Nearly 30 months ago, prime minister, Modi was catapulted to lead India primarily on the plank of promoting ‘development’ and eliminate ‘corruption’. He has utilized every bit of this period to over-zealously pursue these objectives; those efforts and achievements are very much visible on the ground to everybody except those [opposition parties and his die-hard critics in media and intellectual fraternity] who have a vested interest in not taking note of these. Bringing development agenda on to the center-stage is something unique to Modi – dispensation since 2014. Prior to that, for decades, successive governments [barring 6 years stint of NDA (National Democratic Alliance) – government 1998-2004 then under Vajpayee] had only harped on giving doles to the poor. Even...
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Category: Fiscal deficit/subsidies
Viewpoint: Expedite subsidy reforms
By Uttam Gupta, New Delhi 05/01/2017 After protracted wrangling, members of the Organization for Petroleum Exporting Countries (OPEC) agreed on November 30, 2016 to reduce their combined output by 1.2 million barrels a day. Likewise, 11 non-OPEC countries led by Russia decided on December 10, 2016 to knock off over 550,000 barrels from their supplies. The agreement is effective from January 1, 2017. These developments need to be viewed in the backdrop of a steep drop in the price of crude from its peak of US$ 114 per barrel in mid-2014 to US$ 27 per barrel in February, 2016 and had recovered only marginally to US$ 40 per barrel by November-end. The price of LNG which follows the trend in...
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Demonetization – myths versus reality
In the aftermath of demonetization announced by prime minister, Modi on November 8, 2016, the air resonates with a tsunami of charges/allegations regarding its alleged ill-effects. It is time to assess the credibility of these charges. The government has plundered resources of poor The resources with the poor include (i) money held by him/her in cash [notes of various denominations] or (ii) savings in bank/post office if he/she has an account. As regards (i), he got 50 days time to exchange cash held in 1000/500 denominations for new notes at banks and another 3 months at RBI. As for (ii), this money is owned by him/her and shall remain so; all that the government did was to put restriction on...
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Subsidies – forget targeting, even cash transfer not in sight
In an exclusive interview given to a leading economic daily, Dr Arvind Panagariya, deputy chairperson, NITI Aayog has exalted the virtues of targeted cash transfer [TCT] instead of universal cash transfer [UCT] opining that opting for the former would help in reaching out more of state financial assistance or subsidy to the poor. This is stating the obvious. A given amount of subsidy if distributed among a lesser number of persons say, those living below the poverty line [their number is naturally less than the population universe] will result in each person getting more than the amount he would get if that given subsidy amount were distributed amongt the entire population. Yet, its reiteration by none other than Dr Arvind...
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Demonetization of 500/1000 notes – body blow to black money
When, the 4 months window [June 1- September 30, 2016] for declaring black money under income declaration scheme [IDS] was open [under it, a person could pay 45% of disclosed amount (30% tax plus 15% penalty) and thus convert black in to white], prime minister Modi had issued a veiled but stern warning to tax dodgers. He opined that persons who do not come clean now, will be dealt with a heavy hand after September 30, 2016. Based on information collected from various sources viz., banks, property registration offices, jewelers and other platforms where big ticket transactions are done, finance ministry had compiled a list of 9 million persons who spent up to Rs 1 crores in previous year but...
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FINDING THE MONEY FOR CHANGES
The Union Finance Minister has reason to both feel happy and worried. There have been considerable savings on account of subsidy slippages and earnings through spectrum sale. But there still are strains on revenue generation In the wake of the recently concluded spectrum auction yielding around Rs 32,000 crore less than the budgeted amount of Rs 64,000 crore for the current year, Union Minister for Finance , Arun Jaitley exuded confidence that this would not come in the way of his achieving the fiscal deficit target of 3.5 per cent of GDP set for the year. Jaitley’s confidence stems primarily from the success of the Income Declaration Scheme (IDS) announced in the Budget for 2016-17 and launched on June 1,...
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Fiscal consolidation – Jaitely is on course
The much touted spectrum auction has ended in a fiasco. As against an astronomical over Rs 560,000 crores being the expected proceeds from the auction, the actual sale has been a little over 10% or Rs 65,000 crores. Of this, around Rs 32,000 crores will be available during the current year. Critics aver that this will cast a shadow on the ability of finance minister, Arun Jaitely to achieve the fiscal deficit target of 3.5% of GDP [gross domestic product] during the current year. This is because under this head alone, there will be a shortfall of Rs 32,000 crores vis-à-vis the projected level of Rs 64,000 crores. Significant shortfall is also expected in proceeds from divestment of government equity...
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Making Indians pay tax – IDS shows way
The income declaration scheme [IDS] announced by finance minister, Arun Jaitely in the Union Budget for 2016-17 and launched on June 1, 2016 with a tenure of 4 months ended on September 30 which witnessed unprecedented action in major collection centers especially in metropolitan cities. IDS was contemplated in the backdrop of mountain of black money circulating in the economy and the determination of Modi – government to sternly deal with it. There was a great deal of expectation that the scheme would help in flushing out thousands of crores of concealed income and property and bolstering revenue. The expectations have borne fruit. At a press conference, Jaitrly informed that undisclosed income and property of Rs 65,250 crores has been...
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BENEFITS OF A NEW CALENDAR
Advancement of the Budget date will ensure completion of all legislative works before the start of financial year In 2000, the NDA Government, under the then Prime Minister Atal Bihari Vajpayee, switched the timing of the presentation of the Budget from the customary 5 pm to 11 am. While this move was symbolic, the current NDA dispensation has now taken a major step by de-linking this exercise from the vestiges of colonial raj. The Modi Government is likely to advance the presentation of the Budget from the last day of February to the last week of January or the first week of February. This will unleash huge benefits. Under the existing arrangement, by the time the Finance Bill and the...
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Advancing budget date – freedom from British legacy
The news of Modi – government seriously pursuing changing the date of presentation of Union Budget from the last day of February [a practice continued from the British era] to last day of January is music to the ears of every one who has lived with the pains and nuances of the extant dispensation. The last time India de-linked from the vestiges of colonial raj [though that was more symbolic] was also under NDA – government then led by Vajpayee. In 2000, it switched over to presenting the budget at 11 AM instead of customary 5 PM on last day of February [a follow-up to presentation of British budget earlier in the day]. Reform is in DNA of NDA Such...
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