Ecommerce Opinion

The impact of financialization and formalization on India
Sree Vijaykumar
Sree Vijaykumar
From the Editor's Desk
As Teresa Barger of Cartica Capital says in this article, financialisation and formalization are two dominant economic trends in India today. Financialisation is when money comes out of cash, gold and savings accounts into the financial markets. This is being driven by more Indians (especially millenials) participating in mutual funds, insurance-led funds, etc. At this stage of India's growth, this should be good, as corporate India can use this money to grow themselves and the economy. The second trend of formalization is what some of the big bang reforms of the current government have been all about. While demonetization was an attempt at catching individual evaders in the tax net, GST will help increase the corporate tax net as companies at the top of the food chain will force smaller companies to file taxes, so the big companies can claim input credit. This is more likely to succeed than demonetization. It will also drive some SMEs out of business!

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