In the Economic Survey (2016-17) presented in Parliament on January 31, 2017, Chief Economic Advisor Arvind Subramanian advocated Universal Basic Income (UBI) instead of a plethora of subsidies given under extant dispensation. But the idea found no mention in Finance Minister Arun Jaitley’s Budget for 2017-18, presented on February 1, 2017. Meanwhile, in an interview given to a group of economic editors on February 1, Jaitley opined that “UBI is an idea whose time should come, but politics of this country is not mature yet for its implementation.” He could have taken the idea on board at least on a trial basis, but avoided it. So, what are the constraints? What will be the opportune time? Will it come at...
More
No comments
Category: Fiscal deficit/subsidies
Strategic sale of PSUs – to forego, a tactical blunder
In several areas, Modi – government has continued with the policies and programs of the erstwhile UPA – dispensation and has unquestionably bettered upon in implementation and deliverable; for instance, Mahatma Gandhi National Rural Employment Generation Program [MGNREGP] and disbursement of LPG [liquefied petroleum gas] subsidy. Yet, there is one area where the former continues with latter’s legacy with no better outcomes. This has to do with “strategic” disinvestment of Union government’s shares in public sector undertakings [PSUs]. It may be recalled that in its previous incarnation under Vajpayee, the BJP-led NDA dispensation [1998-2004] had vigorously pursued strategic disinvestment, some of high profile cases being Modern Food Limited [MFL], Hindustan Zinc Limited [HZL], Bharat Aluminium Company [BALCO] etc. The UPA...
More
No comments
Are Indian IT czars shooting in the mouth?
During the last one-and-a-half decade or so, the Indian I-T [information technology] industry has recorded unprecedented growth propelled mostly by exports. Of this, a disproportionately high share has come from increase in exports to USA. The industry has an aggregate revenue of over US$ 150 billion [2016] of which around US$ 100 billion [or 2/3rd] is contributed by export and the balance US$ 50 billion from domestic source. Within exports, USA alone accounts for over US$ 50 billion. This rapid growth helped all leading players viz. Tata Consultancy Services [TCS], Infosys, Wipro, Cognizant Technologies etc reap a financial bonanza. Even after distributing handsome dividends, they have accumulated monuments of cash running in billions of dollars. Of course, India has gained...
More
No comments
A tsunami of NPAs in the making
Even as the public sector banks [PSBs] are struggling to cope with the disastrous consequences of unsustainable high level of non-performing assets [NPAs] [over Rs 600,000 crores on last count] on their balance sheet as also choking flow of credit, political establishments in almost all states as also at the central level are at work to make life even tougher for them. In the just concluded elections in Uttar Pradesh [UP], prime minister Modi promised loan waiver to all small and marginal farmers. The commitment was reiterated in almost every election speech ad infinitum. Now, that BJP has got a resounding mandate with ¾th majority, the state government will have no escape from having to redeem this pledge. This will...
More
1 comment
Can Jaitely balance budget sans oil bonanza?
A report by the Comptroller and Auditor General [CAG] tabled in Parliament on March 10, 2017 brings out that in recent years, there has been a sharp increase in the Union excise duty collections, a predominant share of this accounted for by increase in excise revenue on petroleum products. During 2013-14, total excise collection was Rs 169,000 crore of which contribution of petroleum products [POL] was Rs 87,880 crores or 52%. During 2015-16, even as overall excise revenue increased to Rs 287,000 crore, contribution of POL went up to Rs 198,030 crores or 69% of the total [with sin products like tobacco accounting for another 10%, these two categories alone make up 80%]. During this period, there was massive increase...
More
No comments
Royalty liability: milching of ONGC, OIL ends
In an unprecedented move, the government has exonerated its undertakings in the oil sector — Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) from a potential liability of about Rs 22,000 crore in royalty dues to Gujarat and Assam governments. ONGC had to pay Gujarat Rs 8,392 crore and Assam Rs 1,404 crore in royalties for the period April 1, 2008 and January 2014. Together with interest Rs 2,868 crore, the total liability was Rs 12,664 crore. OIL had to pay to Assam Rs 4,902 crore in royalty dues plus Rs 4,355 crore in interest adding to Rs 9257 crore. The Union government has settled this pending liability of ONGC and OIL by paying the royalty amount...
More
No comments
Milching of ONGC/OIL halts
In an unprecedented move rarely seen in the financial history of independent India, the government has exonerated its undertakings in the oil sector viz. Oil and Natural Gas Corporation [ONGC] and Oil India Limited [OIL] from a potential liability of about Rs 22,000 crore in royalty dues to states of Gujarat and Assam. ONGC had to pay Gujarat Rs 8,392 crore and Assam Rs 1,404 crore in royalties for the period between April 1, 2008 and January 2014. Together with interest Rs 2,868 crore, total liability was Rs 12,664 crores. OIL had to pay to Assam government Rs 4,902 crore in royalty dues plus Rs 4,355 crore in interest adding to Rs 9257 crore. Union government has settled this pending...
More
No comments
Competitive populism can derail growth
Last year, Congress Vice President, Rahul Gandhi took an extensive tour of Uttar Pradesh [UP] visiting tens of thousands farmers households in the run up to assembly elections in February/March 2017 [currently underway]. During the visits, he issued a certificate [call it ‘promissory note’] to every farmer promising waiver of his/her farm loan if voted to power in the state. As the election process got kicked off early this month, he reiterated the commitment in all his speeches ad infinitum. Additionally, he has promised cut in electricity tariff by 50% and increase in price offered to farmers for their agricultural produce. In this, he is joined by Akhilesh Yadav, National President, Samajwadi Party [SP] contesting election in alliance with Congress....
More
No comments
GST architecture is only getting worse
Union Finance Minister Arun Jaitley and chairman, GST (Goods and Services Tax) Council must be credited with spearheading requisite efforts like draft of all related laws — Central GST (CGST), state GST (SGST), integrated GST (IGST), legislation on compensation to states for loss of revenue, delineation/apportionment of powers for administering the tax, determination of rate structure etc in a time-bound manner to ensure that this revolutionary tax reform is kicked off from April 1, 2017. The pace at which the GST Council was progressing, it was almost certain that the government would meet the deadline. But, the announcement by Prime Minister Narendra Modi on November 8, 2016 to demonetise Rs 1,000 and Rs 500 currency notes came as a spoke...
More
No comments
Universal basic income – why Jaitely didn’t take it on board?
In the Economic Survey [2016-17] presented in the parliament on January 31, 2017, chief economic advisor [CEA], Dr Arvind Subramanian advocated universal basic income [UBI] instead of a plethora of subsidies given under extant dispensation. But, the idea found no mention in finance minister [FM], Arun Jaitely’s budget speech for 2017-18 presented on February 1, 2017. Meanwhile, in an interview given to a group of economic editors on February 1, 2017, Jaitely opined that “UBI is an idea whose time should come but, politics of this country is not mature yet for its implementation”. He could have taken the idea on board at least on a trial basis but avoided. So, what are the constraints and what will be the...
More
No comments