The government is reportedly considering slashing the withholding tax rate from 20% to the earlier 5%. Market participants believe that lowering the withholding tax rate could make Indian debt and other financial assets more attractive for foreign…
Behind Prime Minister Narendra Modi's call for austerity measures by citizens are substantial foreign exchange outflows linked to higher gold imports and spending on overseas travel under the Liberalised Remittance Scheme (LRS).
The Prime Minister’s solutions focus on cutting back consumption but it will slow down India’s growth; by itself it is not a sustainable solution. What is required is boosting India’s production and productivity.
PM Modi latest statement: As dollars flow out, the Indian rupee weakens, making gold even more expensive. This creates a vicious cycle where the Indian consumer pays more rupees for gold simply because previous gold purchases weakened the rupee.
