Refuting all claims of a shrinking defence budget, the Indian Finance Minister announced a 5% increase in the defence budget for 2013-14. Coming at a time of increasing defence spending, and more recently, allegations of corruption during procurement, how can India put the new budget to effective use?
By Aakash Brahmachari
Mar. 5 – In an effort to dismiss any talk of compromising on defence, the Budget for 2013-2014 has increased India’s Defence Budget by 5% from last year to Rs. 2,03,672 crores ($42.5 billion). This includes Rs. 86, 741 crores ($16 billion) on arms acquisitions which is a hike of 9% over last year. Even as this will ensure India remains a leading arms importer, it will be a welcome relief if these purchases are not tainted by allegations of corruption.
Reports from the ‘Choppergate’ scandal indicate that middlemen were paid about Rs. 162 crores ($30million) to swing the decision in AgustaWestland’s favour.
This is worth about 4% of the Rs. 3,700 crores ($750 million) deal. A quick calculation reveals that if the rate of commission remains constant, middlemen stand to make Rs. 215 crores ($40 million) for every Rs. 5, 375 crores ($1 billion) worth of Indian arms acquisitions. In other words, though the new budget worth Rs. 86, 741 crores may be spread across different deals, it can still potentially net middlemen a commission of Rs. 3,440 crores ($640 million). In a nation of 1.2 billion citizens, that amounts to each citizen sharing a burden of about Rs. 20 ($0.5) for these commissions. Continue reading
Jan. 31 – In a move that hopes to kick-start India’s flagging economy, the Reserve Bank of India (RBI) has lowered the nation’s interest rates from 8 percent to 7.75 percent. This marked the first time since April of last year that rates have been reduced, and only the second time in the past four years.
“It is critical now to arrest the loss of growth momentum, without endangering external stability,” the RBI said in a statement. Continue reading
The 100,000 Rupiah Bill Will Become 100 Rupiah
Dec. 17 – The Indonesian government has announced plans to reduce the number of zeros on the rupiah by three beginning in 2014. The redenomination will simplify payment processes in a national currency upon which many people already ignore the last three zeroes.
The country has one of the highest value denominated currencies in Asia, with only Vietnam and Mongolia having higher denominated banknotes. The phasing in of new banknotes will begin in 2014 and will continue until 2016. This means that for a three-year period there will be notes showing both units of measurement that will continue to be legal tender. Continue reading
Nov. 30 – The new issue of China Briefing Magazine, titled The Asia Tax Comparator, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore throughout the month of December. This month’s issue also offers our new 2013 Asia Tax Guide as a complimentary supplement, providing an overview of corporate and individual income tax rates for key countries in emerging Asia.
In an increasingly inter-connected Asia, many foreign investors are looking beyond China, using the lens of their China experiences to understand the investment environment in countries such as India and Vietnam.
In this issue of China Briefing Magazine, we discuss corporate income tax, value-added tax, business tax, goods and service tax, withholding tax, and individual income tax as these apply in China, India, and Vietnam, as well as in the popular holding company destinations of Hong Kong and Singapore. This includes tax rates, descriptions, incentives, and deadlines, as well as the main FDI source countries/regions and industry-specific notes. Continue reading
Nov. 22 – Remittances into India are set to reach US$70 billion this year, outstripping China’s overseas remittances of some US$66 billion. These figures cover inbound monies sent by their respective diasporas back to their home country. The general trend across developing countries is seeing remittance inflows on the rise, with levels this year set to reach US$406 billion and projections indicating growth of 8 percent in 2013. This is further set to increase incrementally over the next few years and reach a total of US$534 billion by 2015.
Indians abroad, especially in the United States and Europe, have tended to fare rather better than their Chinese counterparts, and are also aided by the fact that greater transparency, a more highly-developed sense of entrepreneurialism, and freer movement of the rupee when compared to RMB restrictions all make the ability for NRI’s to out-compete their Chinese equivalents. Continue reading
By Sonia Katyal
On its way to being a globally inter-connected economy, India must distinguish between necessary reform and unnecessary liberalization rhetoric.
Oct. 23 – In the two decades post 1991 when opening up became a golden word, India has tasted the fruits of a global economy. Its citizens, led by the middle class – which was hitherto neither here, nor there – seemed to have woken up to a dream of accomplishments and accompanying consumerist expectations. This was the era when mobile phones rapidly populated the aam aadmi’s home, every middle class family could plan a foreign holiday, children of the not-so-rich studied abroad, and IT professionals mushroomed in every neighborhood waving their travel stamps as a symbol of a new-found international identity. Continue reading
Sangkhowl is a client of SoFMEDA, a Microfinance NGO located in Northeast India. She used a 20,000 rupee ($360) loan to open a small shop and continue her weaving business.
Opinion/Commentary: Keith Hilden, with assistance from Dylan Waller
Sept. 11 – Microfinance is one pillar of the economy that Beijing and New Delhi has increasingly considered in recent years, in the sense that it is most beneficial to allow free enterprise to administer. Experts have said that the regulatory environments in these two nations are most likely to impact P2P lending platforms in their future success. The networked power of millions of donors all over the world will no doubt be a boon to hundreds of millions of Chinese and Indians alike wishing to join the ranks of the middle class. P2P social networking microfinance can get them there.
India and China alike have faced similar problems in P2P microfinance. With lenders charging extremely high interest rates for loans, predatory high-interest loan shark operations, along with delays and failure in repayment, the demand for a P2P microfinance solution in the form of much lower interest rates is rising. Co-author Mr. Waller has personally seen clients in India transition from taking high interest loans from money lenders to taking low interest loans from credible microfinance institutions (MFI). These services, in the form of low interest, have resulted in clients of MFI being able to expand their business and increase their income. Continue reading