Useful Resources

Sunday, October 30, 2005

What is VAT? (Value Added Tax)


VAT is a system of collection of sales tax under which tax is charged at each stage of sale on the value added to the goods. In practice, the dealer selling the goods collects tax on the full price at which he sells the goods whether to a consumer or to a dealer. At the end of a tax period, usually a month, he reduces from the tax so collected by him, the tax which has been charged to him by the dealers from whom he purchased goods during the tax period and deposits the balance to the Government treasury.
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Source: http://www.pextax.com

Tuesday, October 25, 2005

Comprehensive Study of India – Federal Research Division of U.S.


One should visit the following link.
http://lcweb2.loc.gov/frd/cs/intoc.html


It is online documents of the Library of Congress of United States of America. In the header of the site, it is written thus, " Customized Research and Analytical services serving the U. S. government since 1948" (Starting of Cold War period)(Italized comment by the blogger himself).


There are ten chapters which cover the details about India from the earliest time to the present day. In the earlier chapter, the history of India is discussed in its outline. The elucidation is quite comprehensive. A person who wants a bird eye view of the whole history of India from the earliest time to the present, may find satisfied with the contents of the history portion.


For the General Studies, the candidate, who does not have history as his option, can study from here and make a good essay which may help in many possible questions in General Studies Prelims. The history is discussed in Chapter number one but covers all the main milestones (Chapter of Indian History) in history of India.


Chapter 2 is on the geography of India.


Chapter 4 is on languages, ethnicity and regionalism. The contents give the basic structure on which the personal notes can be further developed.


Chapter 5 discusses the sociological framework of the country.


Chapter 6 is on character and structure of Economy.


Chapter 8 is on Government and politics


Chapter 9 is on foreign policy of India.



One of the most fascinating section is Bibliography. The students who are preparing from civil services may find this section very useful. The students who are interested in overall study may also find the bibliography quite interesting and useful. One can just judge the approach of getting the information about a country by another foreign country when one finds that the titles of class tenth and twelfth published by NCERT are included in the list.


The bibliography is very comprehensive and corresponding to the chapterization which has been done while giving the details of various aspects of the country. But on the whole, it turns up as one single place to decide which books can be picked to study various aspects of the country. When one consider the gernalized outline of the syllabus of General study, the given chapterization and sub headings and then books on them can give a well defined idea and plan to a candidate to how to organise one’s study for the examination.


The students of political science and journalism subject must read the history of the division on the home page of the site.

Sunday, October 09, 2005

The Spring of Dionysos: The long list of Nobel Peace Prize winners

At the post on the link http://springofdionysos.blogspot.com/2005/10/long-list-of-nobel-peace-prize-winners.html you may find a list of Nobel prize winners for peace.

Today that is October 9, 2005, the reports have appeared in different newspapers, in which, it is reported that Norwegian committee of Nobel prize for peace have reported on their site that why Gandhi was not given Nobel Prize for peace.

The issue had already been highlighted on the blogs who had read it earlier than the news paper. It was actually reported by IANS news agency. Another blogger, who had already located the report and then placed his views on his blog at Nobel Cause on October 8, 2005 itself. It contains the whole report which also appears in Times of India and Hindustan times.

I have also placed my remarks at "Why was Gandhi not Given Nobel Prize?"

Saturday, October 08, 2005

Foreign Direct Investment (FDI): Definition and Comment


Definitions of FDI are contained in the Balance of Payments Manual: Fifth Edition (BPM5) (Washington, D.C., International Monetary Fund, 1993) and the Detailed Benchmark Definition of Foreign Direct Investment: Third Edition (BD3) (Paris, Organisation for Economic Co-operation and Development, 1996).

According to the BPM5(IMF-USA), FDI refers to an investment made to acquire lasting interest in enterprises operating outside of the economy of the investor. Further, in cases of FDI, the investor´s purpose is to gain an effective voice in the management of the enterprise. The foreign entity or group of associated entities that makes the investment is termed the "direct investor". The unincorporated or incorporated enterprise-a branch or subsidiary, respectively, in which direct investment is made-is referred to as a "direct investment enterprise". Some degree of equity ownership is almost always considered to be associated with an effective voice in the management of an enterprise; the BPM5 suggests a threshold of 10 per cent of equity ownership to qualify an investor as a foreign direct investor.

Once a direct investment enterprise has been identified, it is necessary to define which capital flows between the enterprise and entities in other economies should be classified as FDI. Since the main feature of FDI is taken to be the lasting interest of a direct investor in an enterprise, only capital that is provided by the direct investor either directly or through other enterprises related to the investor should be classified as FDI. The forms of investment by the direct investor which are classified as FDI are equity capital, the reinvestment of earnings and the provision of long-term and short-term intra-company loans (between parent and affiliate enterprises).

According to the BD3 of the OECD(Paris), a direct investment enterprise is an incorporated or unincorporated enterprise in which a single foreign investor either owns 10 per cent or more of the ordinary shares or voting power of an enterprise (unless it can be proven that the 10 per cent ownership does not allow the investor an effective voice in the management) or owns less than 10 per cent of the ordinary shares or voting power of an enterprise, yet still maintains an effective voice in management. An effective voice in management only implies that direct investors are able to influence the management of an enterprise and does not imply that they have absolute control. The most important characteristic of FDI, which distinguishes it from foreign portfolio investment, is that it is undertaken with the intention of exercising control over an enterprise.

The above definition is contained on United Nation Conference of Trade and Development (UNCTD).

Elaborating further on the above mentioned link, the following details have given.

Components of FDI
The components of FDI are equity capital, reinvested earnings and other capital (mainly intra-company loans). As countries do not always collect data for each of those components, reported data on FDI are not fully comparable across countries. In particular, data on reinvested earnings, the collection of which depends on company surveys, are often unreported by many countries.

The threshold equity ownership
Countries differ in the threshold value for foreign equity ownership which they take as evidence of a direct investment relationship. This is the level of participation at or above which the direct investor is normally regarded as having an effective say in the management of the enterprise involved. The threshold value usually applied for FDI is 10 per cent, for data on the operations of TNCs, it involves chosen ranges of between 10 and 50 per cent. Some countries do not specify a threshold point, but rely entirely on other evidence, including companies´ own assessments as to whether the investing company has an effective voice in the foreign firm in which it has an equity stake. The quantitative impact of differences in the threshold value used is relatively small, owing to the large proportion of FDI which is directed to majority-owned foreign affiliates.

Defining a controlling interest and treatment of non-equity forms of investment
Other than having an equity stake in an enterprise, there are many other ways in which foreign investors may acquire an effective voice. Those include subcontracting, management contracts, turnkey arrangements, franchising, leasing, licensing and production-sharing. A franchise (a firm to which business is subcontracted) or a company which sells most of its production to a foreign firm through means other than an equity stake are not usually collected, some countries have begun to contemplate doing so. For example, the OECD treats financial leases between direct investors and their branches, subsidiaries or associates as if they were conventional loans; such relationships will therefore be included in its revised definition of FDI.

The above mentioned detail of FDI is given on UNCTD.

Comment
In the above mentioned definition, one can derive following conclusions.

  1. The foreign entity may or may not have direct investment.

  2. The foreign entity acquires effective control over the business enterprises.

  3. The control of foreign entity is not only confined to making equity investment only. It may force the Business enterprise to buy the production of the foreign entity. It may also ask the Business enterprise of the other country to join in lease of producing or consuming its production. The control can acquired through, "subcontracting, management contracts, turnkey arrangements, franchising, leasing, licensing and production-sharing."

  4. The direct investment is based on the assessment of a company on its own. It is up to the management of the company to declare that it has a foreign control or not. A company may have a link with a foreign company. Its management decisions may be influenced by its dealing with the foreign company. However, it will come under the purview of the laws of the land for being termed as the associate of a foreign company only and when the management make it public that such an influence is there.

Definition: Transnational Corporation-Multinational Corporation


Transnational corporations (TNCs) are incorporated or unincorporated enterprises comprising parent enterprises and their foreign affiliates. A parent enterprise is defined as an enterprise that controls assets of other entities in countries other than its home country, usually by owning a certain equity capital stake.

An equity capital stake of 10 per cent or more of the ordinary shares or voting power for an incorporated enterprise, or its equivalent for an unincorporated enterprise, is normally considered as a threshold for the control of assets (in some countries, an equity stake other than that of 10 per cent is still used. In the United Kingdom, for example, a stake of 20 per cent or more was a threshold until 1997.).

A foreign affiliate is an incorporated or unincorporated enterprise in which an investor, who is resident in another economy, owns a stake that permits a lasting interest in the management of that enterprise (an equity stake of 10 per cent for an incorporated enterprise or its equivalent for an unincorporated enterprise).

The above definition is given on the site of United Nation Conference on Trade and Development (UNCTAD).

In India, the more popular word is Multinational Corporations.

In one of the other report of UNCTAD, it was mentioned that there were 72 TNCs identified by UN.

Tuesday, October 04, 2005

Eurasia

Eurasia
Here is an article on Plate Tectonics. It may be of interest for the aspirants.

General Information


UPSC has taken initiative to display Last Year Question Papers of CS, CDS, NDA, CMS, Engineering Service on its site. Check them out at www.upsc.gov.in. The files are PDF.


go to www.upsc.gov.in and check what is new.




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