SEBI

do you know about SEBI?
The government of India created the Securities and Exchange Board of India (SEBI) with a view to control and regulate the foreign investment in the capital markets, new issues of capital brought out by the companies and grievances of the companies and the investors. In addition, SEBI has been created with the broader aim of protecting the interests of the investors in securities and promoting and regulating the securities markets in the country.

Based in Mumbai, SEBI has eight divisions and departments which look after several functions to achieve the above mentioned broad objective. The Depositors and Custodians Division looks after the work of registration of depository participants/custodians, as well as their renewal of registration or cancellation of registration. Foreign Institutional Investors Division, on the other hand, deals with registration/renewal of registration of such investors. FII Division looks after the FIPB proposals and the government correspondence connecting with this function.

While Collective Investment Schemes Division deals with registration and renewal of the registration for collective investment schemes, Secondary Market Department is the major department of SEBI which carries out the functions like registration and renewal of registration of the credit rating agencies in the country, in addition to the registration of the brokers and sub-brokers, registration under the Stock Lending Scheme and deposit of various fees by the brokers and refund of fees to them.

With a view to protect the interests of the investors, Investors Grievances and Guidance Division has been set up which carries out the registration of the Investors’ Associations, looks into the grievances of such associations and other investors and carries out the tasks of guiding the investors through the registered Associations or otherwise.

Mutual Fund and Venture Capital Division of the SEBI looks into the tasks like registration of trustees for Mutual Funds, processes the applications for foreign securities, ADRs/GDRs, allow changes from closed ended to open ended schemes, observations on offer documents etc. Primary Market Department is also an important department of SEBI and deals with the matters like fresh registration/cancellation of intermediaries, observations on the offer documents and list-related matters pertaining to the new issues.

The complete control and regulation by the SEBI has enhanced the confidence of the general public in the securities market of the country.

Zero Inflation

short notes on Inflation and Impact of Zero Inflation on the Economy.

Inflation is the measure of rise in general prices in any economy over a given period of time. Normally inflation is measured every week, but for the policy purposes its annual measure is taken into account. Inflation is measured by the government by considering the changes in wholesale price index and those in the consumer price index over the given period of time.

Inflation is of several types and the ‘creeping’ or ‘walking’ inflation of upto 5 per cent per annum is called functional inflation and considered good for the health of growing economies. Running, galloping and hyper inflation is bad for the economy as it also erodes the real income level of the poorer sections of the emerging economies, thereby making their livelihood even more difficult. Hence, in a developing economy, the government policies aim at keeping the inflation rate within the functional limits.

Due to increased prices of the food items, India, along with most parts of the world, faced high inflation rate in double digits during the middle of 2008, which could be termed as ‘running’ inflation. The government took several monetary and fiscal policy measures to control it and succeeded to bring it down. But in early 2009 a peculiar phenomenon was experienced. In March 2009, the inflation rate in the country went down as low as 0.44 per cent, a sudden drop from 2.43 per cent during the week prior to that.

This has given rise to the speculation that the country may experience zero inflation rate. The apprehensions are that zero rate of inflation would act as discouragement to the new investors, who are likely to put on hold their new projects, which would affect the growth rate of the economy.

Zero inflation reduces the level of profits drastically. Such a situation, though may be cheered by the consumers and benefit the poorer sections spending most of their earnings on consumption, yet may actually reduce the economic activity in the economy to the minimum. This may be harmful to the economy in the medium and long run

Goods and Services Tax (GST)

GST is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. Through a tax credit mechanism, this tax is collected on value-added goods and services at each stage of sale or purchase in the supply chain. The system allows the set-off of GST paid on the procurement of goods and services against the GST which is payable on the supply of goods or services. However, the end consumer bears this tax as he is the last person in the supply chain.

The Goods and Service Tax (GST) will integrate State economies and boost overall growth. GST will create a single, unified Indian market to make the economy stronger. The implementation of GST will lead to the abolition of other taxes such as octroi, Central Sales Tax, State-level sales tax, entry tax, stamp duty, telecom licence fees, turnover tax, tax on consumption or sale of electricity, taxes on transportation of goods and services, etc., thus avoiding multiple layers of taxation that currently exist in India.

It is estimated that India will gain $15 billion a year by implementing the Goods and Services Tax as it would promote exports, raise employment and boost growth. It will divide the tax burden equitably between manufacturing and services.

In the GST system, both Central and State taxes will be collected at the point of sale. Both components (the Central and State GST) will be charged on the manufacturing cost. This will benefit individuals as prices are likely to come down. Lower prices will lead to more consumption, thereby helping companies.

Almost 140 countries have already implemented the GST. Most of the countries have a unified GST system. Brazil and Canada follow a dual system where GST is levied by both the Union and the State governments. France was the first country to introduce GST system in 1954.

CGST will include central excise duty, service tax, and additional duties of customs at the central level; and value-added tax, central sales tax, entertainment tax, luxury tax, octroi, lottery taxes, electricity duty, state surcharges related to supply of goods and services and purchase tax at the State level.