24th February

Mega Fiscal Stimulus

The article favors the recent suggestion by Dr. Kelkar to implement a single GST (good and services tax) as a fiscal measure to stimulate the economy that is currently fighting the global economic crisis.

World over, the countries are fighting the downturn, so does India. Government is approaching various ways to stimulate the economy through tax cuts or increased expenditure. But the 13% center-state combined fiscal deficit leaves very less space to do something on increasing the expenditure fund. On the tax cut front, the recent suggestion by Dr. Kelkar to go aggressively to put single GST has received good response from Center as well as opposition. The logic here is to reduce indirect taxes since presently the total indirect taxes, including the local taxes and VAT, amounts to 13%. Post-implementation of GST, it would come down to 17%, a huge stimulus to the economy. Besides this, it would also bring a large part of unorganized business under the tax net and create a common market across the country.

The economic value of GST reform is estimated to be $500 billion with an employment potential of around 4-5 million and not to forget the improvement in productivity. 

Improvident Fund

The article talks about the recent increase in the rates of EPF and the financial implications of the decision on the Fund. 

The decision by EPF board of trustees to retain the rate of interest to 8.5% may be politically correct but not economically. The payout pressure would only be handled either by dipping into the corpus of using the contingency reserve. While the first makes the EPF Scheme akin to Ponzi scheme, ultimately to be rescued by taxpayers (includes unorganized sector as well), the second one would remove the cushion for any future contingency. EPF has to come out of pulls and pressures from interest groups and work logically in coherence with the market forces. Exempted PFs that manage their own corpus would come under pressure to earn unrealistically high returns and in that pursuit they might invest in riskier portfolios eventually defaulting leading to larger crisis. 

There is no reason the unorganized sector should pay for the organized one. It is the govt that should provide safety net to all workers. But EPF payouts should be determined by earnings potential and government should provide cover only for a certain threshold.

Slumdog nationalism

The article talks about the convergence of various nationalisms that the contemporary cinema brings to create world class entertainment for the audience.

The living evidence is the recent Academy Awards sweeper Slumdog Millionaire which has been claimed by three countries as its own film. India, for obvious reasons, claims the Oscars as recognition of Indian talent on the international arena. Britain thinks the movie and Kate Winslet’s award for The Reader as a comeback of British talent. US thinks it as a product of a perfect partnership of Hollywood skills and Bollywood radiance. However, all the three are true. But looking at the bigger picture the message the success of the movie sends is to build resources from across the world. The success of movie inspired by an India writer, made by a British screenwriter, producer, cinematographer, editor and director, filmed in India with Indian actors in Indian music and distributed world wide by US distributors is a standing example.

It also shows that the members of Academy of Motion Arts and Sciences are acknowledging a wider talent. Thus, it’s the adroit choices that make winning differences – as proved by Jamaal Malik.