laws of the spirit. We built a great civilization, a great culture and a unique social order.” Another leader of Hindutva was Syama Prasad Mookerjee, one-time minister of industry; he died in a prison cell in Kashmir, having been arrested while protesting for the rights of Hindus to live in the disputed province.
ONE HAS to understand Hindutva against the backdrop of its struggles. It began as a movement to revive the gloried history of Hindu rule in India against the backdrop of British colonial rule, which many Hindus saw as eroding their status and harming their religion and culture. During the independence struggle these activists objected to Gandhi’s seeming appeasement of Muslim nationalists. In the period before independence many Muslims demanded not only autonomy but also requested the Indian National Congress support various Muslim causes, such as the resurrection of the caliphate after the defeat of the Ottoman Empire in 1918.

Mookerjee, for instance, witnessed the mass slaughter of Hindus in Bengal in 1946 during the Noakhali massacres, when Muslim mobs, fed by rumors at the end of Eid al Fitr, attacked Hindus in the lead-up to the partition of Bengal into what became Bangladesh. Gandhi’s response was to tour the area and speak about peace, but those like Mookerjee understood that when partition came, mass violence would result and fasting and talk of peace would not help.

What the Hindutva activists demanded, especially after India was partitioned and seven million Hindus and Sikhs were ethnically cleansed from Pakistan and Bangladesh, was that India represent its Hindu past. In essence they could not understand why Pakistan became a Muslim state, full of Muslim nationalist and Islamist parties and suppression of minorities, while the one Hindu majority state in the world had to be a fully multi-cultural and secular state. While advocating for the primacy of Hindi as a language and greater reverence to the country’s Hindu past; they were active against the slaughter of cows, and other issues.

They also demanded that the country stop providing special status for Muslim personal law (such as the right of a man to divorce his wife by saying “I divorce you” three times). They demanded a uniform civil code so that minority groups would not have special personal and marriage laws while the majority Hindus had to live under a secular legal system.

In 1992 many Hindutva activists participated in the attempt to reclaim the Ayodha Babri Masjid, a mosque built over a Hindu temple in 1528. The resulting riots led to the destruction of the mosque; but not the rebuilding of the Temple, which has been caught up in archeological debates and legal tangles.

Modi has not stressed this controversial past in his election campaign. He has always lived under the shadow of the Gujarat massacres of 2002 where Hindus and Muslims rioted and many Muslims were killed in the state he governed. Accusations that he was responsible through negligence, as Ariel Sharon had been accused with regard to Sabra and Shatilla, led to him being denied a visa to the US in 2006. He has talked more about “integral humanism” and his party’s dedication to “create a strong, self-reliant and prosperous India,” while using tame words such as “drawing inspiration from our ancient culture and ethos.”
He focused on his humble origins, as a poor tea-seller at a railway station, and how he turned Gujarat into an economic miracle. Voters agreed: “Congress has been in power since independence, they say all the right things, but look at the condition of the country,” one told The New York Times.

The Congress party talked about the “right to food” for the poor and more subsidies, but Modi talked about an India where people don’t need subsidies and bread handouts because they will be living a better life free from the shackles of socialism. Congress romanticized rural India, while its elites live ensconsed in wealth, while Modi was from urban India and is seen as understanding the burgeoning urban classes.

In many ways the demonization of Modi and Hindutva is similar to that which Israel’s Right, national-religious sectors and Zionism have been subjected to. Both Israel and India were born the same year, and while Jews and Hindus were expelled from Muslim states, they saw demands that their countries function as liberal multi-cultural states next to a mass of Muslim nations that are unabashedly religious and nationalist. The insinuation is that it is somehow wrong or “hardline right wing” to have an avowedly Jewish or Hindu state.
For instance, commentators claim that Modi will antagonize relations with Pakistan – without asking why Pakistan bankrolled the terrorists who murdered 164 people in Mumbai. No one blamed Pakistan’s “moderate” leaders for antagonizing India.
The world needs more leaders like Modi, not because of his checkered past, but because we need to not fear national, linguistic and religious pride and nation-states that respect their origins. And minorities need Modi too; because for all the talk of the secular and socialist elites; they did nothing for India’s Muslims except keep them in poverty and reliant always on government.
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Sunday, 25 June 2017

India & China contributed to 50% of the world's GDP till around year1850

India & China contributed to 50% of the world's GDP till around year 1850

The Economic History of the Last 2,000 Years in 1 Little Graph
By Derek Thompson

That headline is a big promise. But here it is: The economic history of the world going back to Year 1 showing the major powers' share of world GDP, from a research letter written by Michael Cembalest, chairman of market and investment strategy at JP Morgan.

I'm guessing that your first question, if you started scanning from the left, is: Wait, India was by far the biggest economy at the dawn of AD? Yup, India.

In Year 1, India and China were home to one-third and one-quarter of the world's population, respectively. It's hardly surprising, then, that they also commanded one-third and one-quarter of the world's economy, respectively.

Before the Industrial Revolution, there wasn't really any such thing as lasting income growth from productivity. In the thousands of years before the Industrial Revolution, civilization was stuck in the Malthusian Trap. If lots of people died, incomes tended to go up, as fewer workers benefited from a stable supply of crops. If lots of people were born, however, incomes would fall, which often led to more deaths. That explains the "trap," and it also explains why populations so closely approximated GDP around the world.

The industrial revolution(s) changed all that. Today, the U.S. accounts for 5% of the world population and 21% of its GDP. Asia (minus Japan) accounts for 60% of the world's population and 30% of its GDP.

So, one way to read the graph, very broadly speaking, is that everything to the left of 1800 is an approximation of population distribution around the world and everything to the right of 1800 is a demonstration of productivity divergences around the world -- the mastering of means of manufacturing, production and supply chains by steam, electricity, and ultimately software that concentrated, first in the West, and then spread to Japan, Russia, China, India, Brazil, and beyond.

Paul Kedrosky)

This article available online at:

The Economic History of the Last 2000 Years: Part II
By Derek Thompson

The graph above is an economic history of the world, after 1 AD, from a
research letter written by Michael Cembalest, chairman of market and investment strategy at JP Morgan. I posted it yesterday with this summary: "Everything to the left of 1800 is an approximation of population distribution around the world and everything to the right of 1800 is a demonstration of productivity divergences around the world."

But that's not exactly right. The Industrial Revolution that occurred in Western Europe around 1800 did dramatically raise productivity and personal income far above what any country had seen in the previous millennia. But in fact, GDP per capita -- an approximation for productivity and income -- started to diverge centuries before the steam engine.

What follows is a deeper -- but still shallow -- dive into 2000 years of economic history, this time through the lens of GDP per capita around the world. This metric helps us identify where growth in wealth occurred, as opposed to just growth in population (e.g.: India and China had thee-quarters of world GDP in 1 AD because they had three-quarters of the world's population).

The first graph is a good picture of what we call the Malthusian Trap. For the vast majority of human history, the most important determinant of wages was births and deaths. With too many births, income fell. After a plague, a roughly stable supply of food and goods shared among a smaller number of people made everybody richer. That is, until births rose, and incomes fell again.

But between 1000 and 1500 wages in Western Europe started to inch up thanks to moderate technologies and agrarian organization, such as three-field rotation and horse harnesses.

... and if you take graph the GDP/capita data between Jesus and Napoleon, you can see even better a real divergence between Western Europe and the rest of the world.

But the thing about the graph above is that the X-axis plays a game of hopscotch. We have data (or an approximation of data) for 1 AD, then another 1000 years later, and another 500 years later, followed by 100-year increments.

So what happens when we zoom back in to the year 1500, when century-by-century data becomes available, and play out the story until the 20th century? You get a really good look at the massive power of the Industrial Revolution, which makes all income growth before about 1800 look pathetic.

There are enough theories about why the Industrial Revolution happened in northern Europe between 1700 and 1800 to fill a million blog posts. Two well-known recent additions are Guns, Germs and Steel, which focuses on the peculiar and advantageous geography of norther Europe and its natural resources, and A Farewell to Alms, which provides the quirky but often persuasive explanation that the Malthusian Trap ironically populated England with workers whose upper-class values made them biologically better adapted to invent and use modern technology.

Our last graph is the full 2000 year sweep of the world through GDP/capita (mind the X-axis, of course). The industrial revolution didn't happen everywhere at the same time, but it did have the same effect everywhere: massively rising GDP/person.

The Japanese and Chinese stories are the most dramatic. Japan, which was behind Eastern Europe before World War I, nearly caught the United States by the end of the 20th century. China, which fell behind Africa in the middle of the 20th century, is now perhaps the most massive success story in industrialization history.

The Economic History of the Last 2000 Years: Part III
By Derek Thompson

Early this week, I posted a little graph of the economic history of the world, after 1 AD, from a
research letter written by Michael Cembalest, chairman of market and investment strategy at JP Morgan. On Wednesday, I posted follow-up graphs to track GDP/capita -- a rough proxy for income, and even productivity -- through the last 2000 years. Here's the last installment.

You can call the graph below an "economic history of the world since Jesus." I've graphed each major power or region's share of world GDP since the year 1 AD (the data is in a PDF
here). There is no data between 1 and 1000 AD, so I've put a little space there. The data does not provide for a clean X-axis -- note the differences between years -- but it provides a good rough picture of the last 2000 years and a nice illustration of the breakaway wealth of the U.S.

The first question I had when I first graphed the data is, How do India and China account for between 50% and 60% of the world economy for the first 1500 years AD? Until about 1800 when the Industrial Revolution sent productivity skyrocketing at an unprecedented pace, income growth was slow and and relatively even around the world. As a result, the regions with the biggest economies were basically just the regions with the biggest populations.

So let's look at populations. This graph, from the same historical data set, shows the distribution of people across regions for the last 2000 years. As you'll see, it's a much more static picture than GDP. China, India, and south-east Asia are still among the densest places on earth, just as they were 2000 years ago. Western Europe is still highly livable. Africa's share of the world's population has rarely deviated from 7% - 13% band. Two millennia ago, Japan had 1.3% of the world's people. Today it has about 2%.

The West started to
outpace the rest of the world after 1000, but its rate of technological advancement was pretty pathetic compared to what we saw after the 19th century.

Here's a stat to sum that up. According to A Farewell to Alms, income per person in Western Europe doubled between the 1310s and the 1450s and then fell by 25% in real terms by 1600. Why? Because of The Plague. By reducing the number of people competing for scarce food, the Black Death did more for average incomes than any existing technology of its time. "In the preindustrial world," Gregory Clark writes, "sporadic technological advance produced people, not wealth."* That is the Malthusian Trap in a nutshell. Look how similar GDP across regions was for the first 1700 years since BC ...

... and now look how wild things got since the Industrial Revolution (pay particular attention to the US in light blue and China/India at the bottom).

In one fascinating passage of Clark's book, he produces a table of laborers' wages measured in pounds of wheat, starting in Ancient Babylonia and taking us through 1780's England. This statistic is so important because it measures what ancient workers wages could actually buy. In the last 200 years, food has gone from 80 percent of our budget to about
10 percent. That's a great indication that we've gotten richer and that our wages are stronger relative to the stuff we want. But for thousands of years, wages measured in wheat didn't grow. They yo-yo'd. I've reproduced Clark's graph below (but buy his book so he won't get mad).

You're looking at the curse of Malthus. Now that's some serious income stagnation.
* Clark's final thesis about how evolution powered the industrial revolution is controversial, but his basic read of the pre-industrial world is not.
This article available online at: Copyright © 2015 by The Atlantic Monthly Group. All Rights Reserved.

Tuesday, 20 June 2017

Better food management by Modi govt. could be reason for lower inflation

Better food management by Modi? From 11% to 2.2%, five charts explain India’s vanishing inflation

Four years ago Indian inflation was running at more than 11 percent. Now it’s melted to a record low 2.2 percent, below Mexico, Turkey and the UK, as the central bank’s battle against price pressures gains traction.
Source-Bloomberg The Financial Express | 2017-06-20T13:42:57+05:30

Four years ago Indian inflation was running at more than 11 percent. Now it’s melted to a record low 2.2 percent, below Mexico, Turkey and the UK, as the central bank’s battle against price pressures gains traction.

The slide has prompted the Reserve Bank of India, led by Urjit Patel, to slash its inflation forecasts and led one member of its six-person monetary policy committee to break ranks at its June 7 announcement, stoking market speculation the bank could next cut rates, perhaps as early as August.

So what’s changed? Economists say cyclical or temporary issues like a stronger currency and weaker domestic demand, combined with structural factors such as better food management by Prime Minister Narendra Modi’s government are in play.

There are risks the cyclical factors could easily unwind, but for now, economists increasingly see structural factors winning out. Inflation is expected to hug the lower band of the
RBI’s 2 percent to 3.5 percent forecast for the first half of the financial year ending in March and remain below the 3.5 percent to 4.5 percent target for the second half.

Becoming Anchored
To be sure, India is benefiting from subdued inflation globally, especially in oil, the country’s biggest import. Along with a 5.4 percent rise in the rupee this year, the cost of imports have been held in check. Crucially, inflation expectations are becoming anchored.

“Inflation expectations, both backward and forward, have declined,” said Pranjul Bhandari, chief India economist at HSBC Holdings. “Inflation each quarter is coming out to be lower than the previous quarter.”

One-year forward inflation forecasts have fallen steadily since 2014 with underlying inflation — stripping out food, fuel, petrol and diesel — in the 4 percent ballpark which the RBI targets in the medium term, she said.

Food Prices
Radhika Rao, a Singapore-based economist at DBS Group, expects inflation to be below 2 percent for June, July and possibly August and only come within the 4 percent target by the March 2018 quarter. That will be nearly 100 basis points lower than the 5 percent estimate the RBI made in April.

Food prices have been a big reason for the decline. Vegetable prices declined nearly 20 percent last month from a year ago with potato prices, a key staple, contracting for the sixth straight month, the country’s wholesale price index last week showed. After averaging 11 percent between 2007 and 2013, food inflation has averaged 4.5 percent since the start of 2016.

That, along with favorable base effects and lower oil prices, has spurred Goldman Sachs Group Inc. to cut its consumer price inflation forecast for the financial year to March 2018 to 4 percent from 4.6 percent.

Adroit Management

The government’s cash ban in November led to “fire sales” by farmers as 500 and 1,000 rupee notes were rendered useless overnight for purchases. More importantly, structural changes like better food management by the government and a muted rise in support prices for farmers have kept a lid on prices, economists say. While falling food prices are good news for India’s rising middle-class, they haven’t gone down well with farmers, some of whom have taken to the streets to protest.

“We believe the backdrop continues to be that of adroit food management by the current government in terms of use of buffer stocks and the crackdown of hoarding, aided by softening in global food prices,” said Prasanna Ananthasubramanian, Mumbai-based chief economist at ICICI Securities Primary Dealership Ltd.

Monsoons, which are critical to the water supply, are forecast to be normal for a second year running and are likely to exert downward pressure on food prices.

New Base
Last month, India also moved to new base year to calculate wholesale prices, bringing it in line with the 2012 base year of the consumer price index. This will reduce volatility in wholesale prices and provide a clearer signal for the RBI, said Soumya Kanti Ghosh, group chief economic adviser at
State Bank of India, the country’s largest bank.

Meanwhile, Bloomberg Intelligence economist Abhishek Gupta says that a raft of structural reforms, from the introduction of the goods and sales tax on July 1, to easier foreign direct investment rules, should boost India’s growth potential over the longer term. “At the same time, actual growth is lagging due to demonetization and high real interest rates,” Gupta wrote in a report earlier this month. “The upshot — a widening output gap that is pulling down inflation.”

Wage increases for India’s government employees and farm-loan waivers could start to pressure inflation higher again, economists say, but even that rebound could be benign. Sovereign bonds have rallied with the yield on 10-year notes falling to 6.47 percent Monday, the lowest closing for the benchmark securities since early February.

“Even if inflation bottoms out later this year, its recovery is likely to be modest,” said DBS’s Rao. “Apart from inflation, lower financing costs will help investment growth.”