Tax collections are far from adequate to pay for free food and the Govt is borrowing heavily to make up for the shortfall, thereby imposing an unsustainable burden on the future generation of taxpayers To shield millions of poor from the devastation caused by the Covid-19, Finance Minister Nirmala Sitharaman had announced that the Government would give five kg of rice or wheat per person per month for “free” to around 80 crore people through the Public Distribution System (PDS) for three months. It would also give for “free” one kg of pulses per household for three months. This was in addition to five kg of cereals per person per month that 80 crore beneficiaries are already getting at a heavily-subsidised price...
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Articles
SC will have to solve the telco mess
A cue is available from the stance taken by SC itself in case of unpaid dues from public sector undertakings (PSUs) such as Gas Authority of India (GAIL), etc. The licence fee and SUC is charged as a percentage of service provider’s adjusted gross revenue (AGR)—8% and 3-5% respectively. During the last three years or so, the telecom industry has been enduring an unprecedented crisis, with most of the companies having huge debt in their books and not generating adequate cash flows for servicing the loans. The crisis was aggravated by an order of the Supreme Court (SC) on October 24, 2019, directing telecom firms to pay ‘unpaid’ dues towards licence fee and spectrum usage charges (SUC). The licence fee...
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Fuel prices are burning
We have an abhorrent situation whereby taxes alone account for about two-third of the price at the pump. The high fuel price contributes to high inflation and higher costs of fertilisers and food During the last three weeks of June, the oil marketing public sector undertakings (PSUs), namely the Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL), increased the retail prices of petrol and diesel continuously almost daily. The cumulative hike works out to about Rs 9 per litre of petrol and Rs 11 per litre in case of diesel. As a result, the current price of both the fuels in Delhi is Rs 80.5 per litre. In April/May, petrol was selling at Rs...
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Power sector in crisis, reforms a mirage
The special economic and comprehensive package ‘Atmanirbhar Bharat Abhiyan’, unveiled by Finance Minister Nirmala Sitharaman in five tranches during May 13 – 17, 2020, has two components that have a crucial bearing on the fledgling power distribution companies – commonly known as discoms. The discoms – mostly owned and controlled by state governments – procure power from independent power producers [IPPs] and public sector undertakings [PSUs] such as the National Thermal Power Corporation [NTPC] besides their own generating stations and sell to consumers. The first component provides for special loan of Rs 90,000 crore from Rural Electrification Corporation [REC] and Power Finance Corporation [PFC] to discoms to enable them to clear their dues to IPPs and PSUs. But there are...
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The GST indemnity riddle
Even as States expect full and timely compensation for the shortfall in their tax revenue, vis-à-vis a given benchmark, the Union Govt has been making short payment and that too after a time lag The dwindling tax revenue of both the Centre and States since the financial year (FY) 2019-20 has led to a piquant situation. Even as States expect “full” and “timely” compensation for the shortfall in their tax revenue (their own collection plus the amount received as their share in indirect tax collected by the Centre as per the Finance Commission’s devolution formula) vis-à-vis a given benchmark, the Union Government has been making short payments and that too, after a time lag. The compensation to States is intertwined...
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A highly unreasonable request
Granting interest waiver, in addition to deferment, will amount to discrimination among borrowers who decide to avail the RBI’s loan moratorium and others who don’t The Supreme Court was against burdening customers with a loan trap while hearing a Public Interest Litigation (PIL) filed by one Gajendra Sharma, demanding a “waiver on interest charged” by a bank citing the relief given by the Reserve Bank of India (RBI) on the payment of equated monthly installments (EMIs) during March and August 31 due to the pandemic. A three-Judge Bench of the Supreme Court observed: “There is no merit in burdening customers, who have opted for the RBI-approved loan moratorium, with additional interest. Once you fix a moratorium it should serve the purpose...
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Remodel Google tax
Tech giants are getting away by not paying tax in the source country but the fact remains that their profits are coming from users located within the Indian territory. This anomaly needs to be addressed soon On June 2, the Trump administration announced a probe into digital services taxes that have been either adopted or are under consideration by its trading partners viz, Austria, Brazil, the Czech Republic, the European Union (EU), India, Indonesia, Italy, Spain, Turkey and the UK. This refers to the so-called “Section 301 investigation” by the United States Trade Representative (USTR) to determine whether levies on electronic commerce discriminate against US technological giants like Apple, Google, Amazon and so on. The probe could lead to the...
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Get ‘data exclusivity’ right
Agro-chemical majors won’t find India attractive for investment, as long as the regulator micro-manages even production decisions In the agrochemical sector, out of the total import of technical material or active ingredients that go into making end-use formulations, imports from China alone account for about 50%. Given China’s frequent changes in rules, targeting of MNCs, its deteriorating trade and investment relationship with the US, European countries and Japan, and questions over its role in spread of Covid-19 globally, hundreds of MNCs are planning to exit that country. They would either go back to their country of origin, or look for relocation destinations such as India. The Modi government has strongly indicated its intent to bring them here. In the agrochemical...
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Green the soil
The Centre’s decision to ban 27 commonly-used pesticides in all three main categories, namely insecticides, fungicides and weedicides, is a move in the right direction The decision of the Centre to ban 27 commonly-used pesticides in all three main categories, viz. insecticides, fungicides and weedicides, in India has led to consternation among various stakeholders, particularly a certain section of the industry. To understand the issue and its implications, let us put a few facts in order. The manufacturing, import, sale, distribution and use of pesticides are regulated under the Insecticides Act (1968) with a view to prevent risk to human beings or animals and for matters connected therewith. The Registration Committee (RC) — set up under the Act — registers every pesticide...
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Hope sprouts in the farm
The Government deserves some credit for at least putting on the table long-pending reforms in agri-marketing, which if carried through, will be truly revolutionary Heralding a new chapter in agricultural market reforms in India, on May 15 Finance Minister Nirmala Sitharaman made three major announcements under the “Atma Nirbhar Bharat Abhiyan.” The first announcement was about the Centre’s decision to enact a legislation to enable direct purchase of specified commodities — under entry 42 of the Union List and entry 33 of the Concurrent List — from farmers outside the designated Agricultural Produce Market Committees (APMCs). Next was the move to enact a Central law on contract farming to provide a legal framework for farmers to engage with processors, aggregators,...
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