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Current Affairs

Moody’s Rating Upgrade

Moody’s in a surprise move today upgraded India’s domestic and foreign currency ratings to Baa3 from Baa2 and also changed the outlook from positive to stable. The market thinks that the biggest game changer for Moody’s was the GST, NPA resolution efforts and other institutional reforms that are expected to improve productivity and tax base and enable India to achieve its high growth potential. In effect, this should also enable capping India’s debt/GDP ratio and bring it down over the longer term. The upgrade comes as a welcome relief especially for Indian asset markets – especially the bond market. However, the upgrade may not change RBI’s reaction function immediately.

Why would Gold prices go up in 2016/17?

Gold: To trade with a bullish bias post Brexit
UK’s surprise decision to leave the European Union has sent investors flocking to the safety of assets such as gold. The bullion rose ~9% in June'16 as the outcome of the British referendum became clear. Markets expect the precious metal to continue seeing strong and sustained demand amid uncertainty surrounding the exact nature of Brexit consequences on the global economy.

Why We Need GST?

Let’s begin by elaborating on the important concept of – cascading effect of taxes. It is also, logically, referred to as “taxes on taxes”. It is simple to illustrate – say A sells goods to B after charging sales tax, and then B re-sells those goods to C after charging sales tax. While B was computing his sales tax liability, he also included the sales tax paid on previous purchase, which is how it becomes a tax on tax.

“Brexit” what next for the World & its impact in India

Although polls suggested a tight referendum, financial markets underestimated the risk of a ‘leave’ vote. The direct impact of the ‘leave’ vote will apply mostly to the UK, as it begins long negotiations to exit the European Union.

Understanding “Brexit” in a nut-shell

What is happening?
A referendum was held on Thursday, 23 June, 2016 to decide whether Britain should leave or remain in the European Union. A referendum is basically a vote in which everyone (or nearly everyone) of voting age can take part, normally giving a "Yes" or "No" answer to a question. Whichever side gets more than half of all votes cast is considered to have won.