Articles

SHEDDING TEARS FOR THE WRONG ‘VICTIMS’

A great deal of misinformation is being spread by vested interests to demonise demonetisation. Positive results of the Government’s courageous move will be seen soon A couple of days ago, Revenue Secretary Hasmukh Adhia had alluded to a good chunk of over Rs15,00,000 crore cash embodied in Rs1,000/500 notes (these were declared invalid by Prime Minister, Narendra Modi from November 8-9 midnight) coming back to the banking system. This was interpreted to mean that the ‘entire’ cash would return by December 30, when the scheme closes. Extrapolating from here, critics (opposition parties included) argue that demonetisation has been a monumental failure as there was either no black money, or that whatever existed, hoarders managed to get this converted into ‘white’....
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Taxing times: judiciary slower than bureaucracy

Giving its verdict on a bunch of petition challenging levy of ‘entry tax’ by states, a nine judge constitution bench of Supreme Court recently upheld its constitutional validity. It directed that individual cases will be decided by the regular benches concerned keeping in mind laws of the respective states. Even as regular benches take their own sweet time to conclude proceedings, the affected companies may get breather for a while to actually pay up. But, ‘Damocles sword’ hangs! The total liability on the companies – mostly in infrastructure and energy sectors which resort to large-scale transportation of goods in bulk across states – is about Rs 30,000 crore plus interest which itself would be a humongous amount considering that these...
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Keep gas pricing formula-driven

On October 1, 2016, the Indian Government reduced the price of domestic gas by 18% to US$ 2.78 per million British thermal units [mBtu] on a net calorific value [NCV] basis. The public sector Oil and Natural Gas Corporation and Oil India Limited raised a hue and cry saying this is even lower than their cost of production at US$ 3.59 per mBtu/US$ 3.06 per mBtu. They want a “floor” below which the price should not be allowed to go. Their demand is flawed. Under the guidelines for domestic gas pricing in vogue since November 1, 2014, the price of this gas was based on a weighted average of prices at four global locations viz., Henry Hub [USA], NBP [National...
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IDEA IS GRAND, BUT WILL IT WORK WELL?

Running a pilot project on DBT for fertiliser by itself does not ensure that the scheme will actually be launched. Moreover, the project is deeply flawed Alluding to direct benefit transfer (DBT) of fertiliser subsidy, in his Budget speech for 2016-17, Union Minister for Finance Arun Jaitley had stated: “We have already introduced DBT in LPG. Based on this successful experience, we propose to introduce DBT on pilot basis, for fertiliser in a few districts in the country, with a view to improving quality of service delivery to the farmers.” The focus on DBT links with a revelation made in the Economic Survey (2015-16). It stated that “24 per cent of the fertiliser subsidy is spent on inefficient producers, 41...
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Neem-coated urea: Why is Narendra Modi govt waiting for 5 years to make India self-sufficient in fertilisers?

Addressing the 9th Global Agriculture Leadership Summit on September 8, 2016, chemicals and fertiliser minister, Ananth Kumar proclaimed that neem-coating of all urea supplies meant for use by farmers has resulted in elimination of diversion to chemical industries and smuggling to neighbouring countries. If, the claim is true, it will have a profound impact on the larger picture of demand-supply balance, self-sufficiency in fertilisers, dependence on import, subsidy pay-out, demand for hydrocarbons especially gas and impact on the environment. The total consumption of urea is about 30 million tonnes annually, including 22 million tonnes indigenous and 8 million tonnes of imported product. Since, all of this is sold by manufacturers/importers at a low ‘controlled’ price, excess of cost of production/import...
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Crippled at Bombay House

GOOD CORPORATE GOVERNANCE The revelations made by Cyrus Mistry, ex-Chairman, Tata Sons (letter dated October 25, 2016) immediately following his dismissal point towards a new low in corporate governance in India. If it can happen in one of India’s leading conglomerates which has a turnover of close to Rs 7,00,000 crores, market capitalisation of Rs 8,50,000 crores, operations in more than 100 countries and has about 7,00,000 employees on its rolls, this speaks volumes about the extent of degeneration that has set in corporate board rooms. What is so disconcerting about the recent events at Bombay House? The most worrying point is the brazen muscle-flexing by Tata family-owned trusts (they have 66% share in Tata Sons) which reduced its head...
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EMPOWERING THE PEOPLE

Prime Minister Modi’s demonetisation drive is a master-stroke which will lay the foundation for double-digit growth When the four-month window (June 1 to September 30) for the declaration of black money under the Income Declaration Scheme (IDS) was open (under it, a person could pay 45 per cent of disclosed amount (30 per cent tax plus 15 per cent penalty) and thus, convert black in to white), Prime Minister Narendra Modi had issued a veiled but stern warning to tax dodgers. He opined that persons who do not come clean now will be dealt with a heavy hand after September 30. Based on information collected from various sources viz, banks, property registration offices, jewellers and other platforms, where big ticket...
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Don’t fiddle with GST soul

NEW RATE STRUCTURE In its meetings held on Nov 3-4, 2016, the GST (Goods and Services Tax) Council arrived at a consensus on the rate structure even as it failed to hammer an agreement on an equally contentious issue of who (read Centre or states) will exercise administrative control over which tax. For now, the next meeting has been deferred till Nov 23, thus casting shadow over the government’s ability to meet the April 1, 2017 deadline to kick off the new tax regime. The Council has opted for four rates – 5% for essential and daily use items, two standard rates of 12% and 18% and highest rate 28% on so called de-merit goods such as luxury cars, aerated...
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FINDING THE MONEY FOR CHANGES

The Union Finance Minister has reason to both feel happy and worried. There have been considerable savings on account of subsidy slippages and earnings through spectrum sale. But there still are strains on revenue generation In the wake of the recently concluded spectrum auction yielding around Rs 32,000 crore less than the budgeted amount of Rs 64,000 crore for the current year, Union Minister for Finance , Arun Jaitley exuded confidence that this would not come in the way of his achieving the fiscal deficit target of 3.5 per cent of GDP set for the year. Jaitley’s confidence stems primarily from the success of the Income Declaration Scheme (IDS) announced in the Budget for 2016-17 and launched on June 1,...
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Bias towards the rich

REINING IN LPG SUBSIDY : The Centre should get into a ‘surgical strike’ mode now and enforce exclusion of all rich/better-off from the ambit of LPG subsidy. Prime Minister Narendra Modi has made pronouncements several times that subsidies will be rationalised to take them away from the rich/better-off and given to the poor besides plugging leakages. While the government has made significant progress on the latter, there is little action on the ground in regard to the former (subsidies). In LPG distribution, the government has performed an extraordinary feat of virtually eliminating leakages and saving about Rs 15,000 crore annually under PAHAL (Pratyaksha Hastaantarit Laabh) for direct benefit transfer (DBT) of subsidy as under it, a record 30 million bogus...
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