Abolishment of retro tax, FDI’s role in India’s $5 tn journey, and falling quality of new job opportunities: Three things Teji Mandi investors should know on August 10, 2021

Abolishment of retro tax, FDI’s role in India’s $5 tn journey, and falling quality of new job opportunities: Three things Teji Mandi investors should know on August 10, 2021

Teji MandiUpdated: Tuesday, August 10, 2021, 05:09 PM IST
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Putting the Dispute Behind

Vodafone Group is looking to put behind its disputes with the government of India after the abolishment of retrospective tax.

The company is looking to hear from the government on refund of taxes and withdraw all litigation and arbitration. It would end a long-standing tax dispute between the British telecom company and the Indian government.

Earlier, Cairn Energy also expressed similar optimism and talked about withdrawing litigations that it filed against the government of India, the world over. It will improve India's standing among foreign investors and help in bringing more FDI.

Road to USD 5 Trillion Economy

A top India-centric American business advocacy group in a recently released report highlighted the role of FDI in India's journey to become a USD 5 trillion economy. As per the report, India's current GDP stands at ~USD 2.7 trillion. And, it will need at least USD 100 billion of FDI investment every year to reach its target of a USD 5 trillion economy.

Recent events like the listing of IPOs of new-age companies including several fintech and digital unicorns points to efforts that are being made in the direction of attracting higher foreign investments in the country. These companies are likely to attract higher foreign investment in the country as compared to old economy stocks. Abolishment of retro tax is also an important event in this regard.

Job Opportunities, but Without Quality

India added 1.6 crore jobs in July 2021, with a higher contribution from labour-intensive sectors like agriculture and construction.

The agriculture sector created 1.12 crore new job opportunities while the construction sector added 54 lakh jobs. At the same time, the service sector created 5 lakh jobs. The manufacturing sector was a major disappointment, shedding 8 lakh jobs during the month.

While new opportunities were created, salaried jobs fell by 32 lakh on monthly basis. It is a clear indicator that new employment opportunities are of poor quality. The majority of them were in the form of labour, informal, and temporary in nature.

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