After taking charge, in his very first Independence Day address on August 15, 2014, prime minister, Modi declared himself as ‘Pradhan Sewak’ – a colloquial term for principal servant. Coining yet another term ‘chowkidar’ [security guard], Modi roared that all of country’s resources – physical and monetary – belong to the people and that he was duty bound to protect these resources. In the same breath, he vowed to bring back all the resources that were looted by corrupt politicians, bureaucrats and industrialists and re-deploy for welfare of the poor. A cursory glance at the actions taken by his government during the last 45 months or so, would show that he has walked the talk. Be it demonetization, Goods and...
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Taxing discounts – a conundrum
Giving discounts on sale of products – purportedly with a view to lure customers and boost sales – has been an age-old phenomenon. Most of the companies operating under competitive market environments take recourse to this practice. With the advent of e-commerce however, and players in this segment [especially those with deep pockets either of their own or supported by MNCs in case of domestic players] in a hurry to capture a good chunk of the retail market in shortest possible time frame, are offering substantial discounts which in some cases could be 50% of the maximum retail price [MRP] or even more. Until hitherto, these were allowed to be deducted as business expenses leading to corresponding reduction in the...
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NPAs – will the patient survive surgery?
Replying to the debate on President’s address during the opening of the budget session of the parliament, prime minister, Modi squarely blamed the erstwhile UPA dispensation led by Congress for the most serious problem of NPAs [non-performing assets] of the banks – mostly public sector banks [PSBs]. What Modi was alluding to was that there had been massive proliferation of loans given by the banks on the directions of the ruling political establishment to favored industrialists and businessmen without conducting due diligence, assessing the viability of the projects/businesses and seeking mortgages. During 2008-2014, loans worth Rs 3500,000 crore were given. A big slice of these loans turned in to NPAs. Yet, these were kept under cover even as a host...
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Resurrection of long-term capital gains tax – a welcome move
The long-term capital gains tax [LTCGT] or tax on capital gains made from investment in equity shares and units of equity oriented funds [whose underlying investment is in shares] held for more than one year was withdrawn in 2004-05. This was to encourage long-term investment in equity shares and give boost to the capital market. In budget for 2018-19, finance minister, Arun Jaitely has re-introduced LTCGT @ 10% on capital gains made in excess of Rs 100,000/- annually. However, the gains accruing from existing investment in equity shares prior to January 31, 2018 will be grandfathered. This implies that any appreciation in the value up to this date will not be considered for computing the taxable gain. For instance, investment...
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Corporate tax sans exemption – miles away
While, presenting the union budget for 2015-16, finance minister, Arun Jaitely had announced that the corporate tax rate would be reduced from existing 30% to 25% over a period of 5 years. This was to be synchronized with withdrawal of all exemptions available under the existing dispensation. In the budget for 2016-17, for new projects set up after April 2016, the tax rate was reduced to 25%. Further, companies with turnover less than Rs 5 crore were charged 29% plus surcharge. In 2017-18, the tax rate for small companies was further reduced to 25% even while increasing the qualifying limit to Rs 50 crore. In the budget for 2018-19, Jaitely has given the benefit of 25% rate to all companies...
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Fiscal road-map abandoned midstream
In his budget speech for 2016-17, finance minister, Arun Jaitely announced the government’s intent to review Fiscal Responsibility and Budget Management [FRBM] Act with a view to make the target flexible to make it range bound instead of a fixed number as had been the position hitherto under the extant Act in vogue since 2003. Accordingly, a committee under Mr NK Singh, Chairman, Fifteenth Finance Commission, was set up to examine this issue besides revamping of the Act. The committee recommended a fiscal deficit target of 2.5% of gross domestic product [GDP], revenue deficit of 0.8%, a combined centre-state debt ceiling of 60% and central debt ceiling of 40% by fiscal 2022-23, end point of its six-year medium term fiscal road-map. It also recommended...
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National Health Protection Scheme – an election gimmick
In yet another demonstration of his commitment to take care of majority of the poor, in the last budget [2018-19] of its term before the next general elections in 2019, Modi government has announced a National Health Protection Scheme [NHPS]. Touted as the world’s largest public health care program [bigger than even Obamacare in USA], it seeks to provide health insurance cover of up to Rs 500,000/- to 100 million poor and vulnerable families. Taking an average family size of 5 persons, the benefits are expected to reach 500 million individuals or 40% of India’s population. In his budget speech, the finance minister, Arun Jaitley quipped “It is taking health care to a new aspirational level as it is going...
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Can pakoda seller be at par with beggar?
In an exhaustive interview given to a news channel on the eve of the New Year 2018, prime minister, Modi cryptically observed “won’t you consider a vendor selling ‘pakodas’ [a most preferred snack consumed all over India] and earning Rs 200 per day as a job”. The observation has added fuel to a raging debate over the employment generation record of the NDA government. The grand old national party, Congress is not tired of lashing out at the government for its alleged failure to redeem its election promise of generating 20 million jobs every year. Reacting to Modi’s observation, P Chidambaram, a senior Congress leader and former finance minister under UPA has opined “if selling pakoda is tantamount to creating...
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PSU divestment – is NDA following UPA footsteps?
The sale of 51.11% shareholding of the union government in Hindustan Petroleum Corporation Limited [HPCL] – a public sector undertaking [PSU] in the downstream oil segment – to Oil and Natural Gas Corporation [ONGC] – another PSU in the upstream oil and gas segment is expected to be consummated by January 31, 2018. This is estimated to yield a whopping about Rs 37,000 crores for the exchequer. Together with Rs 55,000 crores already mobilized: Rs 34,000 crore from sale of share in 24 PSUs [vide buyback offers, initial public offerings and offer for sales]; Rs 17,000 crore from listing of insurance companies like General Insurance Corporation [GIC], National Insurance Company [NIC] and Rs 4,000 crore from sale of holdings in...
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Building an egalitarian society – Modi alone can’t do
Just around the time Prime Minister, Modi was hard selling India as a preferred investment destination during his inaugural address at the 48th World Economic Forum [WEF] Annual Meeting, Davos – citing its far reaching economic reforms, expanding market opportunities, huge demographic dividend and inclusive development agenda, the annual Oxfam survey has brought to the fore a glaring statistics regarding on income inequalities in India. According to Oxfam, about 73% of the wealth generated during 2017 was appropriated by a 1% of the population [a steep jump of 15% over the corresponding figure 58% during 2016]. At the same time, almost 50% Indians – covering mostly the poor – saw their income increase by mere 1%. These numbers are out...
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