Assured of financial help to meet most of their basic needs ‘perpetually’, the freebies cult is changing the mindset of people and making them complacent A few days back, Prime Minister Narendra Modi asked senior bureaucrats to point out deficiencies in government policies. In response, some officials have zeroed in on ‘the freebies promised by winning party in state elections’. In the past, freebie – an acronym for “something given free of charge” – found a place in a corner of the manifesto of parties. In recent years, this has occupied the centre-stage and holds the key to winning elections. For instance, in February 2020, the Aam Aadmi Party (AAP) led by Arvind Kejriwal mesmerised Delhi voters by promising freebies....
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GST: Should States’ compensation stay?
The worst phase of pandemic over, GST collections are expected to touch record highs and both the Centre and States can expect to perform better Less than three months from now June 30, 2022 will be an important milestone under the national Goods and Services Tax (GST) regime that was launched on July 1, 2017. In the follow-up to The Constitution (One Hundred and First Amendment) Act, 2016, that introduced the GST, the Union Government had also introduced The GST Compensation Act, 2017. It provides for compensation to the States for five years (2017-18 to 2021-22) for the loss of revenue to be calculated as the difference between their actual collection (including transfer of their share in indirect tax collected...
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Fertiliser fears come to fore due to war
The crisis in Ukraine following the invasion by Russia has exposed the chinks in the Indian fertiliser industry. Despite predictions by successive governments during the last four decades that India would become self-reliant on the fertiliser front and putting in place policies aimed at achieving the goal, the country remains preponderantly dependent on imports for meeting the requirements of its farmers. The three most popular fertilisers used by farmers are urea, di-ammonium phosphate (DAP) and muriate of potash (MOP), which are the major sources of nitrogen, phosphate and potash respectively. Natural gas is the raw material/feedstock/fuel used for the manufacture of urea whereas phosphoric acid and ammonia are the prime raw materials (RMs) needed for making DAP. In the case...
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Tax buoyancy is a good omen
Efforts to boost tax revenue will come to naught if expenses, particularly on ‘welfare schemes’, are allowed to grow in an unsustainable manner For years, the tax receipts of the Union Government have consistently fallen short of the target set in the respective year which together with the expenditure exceeding the target has led to fiscal slippage – a glamorous term for the fiscal deficit (FD). Against this dismal record in the past, 2021-22 will have the unique distinction of the tax collections – both direct and indirect – exceeding the target. The total direct tax collection net of refund as on March 16, 2022 stood at around Rs 1363,000 crore which is higher the budget estimate (BE) of Rs...
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Time to revisit the three farm laws
When farmers get dozens of options to sell, plain common sense says that they are bound to get a good deal in every respect, including a good selling price While, staying the implementation of the three contentious farm laws, the Supreme Court (SC) had set up a Committee to recommend the way forward. The committee submitted its report on March 19, 2021. Even as the SC action on the report was pending, on November 19, 2021 Prime Minister Narendra Modi announced repeal of the laws even while maintaining that these laws are beneficial to small and marginal farmers who are in a majority. Now, in a startling revelation, Anil Ghanwat, a member of the committee has revealed that around 85.7...
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Gas shock: India’s vulnerabilities
The Govt should maintain a reserve of gas equal to a percentage of annual use which can be used as buffer to meet demand at affordable price during crises The Ukraine war has exposed the vulnerabilities in India’s gas supply systems. Our demand for natural gas (NG) is around 54.6 billion cubic meter (bcm) of which nearly 50 percent is met from import as liquefied natural gas or LNG. Russia is the world’s second-largest producer of NG with a share of 10 percent. In total world export of gas, its contribution is even higher at 25 percent. Most of Russian gas goes to the European Union (EU) countries with the latter drawing 40 percent of their total NG supplies from...
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Fertiliser subsidy: Political will missing
In the Union Budget for 2022-23, the Modi government has allocated Rs 1,05,000 crore for fertiliser subsidy, which is Rs 35,000 crore less than the revised estimate (RE) for 2021-22 at Rs 1,40,000 crore. Fertiliser subsidy arises because the Centre wants manufacturers/imports to sell fertilisers to farmers at a low maximum retail price (MRP), unrelated to the cost of supply, which is much higher. In the case of urea, the difference is reimbursed to the manufacturers as a subsidy on a ‘unit-specific’ basis. In the case of phosphatic and potassic (P&K) fertilisers, it fixes ‘uniform’ subsidy on a per-nutrient basis for all manufacturers and importers. The three basic factors impacting subsidy are MRP, per unit cost of supply and the...
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Whether to resurrect LPG subsidy or not
The Govt should focus on reducing price (sans subsidy) by cutting import dependence, fostering competition by involving private entities and bringing it under GST The recent spurt in the price of LPG in the wake of Ukraine crisis has triggered a demand for resurrection of subsidy which the Narendra Modi government had stopped depositing in beneficiary’s accounts since June, 2020. Is the demand justified? By definition, subsidy on purchase of any given product is subvention or financial assistance provided by the state to a certain class of persons who cannot afford to pay the market-based or cost-plus price from their limited income. In case of LPG, the current price of a 14.2 kg cylinder is around Rs 2000 (in Delhi)....
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The war’s impact on our fertiliser industry
Had there been a free market scenario, the industry would have come under serious strain. But that is not to be as fertilisers are under control The crisis in Ukraine following invasion by Russia has sent shock waves through out the world economy. In India, even as the steep rise in energy import bill will affect almost all sectors of the economy, the impact on fertilizers will be more pronounced. At the outset, let us capture a few relevant facts. Despite prognostications by successive governments during the last four decades or so that India would become self-reliant in fertilizer availability and putting in place policies aimed at achieving the goal, even today, the country remains preponderantly dependent on imports for...
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Corporate governance — Sebi’s volte face
A reform measure cannot be held hostage to the whims and fancies of those who decide not to comply with the reform order Based on the recommendations of Uday Kotak committee on corporate governance (2018), the stock markets watchdog, Securities Exchange Board of India (SEBI) had asked listed companies to separate the positions of Chairperson and Managing Director (MD)/Chief Executive Officer (CEO). The requirement was mandatory. The companies were required to implement the order by April 2020. However, based on representations received from the industry, an additional two years was given for compliance. In April last year, SEBI chairman Ajay Tyagi goaded them to ensure that the April 2022 deadline is not missed. Now, that even this deadline is barely...
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