{Securities Transaction Tax + Commodities Transaction Tax + Revenue Foregone} = A Recipe for Illusionary Scam

Are Transaction Tax and Securities Transaction Tax synchronous? If by chance these are used interchangeably, then the rate is not 0.5%, but in accordance to a slab where sale/purchase, or transaction effects on options or futures, where it is valued in premium in the case of options and actual trade price in the case of futures. Moreover, Securities Transaction Tax differs from intra-day to inter-day transactions. Two crucial factors are the distinguishing parameters here: buying securities and selling securities would attract different STT, and is often resorted to avail exemption in case of long-term capital gain. The rate of taxation is determined by the Government. All stock market transactions that involve equity or equity derivatives like futures and options are liable to be taxed under the STT. Now this last sentence is redundant, but points out to commodities and currencies that stand out exempted from STT. If one talks of stocks, bonds and commodities in the same breath, albeit preliminarily, as different from what the governmental figures exhibit – the latter dips the figures, while it should have been higher according to those in the opposition, then clearly commodities and currency trades should have different taxation structure in the stock exchanges. But, that isn’t the case, for commodities are never traded on the stock exchanges, but on the commodity exchanges, and regulated by Forward Markets Commission and not by SEBI. Further, commodity derivatives can be settled by delivery, unlike security derivatives, which could only be settled by payment or receipt of differences. So bearing this differentiation in mind, where does one see commodities vis-à-vis securities under the rubric of revenue receipt?

I understand it has no truck with revenue foregone (it actually has, and I won’t dismiss it so simplistically!! but for brevity I am presuming it merely). Revenue Foregone is more of a myth in regards to the common misunderstanding surrounding the same. Section 5A (1) of the Central Excise Act 1944 empowers the Union Government to lower tariff rates below levels prescribed in the schedules, and are specifically applicable to mass consumable goods and more often than not are not tax sops to corporations. On the other side, Customs duty concessions are mostly for imported goods and used as inputs for exports as defined under Section 25 (1) of the Customs Act, and thus many a times run the risk of being included on the revenue foregone side, while it is mainly to boost India’s exports more competitively on the global market scene. Taken these two, the myth of Revenue Foregone only proliferates either as giveaways to corporations, or as political decisions taken on behalf of corporations, while the real demand from these corporations seldom make such warrants.


Taxation on the money made via share market trading depends largely on the purpose for which share transactions are done. An individual can trade shares for business purposes or as an investment activity. In both these cases, the STT that is levied by the Government, varies. Why this obsession with STT is the obvious question? Because: STT is fast, transparent and effective. Since tax is levied as soon as the transaction arises, instances of non-payment, wrong payment etc. are reduced to a minimum. The net result of this is, however, it pushes up the cost of transactions. Now, while calculating the estimated potential of revenues from such taxes, the possibility of migration of trade volume is generally not taken into account. Hence, actual revenue mobilized in most cases does not correspond with the estimated potential, because the revenue potential is a function of the elasticity of trading volume with respect to transaction cost/STT spread. On the issue of volatility, things settle down to an ambiguity, and as far as stock exchanges are concerned, one cannot overlook it. The impact of transaction tax on volatility is a function of market microstructures. If market fundamentalists out-number noise traders, then STT will not only affect the latter, but also have a disproportionate effects on the former, leading to a fall in the trade volume and liquidity and inversely rising volatility. This inconclusively questions the veracity of transaction tax and STT, and the two are synchronous with STT and others being merely under different headings of taxation.

Let us leave behind CTT for the time being, as that would complicate matters since we are talking stock exchanges here and not commodity exchanges. Only thing, I’d like to point out then is not using commodities for revenue receipts, if such receipts are generated from stock exchanges as there is a categorical error in bringing them on a similar platform. If one goes into different heads and nomenclatures, what good does it bring about looking at transaction tax stripped off its components is something I find difficult to fathom? Would it not defeat the purpose if one is looking at volume or volumes of trade and revenue receipts under these? Looking now briefly at CTT. First proposed in 2008, it was met with extreme opposition, and CTT was proposed again in the Budget in 2013, but only on Non-Agricultural Commodities such as Gold, Silver, Aluminium, Crude Oil among others. This time the Bill was passed & CTT was levied on Trades in Commodity Futures on & after 1 July 2013. With the introduction of CTT in commodity trading, trading volumes on the MCX and other commodity exchanges in India have seen a dip as high as 50% – 60%. It has also driven away smaller segments of the volume contributors away from the segments since scalping, jobbing, etc have become an unviable and expensive proposition.




Commodity Trading Firms (CTFs) are listed on stock markets, meaning registrations are not issues at all. They are trading entities and come out with listing in what is called a split listing, i.e. across stock exchanges to accrue better value and worth, at least they set the rules when they launch their IPOs. As to how they are different from IFIs, the idea is where do they invest and how do they invest? They are private firms to begin with and have no truck with contingency reserve funds that tie the IFIs with government and/or transnational governments. Even in the absence of any contingency reserve agreements, governments put money, rather channel money in MDBs/BDBs. This differentiates them from CTF (commodity trading firms). The investment from CTF moves thusly: investment through convertible loans tied up with rights (ownership/control), especially in places fraught with uncertain civil life versus the military regimes, markets drying up and no-takers for risks. These CTF move in there and set up shop and demand rights be transferred to them through a more than required majority of release of new shares. The deal gets struck.

Shock therapy: Escaping the Karl Polanyi matrix: The impact of fictitious commodities: money, land, and labor on consumer welfare

Things have kept me on the hook for a while, ranging from complexity of economics and finance to math to physics and obviously philosophical heres and theres. But, seriously getting back on to the bitcoin, blockchain and its political consequences have been in the lurch for a while now and would still remain there for some time to come. Yes, I have been on the lookout for such a nexus and who better than Nick Land to get me there, but his books on the Kindle are still pending to be read. But, time would have its way on these for sure. In the meanwhile, I am sharing a paper that was a talk of the group I belong to some while back in my professional capacity, and which has pummeled me to once again discover economies of the right-wing finding adequate subscription and where those on the other side of the spectrum, the left find it efficiently adequate to ignore as usual, thus slipping and sliding away into the economies of the scalar as against any directed-ness to taking the same headlong.


When economists address the issue of the production of goods they begin with the concept of ‘factors of production’: these can be thought of as akin to resources, but fundamental productive resources that are necessary to make anything that can later be sold in a market. This is important because, as Karl Polanyi pointed out, labour is not labour until there is a labour-market. Before this momentous transformation people are people or citizens or even workers, but not labour.

Land also undergoes a transformation when it becomes available for sale in a market, although it does not undergo a change of name. What an economist means by land, however, is not what the layman means by land. As a factor production land includes everything that can usefully be extracted from land (including from deep beneath it) to become part of a productive process. Thus ‘the economic notion of resources is strictly anthropocentric. That is, the economic value of any resource is defined by human needs and nothing else’. There is no space in this definition for land to have a spiritual or relational importance, what economists would call an ‘intrinsic value’, as it does for many indigenous people, who see the land as their mother.

Polanyi referred to land and labour as ‘fictitious commodities’. Real commodities are ‘objects produced for sale on the market’. Land, by contrast, ‘is only another name for nature, which is not produced by man’ while labour ‘is only another name for a human activity’. To refer to these basic economic elements as equivalent to goods that were produced specifically to be sold he considered to be a fiction.

Commodity land, money, and labor remain a largely unseen matrix as they have been part of the market economy since “The Great Transformation” from a feudal to market society. Market competition raises the price of land and money through increased demand for fixed assets, rather than lowering it through increasing supply as in the case of microchips or other competitive product. Commodity labor in flexible labor markets normally results in wages being driven down due to the oversupply of labor. Labor is also subject to periodic unemployment and loss of income during recessions resulting from booms and busts in commodity land and financial products. Therefore commodifying land, money, and labor reduces consumer surplus, and lowers economic welfare…..

The rest is the paper, which should at least be attempted @reading.

Escaping the Polanyi matrix: the impact of fictitious commodities: money, land, and labor on consumer welfare by Gary Flomenhoft

Tailoring French Theory


In the words of Cusset, the goal of French Theory is,

“…to explore the political and intellectual geneology, and other effects, even for us and up to today, of a creative misunderstanding between French texts and American readers, a properly structural misunderstanding––in the sense that it does not refer simply to a misinterpretation, but to differences of internal organization between the French and American intellectual spheres.”

Without any kind of specificity, this is another way of saying about the knower and the known crafted together by a meditation that rides on instability populated by discursive and linguistic norms and forms that is derided as secondary in the analytical tradition. The autonomy of the knower as against the known is questionable, and derives significance only when its trajectory is mapped by a simultaneity put forth by the known.

The knower, if guided by the dictates of language, is guided more on lines of the Derridean deconstructionism, where there is nothing outside the text. This is also reflected in Rorty, where descriptions of the world are constructed by us, and where these very descriptions are categorized for us to fill up the content depicted by our perceptions. Obviously, it becomes quite naïve to embrace this one-sidedness of French theory in its totality, and the real acid test gets encountered in dealing with the socio-political implications. Political implications are far and between, or at times not there at all excepting feigning their presence/affectivity. This is since, in reading a text, what gets surfacial visibility is almost always against the background of repressed internal contradictions and oppositions within the text, that deconstruction purports to unearth, thus creating a visibility that has to maintain its status quo, by not asking the questions that it is supposed to ask in order to shake its self-identity. Thus politically, it is a fall-back on itself, a sort of ideology that refuses to die on the one hand, and spring up surprises under new vocabularies on the other. But, this apolitical, asocial shortcomings should not be taken to mean something entirely pejoratively, for, by invoking the logic of deconstruction, anything goes or everything is, furthering the directedness of critiques that are not singular, but harboring the vastness of multiplicities. Stanley Fish puts it brilliantly (I quote him at length) when he says,

Criticizing something because it is socially constructed (and thus making the political turn) is what Judith Butler and Joan Scott are in danger of doing when they explain that  deconstruction “is not strictly speaking a position, but rather a critical interrogation of the exclusionary operations by which ‘positions’ are established.” But those “exclusionary operations” could be held culpable only if they were out of the ordinary, if waiting around the next corner of analysis was a position that was genuinely inclusive.

Deconstruction per se, has no terminus, as it feeds itself upon a loop of signifiers in movement, unearthing depth with every question asked in a way that resembles nothing short of ad infinitum. It gets derogatory only because of this endless movement, wherein anything social or political that gets constructed is transient, or simply abhorred. So, to make any social/political and even philosophical-literary sense, the method of deconstruction has to undergo confinement, or freeze-framing, a being that has been fixed, and waiting to undergo a further becoming. To quote Cusset,

Deconstruction thus contains within itself a risk of the withdrawal from the political, a neutralization of the positions, or even an endless metatheoretical regression that can no longer be brought to a stop by any practical decision or effective political engagement. In order to use it as a basis for a program of subversion or a discourse of conflict, the American solution thus was to “detourn” or divert it, to fragment it, to split it off from itself in order to break out of this paralyzing epistemic balancing act.

Whatever fragmentation occurred, whatever split the theory underwent, or whatever was the diversion that was undertaken, the net result was the entry of French theory through the annals of literature departments only to explode on to the terrain of various disciplines by the sheer force and triumphant nature of the narrative. The narratives had relativism that garnered enough force to question the very veracity of other disciplines by intervening into the discourses of these diverse disciplines with the sole intention of giving them a re-reading. The narratives were machinic, in the sense of producing truths that hitherto had been the sole and isolated responsibility of individual disciplines. With the permeability on offer because of re-reading carried upon the discourses, truth started to undergo a shift in its position from pre-historical intuitive valuation to literary productions, thanks to the maneuvering attitude of narratives. The powers that be, invested in the narratives were a propellant force to dismantle (shake) the dominion of authoritative discourses on truth and create a level playing field with the provision of dragging the marginalia accounts of truth into the fold, thus giving rise to a certain form of democratic space. These democratic spaces invited cultural domains to participate in their own productions of truths, thus becoming more and more machinic resulting in such unprecedented theoretical productions (these obviously preceded truth productions), that were eventually heading towards each domain forgetting its own accumulation, and thereafter suffering from the disappearance of theory in the production of its effects.