The new mechanism would regulate the release of funds to the states and track their use, thereby preventing idling The Union government executes a plethora of welfare programs aimed at providing basic and necessary amenities and upliftment of the most disadvantaged members of society. It does so mainly through “Central Schemes” (CS) which are fully funded and implemented by it. A total of 740 CS schemes are currently under implementation. During FY2022-23, the CS spending was Rs 1208,000 crore In addition, there are “Centrally Sponsored Schemes” (CSS) designed to supplement the efforts of the states in achieving various socioeconomic goals and implementing national priorities. These are funded by the central government and the states in varying proportions viz. 90:10, 60:40,...
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AAP pushing discoms into crisis
The AAP government’s decision to supply subsidised power in Delhi is adversely affecting the financial health of discoms Since the financial year (FY) 2019-20, the AAP government in Delhi led by Arvind Kejriwal has been subsidising the distribution of electricity to household (HHs) consumers. Whereas, HHs consuming up to 200 units per month are fully exempt from paying any charges, those with consumption between 201-400 units per month get 50 per cent of the bill amount as a subsidy subject to a cap of Rs 800. During FY 2019-20, the government spent Rs 2405 crore on subsidizing these consumers. The expenditure increased to Rs 2940 crore during FY 2020-21. It further increased to Rs 3090 crore during FY 2021-22. In...
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MSP guarantee is bad economics
Yet, political parties give because it helps them win elections. MSP representative image. Credit: DH File Photo In the recently concluded state assembly elections, among the various guarantees made by the BJP—Modi’s guarantees—a significant commitment is a hefty increase in the minimum support price (MSP) for paddy and wheat offered to farmers in Madhya Pradesh and Chhattisgarh. In MP, the party promised an MSP of Rs 3,100 per quintal for paddy, a 42% increase from the current Rs 2,183 per quintal fixed by the Centre. For wheat, the promised MSP is Rs 2,700 per quintal, a 27% rise from the existing Rs 2,125 per quintal. In Chhattisgarh, a commitment was made to procure paddy at an MSP of Rs 3,100...
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COP28: High on rhetoric, less on action
The COP 28 offers no credible action. On meeting the ‘funding gap’, save a token amount for Loss and Damage Fund (LaDF), there was nothing to show The just concluded 2023 United Nations Conference of the Parties (COP28), in Dubai, has pledged to “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, to achieve net zero by 2050 in keeping with the science”. The ‘net zero’ refers to a scenario wherein the emission of greenhouse gases (GHGs) into the atmosphere equals their removal. Historically ‘indiscriminate’ and ‘excessive’ use of fossil fuels – a generic term for major fuels such as coal, oil and natural gas – mostly by...
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FDI in export–linked e-tailing is a bad idea
When the government expects the foreign companies to do almost everything that a retailer do, how can the former deny the latter the right to sell The government is considering allowing foreign direct investment (FDI) in inventory-based models of e-commerce, subject to the rider that these will be solely aimed at export markets. A comprehensive policy on FDI in e-commerce has been under deliberation since 2018. In fact, during discussions with representatives of e-commerce firms and a domestic traders’ body viz. Confederation of All India Traders (CAIT) held on August 2, 2023, the Department for Promotion of Industry and Internal Trade (DPIIT) in the Ministry of Commerce and Industry made a presentation on the ‘fundamentals’ of the proposed e-commerce policy....
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RBI should loosen the monetary lever
RBI’s decision to keep the policy rate unchanged could pose a serious risk to growth due to a rise in lending rates and higher-cost of loans to industries The Reserve Bank of India (RBI) six-member Monetary Policy Committee (MPC) on December 8, 2023, decided to keep the policy rate (the interest rate at which the RBI lends to banks) unchanged at 6.5 per cent. The MPC has also said that the actions of the RBI will remain “actively disinflationary”. The decision is a continuation of a trend wherein the RBI has been overly obsessed with the management of inflation and aggressively used the two prime monetary policy instruments in its armoury namely the policy rate and liquidity (a jargon for...
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G7 sanctions slip through the cracks
Russia is the third-largest producer of crude oil, with over 12 per cent of global crude production, and the second-largest exporter after Saudi Arabia. An oil and gas industry worker walks during operations of a drilling rig at Zhetybay field in the Mangystau region, Kazakhstan. Credit: Reuters Photo The reports of the US Treasury Department imposing sanctions on two ship owners in October 2023 for allegedly transporting Russian oil at $75 and $80 per barrel, while relying on US-connected service providers, demonstrate a feeble attempt to achieve the lofty goal set by the G7 in mid-2022. The group, consisting of the United States, Germany, France, Britain, Italy, Canada, and Japan, aimed to punish Russia for its military actions against Ukraine by...
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SC should declare poll freebies a corrupt practice
When a candidate uses his money to bribe the voter, it is treated as corrupt practice, but when his party bribes voters using ‘public money’ it is not treated the same way Taking a cue from the practice of mesmerizing voters with freebies – an acronym for “something is given free of charge” – started by the Aam Aadmi Party (AAP) in the February 2020 Delhi elections, early this year, in Karnataka elections, the grand old party (GOP) gave five guarantees (a more respectable nomenclature for freebies) on a grand scale. These delivered the intended result. In the just concluded elections in Madhya Pradesh (MP), Rajasthan, Chhattisgarh and Telangana, the guarantees have occupied the centre stage in the manifestos of...
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Cut out red tapism in public sector share sale
The lengthy and cumbersome process of approval and bureaucratic red tape undermines the chances of the Government selling CPSU shares to willing investors In the Budget for 2023-24, Finance Minister Nirmala Sitharaman had set a target of Rs 51,000 crore for proceeds of the sale of Union government shareholding in central public sector undertakings (CPSUs). As per available indications, the government may fall short of this target by Rs 30,000 crore. An overwhelming share of the shortfall is due to delays in the disinvestment plans of IDBI Bank (the government plans to sell 30.48 per cent of its stake as well as 30.24 per cent shareholding of LIC aggregating to a total stake sale of 60.72 per cent) and state-owned...
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India’s major subsidies bill balloons. And, it was set to happen
The underachievement of targets is a manifestation of an attempt by the ruling dispensation to artificially suppress the BE in order to show a better picture of the fiscal deficit. The Union government may end up spending Rs 50,000 crore more than the budget estimate (BE) on the three major subsidies — fertiliser, food and cooking gas — during the current financial year. The maximum slippage of Rs 25,000 crore would be in fertiliser subsidy where the revised estimate (RE) is likely to be Rs 2 lakh crore against a BE of Rs 1.75 lakh crore. Food subsidy will increase by Rs 15,000 crore with the RE rising to Rs 2.12 lakh crore against the BE of Rs 1.97 lakh crore....
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