ECONOMY by VIVEK SINGH

2021-04-29 08:16:14 Open / Comment

2021-04-28 08:09:59 The above is article from Hindu. A general article on balancing the rights of the patent owner and the society in general.

Post independence, the colonial-era laws that we inherited allowed for pharmaceutical patents. But based on the Rajagopala Ayyangar Committee, India enacted the "Patents Act 1970" which removed patents on PRODUCTS and allowed patents only on PROCESSES. This allowed Indian generic drug manufacturers to produce the drugs through different processes and as a result life saving drugs were made available to people at affordable prices. BUT, the WTO TRIPS Agreement of 1995 asked all the member countries of WTO to have their patent laws in compliance with the TRIPS law and we (India) were given time till 2005 to change our patent laws to comply with the TRIPS Agreement. Accordingly India introduced PRODUCT patents in the Indian Patent Act 1970 through an amendment in 2005.

As the patents give a monopoly to the innovator, it has wide implications on the affordability of drugs for the poor. And this system of patents forces the poor (with disease) to pay the price... which means the very poor in the developing world are condemned to death. Joseph Stiglitz (the economist with Nobel prize) suggests that "A system that replaces patents with prizes will be more efficient and equitable" because the incentive for research will flow from Govt. funds while ensuring that the biases associated with patent monopolies are removed. Open / Comment

2021-04-28 07:51:59 Open / Comment

2021-04-27 16:20:07

Open / Comment

2021-04-27 12:05:10 The above is article from Hindu.
Since last few days a discussion is going on that there should be a "Global Minimum Corporate Income Tax" and countries should keep their corporate income tax above that level. Why this idea is being mooted by US and other developed countries and why it is being opposed by the President on the World Bank and How it will exactly impact us??

Actually post 1990 after the collapse of the Soviet Block, Eastern European Nations started reducing the corporate and other direct taxes (dividend distribution, capital gain tax etc) to attract the global capital and this started a race to the bottom. Countries reduced the tax rate to attract foreign investors/capital and to dissuade the capital from leaving their countries. This resulted in decrease in resources and Govt's reduced their spending on education, health and other civic amenities. Then developing countries (India also reduced the corporate tax drastically in 2019 to attract investors) also followed this even though private markets do not cater to the poor i.e. the private companies who got excess income because of reduced taxes do not serve the poor and this resulted in disparities/ inequalities.

Because of the reduced direct taxes, Govts have generally resorted to increasing indirect taxes (VAT and GST) for their revenue generation. Indirect taxes are regressive in nature and hurts the poor more as compared to rich and is inflationary (see ECO 550 MCQ pdf). This results in inequality. Rising inequality results in shortage of demand in the economy which then requires more investment and that calls for more concessions on capital. However it does not guarantee investment because investment in response to tax cut is not guaranteed. However, increased govt. spending are sure to raise demand.

Direct taxes tend to lower the post tax income inequality because it takes more taxes from the rich which is used to distribute to the poor.

But, now this is the time for developing countries to attract investment/capital through competitive (reduced) tax rates and that is why it may be difficult to convince them to agree to a minimum corporate tax. Open / Comment

2021-04-27 11:45:47 Open / Comment

2021-04-24 11:36:09 Not much is happening on Economy front these days and most of the news in the newspapers are related to Covid spread. If some relevant news comes up will definitely share on the channel. But I also want to make it clear that I do not want to overburden you with junk information.

Practise the MCQs and stay motivated :) Open / Comment

2021-04-22 17:42:33 Please find the ECONOMY MCQs PDF which contains 550 questions and detailed explanation. From the last year pdf, I have removed some questions which now I feel is not relevant and added more questions. These new questions has been added in the relevant topics itself rather than in separate section. I request you all to take a print out (hard copy) and practise it. No further questions will be released for 2021. If some new questions come to my mind then I will keep on sharing on this channel. I will try to release video explanation of tough questions on Shubhra Ranjan IAS Study Youtube Channel and the link will be shared on this channel also. Open / Comment

2021-04-22 08:30:33 Source: Indian Express
You can read the Narasimhan Committee recommendations (First in 1991 and Second in 1998) from the Book. Open / Comment

2021-04-21 08:01:20 The above is article from Yesterdays Express.

As you all know that RBI as an institution has different objectives of price stability, credit creation leading to economic growth, financial stability etc. But RBI's monetary policy has specific objective of inflation targeting.

The above article says that RBI is more focussed on reducing the borrowing cost for Govt's huge fiscal deficit plan and it is targeting the interest/yield in the Govt.'s bond market (Govt. securities are bought and sold by RBI and financial institutions). And because of that it has planned an aggressive Government Securities Acquisition Programme (G-SAP) to bring down the yield/interest rate. But this pumping of money by the RBI (under G-SAP) may not bring down the interest rate as the inflation is already rising and bond investors thus demand more interest rate.

This article mainly summarizes/criticizes that because RBI has shifted its priority/objective from controlling inflation and growth towards reducing the cost of borrowing for Govt. (which is not the RBI's objective), it may result in other problems in the economy like inflation. Open / Comment