Indian Current Affairs: 10.08.2008

The growth of advance corporate tax collection in the first four months of FY09 vis-à-vis the corresponding period last fiscal slipped by almost half — from 35% to 18%. For some in India Inc, their advance tax payment has actually entered into a negative zone this year.
Advance tax collection, including late payments till July 31, 2008, stood at Rs 23,500 crore, up merely 18% from Rs 19,900 crore received during the same period last fiscal.
The net direct tax collections in the first four months of this fiscal was, however, impressive at Rs 71,648 crore, up from Rs 48,756 crore, a growth of 47%. This, however, includes fringe benefit tax, securities transaction tax, banking cash transaction tax and tax deducted at source in addition to advance tax.
Are these really the early signs? The jury is still out on this one.

This is a phrase used when we are undecided about something or when an opinion is yet to be firmed up.
The dictionary meaning of the idiom: no decision has been made, esp. because information is lacking.

Even as we are reading about a possible economic slowdown, the luxury goods market (luxe goods) is reportedly doing extremely well – growing at over 35% CAGR (Compounded Annual Growth Rate).
Don’t get an idea of luxe goods? Sample this:

Experts are explaining this away as an instance of the theory of Giffen goods being at play.

Giffen good is a so called inferior good. When the price of such a good rises, the substitution effect causes people to buy less of it, as usual. But at the same time the income effect overcompensates, leading people to buy more of the good, even as its price rises.
Evidence for the existence of Giffen goods is limited, but microeconomic mathematical models explain how such a thing could exist.
Giffen goods are named after Sir Robert Giffen, who was attributed as the author of this idea by Alfred Marshall in his book “Principles of Economics.”

But can we really classify luxe goods as Giffen goods? I don’t think so. What is happening is perhaps this. Even in times of a slowdown, the uber rich keep growing rich and a few from the lower ranks will keep making it to the top brackets of income. It is this, which drives the demand for luxe goods. This is aided by having a low base for the luxe goods market to start with. Luxe goods (especially the international brands) have made an entry only recently into India. They have a very low base. Hence growth rates will be obviously very high; whatever is the growth rate of the economy.

World sales of major commercial properties fell 49% to $306 billion in the first six months of 2008 from the same period last year, as sales in developed countries were hit hard by the credit crisis and slowing economies.
Sales activity fell sharply in many developed Western economies while Brazil, Russia, India and China, and most other emerging markets posted gains.

Many travel agents in India, whose revenues come from the commission on selling air tickets, may soon be forced to make an exit from their business. If industry estimates are be to believed, about 80% of the total travel agents in the country will be left with no options but to call it quits once the airlines stop paying any commissions to booking agents from October 1, 2008.
Airlines have already reduced travel agents’ commissions from 10% to 5% as the airline industry was severely hit by increased ATF (Aviation Turbine Fuel) prices and overall slowdown of the economy.
However, the transition to a zero commission regime will not be very smooth considering that 90% of the airline booking business is still handled by travel agents.
At present, there are about 2,860 International Air Transport Association (IATA) affiliated agents in India and roughly around 40,000 sub IATA agents who purchase tickets from IATA affiliated agents. Once this move comes into force, as many as 35,000 agents and sub-agents will be forced to shut shop.

Even as we are reading the above excerpt, the Indian Railways passengers are lapping up e-ticketing in a big way. E-ticketing has made a long journey since 2002-03 when it was first introduced in India. During that year, only 4.17 lakh passengers booked e-tickets. In 2007-08, it touched 3.52 crore. During the first four months of the current fiscal, 1.95 crore passengers booked their tickets electronically.
Olympics

With so much going on at Olympics in Beijing, it would be too tough for us to cover anything on it. I would advice you to keep a copy of Olympic specials that appear during this period. One such example is from The Week. Found it really educative.

Indian Current Affairs