Showing posts from January, 2018

Economic Survey 2018 - international trade insights

Economic survey was released yesterday . It is a good commentary on the current state of Indian economy and analyses most issues that matter from the policymaking point of view. It provides some interesting insights about international trade due to the chief economic advisor's deep knowledge in this area. I shall briefly enumerate a few points that I found interesting (among vast treasure trove of information) Link between prosperity and trade Economic survey states that there is a strong correlation between prosperity of a state and their participation in international and intra national (inter-state) trade as shown in figures. The only outlier appears to be Kerala (KE) which seems to be doing well and yet not participating in international or intra-national trade. This is partially explained due to the Kerala's economy earning through tourism and remittances which has not been probably factored into as trade. The survey doesn't attribute causation of one on anot

India's response to US tax rate cut

US has passed the bill to cut its corporate tax rate and IMF loves the move . The tax rate has been slashed from 35% to around 20%. That's a BIG cut which would make every organisation in the USA rethink its tax planning. The rethink has already begun at organisations like Apple , which reamined innovative in its tax planning all these years, and had stashed profits abroad to avoid taxes, and is now thinking of moving it back. Even domestic firms are looking at increased cashflows, e.g. Comcast as shown in figure below.  Tax cut leads to higher cash flow to Comcast: Source Economist Before going further, let me sum up the changes envisaged in the corporate tax reform a) The corporate tax rates in US is being brought down from 35% to around 20%  b) US is moving into territorial taxation system where the earnings abroad would be facing a one-time repatriation tax of around 15% on cash and and lesser on other assets. After this one time measure,

Need for Integrated National Logistics Policy in India

As per this CII report , Logistics in India’s rapidly growing economy is supported by the world’s 2nd largest road network, 4th largest rail network, 14,500 km of navigable waterways, 200+ maritime ports and 125 airports. However, India ranks 35 in World Bank’s Logistics Performance Index (LPI) due to poor modal share - 60% of India’s domestic freight moves on roads, despite other modes being 50-60% cheaper and 50-90% less polluting. This unfavorable modal mix is due to lack of seamless intermodal connectivity in the country. This highlights the need for development of multimodal infrastructure in the country through close coordination between different agencies involved in planning and developing transport infrastructure. Logistics need in India Development of an efficient logistic system is an essential prerequisite for a transitioning economy to grow into a developed economy. Of late, Government has acknowledged the importance of an efficient logistic system for t

Exports logistics and ease of doing business - Issues in Gujarat state

Gujarat tops the ease of logistics survey Gujarat has topped the perception based survey conducted by Deloitte on behalf of ministry of commerce. While I am not sure of the methodology and sample details, I am fairly sure that the survey is mostly accurate to the extent where the perception goes. I have been posted in Gujarat for sometime now and I am impressed by the amount of ease of logistics transactions in this state, when compared against other states I have worked with earlier.  Logistics survey by Deloitte - the best and worst states in terms of logistics While that is so, my day to day interaction with the exporters from the region has given me some insight about a few challenges which I am summarising sector-wise in this post. I am treating logistics issues from the point of view of exporters, as the goods move, from the factory gate to the port.  Overview of Gujarat exports and logistics Gujarat stands second in terms of exports from India, after Mah