In an open letter addressed to Prime Minister, Mr P Chidambaram, former finance minister in the erstwhile UPA government has taken pot shots at Modiji for his ‘alleged’ failure to create jobs. He laments that during 2014-15, jobs were generated at a measly rate of 100,000 per quarter which works out to 400,000 in the whole year. Mr Chidambaram’s observation is reminiscent of a phrase coined by ex-Prime Minister, Dr Manmohan Singh “money does not grow on tree”. Dr Singh was alluding to efforts-led creation of wealth even as right under his nose, people witnessed a contrasting spectre of huge amount of national wealth being plundered and given to close contacts/favourites of political bosses in the grand old party. However,...
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Category: Fiscal deficit/subsidies
Modi delivers ‘scam-free’ India
On May 26, 2015, Modi – government completes one year in office. Naturally, it is time to review and reflect on the pluses and minuses; on what it did and what it did not. But for die hard critics, those wearing coloured glasses and determined to see only negatives, all others viewing happenings from an objective and un-biased mindset will only be able to see positives as this is all that the present dispensation – led by a charismatic leader Modiji – has put on the plate of 1.25 billion people of India. Poor catapulted to center stage For the common man, the poor and the poorest among them, there is a lot to feel relieved and rejoice as the...
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GST – let this not be baby born sick
On May 6, 2015, Lok Sabha passed the constitutional amendment bill on Goods and Services Tax (GST). The government strategists are working hard to get this approved by Rajya Sabha (RS) where the ruling NDA [National Democratic Alliance] is in minority. The bill is listed in agenda for RS on May 11, 2015. There is a distinct possibility of it going through in RS as Congress which uses every opportunity to embarrass the ruling establishment [Dr Manmohan Singh even suggested that the bill be referred to the Standing Committee] cannot afford to be seen as sabotaging or delaying a bill it had introduced in 2011 and has narrated its virtues umpteen number of times. GST has the potential to increase...
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Direct benefit transfer – Time to move beyond LPG
Putting cash in the bank account of a beneficiary or direct benefit transfer (DBT) is a revolutionary idea that has the potential for radically transforming the way government’s welfare schemes including subsidies are administered. DBT is globally recognized for (i) openness and transparency in administration; (ii) substantially enhanced targeting and speedy reach; (iii) elimination of leakages and (iv) avoidance of market distortions and resultant benefits of competition where subsidies on food, fertilizers, LPG and kerosene etc are involved. India latched on to this idea only a couple of years back when the erstwhile UPA – government announced its adoption in January 2013 for some 29 schemes. The move was half-hearted as it kept out food and fertilizers [these account for...
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Modi’s dream budget – 2015/16
Borrowing from cricket terminology, media is agog with description of Modi – government first full-fledged budget 2015-16 as a ‘super-budget’. There could not be a more apt description. Finance minister Jaitely has delivered wholeheartedly on the hopes and aspiration of 1.25 billion people of India who only 9 months ago had given Team Modi a resounding mandate to govern and extricate them from the deep economic morass they were plunged in to, courtesy a decade of mis-management and policy paralysis. People gave command to Team Modi on five major planks viz., (i) inclusive development; (ii) building infrastructure; (iii) social safety net (iv) poverty alleviation and (v) countenancing the menace of corruption. On all these counts, the team has delivered without...
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Switch to accrual-based accounting for subsidies
In his maiden Budget, finance minister Arun Jaitley had announced the setting up of an Expenditure Management Commission (EMC) to recommend a roadmap for rationalising and phasing out the major subsidies. As a follow-up, on September 4, the government constituted the EMC with former RBI Governor Bimal Jalan as the chairman. The EMC’s mandate puts under the scanner the government’s spending on all its programmes and schemes, all its procurement (from defence to office items) besides the methodology for counting receipts and expenditure. It is expected to recommend measures for utilisation of allocated funds in the most cost-effective manner. Jaitley has said that the recommendations the EMC made in its interim report will form the basis for subsidy reforms—with emphasis...
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Lift the veil on subsidies
In his maiden budget for 2014-15 presented on July 10, 2014, finance minister, Arun Jaitely had announced setting up of an expenditure management commission (EMC) to recommend a road- map up for rationalizing and phasing out major subsidies. As a follow up, on September 4, the government constituted the EMC under chairmanship of Dr Bimal Jalan. The commission’s mandate puts under scanner government’s spending on all its programmes and schemes, procurement from defence to office items besides the methodology for counting receipts and expenditure. It is expected to recommend measures for utilization of allocated funds in the most cost effective manner. While addressing the just concluded ET Global Business Summit, Jaitely informed that the recommendations of the commission made in...
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Fiscal deficit target (2014-15) – within reach
While presenting his maiden budget (on July 10, 2014) for 2014-15, finance minister, Arun Jaitely had accepted a daunting challenge of achieving fiscal deficit (excess of central government’s expenditure over receipts) of 4.1% GDP – a number set by his predecessor P Chidambaram in the interim budget. Fiscal deficit at 4.1% of GDP translates to Rs 531,000 crores. During April – October, 2014 or just 7 months of current year, about 90% of this or Rs 478,000 crores has been exhausted. This has led many experts to doubt the capability of present government to stick to the target for the whole year. The doubt is reinforced when one looks at increase in tax revenue which was only around 5% during...
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LET’S HAVE THAT RATE CUT, PLEASE
The Modi Government’s focus is on creating assets. With this, fiscal deficit will be under control and there will be no risk of banks’ money landing in pockets which could destabilise the economy and aggravate inflatio For the sixth time in succession, Reserve Bank of India Governor Raghuram Rajan has refused to budge. In its monetary policy stance released early this month, the RBI has retained the repo rate (rate at which banks borrow from RBI) at eight per cent. This is despite a retail inflation during November at 4.3 per cent (wholesale inflation has plunged to ‘zero’) already hovering at just half the eight per cent benchmark set by the RBI for January, 2015, below which, a cut in...
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RBI must shed its ‘stubbornness’
For the sixth time in succession, RBI Governor, Raghuram Rajan has refused to budge. In its monetary policy stance released early this month, RBI has retained the repo rate (rate at which banks borrow from RBI) at 8%. This is despite retail inflation during November, 2014 at 4.3% (whole sale inflation has plunged to ‘zero’) already hovering at just half the 8% benchmark set by RBI for January, 2015, below which cut in repo rate can be triggered. This is also despite fragile recovery in GDP growth viz., 5.7% during April-June, 2014; 5.3% during July-September, 2014 and decline in industrial growth by 4.2% in October, 2014, all of which underscores dire need for a booster dose. And, this is despite...
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