Noncorporate Sector Research Articles

Pradhan Mantri Mudra Yojana

The setting up of Pradhan Mantri Mudra Yojana and MUDRA attempted to fill or reduce the financial crisis in the micro enterprises to stimulate economic development. MUDRA has been aimed at administering a common platform to both banks and tiny enterprises customers and plays a significant role by bringing them together to this platform. It has been set up as a refinancing institution. Its main goal is to provide mudra loans up to Rs 10,00,000 to the micro enterprises through last mile financiers, so that they can start or expand their businesses. Its primary goal is to refinance various last-mile financial institutions that support the growth of small businesses in the non-corporate sector by lending money to them. These last mile financial institutions include NBFCs, Regional Rural Banks, Commercial Banks, Small Finance Banks, and MFIs. These institutions provide funds to the small business sector which is involved in manufacturing, trading, and Agri-allied activities. The borrower can approach to any of financial institution to get the benefit of mudra loans and to serve the purpose of their existence.
 Mudra scheme helps millions of small borrowers who were facing the acute financial shortage due to numerous reasons and were striving hard to get the financial assistance for starting or expanding their business activities. In this study, an effort has been made to use statistical methods like mean, coefficient of variation, and trend analysis to examine the category-wise performance of various mudra loans during a six-year period, from 2016–17 to 2021–22. The analysis is based on secondary information that was obtained from the MUDRA official website. The interpretation of the figures for the study period indicates that among the three main categories of Mudra Loans, Shishu Loan Scheme has captured the largest share in terms of number of accounts as well as in terms of amount sanctioned followed by Kishore and Tarun Loans. Since its origin, over a period of seven years of operations i.e., from 2015-16 to 2021-22, PMMY has benefitted in aggregate approximately 34.92 crore loan account holders of micro enterprise segment by administering an aggregate amount of 18.90 crore.

An Analysis of Pan-India Financial Intermediation Accomplished through the Implementation of Pradhan Mantri Mudra Yojana (PMMY) - Literature Review

Purpose: A vast part of the non-corporate sector operates as unregistered enterprises. They do not maintain proper books of accounts and are not formally covered under taxation areas. Therefore, the banks find it difficult to lend to them. The majority of this sector does not access outside sources of finance. It is in this backdrop that the Government of India (GOI) is setting up a Micro Units Development & Refinance Agency (MUDRA) Bank through a statutory enactment. This Agency would be responsible for developing and refinancing all Micro-finance Institutions (MFIs) which are in the business of lending to micro / small business entities engaged in manufacturing, trading and service activities. The bank would partner with state-level / regional level coordinators to provide finance to Last Mile Financiers of small/micro business enterprises. Since the enactment is likely to take some time, it is proposed to initiate MUDRA as a unit of SIDBI to benefit from SIDBI’s initiatives and expertise. Objective: The main objective of the literature survey is to examine the impact of MUDRA Yojana on new start-ups and employment opportunities. Design/Methodology: The study report relies on secondary data gathered from a wide range of areas, including websites and published publications. Following the review of the study and their area gap in the literature, the potential to examine the function of MUDRA in developing small scale industries and small and medium enterprises. Finding/Result: The study shows that PMMY needs to have more control over the fixation of Interest rate. In the study, we can understand that people from backward castes are still not accessing the MUDRA Yojana. The study shows that MUDRA Yojana is providing the fund but not giving Skill oriented training sessions for new entrepreneurs. Originality/Value: This study was conducted to determine the contributions of MUDRA financing in terms of operating capital to small scale Industry to create Job opportunities in rural and urban areas. Paper type: A literature review.

Taxation and Innovation in the Twentieth Century

Abstract This article studies the effect of corporate and personal taxes on innovation in the United States over the twentieth century. We build a panel of the universe of inventors who patented since 1920, and a historical state-level corporate tax database with corporate tax rates and tax base information, which we link to existing data on state-level personal income taxes and other economic outcomes. Our analysis focuses on the effect of personal and corporate income taxes on individual inventors (the micro level) and on states (the macro level), considering the quantity and quality of innovation, its location, and the share produced by the corporate rather than the noncorporate sector. We propose several identification strategies, all of which yield consistent results. We find that higher taxes negatively affect the quantity and the location of innovation, but not average innovation quality. The state-level elasticities to taxes are large and consistent with the aggregation of the individual-level responses of innovation produced and cross-state mobility. Corporate taxes tend to especially affect corporate inventors’ innovation production and cross-state mobility. Personal income taxes significantly affect the quantity of innovation overall and the mobility of inventors.

Forensic Audit: The Relevant Issues

Forensic Audit can be defined as an examination of an organization’s financial and other associated records in order to trace out the evidence/proof against frauds committed which can be used in a court of law. Forensic audit, which is investigative in nature, requires in-depth study / analysis of the area under investigation and evidence identified which can be used in the court of law. Forensic Audit is a rigorous examination of financial and other related transactions and records, while proof is derived against the offence committed and can be used in the court of law. With the increasing trends in the corporate scams and scandals, the normal auditing practices are often proved to be limited in certain circumstances making the room for forensic auditing. This Paper has been planned to study the various issues in forensic auditing in different corporate as well as non-corporate sectors and steps taken by the Government of India in curbing the fraud/scams.

Practising circles: Studying institutional change and circular economy practices

Abstract Recent international and national policy initiatives promulgate the Circular Economy (CE) as the new central pathway towards sustainable modes of production and consumption. A growing number of commentators criticize the approach, despite its success in triggering discussions about product design (longevity, reparability) and about options for sharing goods and services. The criticism centers on the mere technological fix orientation of the CE approach and its ecological modernist idea of gradually adapting the current production system to material resource constraints - while leaving aside socio-political aspects of consumption as well as the possible need for sufficiencyoriented lifestyles. This paper argues for a broader understanding of CE and for the use of an institutional perspective inspired through practice theory, and presents a framework to assess the transformative potential of CE, encompassing its alternative/dissenting articulations in the noncorporate sector.

State-level implications of federal tax policies

The United States federal fiscal policy has differential impact across states. We construct a new quarterly state-level dataset that we use to analyze the impact of unexpected changes in federal personal and corporate income taxes. We find substantial heterogeneity across states, with more than half having no significant response to the tax cuts. In addition, less capital intensive states have larger responses to corporate tax cuts. Although puzzling in standard models, a model with corporate and non-corporate sectors is consistent with this evidence. Overall, our results suggest the importance of variation and reallocation across states in evaluating federal policy.

Determinants of Aggregate Credit Flows to U.S. Corporate and Noncorporate Sector

This article explores the financial accounts of the United States to analyze the synchronicity in bank and nonbank credit flows with the fund flow patterns of U.S. nonfinancial corporate and noncorporate sector. We differ from prior studies and examine the long-term behavior from 1952 to 2015 in relation to peaks and troughs in business cycle, sector-specific factors, and macroeconomic variations. We find that the nonbank credit flows have evolved as a significant source of credit for corporate and noncorporate sector and exhibit higher levels of synchronicity during the period after 1980. The high synchronicity of nonbank credit flows necessitates sufficient resilience in the business cycle upsurge through countercyclical actions, specifically in the noncorporate sector. Multivariate regression results reveal that noncorporate sector relies more on nonbank credit for short-term cash and working capital requirements, whereas corporate sector opts nonbank credit for long-term investments. We also find evidence of relatively higher inter-sectoral impact of business cycle shocks between corporate and noncorporate sector from 1980 to 2015.

Associates and their working environment: a comparison of corporate and non-corporate associates.

Introduction The share of the dental market held by corporate bodies continues to increase. With the profession currently facing many challenges it is important to understand their place in the profession and their effect.Aim This exploratory study aims to provide an insight into dental associates in relation to their working environment. Specifically, the differences between working in corporate and non-corporate environments in England.Materials and methods Secondary analysis of a self-report questionnaire examining demographics, pay, working conditions, job satisfaction and morale using a combination of closed and open-ended responses sent to randomly selected associate dentists who are BDA members. Responses from associates working in England solely in either the corporate or non-corporate sector were analysed.Results Significant differences were seen between associates working in corporate practice when compared to those in non-corporates practice, for example, significantly less corporate associates were female and corporate associates reported relatively lower levels of autonomy and control.Discussion The differences seen between sectors could be related to rationalisation and should this be the reality it could have far reaching effects on the profession and its ability to manage itself.Conclusion This study highlights some differences between the corporate and non-corporate dental sectors. Further work is needed to build a deeper understanding of the sector.

Forensic Accounting (A Great Weapon Against Accounting Frauds and Malpractices in Corporate World)

India's image on tackling corruption has not improved with Transparency International's Corruption Perception Index (CPI) placing it at 94th rank out of 176 nations this year. In recent times, there have been an increasing number of frauds and white collar crimes in all the sectors of the world economy. In India, number of infamous corporate scandals like Harshad Mehta (1992), Kingfisher Airlines credit card fraud (2007), Ketan Parekh (2008) and Satyam Computers (2009) etc. have adversely affected the development of the corporate and non-corporate sectors. Frauds, in the different sectors like bank, insurance, stock market, cyber world etc., need a sharp scientific tool, for investigation and settlement of disputes. The researcher hopes that Forensic Accounting will prove as “Brahmastra” (infallible weapon) against accounting frauds, malpractices in the corporate world.

The welfare loss from differential taxation of sectors in Germany

In the spirit of Harberger, we apply a dynamic computable general equilibrium (CGE) model and estimate the excess burden stemming from the tax-induced distortion in the allocation of capital across the corporate and the non-corporate sectors in Germany. In doing so, we perform a counterfactual analysis and ask how the allocation of capital across sectors would change compared with a sector-neutral tax system which assures an identical effective tax burden on both sectors. Our estimates suggest that the excess burden per-period amounts to approximately 2.2 billion Euros or to about 0.1 per cent of GDP. In present value terms, the excess burden translates to about 89 billion Euros or 4.0 per cent of GDP. In order to identify the impact of the firm’s financial behaviour on the size of the emerging excess burden, we perform several sensitivity analyses with regard to debt financing, external equity financing and debt constraints via agency cost.

The Welfare Loss from Differential Taxation of Sectors in Germany

In the spirit of Harberger, we apply a dynamic computable general equilibrium (CGE) model and estimate the excess burden stemming from the tax-induced distortion in the allocation of capital across the corporate and the non-corporate sectors in Germany. In doing so, we perform a counterfactual analysis and ask how the allocation of capital across sectors would change compared with a sector-neutral tax system which assures an identical effective tax burden on both sectors. Our estimates suggest that the excess burden per period ranges from 2.0 to 3.6 billion Euros or from about 0.1 to 0.16 per cent of GDP. In present value terms, the excess burden translates to about 104 billion Euros or 4.7 per cent of GDP. In order to identify the impact of the firm's financial behaviour on the size of the emerging excess burden, we perform several sensitivity analyses with regard to debt financing, external equity financing and debt constraints via agency cost.

Consumer-Based Taxation at the Business Level: The Croatian Experience

Croatia is the first country in the world to implement consumption-based direct taxation aimed at the individual as well as the business levels. Traditional corporate tax has been replaced by the so-called "interest-adjusted profit tax", which encompasses the corporate as well as the non-corporate sector. This paper analyzes the efficiency of this tax in Croatia with regard to its neutrality as well as its cost-effectiveness. This tax can be regarded as neutral in terms of investment, finance, inflation and organizational form. But the imperfections of financial markets in Croatia still cause distortions between debt and equity capital as well as some distortions between the corporate and non-corporate sectors. The second efficiency aspect is identified as more doubtful, because of the relatively high tax expenditure of protective interest and incentive effects that have not been proven in practice.

Tax evasion and the allocation of capital

The efficiency cost of capital misallocations between the corporate sector and the noncorporate sector is typically measured using statutory tax differences. Corporate-source income tax compliance is high because of third party reporting, however, while noncorporate rental income tax compliance is low. Differential evasion thus exacerbates statutory differences and enlarges the efficiency cost. To measure this effect, we build a numerical general equilibrium model where households simultaneously choose portfolios of risky assets and fractions of income to report.

Tax distortions to the choice of organizational form

Income from corporate and noncorporate firms is treated very differently under the tax law. In theory, given existing tax law, the noncorporate sector should consist of very profitable firms owned by low-tax-bracket investors and firms with tax losses owned by high-tax-bracket investors. But the degree to which firms change their form of organization in response to taxes, and the resulting excess burden, depends as well on nontax factors. Given the role of taxes, we estimate what size the nontax advantage to incorporating must take in each industry so that the forecasted choices for organizational form, aggregated over investors in different tax brackets, are consistent with the aggregate evidence. While the estimated nontax costs are large in some industries, noncorporate activity tends to be concentrated where the costs are small, leading to little excess burden from the tax distortion to organizational form.

The Incidence and Efficiency Costs of Corporate Taxation When Corporate and Noncorporate Firms Produce the Same Good

One difficulty confronting Harberger's celebrated model of the corporate income tax is how to treat noncorporate production in primarily corporate sectors and corporate production in primarily noncorporate sectors. The paper presents a two-good model with corporate and noncorporate production of both goods. The incidence of corporate tax in our mutual production model can differ markedly from that in the Harberger model. The difference between the two models in deadweight loss is also striking, with losses in the mutual production model many times larger than those in the Harberger model.

A Disaggregate Equilibrium Model of the Tax Distortions among Assets, Sectors, and Industries

This paper encompasses multiple sources of inefficiency introduced by the U.S. tax system into a single general equilibrium model. Using disaggregate calculations of user cost, we measure interasset distortions from the differential taxation of many types of assets. Simultaneously, we model the intersectoral distortions from the differential treatment of the corporate sector, noncorporate sector, and owner-occupied housing. Industries in the model have different uses of assets and degrees of incorporation. Results indicate that distortions between sectors are much smaller than those of the Harberger model. Distortions among industries arealso much smaller than those in models using average effective tax rates. Distortions among assets are larger, but the total of all these welfare costs is still below one percent of income.

The Incidence and Efficiency Costs of Corporate Taxation When Corporate and Noncorporate Firms Produce the Same Good

This year marks the twenty-fifth anniversary of Arnold Harberger's celebrated model of the corporation income tax. While the model has been enormously useful as an analytical device for studying two sector economies, its usefulness for understanding the incidence and excess burden of the corporate income tax remains in question. One difficulty confronting all empirical analyses of the Harberger Model is how to treat noncorporate production in primarily corporate sectors and corporate production in primarily noncorporate sectors. The Harberger Model provides no real guide to this question since it assumes that one good is produced only by corporations and the other good is produced only by noncorporate firms. Stated differently, Harberger models the differential taxation of capital used in the production of different goods, rather than the taxation of capital used by corporations per se. This paper presents a two good model with corporate and noncorporate production of both goods. The incidence of the corporate tax in our Mutual Production Model (MPM) can differ markedly from that in the Harberger model. A hallmark of Harberger's corporate tax incidence formula is its dependence on differences across sectors in elasticities of substitution between capital and labor. In contrast, the incidence of the corporate tax in the MPM may fall 100 percent on capital regardless of sector differences in substitution elasticities. The difference between the two models in the deadweight loss from corporate taxation is also striking. Using the Harberger - Shoven data and assuming unitary substitution and demand elasticities, the deadweight loss is over ten times larger in the CES version of the MPM than in the Harberger Model. Part of the explanation for this difference is that in the Harberger Model only the difference in the average corporate tax in the two sectors is distortionary, while the entire tax is distortionary in the MPM. A second reason for the larger excess burden in the MPM is that the MPM has a very large, indeed infinite, substitution elasticity in demand between corporate and noncorporate goods; in contrast, applications of the Harberger Model assume this elasticity is quite small.

The indexation of interest, depreciation, and capital gains and tax reform in the United States

The Treasury's 1984 tax plan suggests features of a comprehensive income tax, including the indexation of interest, depreciation, and capital gains. The 1985 President's proposal retains some of these indexing provisions, but the Tax Reform Act of 1986 does not. This paper looks at the incentives under these tax regimes to make marginal investments in the corporate sector, noncorporate sector, and owner-occupied housing. It finds that inflation in the old system caused effective tax rates to rise for some assets and fall for others. Under the Treasury or President's proposals, the interference of inflation is virtually eliminated. Also, the effects of inflation are substantially reduced by the 1986 Act, because mismeasured depreciation and interest deductions are taken at much lower rates.

The Corporate Income Tax, Entrepreneurship, and the Noncorporate Sector

Harberger's analysis of the corporate income tax depends on his assumption that the corporate and noncorporate sectors produce different goods. This article modifies that assumption while arguing that the distinguishing feature of corporations lies in their ability to raise capital in a large and well organized market. Once this modification is made, the imposition of the corporate income tax has effects markedly different from those described by Harberger. In particular, it induces firms to postpone the decision to incorporate and reduces the cost of capital schedule faced by some unincorporated businesses. The corporate income tax is, in effect, a tax on size. As such, the effect of the tax on the mix of goods produced in the economy is very uncextain.

On a general equilibrium model of the incidence of the corporation tax under uncertainty

This paper addresses two issues. First, we demonstrate that when there is uncertainty in a general equilibrium model of a large country the usual rule for the auctioneer, that of searching for a set of relative prices at which excess demand in each market is zero, is no longer appropriate. It is suggested that the setting of expected demand to expected supply in each market would be a convenient generalization. Secondly, results on the incidence of the corporation income tax when there is uncertainty in the corporate sector, and alternatively when there is uncertainty in the noncorporate sector, are presented.