DMPQ: Explain the following terms: (Economy)

Withholding tax: A tax imposed on the income on a foreign portfolio (investments). This tax is imposed to discourage foreign investments, to encourage domestic investment, and to raise money for the government.

 

Venture capital: Generally, a private equity capital which lends capital to the entrepreneurs who are innovative and cannot get the required fund from the conventional set-up of the lending mechanism. In India, it was the Government of India which did set up the first such fund in 1998–the IVCF.

 

Tobin Tax: A proposal of imposing small tax on all foreign exchange transactions with the objective to discourage destabilising speculation and volatility in the foreign exchange markets. Proposed by the Nobel prize-winning economist James Tobin (1918–2002), the tax has never been implemented anywhere in the world so far.

 

Rent seeking: Spending time and money not on the production of real goods and services, but rather on trying to get the government to change the rules so as to make one’s business more profitable. It is like cutting a bigger slice of the cake rather than making the cake bigger trying to make more money without producing more for customers. The term was coined by the economist Gordon Tullock.

 

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