Solutions to Change

By Rahul V Kumar* The Government of India has decided to phase out the existing higher denomination (500 and 1000 Rupees note) currency from circulation. Many have hailed this decision as an important step to eliminate black money from the system. At the broadest level, I put forward a hypothesis that the decision has many possibilities to strengthen the role of the state. A stronger state has its own consequences on individual freedom and liberty. This, in turn, has more potential to create an unstable monetary environment in the long term. Given the distant possibility of a complete wipe out of black money, there are a few immediate considerations that are worthy of analysis. Arbitrary and quick decisions from the side of the government will be carefully observed by the business community. This could lead to precautionary measures adopted by these groups in future to avoid discretionary government decisions like the present phasing out. Arbitrary and dramatic decisi...

By Dr Martin Patrick, Chief Economist Describing the Goods and Services Tax (GST) as "a monumental tax reform", the Finance Minister of India, Arun Jaitley argues that the implementation of GST will help to add two per cent to the national GDP. He said it will benefit all segments of business, increase tax base and reduce harassment of tax payers. On the other hand, Goldman Sachs has put out estimates which show that the Modi Government’s model for the GST will not raise growth, will push up consumer prices inflation and may not result in increased tax revenue collections. What is the reality? What is GST?  GST is nothing but a hybrid version of the Value Added Tax (VAT), modified to suit the complexities of a federal system. The central taxes do not cover value addition in goods beyond the manufacturing stage, and in services only listed services are covered. On the other hand, in the case of state taxes, only sale of goods is covered. GST rectifies ...