FINANCE

In today's blog we explain a digital payment initiative that the government believes could revolutionize the public distribution system We won’t talk about e-RUPI just yet. Instead, we will look at direct benefit transfers.   Back in the day, if you were struggling to access the basic necessities, the government would foot a part of the bill, by subsidizing its cost. You only had to pay a reduced price for these items and the government in turn would reimburse the company offering you said products.  However, there was one massive problem with the public distribution system. The government could never truly target the real beneficiaries. For instance, a middleman in the distribution system could help you claim subsidies even if you weren’t eligible. And the Indian government routinely lost millions each year offering subsidies to people, who in some cases didn’t even exist.    But then, the introduction of Aadhar and the Jan Dhan account changed the equat...

The taxpayers were able to take the advantage so far, because the Income Tax Department used to get information related to just income from salary, interest on Bank FD and taxes paid There are many salaried persons, who invest in stocks or even do daily trading but never reveal the information related to capital gain / loss in their Income Tax Return (ITR). The motive of not revealing the capital gain/loss in their return of income may be due to sheer ignorance, avoiding trouble of calculating the gains / losses, fear of filing more complicated ITR form than the ITR-1 or to suppress the information to avoid paying higher tax. The taxpayers were able to take the advantage so far, because the Income Tax Department used to get information related to just income from salary, interest on bank fixed deposit (Bank FD) and taxes paid from the respective sources, which were revealed in Form 26AS. But now on, the Department will also get information related to capital gains / losses, dividend in...

The Domino’s pizza turn around is one for the ages:    1960: Founded 2004: IPO  2008: Hits record low $2.83/share 2020: Current stock at $367/share (130,000% gain)   The 100x+ growth story is filled with a bunch of lessons for startups today.   Let's dig in. Domino’s was started by 23 year old Tom Monaghan in 1960. Tom was maniacally focused on fast delivery and great service from Day 1. He spent the early days taking every action required to:   - Reduce delivery time - Reduce cooking time - Increase distribution.  Tom's emphasis on speed and service led to groundbreaking moves that competitors found difficult to compete with:   A catchy slogan with some skin in the game (“ A Half Hour or Half Dollar Off”) escalated to a full blown guarantee:   “30 Minutes or It’s Free” By 2008 , Domino’s scaled to a multi-billion dollar business, but had dim prospects:   - Growth completely stalled - Competitive threats from Pizza Hut (and others) loom...

Individuals who are looking to save tax can make an investment under 80C of the Income Tax Act. This is one of the most preferred investment avenues among salaried and other individuals. Under the income tax act, it allows the deduction of up to Rs 1.5 lakh from the gross taxable income of the taxpayer. Individual taxpayers and Hindu Undivided Families are eligible under Section 80C. While, Corporate bodies, partnership firms, and other businesses are not eligible for tax deductions under Section 80C. The right time to make an investment is at the beginning of the financial year, as this does not only mean that you are making educated investments but also ensures that you earn interest for the entire year from April to March Subsections under Section 80C Section 80C  gives a detailed set of deductions for which a person is entitled and which have contributed to the development of appropriate sub-sections to provide clarification for taxpayers. Investment in Provident Funds such as ...

  In today’s BLOG .  we discuss the budget in 5 minutes. Maybe 6 minutes if we are going to be precise. Maximum 7. … Not more than 8 minutes. Promise!!! The Story: Healthcare was going to be the centre of attention. Everybody knew that. So when the government introduced a new centrally sponsored scheme, with plans to develop capacities of primary, secondary, and tertiary health care in India, it was reason to celebrate. In fact, the government promised to spend ~₹65,000 crores over the next six years in a bid to kickstart this program. And, they topped it by suggesting that they plan to spend 137% more in the next financial year on health care programs. To put that into context. The government is expected to spend ~₹94,000 crores this financial year. The year after, they are planning to spend ~₹2,23,000 crores. And that is a lot of money. But as  this report from ORF  notes, it might not be all that spectacular. The basic contention is this. Yes, the government is al...

  The Story The Union Budget of 2020–21 had a little surprise. The government finally announced its intention to partially sell off Life Insurance Corporation of India (LIC). And rumour has it that they’ve kicked off the whole process by hiring two pre-IPO transaction advisors already. So let’s talk about this mega IPO, shall we? LIC is India’s largest financial institution. It manages close to  ₹31 trillion  in assets (out of India’s ₹40 trillion insurance industry). It sells  3 out of 4 life insurance  policies sold in the country. It’s much bigger than the  23 private sector life insurance  companies put together. And it is a profitable entity which has consistently delivered value to its only shareholder — the government of India. However, when you try to go public and extract top value out of the IPO, you have to focus on other investors who might want to take part in the stake sale. Meaning you have to focus on maximising value for all parties an...

  we provide an explainer on bad banks and.... Yeah, that's about it The Story India has had a problem with bad loans for a while now. People borrow and they don’t pay back. And it’s crippling banking institutions in this country. But if rumours are to be believed,  preliminary discussions  are already underway to solve the crisis by resorting to a radical solution that’s quickly gaining traction — Bad Banks But before we get to bad banks, a note on bad loans. For starters, bad loans aren’t just bad. They’re pure toxic. And once unpaid loans start piling up, the whole bank starts looking suspect. New investors won’t want to pour money into these institutions anymore. Other more robust banks won’t want to lend to them anymore. And even when they manage to borrow money from outside investors they’ll have to do it at such exorbitant interest rates that it’ll most likely suck them dry (financially). Obviously, this also means, the losses will mount and they won’t be able to e...