India's Economy Crashes After "Mind-Bogglingly Inane" Tax System Strikes Back

With just a hint of schadenfreude, we note that, following our discussion of "how to destroy an economy", India's Composite PMI collapsed to 46.0 in July - its lowest on record (well below the kneejerk lows after demonetization in November) as the "mind-bogglingly inane" new tax system and demonetization efforts continue to crush the poor and feed the wealthy.

As Goldman Sachs notes India's Nikkei Markit services PMI contracted in July after reaching a 8-month high in June, following a decline of manufacturing PMI on Tuesday. The fall was led by a significant decline in new business, suggesting a worsened business sentiment after the GST implementation on July 1.

Main points:

  • India's Nikkei Markit services PMI contracted to 45.9 (the lowest reading since September 2013). Combined with the manufacturing PMI reported on Tuesday, the July composite PMI fell to 46.0, the lowest reading since March 2009.
  • Among subcomponents, the new business index fell the most to 45.2 (from 53.3 in June), reflecting disruptions caused by the GST.
  • As the press release from Markit Economics mentioned, “Most of the contraction was attributed to the implementation of the goods & services tax and the confusion it caused".
  • The employment index for services fell to 48.9 (from 51.8 in June).
  • That said, the index for business expectations rose to a 11-month high to 62.3, suggesting optimism from services providers about the future once they have more clarity about the new tax system.
  • The output price index rose to 54.6 (from 51.0 in June), while the input price index moderated to 51.7.
  • Overall, PMI data for July suggest a significant drag on new business activity post the GST implementation. That said, optimism expressed by both manufacturers and services providers about the future is encouraging and suggest a potential improvement in activity once businesses adjust to the new tax system.

From 8-month highs to record lows... why does any one put any faith in the useless 'soft' surveys?

 

But expect more of this insanity to come, as one Indian businessman told us...

Given that the incumbent government has been winning elections despite steps like demonetization and the opposition is in complete disarray (Modi is a great orator), they have been emboldened to introduce measures that would be viewed as draconian by normal standards.

 

In this context, I have to mention Modi has been able to mesmerize voters to an extent that he can make even pain appear as something that is pleasurable and he has been able to conquer state after state and has an invincible aura about him now.

 

Such acts always bring Goebbels to my mind.

Comments

Looney Thu, 08/03/2017 - 12:57 Permalink

  I noticed that Modi’s Pantsuits look very similar to Hillary’s. Do they shop at the same Biohazard Equipment Store?  ;-) Looney

Manthong wildbad Thu, 08/03/2017 - 13:13 Permalink

 
/* Style Definitions */
table.MsoNormalTable
{mso-style-name:"Table Normal";
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-parent:"";
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:10.0pt;
mso-para-margin-left:0in;
line-height:115%;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:"Calibri","sans-serif";
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;
mso-bidi-font-family:"Times New Roman";
mso-bidi-theme-font:minor-bidi;}
Well, the good news is that Modi and the rest of his totalitarian government thinks that they have absolute control of a sixth of the world’s population. What could go wrong?

In reply to by wildbad

Koba the Dread Pernicious Gol… Thu, 08/03/2017 - 17:03 Permalink

The short answer to your question is No, intolerable hardship or death to hundreds of millions of lower caste Indians mean nothing to India's ruling classes or the fattened police and military and bureaucracy that serve it.And here's the good news. If you're one of 800,000,000 Indians starving on the streets, it's all your fault, nobody else's! That's the law of karma, the Hindu's ur-myth: If you're miserable and dying today it is only because you were a rotten person in a former life. You deserve everything you get. So suffer well; you deserve it.Gandhi's crypto Christianity/Islam with their foundations in the universal dignity of life? Oh, that! Indira Gandh (Nerhu's daughter and no relationship whatsoever to Mohan Das Gandhi stomped that out pretty quickly in the 1970s).

In reply to by Pernicious Gol…

VictoryOrDeath misnomer00 Fri, 08/04/2017 - 13:39 Permalink

You have a servant? HE wasn't a 'guy' but the Son of God and was on the cross by choice and for a purpose.  Your words serve no purpose and benefit noone.  Could you imagine having massive nails struck through your body just to be hung up to suffocate under your own body weight, all in the name of love?  If this is what you consider being a 'bitch' then I aspire to be one as do 2,300,000,000 of my fellow humans. 

In reply to by misnomer00

Yog Soggoth wildbad Thu, 08/03/2017 - 16:35 Permalink

You got it. These globalists want a one world digital currency so they can control everyone. This is a test run with a computer program to record the results. Trying on Australia as a different religious/ population mix. Just imagine, you can be put in jail on some trumped up charge, and not even make bail because your nonexistant millions disappeared by an invisible keystroke. Even if you had a lawyer that was loyal to you because of previous relationship he could not bail you out because he does not want his invisible millions to disappear and end up breaking rocks with you. Strange world already when the hard working honest folk end up homeless in their own land. What could happen soon is much worse.

In reply to by wildbad

Manthong Looney Thu, 08/03/2017 - 13:19 Permalink

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:"Table Normal";
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-parent:"";
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:10.0pt;
mso-para-margin-left:0in;
line-height:115%;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:"Calibri","sans-serif";
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;
mso-bidi-font-family:"Times New Roman";
mso-bidi-theme-font:minor-bidi;}
 I would like to see ORI weigh in on this.

In reply to by Looney

Doom Porn Star Truther Thu, 08/03/2017 - 13:08 Permalink

IF China and India really go at each other nuclear Pakistan is likely to try to seize Kashmir while India is preoccupied; and things will get way too interesting all at once...It might be time to just declare victory and get da fuck outta Afghanistan and the whole region.THe US needs no part of THAT sort of situation. Why can't the US just be nice and make friends with Russia?It really would be ALL for the best, you know..

In reply to by Truther

rf80412 duo Thu, 08/03/2017 - 14:20 Permalink

Hmm ... as I recall, at the end of the book the libertarian hero decided to crash human civilization out of spite, because he wasn't making enough money and/or people weren't worshipping him.I remember reading someone snarking that Atlas and Anthem were books 1 and 3 of a trilogy, and book 2 was all about how the totalitarian collectivist society of Anthem emerged in response to an egomaniac killing billions.

In reply to by duo

Koba the Dread duo Thu, 08/03/2017 - 17:31 Permalink

That's what I've been thinking about America for a while, too. Difference is, the only way America will avoid destroying the world through nuclear idiocy or economic idiocy or ideological idiocy is by the gross incompetence envisioned by Rand.This is the way the world ends.This is the way the world ends.This is the way the world ends.Not with a bang but a whimper.Let us hope so!

In reply to by duo

World citizen Thu, 08/03/2017 - 13:21 Permalink

Demonetization... I have been in India a few times... there is no infrastructure for that, and it will take many years to build it... in the meantime, I guess they will have to resort to something else... another bogus cryptocurrency on its way...

hound dog vigilante Thu, 08/03/2017 - 13:35 Permalink

 i'd like to hear more POV from our Indian readers here... please offer your opinion/view, as there is ZERO coverage/understanding of India in US schools/media... what is Modi's real vision/plan?  Looks like he has plenty of support/time to shape or change India as he sees fit... so what is Modi's true ambition for India?  or is Modi just another self-interested politician willing to risk/wreck a country just to stay in power?

Anteater hound dog vigilante Thu, 08/03/2017 - 13:52 Permalink

Modi has just exercised the 'Kiev Gambit', only instead of using IMF loans,(then Congress looting our SS/MC to 'backstop IMF' e.g. pay for the coup),Modi used fiat 'gold bonds' trading for 24KT heirloom jewelry, then outlawedlarge bills to stop ponzi-breaking redemptions, while he melted down all the24KT into bullion bars for Rothschilds in London. Rothschilds gave Modi theequivalent pound sterling credit to float India junk bonds that Modi has usedto privatize industrial properties, public infrastructure and prime farm lands. The catch? Modi needs a GST tax to pay interest on the junk bonds, sincehe doesn't have a Kerry-Kohn and RNC US Congress to backstop his gambit.If he plays it right, he can drive down the buyout costs of other privatization.If he plays it wrong, he will have to liquidate positions to fund junk bonds.If it all blows up, and India(n)s redeem their gold bonds for cash, then war. Ukraine and India, two red-headed stepchildren of the Rothschild's mafiya,coming to a local mall near you. Oh, wait, ... they're here! Go into the light!Google: 'Bush Sr - Marcos Gold - Khashoggi $240B Soviet oil junk bonds' "You're gonna have to smoke a lotta fenadryl if you think this is winning!" DJT/JCK

In reply to by hound dog vigilante

TempEst hound dog vigilante Thu, 08/03/2017 - 15:15 Permalink

Well to understand his plan you have to understand the conditions in India and the man himself. It's going to be a long read so brace yourself! India didn't join the global debt game for the longest period of time. This was done via a tax regime that discouraged foreign products over India products. Unlike China, India is a democratic state with people from all religions and about 100 languages withing it's borders. India as you know it now never existed before. There were a dozen large princely states that were held together by Hinduism. India(Akhanda Bharath) at one point extended from Afghanistan to Indonesia with the entire block being one big trading port from fruits to vegetables to almost anything that was perceived to be exotic before 1900s. At that time Iran and India, although they did fight multiple times were frenimies. They were the western block that helped to keep the nomadic arabs in in Arabia and the Indians provided cover for them on their eastern flank by supporting Buddhism in Tibet and blocking off China. But this system broke down when Arab nationalism(aka Islam) conquered Iran after Iran an India waged a costly war against one another which weakened Indias ability to defend the Persians from the Mongols from the North. This is why most Persians still dislike Mongols and Arabs and hate to be characterized as arab or mongol. Once Iran fell the whole area between India(as you know it today) and Iran was hammered by invading armies from Mongolia and the Arab countries. Although they didn't win all their wars outright, just like modern day ISIS, all these muslim warlords had just one mission and that was subversion and then conversion. Pakistan and Afghanistan became easy targets because they have always had a huge problem with opium, both grown in afghanistan and china in bulk and transported via the silk route. The Chinese and muslims colluded to block the silk route which destroyed the ability of India adn the West to interact and caused massive damage to both economies which were then massively attacked by the muslims on both sides. India fell to these cultists and with chinese support they were able to move swiftly all the way down to Indonesia in one quick move and given Indians and their propensity to be nice to others many small groups of muslims now filled the holes in large parts of South East Asia. With their minimal subsistence and high birth rates they soon displaced the local population. Just like in the US today, India had white collar and blue collar jobs. But over time money does concentrate in jobs that require intelligence and not just manual labor. So they teamed up with these minorities to raise all hell forcefully converting Indias across India and this is when large scale conversions began. The worst case of this was in Indonesia and why you have such a large population of muslims there, all the time China had their back. Europe too was on the brink of collapse but then luckily for India and Europe, Spain found the Americas! This changed the dynamics completely as the war effort from Islamists was now back in defensive mode(been that way in Europe since). Unfortunately, instead of renewing ties with India, somehow the European elite thought they could colonize India. They tried and it worked for 200 years until they walked out without the two sides going to battle. But they left the entire islamic apparatus in place. This destroyed the once mighty east into a bunch of countries with Muslims ghettos pock marking the whole place. Ever since this happened the Hindus dont trust muslims and the muslims never obey laws of the countries they are in because anything that is not hallal is oppressive. This creates a huge problem logistically when it comes to management and it's consequence is sky high corruption. There are people even within India who dont want India to be a super power because that would weaken the jihad that they still haven't finished in India. Indians also lacked the means to travel anywhere outside their country because of all these issues and given that India has no natural sources of energy anymore(malaysia and Indomesia could have really helped us in that regard) everyone just stayed put till the late 20th and early 21st century. So at the turn of the century people coming back in from abroad obviously demanded higher standards and quality and this resonated with a lot Indians who are fed up with all the corruption that was destroying the country. Thus in an overwhelming majority, people voted to get Modi in. He's was a small scale businessman with the knack of an assassin. He systematically purged the state of Gujarat and helped people in that state empower themselves and became the most prosperous state in the country. Again an attempt was made by muslims 'extremists' to usurp him when they burned 50 hindus on a train and set off communal rioting in the state. But he prevailed and came out stronger than before. This set him up for becoming the PM of India. His plan is to enact as many laws as possible that will positively effect the country before his term is over. Once that is done and people get a true taste of what it was like to live prosperously again they will keep demanding it and it is that demand that will grow the country again. The first target of his was the corruption that was rampant in India so he banned those big notes and this took away mostly the power of the corrupt career politicians who used cash as a means of buying votes and running a big black market that hurt the economy immeasurably. Once this step was complete the next step was FDI. By opening the local market to the broader western market he's selling Make in India instead of cheap and made in China. India doesn't have a workforce willing to work like slaves. The land has enough to provide people with sustenance even without Govt help(otherwise such a large population would be unsustainable). What India can provide is a huge base for middle level high skill manufacturing. Just like diamonds Indians are good at making refined stuff like quality cotton, crafty metal work, etc. This would help western countries create the intellectual stuff while the manual work could be redistributed to India so that the products that are created are of higher quality than those that are created in China which are cheaper but of lower quality. Given that the Indian land itself can handle such a large population the people can work for wages that are comparable to their Chinese counterparts but produce higher quality products. So to summarize it, it's you think it up and we'll make it instead of the Chinese model that says you think of it, we'll steal it and sell it back to you cheaper. This along with the strategic geo location of India now makes us powerful allies of Western countries looking to the reign in the crazy Chinese.So in that way he is giving a short term dose of pain for long term gain so much so that even many arab states actually have an interest in seeing India as their new mega market instead of China because of the propensity of Indians to rely on in house construction which means they will most likely continue to use gas powered cars long into the future even if western countries shift over to Nat gas(i.e eletric) cars. But in the end India will have it's day of reckoning with Islam, much like Europe will and that aint gonna be a pretty event. Especially if China gets involved this time and this will be on the mainland of Hinduism, it will be a very brutal event. Until then everyone is going to pretend that Everything is just DAaaaandy!That was the summary of the whole story. If you want more inside gory details about the arab or chinese genocide in Indian territories or how the batsh*t crazy Chinese have no sense when it comes to regional politics just pick any book on the region or just wait for a war to start in the region over the next several decades.  

In reply to by hound dog vigilante

Yog Soggoth Another region… Thu, 08/03/2017 - 17:54 Permalink

Whatever, Calusas topped the world in seafood consumption for who knows how many thousands of years. Traded from Canada to South America, and kicked everyone's butts until they met the Spanish inquisition. What is your version of GDP? Mine is quality of life. And by the way, the Calusa blood is still alive and hiding because of the lawsuits that could be had against the new landowners.

In reply to by Another region…

MEAN BUSINESS Thu, 08/03/2017 - 13:55 Permalink

Sadly India didn't have a 16th Amendment to repeal. Stupidly, Canada has both GST and Income Tax.FairTax.org - Fire up the economic engineMake America mean business Again-----------------big announcement tonight he said, while meeting today with healthcare professionals...what part of unhitching ACA from the tax code in Speaker Ryan's AHCA didn't folks get?-----------------back to haymaking...

milking institute Thu, 08/03/2017 - 14:07 Permalink

The naive optimism by business groups is not surprising. if you follow india's media you know how incredible slavish and subservient vast segments of the population are. Modi's obama like ability to sell the people a shit sandwich is astounding. this will end badly for india,hopefully without a major conflict with pakistan or china.