Saturday, July 09, 2022

Subsidies vs Incentives

In Jan 2016, Modi questioned, why benefits given to poor people are called subsidies, and why benefits given to rich, like exemption on dividends and long term capital gains are called as incentives?

When something is given from the treasury of the government, that is called subsidy. 

When something may or may not come to the treasury, and the Government decides to not take it, it is called incentive. 

When the government removes subsidies, the government will save the equivalent money in their treasury. 

But, when the government removes incentives, they may not save the equivalent money. Some businesses or transactions might be running only because of that incentive. Once the incentive is gone, they may not do that business or transaction. The resultant money that the government would get after removing an incentive is always less than the incentive amount that the government projects. 

Exemption on dividends and long term capital gains were not at all incentives. It is just that they were taxed in a different way. 

Companies pay tax on their profits. After paying the tax, they used to pay dividend distribution tax again, and then they distribute the dividend. Once the dividend comes to the investor, the investor does not need to pay any tax on that [It was already taxed twice.] Modi called it an incentive, because you are not paying the tax third time [For the exact same amount which is already taxed twice].

Couple of years back, Modi's government removed the dividend distribution tax and made the dividend as taxable for the investor. Dividend is coming out of the profit that the company made. Company already paid the tax on the profit that it got. You are paying the tax a second time, because it changed hands. 

Before 2004, Long term capital gains in equity were not exempted from income tax. After Chidambaram became finance minister, he exempted tax on the long term capital gains in equity, and introduced securities transaction tax. 

Modi removed the exemption on the long term capital gains in equity and kept the securities transaction tax. [Again double taxation]. 

Saturday, June 25, 2022

Public vs Government Organizations

In a private organization, a vision is set for the organization. To achieve the vision, the organization would employ people with appropriate terms and conditions.

In a government organization, the employees would set a personal vision for themselves. The employees would expect the organization to work towards achieving the personal vision of the employees. In case the organization does not do that, the employees and/or prospective employees may fight and even destroy the public properties.

Saturday, June 18, 2022

Speak only Truth

Whenever I hear, "Speak only Truth", I always feel uncomfortable. 

If someone asks me, how much salary am I getting, why should I tell the truth? I don't want to tell how much I am earning. Most of the time, I generate a random number and I tell that number. 

If anyone still says, I should speak only the truth, then I would like to ask a few questions and get the truth from them.

What is the username/password of your internet banking account?

What is your email password which is linked with all your social accounts?

Can you tell me the OTP that you have just received on your mobile?

Some time back, when I was doing one transaction with a person, that person asked me to tell a lie to the middleman, so that the brokerage would be saved. I refused for multiple reasons. Main reason was, I need that broker for my future transactions and if there is any breach of trust now, I won't get any favorable deals later on. 

In another case, I forced one person to tell a lie to the middleman, so that I could save the brokerage. [I paid the brokerage for the initial contract, and wanted to avoid brokerage for the extension of the contract.]

In a few cases, I refused to tell lies, because the lie is not convincing. 

In a few other cases, I did not tell lies, because I did not have answers for the follow up questions that may come.

There was at least one instance (there might be more), when I told the absolute truth, but I tried to tell in such a way that, everyone thought, it was a lie. 

Whether I tell lies or truth depends on multiple things. Don't expect truth from me. 

Saturday, June 04, 2022

Since, it is not going to benefit any of us, it should not be done.

I heard the following statement from many people in many different situations.

Since, it is not going to benefit any of us, it should not be done. 

My response used to be, what are you going to lose, if it is done? Since I get some benefit out of it, this needs to be done. If you are going to lose anything out of it, then we will discuss that and see how we can resolve that. 

Of course, Till now, I could never convince the people who said that. [Eventhough they were not going to lose anything.]

Saturday, May 28, 2022

Rich are becoming richer. Poor are becoming poorer.

Rich are becoming richer. Poor are becoming poorer.

When people say the above, they implicitly criticize that the rich are robbing the poor people.

Except politicians and other people who have government power, rich people are not robbing poor people. 

Rich people are becoming richer by utilizing every opportunity that they have without missing even one small opportunity. 

They are becoming richer by improving their skills, knowledge and other things. 

They are becoming richer by taking good advice given by anyone.

They are becoming richer by selecting/electing the right leaders who can lead them.

They are becoming richer by utilizing all their resources in the most efficient way and ignoring anything that is unnecessary. 

Many rich people know the Win-Win concept. 

Poor people might be still poor, maybe because they are not getting enough opportunities. 

Poor people might be still poor, maybe because they do not have enough money to improve their skills or knowledge.

Also, I know many people, who did not take the opportunity, because it is a very small opportunity and their goal is very big. [Any visionary would say, when you cannot run, walk. When you cannot walk, crawl. Move towards your goal even at very small speed, but move.]

I know many people who are reluctant to take advice from anyone except great leaders. 

I heard from many people that, when they were ready to provide some free training, people who could have improved from that training, did not come for various (silly) reasons (and not for the reason of losing their day's income.)

I know many people who unnecessarily fight for unnecessary things and waste their time and resources.

I know many people who do not know how to select a leader who can improve their life. 

I know many people who do not understand the Win-Win concept (Everyone wins in that), and they think everything is a Zero-Sum game (One's loss is another's gain. If myself and another person are collaborating in something, and if I am not going to lose, then they implicitly assume that the other person is going to lose.)

Rich are becoming richer, and poor are becoming poorer are two independent statements. There is no relation between them. If anyone is worried about the poor becoming poorer, they need to concentrate on how to improve the poor people's life, and not think about dragging rich people down. 

Saturday, May 21, 2022

What are we doing to the society?

Sometimes I used to wonder, whether I am doing anything for society or not.

Then, I realized that anyone who earns the same or more than what they consume is useful to society.

Many people are getting employment because you are alive and consuming. Even if you are living with basic necessities, you would be consuming food and other groceries, you might be travelling by bus or train etc. To provide those facilities to you, someone is getting employment (even if it is a fraction of their total employment).  

If you are a rich person who splurges money on many things, then there would be many people living on you. Without you, the total employment would reduce. 

Apart from that, I pay a lot of income tax. (It is not my problem, if people don't vote for good candidates for the efficient use of that money.)

Saturday, May 14, 2022

It just happens like that

Many times, I traveled by Tamil Nadu express from Chennai to Vijayawada. The train reaches Vijayawada at 4 AM. I always used to get up before the train reached Vijayawada even without an alarm. I used to think that it might be sixth sense or that the mind has some internal alarm. 

I was under that illusion till I missed the station one day.

Then, I analyzed everything and found the answer. 

Indian railways typically allot coaches for a particular start and end stations (for sleeper class). For someone starting at Chennai and getting down at Vijayawada or Warangal, they get only the coaches reserved for that. Similarly, for someone traveling from Chennai to Delhi, they get different coaches and they rarely travel with someone traveling to Vijayawada. 

Whenever I travel to Vijayawada, there would be many other people traveling to Vijayawada. When some of them get up and start talking or switch on lights or because of some other disturbance, I also get up. I used to think, I got up myself. 

Once I booked a ticket from Chennai to Delhi to go to Vijayawada. It is because I couldn't get a confirmed ticket to Vijayawada, but got a confirmed ticket to Delhi. The ticket price to Delhi is cheaper than the highest ticket price of premium tatkal to Vijayawada. Also, for tatkal tickets, there is a risk of not getting the tickets. So, I booked till Delhi. 

In my compartment, everyone was going to Delhi or Agra, and nobody needed to get up early. Since there was zero disturbance at 4 AM, I couldn't get up eventhough I had 3 alarms setup in the span of half an hour. I got up 15 minutes after the train left Vijayawada. 

Tamil Nadu express is one train which stops at very less number of stops (first four stops are in four different states). I had to get down at Warangal and return. 

It did not happen just like that. It had a reason.