Kayal Vizhi is a proponent of Voodoo Economics and Voodoo Statistics

by Guest Sat Jul 16, 2016 9:26 pm

This the link to an article from which KV has given a picture in the Diggy Raja thread:

http://www.thenewsminute.com/article/united-states-south-india-can-southern-collective-get-us-better-deal-delhi-46501

So why did KV not give us the link to the complete article? is it because of the reader comments to the article? Here is an interesting reader comment which demolishes KV's raison d'être for posting on online forums:

>> After all, 20% of the population contributes a full 30% of India's tax revenues. This is the money that runs the country. <<

Looks really bad, isn't it? But there is a field of study called "Voodoo Economics" , and now add "Voodoo Statistics" to that - if you base your opinion on "Voodoo something", it is not going to result in any meaningful conclusion. I have had this debate with another gentleman who was making exactly the same argument - but City based - saying something like Mumbai produces 1/2 of India's tax revenue. He even said that Mumbai should secede from India, as a separate country !

Whatever I responded to him, is applicable here as well. When one says that such and such city produces X% of tax revenue, or such and such state produces Y% of tax revenue - what does that mean? If an individual lives in Mumbai or Chennai - his income tax is sourced in that city or state. Or the excise taxes that Govt. levies on traders, or the corporate taxes on companies. You can look at all the revenue sources in a pie-chart. Let us assume Mukesh Ambani is the highest taxpayer as an individual, and Reliance industries is the highest corporate taxpayers, and all the Gujarati banias in Zaveri Bazar in Mumbai are the highest excise taxpayers. All of this will be counted under Mumbai and Maharashtra in statistics - right? The question is - does that tax revenue represent the true economic value contributed by that City or that State? That is the million dollar question - that all these interpreters of "Voodoo Stats" should answer. Reliance companies are located all over India - the refineries are in Gujarat, their petrol pumps are all over. Just because a company is headquartered in Mumbai, or Chennai, or Bengaluru, does not mean these cities (or states) are generating the economic value to that tax revenue. The raw materials are coming from Jharkhand and Chhattisgarh, the labor is coming from all over India. It should be pretty obvious to even a non-specialist there is a vast difference between the contribution of economic value and counting of tax revenue. There is no way that a proper deduction can be made on which city or state contributes how much economic value.

Now, let us look at the expenditure side of this narrative. As you know defence expenditure is the major portion of the budget. Just a little example - almost every district in North India has a cantonment. Rajput Regiment is stationed in Fatehgarh in U.P. The central govt. spends money on maintaining the Rajput regiment - incl. salaries, infrastructure, etc. Would money spent on Rajput Regiment be counted as money spent on Fatehgarh and UP? Does Rajput Regiment exist to defend just Fatehgarh?

This discussion would be incomplete without commenting on the politics of such a narrative....The first time such narrative was used was during partition when Sarat Chandra Bose (Netaji's elder brother...) campaigned for a United Sovereign Bengal. ..."Voodoo Economists" made precisely the same point as part build up the case for Bengal's secession from India. But someone from Bengal Congress reminded those clowns that the source of raw materials for Kolkata industries was Bihar and Orissa, and even if you are successful in separating Bengal from India - the leftover India can easily ruin all your industries, by cutting off supply of raw materials.

by Kayalvizhi Sat Jul 16, 2016 9:45 pm

<<< the leftover India can easily ruin all your industries, by cutting off supply of raw materials.>>>

There are other sources for raw material. Where does Japan get raw material. Not from Assam.

Also what are these raw material states do with the raw material? Eat them. They need industrialized nations to buy them'

by Guest Sat Jul 16, 2016 10:01 pm

Maharashtra is the biggest contributor to the Indian government's income tax collections. The state contributed Rs. 2,77,720.11 crore, or about 40 percent, of the total Rs. 6,95,788.85 crore in income tax collections, in financial year 2014-15. This and other details spanning 16 years were released by the country's income tax department for the first time on Friday.

http://www.ibtimes.co.in/maharashtra-biggest-contributor-income-tax-collections-india-676782

by Guest Sat Jul 16, 2016 10:10 pm

Curious case of states

The data released also shows how much each state has contributed in terms of direct taxes collection. The biggest contributors are Maharashtra, Delhi, Karnataka, Tamil Nadu and Gujarat.

For the year 2014-15, Maharashtra brought in a whopping 2.77 lakh crore rupees in direct taxes – which is nearly 40% of all direct taxes collected in that year. Delhi is the second biggest contributor at 91, 247 crore rupees. While the industrial states of Tamil Nadu (44,732 crore rupees) and Gujarat (35,912 crore rupees) also place highly, they are beaten handsomely by Karnataka which is the third highest contributor of direct taxes at a significant 60,592 crore rupees.

While Karnataka’s place reflects its strong minerals and automobile manufacturing presence, its contribution also speaks volumes to the strong continued growth of the information-technology industry and the currently booming start-up and e-commerce ecosystem.

Another interesting fact to note here is that the residents of Gujarat – a highly industrialised state with an urbanisation rate of nearly 65% – appear to pay a lot less tax when compared to the popular perception the state enjoys. A glance at the table below shows that Tamil Nadu suffers from the problem.

When The Wire compared the GDPs of the states and their direct tax contribution, it shows that while the GDPs of Delhi and Karnataka are substantially lower than that of Tamil Nadu and Gujarat, they actually contribute much more when it comes to direct tax collection. The table below shows that Karnataka’s state GDP was 7.02 lakh crore rupees in 2014-15 and yet it contributed a little over 60,000 crore rupees in direct taxes. Gujarat’s state GDP, on the other hand, was recorded at 7.6 lakh crore rupees in 2014-15. It contributed only 35, 912 crore rupees in direct taxes in the same year though.

http://thewire.in/32648/new-data-indicates-that-direct-tax-share-in-economy-is-at-decade-low/

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Kayal Vizhi is a proponent of Voodoo Economics and Voodoo Statistics

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