Is India ready to welcome WALMART?

(Originally Posted on SIMSR Newsletter eGlobuzz in October – December 2012 Issue)

The 1991 crisis in India highlighted one key weakness of Indian economy, Protectionism. This protectionism cost us high growth, development and prosperity. In the process of avoiding the competition Indian government ended up protecting the industries. Competition is always beneficial for an economy to prosper.

The Change

14th September 2012, was the day when government of India announced major reforms, raising FDI in retail to 51% and FDI in aviation up to 49%. These reforms were well received in the industry, in spite of some politicians making it into their political agenda, supposedly on behalf of small retailers. Both the parties came up with some valid and some not so valid points.

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GAAR – A Make Or Break Situation

( Originally Published on 16 September 2012 @
MBA Skool)

As per a general notion which says, “100 main 99 beimaan phir bhi mera bharat mahaan”, which says we Indians, are proud of our country in spite of 99% dishonest people. Of course there are various reasons to be proud of our mother land. But dishonesty among people is prominent. Black money was around 10% of the GNP in 1975-76. Along with the growth of the country and various tax evasion practices, black money is now termed as a parallel economy, becoming a serious issue for Government.

Earlier Measures

Measures like Voluntary disclosure of Income scheme (1996) for converting black money to white money failed to make a dent. Some cases like Hasan Ali case (caught for stashing 36,000 Crore rupees in foreign banks), showed the penetration of black money. While the major eye opener was the Vodafone – Essar deal. Vodafone entered India through Cayman Islands, a tax heaven. This deal which was worth $11.2Bn, not a single penny was paid as tax to the government. Getting a 100% depreciation in first year of investing in windmills, was to promote clean energy. Companies used it as a tax evasion tool. This meant that there is a need of law against avoidance of avoidance of taxes.

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