Early this year, the finance ministry and NITI Aayog mooted a road-map for direct benefit transfer [DBT] of fertilizer subsidy and alluded to club this with assistance @ Rs 6000/- per annum being given under PM-KISAN and give the total amount as quasi–universal basic income transfer. To begin with, this will be run on trial basis in select districts to cover small and marginal farmers only. However, full scale implementation pan-India will be possible in 2-3 years. The finance ministry/NITI Aayog were to put up the proposal to the new government for latter’s approval. But, there was no announcement in the budget for 2019-20 presented by the finance minister, Nirmala Sitharaman on July 5, 2019. Now, a panel under Niti...
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Funding welfare schemes – make it transparent
Modi – government deserves commendation for showing a high degree of sensitivity to the dire need for improving the living conditions of millions of poor and down trodden – residing in both rural and urban areas – by providing all basic amenities such as affordable housing, electricity, sanitation/toilet, fuel/gas, drinking water, health care, education etc. During the last 5 years, it has built about 1.5 crore affordable housing units, given 2.6 crore electricity connections, built around 9 crore toilets, given 7 crore gas connections and provided free medical treatment for expenses up to Rs 500,000/- [with an intent to cover 10 crore families]. Under Modi 2.0, the government has vowed to reach the target of 2 crore housing units by...
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How sugar turns bitter for the consumer?
The Cabinet Committee on Economic Affairs [CCEA] has approved a proposal of food ministry for creation of 4 million tons of sugar buffer stock during August 1, 2019, to July 31, 2020. The government will spend Rs 1,674 crore towards the cost of carrying the stock. The amount would be directly credited into farmers’ account on behalf of sugar mills against their cane price dues. It has also decided to keep Fair and Remunerative Price [FRP] of sugarcane unchanged at Rs 275 per quintal. FRP is the minimum price which mills have to pay to farmers for purchasing sugarcane – raw material used in making of sugar. The price is applicable to the sugarcane purchase made during October 1, 2019...
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Are farmers happy under Modi?
In the follow up to BJP’s defeat in the three major states in central India viz. Madhya Pradesh, Rajasthan and Chhattisgarh last year, there was a widespread perception that a major factor behind this was resentment among farmers [besides the unemployed youth] with the alleged anti-farmer policies of incumbent governments in these states as also those pursued by the union government. Under Modi – dispensation, the prices of farm products had increased at a slower pace than those of the non-farm products or the ‘terms of trade’ moved against agriculture [a jargon used by economists to describe the phenomenon]. As a consequence, farmers’ income grew slower than non-farm income which – analysts argued – prompted them to vote against BJP....
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Overseas sovereign borrowing – a double-edged sword
In the Union Budget presented on July 5, 2019, the government has come up with ‘overseas sovereign borrowing plan’ to meet the funding requirements of an ambitious investment program that involves a spend of Rs 100,00,000 crore [US$ 1.4 trillion] over the next 5 years to make India US$ 5 trillion economy by the year 2024-25. During the current year, it is aiming to raise US$ 10 billion from this source. For now, its intent is to go for US$ 3 – 4 billion the contours for which are expected to be finalized by September, 2019. Currently, there is surplus liquidity and benign interest rate environment in the international market [courtesy, the Federal Reserve of the USA keeping interest rate...
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Boosting tax revenue – FM’s novel ways
During 2018-19, the government had faced a shortfall of about Rs 95,000 crore in tax revenue [Rs 60,000 crore in GST and Rs 35,000 crore in direct tax] vis-à-vis the revised estimate which itself was Rs 100,000 crore lower than the target fixed while presenting the budget on February 1, 2018. This forced it to compromise on development expenditure, postpone payments such as subsidies to the next year even as it didn’t want to miss the fiscal target. During the current year also, tax collections are not showing the required buoyancy [in June, 2019, the monthly GST collection was even less than Rs 100,000 crore as against over Rs 110,000 crore needed to reach the yearly target]. The government is...
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Taxing the super-rich – is it justified?
In the Union Budget for 2019-20 presented by the finance minister, Nirmala Sitharaman on July 5, 2019, the government announced increase in the surcharge on individuals [or association of persons (AOP) or trusts)] with annual income in the Rs 2 crore to 5 crore range from existing 15% to 25% and on individuals with income > Rs 5 crore from existing 15% to 37%. This will result in an effective tax incidence of 39% on earners in Rs 2 crore to 5 crore range and 42.7% on those earning > Rs 5 crore. There is much hue and cry more so because this will affect foreign portfolio investors [FPIs] who are registered in India as AOP or trusts. The plunge...
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Relinquishing control over PSUs, really!
In her maiden budget presented on July 5, 2019, the union finance minister, Nirmala Sitharaman has set an ambitious target of Rs 105,000 crore as proceeds of disinvestment of government shares in public sector undertakings [PSUs] [this is even higher than about Rs 100,000 crore it had garnered during 2017-18]. She has also hinted at aggressive pursuit of ‘strategic’ disinvestment and even consider reducing governments’ shareholding in PSUs to below 51% on a case-by-case basis. A target of realizing 1/3rd of the proceeds from this route has been set. Over Rs 35,000 crore, the government is contemplating to garner from the ‘strategic’ disinvestment includes proceeds from divestment of Air India which according to the secretary, department of investment and public asset management...
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Modi 2.0 fails to kick off fertilizer reforms
Having been returned to power, we were looking forward to Modi kick off reforms in the fertilizer sector which were ignored by successive governments in the past. The expectation was legitimate as any reform measure is bound to affect stakeholders in the immediate short-run but that is unlikely to pose any threat to the government which has a mandate to run for full five years and it does not have to face the electorate before this. So, now was the golden moment to go for the big bang. But, the union budget presented by finance minister, Nirmala Sitharaman on July 5, 2019 has belied the expectation. There is no reference to fertilizers even as the allocation for fertilizer subsidy at...
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Ailing BSNL/MTNL – privatization is the way forward
The Bharat Sanchar Nigam Limited [BSNL] – a jewel among the most profitable public sector undertakings [PSUs] of the union government and an entity that virtually monopolized the telecommunication sector over two decades ago – is reported to have sent an SOS to the department of telecommunication [DoT] – its nodal ministry – seeking immediate release of funds to enable it pay salaries to its employees for the month of June, 2019. This has led to consternation in industry circles with many commentators even questioning the very need to continue operations of this highest loss making PSUs [during 2018-19, it posted loss of Rs 13,804 crore] besides Mahanagar Telephone Nigam Limited [MTNL] – another one time jewel in the portfolio...
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