Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

What’s the ongoing story : AFTER HIKING import duty on gold , the government and the Reserve Bank of India are learnt to be considering multiple measures to attract foreign investment inflows including a cut in the withholding tax rate on government bonds, if not completely eliminating it.

Key Points to Ponder:

• What is Withholding tax?

• What is foreign portfolio investment (FPI)?

• What is Foreign Direct Investment (FDI)

• What is the difference between FDI and FPI?

• What is the primary objective behind reducing withholding tax?

• Why does Government wants greater foreign participation in the financial and debt market?

• What are the benefits and risks of increased foreign portfolio investment in India?

Key Takeaways:

• Withholding tax is akin to a tax deducted…