Category: Finance

Indian Funds in Swiss Banks Plummet by 70% in 2023, Hitting Four-Year Low

Staff ReporterFinance 0

In 2023, Indian deposits in Swiss banks fell dramatically by 70%, reaching their lowest point in four years at 1.04 billion Swiss Francs (₹9,771 crore), according to data from the Swiss National Bank (SNB). This sharp decline follows a peak in 2021 and is mainly due to reduced investments in bonds, securities, and other financial instruments.

Key Drivers of the Decline

The significant reduction in funds held by Indian clients is primarily due to a substantial decrease in investments in bonds, securities, and other financial instruments. Additionally, funds held in customer deposit accounts and cash through other bank branches in India have also seen significant declines.

Breakdown of Funds

– Customer Deposits:CHF 310 million (down from CHF 394 million in 2022)

– Other Banks:CHF 427 million (down from CHF 1,110 million)

– Fiduciaries/Trusts:CHF 10 million (down from CHF 24 million)

– Other Amounts: CHF 302 million (down from CHF 1,896 million)

Historical Context

Indian deposits in Swiss banks have generally been on a downward trend since reaching a record high of nearly CHF 6.5 billion in 2006. Exceptions to this trend occurred in 2011, 2013, 2017, 2020, and 2021.

Black Money Debate

These figures do not account for the alleged ‘black money’ held by Indians in Switzerland, as they represent official numbers provided to the SNB. Additionally, the data excludes funds held by Indians under third-country entities.

International Comparisons

As of the end of 2023, India ranked 67th in terms of foreign clients’ funds in Swiss banks, down from 46th in 2022. The UK topped the list with CHF 254 billion, followed by the US (CHF 71 billion) and France (CHF 64 billion).

Bank for International Settlements Data

According to the Bank for International Settlements’ “locational banking statistics,” Indian deposits in Swiss banks saw a 25% decrease in 2023, amounting to USD 70.6 million (₹663 crore). This metric is considered more accurate by Swiss and Indian authorities.

Cooperation on Tax Evasion

Switzerland has been actively sharing information with India to combat tax evasion and financial fraud. Since 2018, an automatic exchange of tax-related information has been in place, providing detailed financial data to Indian tax authorities annually.

Global Context

Overall, the total amount of funds held by foreign clients in Swiss banks decreased to CHF 983 billion in 2023 from CHF 1.15 trillion in 2022. Indian assets accounted for CHF 1.46 million, marking a 63% decrease from the previous year and the lowest level in over two decades.

Swiss National Bank (SNB) Key Points

– Establishment:The Swiss National Bank (SNB) was established on June 16, 1907.

– Headquarters:The headquarters are located in Bern and Zurich, Switzerland.

– Current President:Thomas Jordan (as of 2023).

– Primary Role:The SNB serves as the central bank of Switzerland, responsible for monetary policy, issuing banknotes, and ensuring the stability of the Swiss financial system.

– Ownership: The SNB is a joint-stock company with shares traded on the stock market, but the majority of shares are held by Swiss cantons and cantonal banks.

Functions

– Formulating and implementing the country’s monetary policy.

– Managing currency reserves.

– Ensuring the stability of the financial system.

– Issuing Swiss Franc banknotes.

– Acting as a banker to the Swiss Confederation.

Legal Framework

The SNB operates under the Swiss National Bank Act, which defines its mandate and powers.

Financial Reporting

The SNB publishes annual reports detailing its financial position, monetary policy, and other activities.

The substantial decline in Indian funds in Swiss banks in 2023 is indicative of a broader trend of decreasing investments in bonds, securities, and other financial instruments. Despite a history of fluctuations, the recent figures highlight a significant downturn from the peak levels seen in previous years. The ongoing efforts between Switzerland and India to combat tax evasion and financial fraud underscore the importance of transparency and cooperation in international finance.

Billionaire Timothy Mellon Donates $50 Million to Trump Super-PAC, Setting Record for 2024 Election; Michael Bloomberg Contributes $19 Million to Biden Campaign

Staff ReporterFinance 0

Timothy Mellon, a billionaire born into one of America’s wealthiest families, has contributed $50 million to the Trump campaign super-PAC, Make America Great Again Inc., as revealed in federal filings on Thursday. This donation is now recognized as the largest individual contribution disclosed in the 2024 election cycle.

Mellon, 81, formerly served as the chairman of Pan Am Systems Inc., a private manufacturing and transportation enterprise. This year, he intends to publish a memoir about his tenure as chairman, titled “panam.captain,” through Skyhorse Publishing.

The federal documents indicate that Mellon made his substantial donation on May 31, 2024, just a day after Trump was convicted of 34 felonies by a New York state court in a significant hush-money case. Additionally, Mellon has contributed at least $20 million to Robert F. Kennedy Jr.’s campaign, who is running as an independent candidate in the 2024 presidential race, according to the BBC.

TIME has contacted the Trump and Robert F. Kennedy Jr. campaigns for comments and further information.

Forbes reports that Mellon is the great-grandson of Thomas Mellon, an Irish immigrant who arrived in the U.S. in 1818. Thomas Mellon was a lawyer and judge who invested in various real estate and banking ventures. By his death, he had accumulated a substantial fortune, which his sons inherited. Today, the Mellon family is worth around $14.1 billion, ranking them as the 34th wealthiest family in America.

On the other side of the political spectrum, the Biden campaign has also attracted significant donations. The Washington Post revealed that billionaire Michael Bloomberg donated $19 million to the Future Forward (FF) PAC, a pro-Biden political action committee. Additionally, Bloomberg gave another $929,600 to the Biden Victory Fund.

Timothy Mellon’s substantial contribution to the Trump campaign comes at a pivotal moment, highlighting the ongoing financial battles in the 2024 election. Mellon’s donation, made a day after Trump’s legal conviction, underscores his commitment to Trump’s political future despite the former president’s legal troubles. Trump’s conviction in a landmark hush-money trial has not deterred Mellon from providing significant financial support. The timing of this donation could be seen as a statement of defiance and unwavering support for Trump’s agenda.

Mellon’s other major political contribution is to Robert F. Kennedy Jr.’s campaign, showcasing his willingness to support multiple candidates who align with his views. This $20 million donation to Kennedy’s campaign signifies Mellon’s broader influence on the 2024 presidential race, as he backs an independent candidate challenging the traditional two-party system.

Forbes’ profile of Mellon’s ancestry paints a picture of a family that has long been embedded in American wealth and influence. Thomas Mellon’s success in law and real estate laid the foundation for the Mellon family’s vast fortune, which continues to impact American society and politics today. With an estimated worth of $14.1 billion, the Mellon family remains a powerful force in the country’s economic landscape.

In parallel, the Biden campaign’s receipt of large donations underscores the high stakes of the upcoming election. Michael Bloomberg’s $19 million contribution to the Future Forward PAC and the additional funds to the Biden Victory Fund illustrate the financial muscle behind Biden’s campaign. Bloomberg’s significant support for Biden reflects his belief in the current president’s vision for America’s future. Bloomberg, a former mayor of New York City and a billionaire himself, has consistently supported Democratic causes and candidates, using his wealth to influence the political landscape.

The battle for campaign funds in the 2024 election highlights the broader contest between major political donors and their respective candidates. Timothy Mellon and Michael Bloomberg represent two sides of this financial arms race, each backing candidates they believe will best serve their interests and visions for the country.

Mellon’s memoir, “panam.captain,” expected to be published by Skyhorse Publishing, will provide insights into his experiences as chairman of Pan Am Systems Inc. This publication will likely offer a deeper understanding of Mellon’s business acumen and his perspectives on industry and transportation. His leadership at Pan Am Systems has been a significant part of his career, and this memoir could shed light on the principles that guide his business and political decisions.

Overall, the donations from Mellon and Bloomberg to their respective political causes reflect a broader trend of billionaires using their wealth to influence American politics. The substantial contributions from these individuals underscore the critical role of money in modern election campaigns. These donations not only support the candidates but also shape the political discourse and strategies leading up to the 2024 election.

As the election approaches, the financial backing from major donors like Mellon and Bloomberg will play a crucial role in determining the resources and reach of each campaign. Their support highlights the intersection of wealth and politics in the United States, where financial power can significantly impact electoral outcomes. The influence of these billionaires extends beyond their donations, as they bring attention to the candidates and issues they support, swaying public opinion and mobilizing voters.

Timothy Mellon’s $50 million donation to Trump’s campaign and Michael Bloomberg’s $19 million contribution to Biden’s campaign underscore the immense financial stakes in the 2024 presidential election. Mellon’s additional support for Robert F. Kennedy Jr. further emphasizes his strategic political investments. These significant contributions from wealthy individuals highlight the critical role of money in shaping the future of American politics. As the campaigns progress, the impact of these donations will become increasingly evident, demonstrating how financial power can drive political change in the United States.

Record Home Prices and High Mortgage Rates Challenge Buyers and Sellers in Tight Housing Market

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A Challenging Era for Homebuyers

Home prices surged to an unprecedented high last month, with recent data highlighting the increasing difficulty of purchasing a home. Elevated mortgage rates have sidelined many potential buyers and sellers, contributing to a scarcity of available homes and driving up prices for those on the market.

Here are four key insights into the current housing market:

Low Activity in Buying and Selling

May, typically a peak season for real estate, saw a decline in existing home sales compared to April, with a 2.8% drop from the previous year, as reported by the National Association of Realtors. Elevated mortgage rates have made home purchases more costly, pushing potential buyers out of the market. Additionally, current homeowners are hesitant to sell due to their existing lower mortgage rates.

The limited number of homes being sold are fetching higher prices, with the median home price in May reaching a record $419,300. Affordable homes, including starter homes, are becoming increasingly scarce. Jessica Lautz, deputy chief economist for the Realtors association, noted, “At lower price points, people are being priced out of the home-buying market, and there’s just less inventory when we think about homes that are under $250,000.”

Slight Relief in Interest Rates

There is some positive news: interest rates have slightly decreased in recent weeks. Freddie Mac reported an average rate of 6.87% on a 30-year mortgage this week, down from 7.2% in early May. Mortgage rates might fall further if the Federal Reserve reduces borrowing costs later this year. However, current rates remain more than double what they were pre-pandemic, significantly increasing the monthly payments required for home purchases today.

Increasing ‘For Sale’ Signs

While the number of homes on the market remains low by historical standards, there is a slight increase. The Realtors association noted that there were 1.28 million homes for sale at the end of May, an 18.5% increase from a year ago. Despite higher interest rates, life events such as new jobs, births, or family changes are compelling some homeowners to sell. Lautz explained, “Perhaps they have a new job or a new baby or a family change. We’re seeing new inventory come into the market because of these traits.”

Decline in New Home Construction

Previously, the shortage of existing homes allowed new home builders to help fill the market gap. In April, nearly one-third of homes for sale were newly built, compared to 13% before the pandemic. However, new home construction has slowed, potentially exacerbating the shortage of homes for sale. Builders started 5.2% fewer single-family homes in May than in April, and building permits for future construction also fell by 2.9%.

A Tough Market for Buyers and Sellers

The current housing market presents significant challenges for both buyers and sellers. Elevated mortgage rates and a lack of affordable homes have pushed many potential buyers out of the market. The median price of a home sold in May hit a record $419,300, driven up by the scarcity of lower-priced homes. Lautz pointed out, “At lower price points, people are being priced out of the home-buying market, and there’s just less inventory when we think about homes that are under $250,000.”

Despite some relief with a slight drop in interest rates, the overall cost of homeownership remains high. The average rate on a 30-year mortgage dropped to 6.87%, offering some respite compared to early May’s 7.2%. Future reductions in borrowing costs by the Federal Reserve could further lower mortgage rates, but current rates are still significantly higher than pre-pandemic levels, doubling the monthly payments required for new homeowners.

Slight Increases in Home Listings

The number of existing homes on the market, while still low, is slowly increasing. The Realtors association reported 1.28 million homes for sale at the end of May, marking an 18.5% rise from the previous year. This increase is partly due to life events that necessitate moving, such as job changes or family expansions. Lautz mentioned, “Perhaps they have a new job or a new baby or a family change. We’re seeing new inventory come into the market because of these traits.”

Challenges in New Home Construction

While new homes previously helped to mitigate the shortage of existing homes, the pace of new home construction is now slowing. In April, new builds accounted for nearly one-third of homes for sale, compared to 13% before the pandemic. However, builders started 5.2% fewer single-family homes in May than in April, and building permits for future construction also decreased by 2.9%.

Conclusion

The current housing market is marked by high prices, limited inventory, and elevated mortgage rates, making it a challenging environment for both buyers and sellers. The median home price has reached a new high, and the lack of affordable homes continues to price many out of the market. While there has been a slight decline in interest rates, they remain significantly higher than pre-pandemic levels, resulting in higher monthly payments for new homeowners.

The slight increase in home listings offers some hope, driven by life events necessitating moves. However, the slowdown in new home construction may worsen the shortage of homes for sale. As the market navigates these challenges, potential buyers and sellers must adapt to the evolving landscape.

Lautz’s insights encapsulate the current market’s complexity: “At lower price points, people are being priced out of the home-buying market, and there’s just less inventory when we think about homes that are under $250,000.” Despite these challenges, the market continues to show signs of resilience, with some increase in listings and potential for further declines in interest rates.

Study Finds Inflation Expected to Outpace Salary Increases Across Most Industries by 2028

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Inflation is projected to outpace the majority of salaries in the coming years, as per recent findings. The analysis, conducted by Moneywise and published earlier this month, examined data from the Bureau of Labor Statistics (BLS), the Federal Housing Agency (FIFA), and Redfin to assess the relationship between salaries and inflation over the past five years. According to the consumer price index (CPI), a widely used measure of inflation, the latest data shows no change from May and an annual increase of 3.3 percent.

The research revealed a stark reality: 97 percent of occupations failed to keep pace with inflation during this period. Adjusted for inflation, salaries experienced an average decrease of 8.2 percent. Moneywise pointed out that alongside rising inflation, home prices soared by an average of 56 percent over the same five-year span.

Examining 36 industries, the study predicted the median salaries for 2028 based on the average salary changes observed over the past five years. Notably, no industry showed an increase in real salary when adjusted for inflation. The sectors most adversely affected included sales, real estate, and engineering, all experiencing significant declines in annual salaries. Conversely, aviation, customer service, music, management, and hospitality industries saw comparatively smaller declines in their annual salaries.

A USA Today summary highlighted waiters and waitresses as the sole group to experience a salary increase (1.73 percent) when adjusted for inflation over the past five years. However, the outlook for several occupations appears bleak for the future. Elementary school teachers, accountants, administrative assistants, registered nurses, and general maintenance workers are anticipated to witness the most substantial declines in adjusted salaries by 2028.

Conversely, the outlook is relatively brighter for wait staff, food preparation workers, retail sales workers, cashiers, and customer sales representatives, according to USA Today’s report on occupations where adjusted salaries are expected to fare better.

Despite varied impacts across industries, the overarching trend is clear: inflation continues to outstrip salary increases for the vast majority of occupations, a trend likely to persist in the years ahead.

US Sanctions Force Moscow Exchange to Halt Dollar and Euro Trading, Shift Focus to Yuan

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New US sanctions against Russia have resulted in the immediate halt of trading in dollars and euros on the Moscow Exchange (MOEX), the primary financial marketplace in the country.

On Wednesday, despite being a public holiday in Russia, both MOEX and the Russian central bank swiftly issued statements following the announcement of the new sanctions by Washington. These sanctions aim to curb the flow of money and goods supporting Moscow’s military actions in Ukraine.

The central bank stated, “Due to the introduction of restrictive measures by the United States against the Moscow Exchange Group, exchange trading and settlements of deliverable instruments in US dollars and euros are suspended.”

As a consequence, banks, companies, and investors will no longer be able to trade these currencies through the central exchange, which provides benefits such as enhanced liquidity and oversight. Instead, trades will now have to be conducted over the counter, where transactions occur directly between two parties. The central bank mentioned it would use data from these trades to establish official exchange rates.

Many Russians maintain savings in dollars or euros, considering past economic crises when the ruble’s value plummeted. The central bank assured citizens that their deposits were safe. “Companies and individuals can continue to buy and sell US dollars and euros through Russian banks. All funds in US dollars and euros in the accounts and deposits of citizens and companies remain safe,” it reassured.

An individual from a significant, non-sanctioned Russian commodities exporter commented to Reuters, “We don’t care, we have yuan. Getting dollars and euros in Russia is practically impossible.”

With Moscow seeking to enhance trade and political relationships with Beijing, the Chinese yuan has overtaken the dollar as the most traded currency on MOEX, making up 53.6% of all foreign currency transactions in May.

Typically, the dollar-ruble trading volume on MOEX is around 1 billion rubles ($11 million) daily, while euro-ruble trading volume is approximately 300 million rubles ($3 million) each day. In contrast, yuan-ruble trading volumes now frequently exceed 8 billion rubles ($90 million) daily.

Dollar rates have surged

Before the national holiday, the ruble closed at 89.10 to the dollar and 95.62 against the euro. Following the sanctions announcement, some banks rapidly increased their dollar rates.

Norvik Bank announced Wednesday that it was buying dollars for just 50 rubles but selling them for 200 rubles, although it later adjusted the rates to 88.20/97.80. Tsifra Bank was buying dollars at 89 rubles and selling them at 120.

The US Treasury declared it was “targeting the architecture of Russia’s financial system, which has been reoriented to facilitate investment into its defense industry and acquisition of goods needed to further its aggression against Ukraine.”

Russia’s central bank has been preparing for such sanctions for nearly two years. In July 2022, the bank stated it was modeling different sanctions scenarios with participants of the foreign exchange market and infrastructure organizations.

Russian broker T-Investments remarked on Telegram, “This is bad but expected news.”

Forbes Russia reported in 2022 that the central bank was considering a mechanism for managing the ruble-dollar exchange rate should exchange trading be stopped due to sanctions against MOEX and its National Clearing Centre, which was also affected by the new sanctions.

MOEX announced that share trading and money market trades settled in dollars and euros would also be suspended. The money market includes low-risk, short-term debt instruments like government bonds and commercial debt.

These recent developments underscore the significant impact of the latest US sanctions on Russia’s financial operations. The shift from central exchange trading to over-the-counter deals marks a substantial change in how financial transactions will be conducted in Russia. The central bank’s reassurance about the safety of deposits in dollars and euros aims to maintain public confidence, although the actual ability to trade these currencies has been drastically reduced.

The response from market participants, such as the adjustment of dollar rates by various banks, reflects the immediate economic adjustments being made in light of the new sanctions. The increased reliance on the yuan and the continued preparation by the Russian central bank highlight the ongoing strategic shift in Russia’s financial practices to mitigate the impact of Western sanctions.

As Russia deepens its financial and trade ties with China, the prominence of the yuan in the Russian financial market is likely to grow further. This realignment not only reflects the current geopolitical tensions but also suggests a long-term shift in the global financial landscape, with significant implications for international trade and currency markets.

The central bank’s proactive stance in simulating sanctions scenarios and developing contingency plans demonstrates a level of preparedness, although the full impact of these new sanctions will unfold over time. Market participants and the general public will closely watch the developments as Russia navigates through these challenging economic conditions.

Overall, the suspension of dollar and euro trading on the Moscow Exchange marks a pivotal moment in Russia’s financial sector, driven by geopolitical dynamics and strategic economic adjustments. The move to over-the-counter trading, the reliance on the yuan, and the central bank’s assurances are all part of a broader strategy to stabilize the Russian economy amidst increasing international pressure. The effectiveness of these measures and their impact on the Russian financial system and broader economy will be critical areas to monitor in the coming months.

Bitcoin Faces Volatility Amid Economic Uncertainty: Crypto Stocks Eye Recovery in 2024

Staff ReporterFinance 0

Cryptocurrencies have faced a challenging period following a robust performance in 2023 and the first quarter of this year. Bitcoin (BTC), in particular, surged to an all-time high of $73,750 in March, marking a significant milestone. However, momentum has since waned, with Bitcoin struggling below $70,000 for most of May and continuing into June. On June 13, Bitcoin briefly dipped below $67,000 before rebounding slightly to trade at $67,100.

The decline in Bitcoin’s value can be attributed to several factors, notably the Bitcoin halving event in April. This event, occurring roughly every four years, cuts the block reward by 50%, intended to limit the total supply of Bitcoin to 21 million coins. Historically, such reductions have spurred demand for cryptocurrencies, typically resulting in price increases. Despite these expectations, Bitcoin failed to regain its earlier momentum post-halving. Concurrently, a slowdown in the Wall Street rally during April, driven by concerns over inflation and potential interest rate hikes, also impacted Bitcoin’s performance.

While inflation showed signs of easing in April and May, alleviating immediate fears of aggressive rate hikes, uncertainty surrounding the Federal Reserve’s future rate cut plans unsettled investors. Federal Reserve Chairman Jerome Powell indicated a more cautious approach following the FOMC meeting, suggesting only one rate cut this year, a significant revision from the earlier projection of three cuts discussed in March. Powell emphasized that although inflation had decreased substantially over the past year, it remained above the Fed’s target of 2%, implying a prolonged period of higher interest rates. Such conditions typically dampen enthusiasm for growth assets such as technology stocks, consumer discretionary stocks, and cryptocurrencies.

Despite the recent setbacks, experts remain optimistic about Bitcoin’s long-term potential. Year-to-date, Bitcoin has still managed to gain 45.5%, building on its impressive 207% surge in 2023.

Turning attention to investment opportunities in the cryptocurrency sector, several stocks are poised for potential growth in 2024. Four notable picks, each carrying a favorable Zacks Rank, have been highlighted:

NVIDIA Corporation (NVDA), a leader in visual computing technologies, has transitioned from PC graphics to advanced solutions supporting AI, high-performance computing, gaming, and virtual reality platforms. NVDA boasts an expected earnings growth rate of 106.2% for the current year, with a Zacks Rank #1.

Interactive Brokers Group, Inc. (IBKR), a global electronic broker, facilitates cryptocurrency trading alongside traditional commodities futures. IBKR anticipates a 14.6% earnings growth rate for the current year, with a Zacks Rank #2.

Robinhood Markets, Inc. (HOOD), known for its financial services platform in the U.S., offers a range of investment options including stocks, ETFs, options, precious metals, and cryptocurrencies like Bitcoin and Ethereum through its Robinhood Crypto platform. HOOD projects substantial earnings growth this year, with estimates revised upwards by 110.3% over the last 60 days, earning it a Zacks Rank #2.

Coinbase Global, Inc. (COIN) provides critical infrastructure and technology supporting the global cryptocurrency economy, offering services from consumer accounts to institutional trading liquidity and developer tools for crypto applications. COIN expects significant earnings growth, with estimates improving by 219.1% over the last 60 days, securing a Zacks Rank #1.

While recent months have seen cryptocurrencies face headwinds due to regulatory uncertainties, inflation concerns, and interest rate expectations, the underlying bullish sentiment towards Bitcoin and select crypto-related stocks underscores potential opportunities for investors looking ahead to 2024.

Asia’s Billionaire Boom: Meet the Top 10 Wealthiest Individuals of 2024

Staff ReporterBusiness, Finance 0

As the global economy undergoes significant transformation, Asia has risen to prominence as a major center for wealth creation. The region now hosts some of the world’s wealthiest individuals, whose substantial contributions have significantly bolstered their nations’ economic prosperity. The net worth of these affluent individuals surged notably in FY 2023–24.

Below is a compilation of the ten wealthiest individuals in Asia as of May 2024. This list includes three individuals from India, with the majority being from China.

  1. Mukesh Ambani:

Mukesh Ambani is the chairman and managing director of Reliance Industries Limited, India’s most valuable company by market value. Under Ambani’s leadership, Reliance has diversified into refining, petrochemicals, retail, and telecommunications. Forbes has consistently ranked him as India’s richest person for the past decade.

  1. Gautam Adani:

Gautam Adani is the founder and chairman of the Adani Group, a multinational conglomerate headquartered in Ahmedabad, Gujarat, India. He diversified his business interests into trading metals, textiles, and agro-products. In 1988, he established Adani Exports, now known as Adani Enterprises, focusing on agriculture and power commodities. Securing the Mundra Port contract in 1995 marked a significant milestone for Adani. His strategic acquisition of Holcim’s Indian assets in 2022 made him India’s second-largest cement producer.

  1. Zhong Shanshan:

Zhong Shanshan, the visionary behind Nongfu Spring, a leading bottled water company, is currently the third richest man in Asia and the wealthiest individual in China. Born in 1963, Zhong started in the beverage industry in the 1980s and founded Nongfu Spring in 1996. The company has since become one of China’s largest beverage companies, offering products like water, juice, and tea. He also significantly influences Beijing Wantai Biological Pharmacy, a key producer of COVID-19 diagnostic tests.

  1. Prajogo Pangestu:

Prajogo Pangestu is the wealthiest individual in Indonesia, known for his ventures in energy and petrochemicals. He began with a timber company, but his enterprise, PT Barito Pacific, has grown to be a leader in petrochemicals, plastic production, mining, and thermal energy in Indonesia. His wealth saw a notable rise in 2023 when two of his group’s companies, Petrindo Jaya Kreasi and Barito Renewables Energy, went public.

  1. Colin Zheng Huang:

Colin Zheng Huang is the founder and chairman of Pinduoduo, a Chinese e-commerce company. Born in 1973, Huang began his career in technology before founding Pinduoduo in 2015. The company has quickly become one of China’s largest e-commerce platforms, focusing on social commerce and group buying. Though Huang stepped down as chairman a few years ago, he retains approximately 28% of the company shares. He also founded the online gaming company Xinyoudi and another e-commerce platform, Ouku.com.

  1. Zhang Yiming:

Zhang Yiming is the founder and chairman of ByteDance, the Chinese tech giant best known for creating TikTok. Born in 1983, Zhang began in the technology sector and launched ByteDance in 2012. The company has grown into one of China’s largest tech companies, focusing on social media, e-commerce, and artificial intelligence, boasting a global user base exceeding 1 billion.

  1. Ma Huateng:

Ma Huateng, also known as Pony Ma, founded Tencent Holdings, a leading Chinese technology company. Starting his career in the tech industry, Ma established Tencent in 1998. The company has grown to be one of China’s largest, specializing in social media, e-commerce, and gaming. He oversees WeChat, a messaging app with 1.3 billion users, and has significant stakes in global gaming, including Epic Games. Ma’s influence extends to investments in companies like Tesla and Spotify. He recently announced plans for Tencent to develop new artificial intelligence technologies to benefit humanity.

  1. Savitri Jindal and Family:

Om Prakash Jindal and his wife Savitri Jindal founded Jindal Steel and Power, an Indian steel and power company. Following OP Jindal’s passing, the company diversified into power generation and real estate. Savitri Jindal, the richest woman in India, continues her husband’s legacy, supporting sectors such as education and healthcare.

  1. Tadashi Yanai and Family:

Tadashi Yanai is the founder and chairman of Fast Retailing, a prominent Japanese retail company. Born in 1949, Yanai began his career in retail and founded Fast Retailing in 1963. The company has grown to become one of Japan’s largest retail firms, specializing in fashion and lifestyle products. Yanai drives Fast Retailing, which includes brands like Theory, Helmut Lang, J Brand, and GU, with Uniqlo as its flagship brand. Uniqlo operates over 2,400 stores in 25 countries. In October 2023, Uniqlo opened its first store in Mumbai, India, aiming to establish itself in the competitive local and international market.

  1. Li Ka-Shing:

Li Ka-Shing, born in 1928, founded CK Hutchison Holdings and CK Asset Holdings, two conglomerates based in Hong Kong. His career began in the textile industry, leading to the establishment of CK Hutchison Holdings in 1950. The company has diversified into sectors such as real estate, energy, and telecommunications. Starting with $6,500 in savings and loans from relatives, he launched Cheung Kong Plastics at age 21. Through the Li Ka Shing Foundation, he has donated over $3.8 billion to various causes, primarily in Greater China. Recently, CK Hutchison Holdings and Vodafone Group agreed to merge their British telecommunications businesses, creating the UK’s largest mobile operator.

Bitcoin Reaches Second-Highest Weekly Close at $69,640 Amid Volatile Market Conditions

Staff ReporterFinance 0

Bitcoin, the preeminent cryptocurrency by market capitalization, has achieved its second-highest weekly close ever recorded. The digital asset closed Sunday at $69,640 after navigating a turbulent week. On June 7, Bitcoin’s price reached $71,949, marking its highest level since May 21. However, it failed to break the $72,000 resistance level due to stronger-than-expected U.S. job gains reported in May. The robustness of the labor market may discourage the Federal Reserve from reducing interest rates soon. Cryptocurrencies, often considered risk assets, typically thrive under a more relaxed monetary policy.

Despite facing macroeconomic challenges, Bitcoin enthusiasts are optimistic about reclaiming the $70,000 threshold. As of now, the cryptocurrency is trading at $69,540 on the Bitstamp exchange. Significant inflows into spot-based Bitcoin exchange-traded funds (ETFs) last week seem to be a key bullish driver for the market.

However, Bitcoin remains range-bound for the time being. Galaxy Digital CEO Mike Novogratz noted that Bitcoin would need to surpass the $73,000 resistance level to enter a new trading range and potentially reach the $100,000 milestone. “It would have to surpass the $73,000 resistance level in order to be able to enter a new range and eventually surpass the $100,000 level,” Novogratz said.

Bitcoin recorded its highest weekly close of $71,285 in March after hitting its current all-time high of $73,794 on March 11. Following this peak, the cryptocurrency underwent a sharp correction. On May 1, it dropped to $56,500 due to the dual impact of declining ETF flows and stagflation concerns highlighted by influential figures like JPMorgan CEO Jamie Dimon. “Stagflation concerns fueled by such big names as JPMorgan CEO Jamie Dimon” contributed to the drop. Despite Bitcoin’s recovery, it has yet to establish a stable position above $70,000. According to U.Today, the distribution of Bitcoin by long-term holders to new ETF investors might be the primary reason why the bulls have not regained full control. “Long-term Bitcoin holders distributing their acquired coins to new ETF holders might be the key reason why the bulls are not in control just yet,” as reported by U.Today.

Bitcoin, the world’s foremost cryptocurrency by market capitalization, secured its second-highest weekly close on record, finishing Sunday at $69,640 after a notably volatile week. On June 7, Bitcoin’s price surged to $71,949, its highest point since May 21, yet it couldn’t breach the $72,000 resistance level due to stronger-than-anticipated U.S. job gains in May. The strength in the labor market could deter the Federal Reserve from lowering interest rates in the near future, as cryptocurrencies like Bitcoin often benefit from more lenient monetary policies.

In the face of these macroeconomic headwinds, Bitcoin proponents remain hopeful about the cryptocurrency reclaiming the $70,000 mark. Currently, Bitcoin trades at $69,540 on the Bitstamp exchange. Substantial inflows into spot-based Bitcoin exchange-traded funds last week appear to have significantly buoyed the market.

Nevertheless, Bitcoin continues to be range-bound. Galaxy Digital CEO Mike Novogratz stated that Bitcoin would need to overcome the $73,000 resistance level to enter a new trading range and eventually aim for the $100,000 mark. “It would have to surpass the $73,000 resistance level in order to be able to enter a new range and eventually surpass the $100,000 level,” said Novogratz.

In March, Bitcoin achieved its highest weekly close of $71,285 after reaching its all-time high of $73,794 on March 11. This was followed by a steep correction. On May 1, Bitcoin plummeted to $56,500 due to the combined effects of slowing ETF flows and stagflation fears raised by prominent figures like JPMorgan CEO Jamie Dimon. “Stagflation concerns fueled by such big names as JPMorgan CEO Jamie Dimon” contributed to the decline. Although Bitcoin has rebounded, it has not yet managed to secure a position above the $70,000 level. As per U.Today, long-term Bitcoin holders distributing their coins to new ETF investors might be a crucial factor in the bulls’ struggle for dominance. “Long-term Bitcoin holders distributing their acquired coins to new ETF holders might be the key reason why the bulls are not in control just yet,” U.Today reported.

Bitcoin, leading the cryptocurrency market by capitalization, reached its second-highest weekly close ever at $69,640 on Sunday after a week of volatility. On June 7, the cryptocurrency’s price peaked at $71,949, its highest since May 21, but failed to surpass the $72,000 resistance level due to stronger-than-expected U.S. job gains reported in May. The labor market’s strength might inhibit the Federal Reserve from reducing interest rates soon, which typically benefits risk assets like cryptocurrencies.

Despite macroeconomic challenges, Bitcoin bulls are optimistic about regaining the $70,000 level. The cryptocurrency is currently trading at $69,540 on the Bitstamp exchange. Significant inflows into spot-based Bitcoin ETFs last week appear to be a major bullish factor for the market.

For now, Bitcoin remains within a trading range. Galaxy Digital CEO Mike Novogratz mentioned that Bitcoin needs to break through the $73,000 resistance level to enter a new range and potentially surpass $100,000. “It would have to surpass the $73,000 resistance level in order to be able to enter a new range and eventually surpass the $100,000 level,” Novogratz stated.

In March, Bitcoin achieved its highest weekly close of $71,285 after hitting its all-time high of $73,794 on March 11, followed by a sharp correction. On May 1, Bitcoin dropped to $56,500 due to the combined impact of reduced ETF flows and stagflation concerns highlighted by figures like JPMorgan CEO Jamie Dimon. “Stagflation concerns fueled by such big names as JPMorgan CEO Jamie Dimon” played a role in this decline. Although Bitcoin has recovered, it has not yet established a solid footing above the $70,000 mark. U.Today reported that long-term Bitcoin holders distributing their coins to new ETF investors might be a key reason why the bulls have not taken full control. “Long-term Bitcoin holders distributing their acquired coins to new ETF holders might be the key reason why the bulls are not in control just yet,” as reported by U.Today.

Bitcoin, the top cryptocurrency by market cap, ended Sunday at $69,640, its second-highest weekly close to date, after a week of significant volatility. On June 7, Bitcoin’s price hit $71,949, its highest since May 21, but couldn’t break the $72,000 resistance level due to stronger-than-expected U.S. job gains in May. This robust labor market might prevent the Federal Reserve from lowering interest rates soon, a situation that usually favors cryptocurrencies, considered risk assets.

Despite these macroeconomic obstacles, Bitcoin supporters are optimistic about reclaiming the $70,000 level. Currently, Bitcoin is trading at $69,540 on the Bitstamp exchange. Massive inflows into spot-based Bitcoin ETFs last week seem to be a major bullish catalyst for the market.

However, Bitcoin remains range-bound for now. Galaxy Digital CEO Mike Novogratz stated that Bitcoin would need to break the $73,000 resistance level to enter a new range and eventually exceed $100,000. “It would have to surpass the $73,000 resistance level in order to be able to enter a new range and eventually surpass the $100,000 level,” Novogratz commented.

In March, Bitcoin logged its highest weekly close of $71,285 after reaching its all-time high of $73,794 on March 11. Following this peak, the cryptocurrency experienced a steep correction, plunging to $56,500 on May 1 due to slowing ETF flows and stagflation concerns highlighted by influential figures like JPMorgan CEO Jamie Dimon. “Stagflation concerns fueled by such big names as JPMorgan CEO Jamie Dimon” contributed to this decline. While Bitcoin has recovered since, it has not yet managed to establish itself above the $70,000 mark. According to U.Today, the distribution of Bitcoin by long-term holders to new ETF investors might be a key reason why the bulls are still not in full control. “Long-term Bitcoin holders distributing their acquired coins to new ETF holders might be the key reason why the bulls are not in control just yet,” as reported by U.Today.

Major US Banks Under Fire for Failing to Protect Customers from Fraud on Zelle: Senate Panel Report

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JPMorgan Chase, Bank of America, and Wells Fargo are under scrutiny for not adequately safeguarding their customers from substantial fraud and scams, amounting to hundreds of millions of dollars each year, according to a US Senate panel. During a hearing by the Permanent Subcommittee on Investigations, Chairman and Democratic Senator Richard Blumenthal highlighted the extent of the issue, revealing that the customers of these banking giants filed claims to recover a staggering $456 million in 2022, all lost through scams and fraud on the payments network Zelle.

“The banks of America have a dirty little secret. It’s called Zelle,” Senator Blumenthal stated during the hearing. He criticized Zelle’s marketing, which promotes the service as “a fast and easy way to send and receive money.” However, as the Senator pointed out, the Committee’s findings suggest that Zelle often facilitates a “fast and easy way to lose money.”

Zelle, a network co-owned by seven major US banks including JPMorgan Chase, Bank of America, and Wells Fargo, is under fire for giving users a false sense of security while leaving them exposed to significant fraud risks. Blumenthal elaborated on this, saying, “Zelle transfers are nearly instant and irreversible, and by the time a consumer knows they’ve been scammed, usually it’s too late to do anything about it – at least according to Zelle and according to the banks that own, control, and in effect operate Zelle.”

The Senator emphasized the deceptive sense of trust that Zelle and its owning banks offer to consumers, stating, “Zelle and the banks that own it offer to customers the appearance of the trust they feel they deserve. But the risks there are real and present, and they simply are failing to protect consumers in the way that they deserve.”

The Subcommittee’s investigation revealed that out of the $456 million reported lost by customers due to scams on Zelle in 2022, only $341 million was refunded. This leaves a substantial amount unrecovered, highlighting the vulnerabilities and inefficiencies in the current protection mechanisms. Additionally, the panel found that 13% of users on Zelle and other peer-to-peer payment platforms reported sending money to someone, only to later discover it was a scam.

In response to the Senate panel’s concerns, Zelle’s parent company, Early Warning Services, LLC, issued a statement. “Providing a safe and reliable service to consumers is the top priority of Early Warning Services, LLC, the network operator of Zelle, and our 2,100 participating banks and credit unions. As a result of our continued efforts to build on Zelle’s strong foundation of security, less than one-tenth of one percent (.1%) of transactions are reported as fraud or scams, making Zelle one of the safest ways for consumers to pay people they know and trust. Zelle is also currently generally free for most consumers.”

Despite these assurances, the Senate panel’s findings suggest that the measures in place are not sufficient to protect consumers fully. The discrepancy between the amount lost and the amount repaid points to gaps in the system that need to be addressed. The hearing has brought to light the urgent need for more stringent security measures and better consumer protection protocols on peer-to-peer payment platforms like Zelle.

The Senate panel’s investigation sheds light on the pressing issue of financial security in digital transactions. As peer-to-peer payment platforms become increasingly popular, the responsibility to protect consumers from fraud falls heavily on the service providers and the banks that support them. The findings from this investigation underscore the need for more robust security measures and greater accountability from financial institutions involved in such payment networks.

The revelations have sparked a call for action, urging banks and payment networks to enhance their security frameworks and provide better protection for their customers. The issue of fraud on Zelle is not just a minor inconvenience; it represents a significant financial risk to consumers, many of whom rely on these platforms for everyday transactions. The Senate panel’s scrutiny aims to push for changes that will make digital financial transactions safer and more secure for all users.

The investigation by the Permanent Subcommittee on Investigations has highlighted a critical flaw in the current financial ecosystem, where major banks like JPMorgan Chase, Bank of America, and Wells Fargo are not doing enough to shield their customers from fraud on the Zelle network. The substantial losses reported and the relatively low repayment rates indicate that much more needs to be done to protect consumers. The Senate panel’s findings and the subsequent responses from the involved parties underscore the urgent need for enhanced security measures and better consumer protection to prevent such fraud in the future.

UNICEF Report: 181 Million Children Suffer from Severe Food Poverty Amid Global Crises

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Many children worldwide are not getting enough to eat, but what does “not enough” look like? In East Africa, it means babies receive a mix of breast milk and maize porridge. In Yemen, it’s a paste made of flour and water. In conflict zones like Gaza, children might eat raw lemon and weeds.

A new UNICEF report examines what children in 137 low- and middle-income countries are being fed and its impact on their growth and development. The findings are alarming: one in four children under five experience “severe food poverty,” meaning they consume two or fewer food groups daily. “It amounts to 181 million children who are deprived of the diets they need to survive,” says Harriet Torlesse, a nutrition specialist at UNICEF and the lead author of the report. “If you think about these diets, they really don’t contain the range of vitamins and minerals and proteins that children need to grow and develop.”

Nutrition experts, in discussions with NPR, highlighted that the world is not progressing in combating malnutrition and hunger. The COVID-19 pandemic, the war in Ukraine, inflation, and localized conflicts have exacerbated food supply disruptions and increased food prices.

However, the report also notes some positive developments, showing that several low-income countries have made strides in providing better nutrition to children under five. Here are four key takeaways from the report:

  1. Not Just About Quantity, But Quality of Food

Richmond Aryeetey, a professor of nutrition at the University of Ghana, explains that the issue is twofold: “There are those who are not getting enough who would fall into the full poverty criteria. And then there are also those who potentially have the opportunity to get enough but are being fed unhealthy food.” Aggressive marketing of snacks and sugary beverages, particularly targeting children, plays a significant role in this. In low-income countries, regulating these industries is more challenging. Deanna Olney, Director of the Nutrition, Diets, and Health Unit at the International Food Policy Research Institute, adds, “One of the features of these snack foods is that they’re often really cheap and they fill you up. And so, people are inclined to buy them. But if they were more expensive because of taxes, you know, then maybe they’d be less inclined to choose those for their children.”

The prevalence of ultra-processed foods contributes to rising rates of overweight and obesity among children, an issue needing more attention.

  1. Conflict Zones and Acute Child Hunger

While conflict is not the primary driver of child hunger globally, it leads to some of the worst cases, notably in Sudan, Somalia, and Gaza. UNICEF’s data shows that since December, 9 out of 10 children in Gaza have faced severe food insecurity. Harriet Torlesse remarks, “Children in Gaza at this point in time are barely eating any nutritious foods at all. Before the war in Gaza, only 13% of children were living in severe food poverty.”

Technological advances have improved the measurement of food intake in conflict zones, and Gaza currently has the highest documented rate of severe malnutrition.

  1. Severe Food Poverty’s Impact on Child Development

Children living in severe food poverty are significantly more likely to suffer from wasting, where a child is too thin for their height, indicative of life-threatening malnutrition. Over 13 million children under five are affected by this extreme condition. Torlesse notes, “We know that these children don’t do well at school. They earn less income as adults, and they struggle to escape from income poverty. So not only do they suffer throughout the course of their life, their children, too, are likely to suffer from malnutrition.”

Malnutrition stunts not only physical growth but also brain development, limiting a child’s ability to fully contribute to their community and country later in life. Richmond Aryeetey highlights the economic impact with a study from 2016: “The estimate was that Ghana was losing close to about $6.4 million annually because of children who are not being fed adequately. That’s a lot of money being lost because we are not feeding our children well.”

  1. Effective Solutions and Success Stories

There is hope, as several low-income countries have successfully reduced severe child food poverty. Nepal and Burkina Faso have halved their rates, and Rwanda has achieved a one-third reduction. These countries share common strategies leading to success. “The first being they’ve all made a real, deliberate effort to improve the supply of local nutritious foods. Be it pulses or vegetables or poultry,” says Torlesse. Reducing dependency on imported food is crucial for minimizing hunger.

Other countries are combating ultra-processed foods. In Peru, legislation mandates that processed foods and beverages carry warning labels listing sugar, fat, and salt content, and a 25% tax on high-sugar drinks has been introduced.

Nepal’s nationwide cash grants to poor families have increased the purchase of nutritious foods like meat and pulses. Additionally, efforts within health systems have provided essential counseling and support, helping caregivers feed their children with locally available, nutritious foods.

Richmond Aryeetey underscores the need for a more comprehensive approach to tackling child hunger: “…we are sending people to the moon. We are doing all kinds of technologically advanced stuff, and yet we are not able to feed children. It’s really a shame.”

While severe food poverty remains a critical issue affecting millions of children globally, targeted efforts in improving local food supply and regulating unhealthy food options have shown promising results. A concerted global effort is needed to ensure that every child has access to the nutritious food they need to grow and thrive.

Nvidia Surpasses Apple in Market Cap, Becomes Second-Largest U.S. Company Amid AI Boom

Staff ReporterFinance, Technology 0

Nvidia, the darling of Wall Street’s artificial intelligence enthusiasts, continues to ascend to unprecedented heights. The company’s market capitalization climbed to $3.019 trillion on Wednesday, slightly surpassing Apple’s market cap of $2.99 trillion. This milestone positions Nvidia as the second-largest publicly traded company in the United States, trailing only Microsoft’s market cap of $3.15 trillion.

Nvidia is now the third U.S. company, after Apple and Microsoft, to surpass the $3 trillion mark. On Wednesday, shares of the Santa Clara-based chipmaker increased by 5.2% to approximately $1,224.4 per share, while Apple shares concluded the session with a 0.8% rise, closing at $196.

These gains also contributed to the S&P 500 and the tech-heavy Nasdaq indexes reaching new record highs by the end of the day.

Nvidia (NVDA) has reaped the most significant benefits from the AI craze that has taken Wall Street by storm this year, with its stock up by 147% in 2024 following a 239% surge in 2023. In contrast, Apple shares have seen a modest 1.7% increase year-to-date.

Earlier this week, Jensen Huang, Nvidia’s CEO, announced that the company plans to launch its most advanced AI chip platform, named Rubin, in 2026. This platform will succeed the Blackwell, which provides chips for data centers and was announced only in March. At the time, Nvidia described Blackwell as the “world’s most powerful chip.”

Nvidia dominates the AI semiconductor market, holding approximately 70% of the market share. Some analysts believe that the company’s stock has even more room to grow. “As we look ahead, we think NVDA is on pace to become the most valuable company, given the plethora of ways it can monetize AI and our belief that it has the largest addressable market expansion opportunity across the Tech sector,” wrote Angelo Zino, a senior equity analyst at CFRA Research, in a note on Wednesday evening.

In a move to make its shares more accessible, Nvidia announced a 10-for-1 stock split last month. This split aims to make buying shares in the highly sought-after semiconductor company more feasible for individual investors. The post-split shares will begin trading at market open on June 10.

Apple’s iPhone Sales Soar to $1.95 Trillion Despite Q1 Decline

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Despite a slight decline in the first quarter of 2024, Apple’s lifetime iPhone sales have reached staggering heights, with total revenues surpassing $1.95 trillion, according to a new report released on Wednesday.

In Q1 2024, Apple shipped 50.1 million iPhones, a decrease of five million units compared to the same period last year. Consequently, iPhone sales revenue dropped by nearly 10%, amounting to $45.9 billion, as per data from Stocklytics.com.

Five years after the launch of the first iPhone, Apple had generated $78.7 billion in iPhone sales. By fiscal year (FY) 2014, this figure had surged to $101.9 billion, continuing to climb steadily based on Statista and official company reports.

Over the course of two years, Apple accrued more than $405 billion from iPhone sales. Although revenue figures dipped slightly in Q2 FY 2024, iPhone sales have remained robust.

In H1 FY 2024 alone, Apple earned $115.6 billion from iPhone sales, pushing its cumulative revenue from iPhone sales to an impressive $1.95 trillion.

The report also highlighted that over 2.65 billion iPhones have been shipped since their initial launch in 2007. In 2014, Apple shipped 192.7 million iPhones. A decade later, this number had risen to 231.8 million.

China Sells $101.9 Billion in US Treasury Securities Amid Shift Away from Dollar

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In a significant development, China has sold $101.9 billion in US Treasury securities over the past year, according to the latest figures. The US Treasury Department reports that China’s holdings have decreased from $869.3 billion in March of the previous year to $767.4 billion in March of this year.

China’s Shift from Dollar:

This news comes at a time when China is gradually moving away from the dollar in cross-border trade. Furthermore, the global economic alliance known as BRICS is considering the launch of a digital competitor to the US dollar. These developments indicate a potential shift in the global economic landscape and the role of the US dollar as the world’s reserve currency.

The Decline in China’s Holdings:

China’s holdings of US Treasury securities have been steadily declining from an all-time high of $1.31 trillion, which was recorded in November of 2013. This trend suggests a strategic shift in China’s investment and economic policies.

The Federal Reserve’s Perspective:

The Federal Reserve is closely monitoring these developments. At a recent conference on the global importance of the US dollar, Fed Governor Christopher Waller acknowledged the evolving role of the world’s reserve currency. He stated, “There has for some time been commentary predicting the dollar is destined for demise – potentially an imminent demise… The role of the US in the world economy is changing, and finance is always changing. The dollar remains by far the most widely used currency by a number of metrics.”

Waller also pointed out that America’s use of sanctions against foreign nations could impact the future dominance of the dollar. He noted, “If these sanctions and policies are long-lasting, the shifting cross-border payments landscape – including the rapid growth of digital currencies – could also pose challenges to the dominant role of the US dollar.”

In February, Waller had stated that despite the challenges, nations have “few practical alternatives to the dollar,” noting that “in times of global stress, the world runs to the dollar, not away from it.”

The sale of a significant amount of US Treasury securities by China and the contemplation of a digital competitor to the US dollar by BRICS are indicative of a changing global economic landscape. While the US dollar remains the most widely used currency, its role as the world’s reserve currency is evolving. As nations navigate these changes, the world will be closely watching the strategies they adopt and the impact these will have on global finance.

India’s Rising Inequality

Staff ReporterFinance, India 0

India’s problem is that it is under-taxed. This has been said several times, including in the Economic Survey published by the government, and by a former finance minister on the floor of the parliament. What is referred to here is the low tax-to-GDP ratio and not the tax rates. The rates are quite high, with top individual marginal income tax rates touching 42 percent, and median Goods and Services Tax at 18 percent.

GST is an indirect tax paid by all, whether rich or poor, on their consumption. Since it does not depend on the income of the taxpayer, it is inherently regressive. Not surprisingly a much higher proportion of total GST collected comes from the lower half of the income distribution, highlighting its unfairness. We need both income and consumption taxes, but the rate of GST has to be much lower. And dependence on income tax has to increase, and it should be progressive and rates increasing by income slab.

Unfortunately, we give such a large exemption, that up to 7 lakhs (700,000 rupees) of annual income, the tax burden is zero. This is almost four times the per capita income of the country. It is equivalent to saying that in America nobody will pay income tax below an annual income of a quarter million dollars. Americans start paying income tax for income as low as 5000 dollars, only one-tenth of their per capita income.  India certainly needs to widen its income tax net. We have only 7 income taxpayers for every 100 voters as per the Economic Survey.

Rising inequality

Along with a low tax-to-GDP ratio, we have rising inequality. The latest report from the World Inequality Lab based on hundred years of data from 1922 till 2023 shows income and wealth inequality to be the highest ever. Fighting inequality is not the same as fighting poverty. The poverty ratio has been falling in India, but there are people still living dangerously close to the poverty line or just above it. One illness in the family can drive the entire family below the poverty line. Hence, we have food security schemes such as free food grain for 800 million Indians, i.e. nearly 65 percent, even though the poverty rate is below 15 percent.

One of the Sustainable Development Goals of the United Nations calls for a reduction in inequality. On that count, India must exert more by making the income tax net wider and ensuring a lower indirect tax burden of GST and other sundry taxes. Most importantly inequality of opportunity (not outcomes) can be reduced by providing much higher quality and quantity levels of primary education and healthcare.

But spending on social priorities has been going down as a fraction of government budgets.  This means we need more tax collection. What other heads are there? This is where the discussion of wealth tax comes in. Thomas Piketty claims that just by taxing the wealth of the richest two hundred people in the world, at a small rate, the world can generate hundreds of billion dollars for social spending. That same logic can be applied in India.

Wealth is difficult to assess, especially if kept in real estate. It is also notoriously difficult to discover since people have an incentive to hide it. There is tax evasion and dodging. The correlation between wealthy individuals and the highest-income taxpayers in India is not strong. How many of the Forbes billionaires are also the highest-income taxpayers?

So, is there a workable and reasonable way to tax wealth?  Countries like Spain, Norway, Switzerland and France have some form of wealth tax. Even the Netherlands has a tax called “Box-3” which is a tax on wealth, i.e. by taxation of savings and investment. Of course, all these are rich countries. And their financial systems are highly evolved, with evasion rather difficult.

Wealth concentration

India is a poor or medium-income country, so it is premature to talk about wealth tax. It has among the highest number of dollar billionaires in the world. A small annual tax of say 0.1 percent per annum would surely not deter these wealthy from wealth or employment creation or investing in India. If there is capital flight out of the country it is not because of wealth taxes.

Unlimited wealth concentration cannot be healthy for any democracy. The principle of political and social equality of our republic is in sharp contradiction to rising economic inequality. That is why we need to find ways to arrest worsening income and wealth inequality. No modern capitalist economy can be rid of inequality. But it is like industrial pollution. Modern life is impossible without some emissions. But there comes a time when as a society we say this is enough. Otherwise, worsening inequality leads to social instability, the rise of gated communities, the threat of rising crime and ultimately investor flight. What is that stage when inequality becomes intolerable and excessive is for us to decide collectively.

India’s macro savings are only half in instruments like stocks, bonds, insurance and bank deposits. The rest is in real estate or gold. Real estate valuations are revealed only when there is a transaction on which stamp duty is imposed. Such transactions are rare and hence stamp duty collection is low at the state level from real estate.

Thanks to digitization and better triangulation, we have good data on financial savings. Hence it is possible to levy a wealth tax on just that part, above a threshold of say 100 crore rupees. It could be as small as 0.1 percent. The purpose is not merely to raise fiscal resources. Many prominent rich people such as Narayan Murthy, Bill Gates, Warren Buffett, Nikhil Kamath, Sir Richard Branson have all said that they welcome higher taxes.

In the Financial Times, Ian Gregg, chairman of the British bakery chain Greggs, wrote an op-ed saying that the wealthy should be taxed more, and that trickle-down economics was not working.  Are these wealthy people saying tax us more just to sound politically right, or out of genuine compassion? Maybe a bit of both, and also to save society from a worsening scenario, where fury is unleashed on the obscenely wealthy.

In the UK it was estimated during Covid that a one-off small tax on the wealthy would generate a quarter trillion pounds for the government. Such is the scale of this potential fiscal gain.  A workable wealth tax can use best practices from some of the dozen countries that implement it and start with a small rate applicable to disclosed financial assets alone.  Taxing real estate can be kept as a domain of stamp duty for now, and taxing the ownership of gold is something for the future.

(The writer is a noted economist and commentator. Views are personal. By special arrangement with The Billion Press)

Read more at: https://www.southasiamonitor.org/perspective/indias-rising-inequality-government-should-work-toward-workable-wealth-tax

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