Archive for the ‘India’ Category

What are different types of sharees?


Sharee (also sari, saree) is a dress predominantly worn by Indian women. It is often difficult to classify a sharee for a foreigner. This article shows the classification.


Why rupee always falls against dollar, pound, euro?

Historically, Indian Rupee always fell against strong currencies like Dollar, Pound or Euro.

During mid of 2013, rupee had almost a free fall. It now equals 1 $ = 60 Rs or 1 £ = 93 Rs.
So why suddenly rupee fell so low?
One reason is better economic outlook in USA. Large scale investors are now expecting better return on their investment from USA. Thus, their funds are going towards USA and less amount is coming to India. For many day to day products, India needs foreign currency (in the form of $, £, € etc.) so less foreign currency coming to India means more demand for $ £ € to buy goods/raw materials from outer world.
Incidentally, weakening of rupee should make export much more attractive as same $ will now buy more Rs. However, there is a catch. To produce many of those exportable goods, businesses need to import raw materials from outside India, which requires foreign currency! Since such import is getting more expensive, resulting goods (manufactured in India) is also becoming expensive – thus eroding the benefit of weakening rupee for export.
Weakening rupee also sometimes prompt foreign importers (who buy exported goods from India) demanding a re-negotiation on price (as they claim weakening rupee will benefit Indian exporters also we have just seen that may be the case always).
Non residents Indians (NRI) are happy because if they send foreign currency to India now they will get much better return (i.e. more Rs for every $ sent). However, such fun is only possible if they don’t want to take money out of India at a later date. If NRIs send money to India and invests in a scheme in India, when they convert money later from Rs to $/£/€, chances are – due to rupee weakening even more, they will get a very poor return.
So, in short, weakening rupee is not a good news for investors especially those who want to invest foreign currency in India and then want to convert that to their native foreign currency once their investment is matured. If rupee falls further between the time they invested and investment matured and considering rate of return and inflation, they may even get same/lower than what they originally invested in $/£/€ terms!
In theory, Reserve Bank of India (RBI) can intervene by imposing a temporary limit of foreign currency going out of India but that will irk lots of common public and goes against free market economy principle (which India has adopted since 1990s).

What is black money in India?


Black money is a term used (predominantly in India) to indicate money which has not been declared for tax purpose.

Black money occurs in all economies but in few countries, the amount is massive.

Let us illustrate this with an example; if you pay cash to your plumber and he does not declare this in his income statement, the amount becomes a black money. In most countries, this happens in small scale transaction involving small traders. However, in many countries (especially India and surrounding countries) it happens at a mass scale.

For example, one builder sells a flat for Rupees 10 million. When a buyer is found, he offers it to sell for Rs 9 million on the condition that official transaction will be noted as Rs 7 million and then buyer will pay him Rs 2 million separately without keeping any footprint of the transaction. Thus, they will pay tax on Rs 7 million only. Buyer will accept it as he is getting a price reduction of Rs 1 million. Seller is saving on tax as he won’t declare Rs 2 million as income. So in a nutshell, the tax amount is shared between buyer and seller.

This activity flourishes because of two reasons:

1. People believe by dodging tax they are helping themselves

2. In many cases the practice is so rampant that normal citizens do not dare to buck the trend because they believe law will take side of rich people only (even though when these people are actually in fault)

Some analysts estimate that the amount of black money stored by Indians in Swiss bank is over Rs 1 trillion. Indian government did not show any real interest to tackle this problem because many head honchos in political parties are benefitting from this practice by paying little tax.

Why India performs poorly in Olympics?


When compared to relative population of other countries, India usually performs quite poorly in Olympics.

What is the fundamental reason for this?

This is down to cultural outlook. Parents in India encourage their children to excel in academics rather than sports. Middle class in India aspire for a well paid and secured job. If an aspirating athlete fails in India, the future is pretty bleak. Many athletes often struggle to make both ends meet because of relative poverty.

Sports require investment which is often beyond reach of ordinary citizens without any substantial grant from government. The grants from Indian government is often mediocre at best and even then it is frequently tainted with politics and regionalism. Thus main good talents are lost.

Some rich Indian kids manage to persuade their dream in sports but their numbers are very few.

This is quite contrast to China. Chinese government invest huge amount in sports and candidates ate picked for rigorous training from childhood. Of course, being a communist country, such acts of government is often considered as dictatorship. Whether is is good or bad is debatable but we can’t ignore that China achieved lot more in sports compared to India. Such practice is not possible in democratic India.

Until very recent time, Indian media glorified only cricket and largely ignored in other sports. This also discouraged lots of Indian citizens to come to sports which could have improved india’s Olympic performance.

Having said so, india’s performance in last two Olympic improved and Indian contenders now started winning individual events. So it is expected that in next few olympics India will perform much better.

Why auto rickshaw is not used as personal transport?


Auto rickshaws are ubiquitous low cost public transport in India and few other countries in SE Asia.

It is positioned in the market between two wheelers and cars. But strangely enough these vehicles are never used as personal transport! It might seem intuitive that those can afford these but not cars could be using as personal transports but that idea never caught. There is no clear explanation for this but usually it is assumed that people in India assume this as low status vehicle. One does not like to be seen driving this. Those who drive auto rickshaws for living are considered not being up to any better quality jobs (even though they earn moderate amount of money as per Indian standard).

Those who can afford cars won’t buy autos because they offer very poor ride quality, comfort and safety kits compared to proper cars. In fact, some people consider autos as worst of both worlds. They are not comfortable as cars and not cheap and agile enough like two wheelers.


Which whole milk and skimmed milk cost the same?


Whether whole milk is cheaper than skimmed milk or not, depends on where you are buying it.

Milk is produced as whole milk (i.e. with fat). Then it is pasteurized (i.e. killing of bacteria via heating the milk but not altering its taste or nutrition value). After this, the excess fat is removed to create skimmed or semi-skimmed milk. Now removing this fat is an additional process for skimmed milk. So that indicates skimmed milk should be more expensive. However, the removed fat can be put for other uses – so there is an intensive to selling skimmed milk

The price of milk often reflects whether it is placed as a lifestyle choice or based on actual cost of processing. For example, in UK, whole milk and skimmed milk cost the same to encourage people consume less fat. However, in India, whole milk costs more than skimmed milk because the former contains additional fat.

Why Vodafone has been asked to pay huge tax in India?


In 2012, Indian government imposed Rs 20,300 crore taxes (£2.5 billion) on Vodafone India. Why suddenly this move was made?

India has 2nd (after China) fastest growing mobile phone market. Vodafone, a British telecom company, entered this lucrative market in 2007 by buying 67% share of Hutchison-Essar, which was a dominant mobile player in Indian market then. However, this agreement was signed in Cayman Island in Caribbean, which had no corporation tax. India has “double taxation” agreement with many countries in the world. This means, if a person or corporation had paid tax in any of those countries, they do not have to pay tax again in India. However, this excludes countries where either corporation tax is zero or close to nil. Cayman Island is one such country. This rule was constructed in an aim of not to penalize companies with dual taxation. But many corporations are signing contracts in tax haven countries and thus, even though they are doing business in profitable Indian market, they are not paying any corporation tax.

Indian government has implemented a correction in law and applied retrospectively. This means, it will be considered as if this act was in place since 1962 even though it was implemented in 2012.

Vodafone disagreed to pay this tax and said they would go to court against this. Their argument is that they can’t be held liable for tax when law was changed after the transaction happened. Indian government argues that Vodafone used an unethical loophole intentionally to avoid tax.




Why caste system still exists in India?


Caste system  in India originated over thousands of year back. It was based on putting people in different castes based on their professions. Quite strangely, this caste system is still prevalent in India even among many educated people!

There are two main reasons behind this. Firstly, people who were placed in a superior caste (e.g. priests, rulers etc.) still consider themselves superior to other people and it is psychologically difficult for them to give up their superiority feeling.  The second reason is Indian politics. Political parties use castes to polarize voters in elections. Thus they actually encourage division among multiple castes. Indian government still reserve some government jobs for lower caste people. Many of these people, even though were backward in ancient times, are now quite rich. This makes middle class people in higher castes angry.  It is not that all Indians believe in caste system but majority of them still do!

This has led to this awkward custom continue even in 21st century India.