For decades, farmers in India have been resorting to indiscriminate and excessive use of chemical fertilizers [source of plant nutrients such as nitrogen ‘N’, phosphate ‘P’, potash ‘K’ besides a host of secondary and micro-nutrients; which put simply, are food for crops in as much the same way as cereals, fruits, vegetables are essential for human beings] leading to deterioration in soil health, adverse impact on the environment and imperiling public health. The mother soil is the repository of these nutrients [or ‘food for crops’], the precise quantum in any given location depends on a multitude of factors such as their stock to begin with when farmers started cultivating the land [say 100 years ago or even earlier], addition from...
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Trade deal – forget big, even mini unlikely
Prior to the maiden visit of President, Donald Trump to India [February 24 – 25, 2020], there was a sense of dejection about the possibility of US and India signing even a limited trade deal not to talk of a ‘big deal’. This is to be seen in the backdrop of the United States Trade Representative [USTR], Robert Lighthizer [the point man who has the onerous responsibility of formulating US trade policy and negotiating trade pacts with countries world-wide] not being part of the delegation. Earlier, Lighthizer had cancelled a visit to New Delhi when he was scheduled to wrap up discussion on a trade deal. However, on conclusion of the visit, the mood is buoyant. This was reflected in...
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Telecom industry on the brink
Bringing to a climax more than a decade old court battle between department of telecommunication [DoT] and telecom service providers, in an unprecedented judgment, on October 24, 2019, the Supreme Court [SC] ordered the latter to pay ‘unpaid’ dues towards license fee and spectrum usage charges [SUC]. The unpaid dues [call these additional liabilities] arose consequent to the SC accepting the DoT interpretation that adjusted gross revenue [AGR] [license fee and SUC is charged as percentage of AGR] includes – apart from telecom services revenue – revenue from non-telecom services viz. rent, profit on sale of fixed assets, dividend, interest etc. The additional liability on private telecom service providers is a whopping about Rs 147,000 crore for the period 2006-07 to 2016-17...
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Freebies – road to fiscal disaster
In the just concluded elections in Delhi, the electorate has returned Arvind Kejriwal [AK] to the coveted position of Chief Minister with a thumping majority [Aam Aadmi Party (AAP) won 62 out of a total of 70 assembly seats even as its dominant rival BJP secured a mere 8; the third main contestant in the fray Congress got none]. Kejriwal claims that this is a vindication of the ‘development model’ pursued by him during the last 5 years since February 2015. He vows to pursue this in Delhi during the next 5 years and has crafted plans to leverage it for establishing the footprint of AAP in other states. What precisely is the model? Will the states be able to...
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Budget 2020-21 – will FM’s tax proposals spur growth
Amidst an atmosphere of gloom and doom [triggered by growth plunging to a low of less than 5% during the current year and muted projections in regard to growth during the next year], it is necessary to closely scrutinize tax proposals in the Union Budget for 2020-21 [presented by the Finance Minister, Nirmala Sitharaman on February 1, 2020] to assess whether or not these will generate the much needed growth impulses. The 4 major factors impinging on growth are (i) private consumption; (ii) investment; (iii) export; (iv) spending by the state. Modi – government has kept up the tempo of expenditure by way of building infrastructure on an unprecedented scale and massive spending on welfare schemes. As regards export, given...
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Strategic disinvestment – will it take off in 2020-21
Buoyed by the success of disinvestment [sale of government shares in public sector undertaking (PSU)] undertaken during 2017-18 and 2018-19 [when the centre garnered over Rs 100,000 crore and Rs 85,000 crore respectively], for the current year, Modi – government had set an ambitious target of getting Rs 105,000 crore. A major slice of these proceeds was to come from ‘strategic disinvestment’ – or transfer of a sizeable portion of ownership [this could go up to 51% implying privatization] and management control to a private entity. The crucial ‘strategic disinvestment’ proposals included divestment of all of government’s shareholding in Bharat Petroleum Corporation Limited [BPCL] 53.29% ; Containers Corporation of India [ConCor] 30%; Shipping Corporation of India [SCI] 63.75%; North Eastern...
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Drastic cut in food subsidy – real or fudged
In the Economic Survey [2019-20] released on January 31, 2020, the chief economic advisor [CEA], K Subramanian had recommended some reduction in food subsidy by limiting coverage of the scheme as also by increasing issue price of foodgrains. In this backdrop, one was looking forward to announcement of a major reform in this important area in the Union Budget for 2020-21 to presented by the Finance Minister [FM], Nirmala Sitharaman on the following day. Even as the speech was devoid of any such announcement, however looking at the numbers, one comes across the revised estimate [RE] of food subsidy for 2019-20 at Rs 109,000 crore – a steep decline of 40% from the budget estimate [BE] of Rs 184,000 crore...
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Aspirational India – long on vision but short on resources
The Union Budget for 2020-21 presented to the Parliament by the Finance Minister, Nirmala Sitharaman on February 1, 2020, confirms apprehension that the actual fiscal deficit [FD] for 2019-20 would exceed the budget estimate [BE] by a significant margin. Sitharaman puts it at 3.8% of GDP [gross domestic product] against the target of 3.3%. However, she has justified this deviation in terms of the recommendation of the NK Singh committee on review of the Fiscal Responsibility and Budget Management [FRBM] Act [2003] which permits breach of the target in case of “far reaching structural reforms with unanticipated fiscal implications”. For 2020-21, the finance minister has provided for FD of 3.5% as against 3.0% as stipulated under the FRBM Act. Here...
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Amnesty schemes can’t fill void in tax collection
The year 2017-18 [following the announcement of demonetization Prime Minister, Modi on November 8, 2016] witnessed an unprecedented surge in tax collection led mostly by steep increase in personal income tax [PIT]. During 2018-19 however, it received a jolt with collection missing the target by significant margin. The set-back has continued during the current year. In the budget for 2019-20, the finance minister, Nirmala Sitharaman had set gross tax receipts [GTR] target of about Rs 2460,000 crore of which the net central tax [NCT] was Rs 1650,000 crore [after transfer of Rs 810,000 crore to states as per 14th Finance Commission]. As we draw towards year end, the government is staring at a shortfall of about Rs 356,000 crore in...
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Reducing income inequalities – needs change of mindset
Almost every government irrespective of its political affiliation assigns top priority to accelerating economic growth [commonly understood as giving a push to gross domestic product (GDP)] believing that fruits of this acceleration will automatically percolate to the lowest strata of the society resulting in their higher income and better living standard. This belief has led successive regimes to single mindedly focus on growth without even bothering to look at income distribution. This task is left to economists for analysis more in the nature of a post mortem and mountain of research but is of little use in so far as learning lessons and changing policy discourse is concerned. One such piece of research is ‘Time to Care’ released by rights...
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