Bringing to a climax more than a decade old court battle between department of telecommunication [DoT] and telecom service providers, in an unprecedented judgment, on October 24, 2019, the Supreme Court [SC] ordered the latter to pay ‘unpaid’ dues towards license fee and spectrum usage charges [SUC]. The unpaid dues [call these additional liabilities] arose consequent to the SC accepting the DoT interpretation that adjusted gross revenue [AGR] [license fee and SUC is charged as percentage of AGR] includes – apart from telecom services revenue – revenue from non-telecom services viz. rent, profit on sale of fixed assets, dividend, interest etc. The additional liability on private telecom service providers is a whopping about Rs 147,000 crore for the period 2006-07 to 2016-17...
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Category: Foreign investment & other inflows
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If demand doesn’t improve, firms might retain the tax cut bonanza instead of investing. It would’ve been better to put more cash in the pockets of individuals by giving more IT relief Amid an atmosphere of gloom and doom (triggered by growth plunging to a low of less than five per cent during the current year and muted projections for next year), it is necessary to closely scrutinise tax proposals in the Union Budget for 2020-21 to assess whether or not these will generate the much-needed growth impulses. The four major factors impinging on a surge are private consumption, investment, export and spending by the State. The Modi Government has kept up the tempo of expenditure by way of building infrastructure and...
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Budget 2020-21 – will FM’s tax proposals spur growth
Amidst an atmosphere of gloom and doom [triggered by growth plunging to a low of less than 5% during the current year and muted projections in regard to growth during the next year], it is necessary to closely scrutinize tax proposals in the Union Budget for 2020-21 [presented by the Finance Minister, Nirmala Sitharaman on February 1, 2020] to assess whether or not these will generate the much needed growth impulses. The 4 major factors impinging on growth are (i) private consumption; (ii) investment; (iii) export; (iv) spending by the state. Modi – government has kept up the tempo of expenditure by way of building infrastructure on an unprecedented scale and massive spending on welfare schemes. As regards export, given...
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Not so strategic disinvestment
Unless there is an economic turnaround and the bureaucratic machinery moves with alacrity to make preparations for conducting PSU sales, the Govt will not reach the Rs 2,10,000 crore target Buoyed by the success of disinvestment in Public Sector Undertakings (PSU) during 2017-18 and 2018-19 (when the Centre garnered over Rs 100,000 crore and Rs 85,000 crore respectively), for the current year, the Modi Government had set an ambitious target of getting Rs 1,05,000 crore. A major slice of these proceeds was to come from “strategic disinvestment” or transfer of a sizeable portion of ownership (this could go up to 51 per cent, implying privatisation) and management control to a private entity. The crucial “strategic disinvestment” proposals included divestment of all of...
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Strategic disinvestment – will it take off in 2020-21
Buoyed by the success of disinvestment [sale of government shares in public sector undertaking (PSU)] undertaken during 2017-18 and 2018-19 [when the centre garnered over Rs 100,000 crore and Rs 85,000 crore respectively], for the current year, Modi – government had set an ambitious target of getting Rs 105,000 crore. A major slice of these proceeds was to come from ‘strategic disinvestment’ – or transfer of a sizeable portion of ownership [this could go up to 51% implying privatization] and management control to a private entity. The crucial ‘strategic disinvestment’ proposals included divestment of all of government’s shareholding in Bharat Petroleum Corporation Limited [BPCL] 53.29% ; Containers Corporation of India [ConCor] 30%; Shipping Corporation of India [SCI] 63.75%; North Eastern...
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Allow 100% FDI in online, offline retail in all sectors
The Confederation of All India Traders (an umbrella organisation of small traders and businesses), has complained to the government that global e-commerce majors – Amazon and Flipkart – are giving huge discounts, selling exclusive brands and controlling inventory of sellers etc. All these are prohibited under the extant policy on foreign direct investment (FDI). Promising action, Minister for Commerce and Industry Piyush Goyal has ordered collection of data on their financials, business model and operating practices. This is not a new development. Ever since the guidelines permitting 100% FDI in the ‘market-place’ model of e-commerce were issued in early 2016 (Press Note 3), complaints of violations had been pouring in even as the then minister Suresh Prabhu promised action. The...
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The dawn of a new era
Slowly but surely, India has manoeuvred its way through digital transformation. It must build on this success and the communication revolution to a new level for the creation of a vibrant economy Having missed the first and second industrial revolution of the 19th and early 20th century (courtesy the subjugation of India to colonial rulers of those times) and even the third technology-driven revolution (this one was primarily due to the “protectionist” and “inward-looking” Government policies, which were not conducive to embracing technology), India is at the forefront of leading the fourth industrial revolution — a digitally driven one —with speed and scale. The digital revolution calls for a shift from mechanical and analogue electronic technology to digital electronics, which...
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Analyzing growth – slowdown is not structural
During the first five years of Modi – government i.e. 2014-15 to 2018-19, GDP [gross domestic product] grew @7.5% on an average. However, during the first and second quarter of current year, growth has slipped to 5% and 4.5% respectively. Actually, it started moving on a downward trajectory from the third quarter of last year when it was 6.6% followed by 5.8% in the fourth quarter. The average for these 4 quarters [3rd and 4th quarter of 2018-19 and 1st and 2nd quarter of current year] works out to about 5.5%. In comparison with the impressive growth recorded over a 5 year period, this is a significant dip of 2% but can’t be termed by any stretch of imagination as...
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Too little and a little too late
The Govt has put a moratorium on pending spectrum payments for telecoms without altering the overall timeline of clearing all dues by 2030-31. But, given the huge amount to be paid, this won’t be of much help Vodafone Idea Limited (VIL) — a joint venture between UK-based Vodafone and KM Birla-owned Idea Cellular — and Bharti Airtel have reported a staggering loss of Rs 51,000 crore and Rs 23,000 crore respectively for the second quarter of the current financial year ending September 30, 2019. This is primarily due to a recent order of the Supreme Court (SC) directing telecom companies to give “unpaid” dues towards licence fee and spectrum usage charges (SUC). The order is the culmination of a long-drawn court...
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E-commerce majors – punish only if they break rule-book
The Confederation of All India Traders [CAIT] [it represents millions of small traders who are not only a major source of employment but also is a constituency which Modi – dispensation can’t afford to ignore from a political perspective] has complained to the government that global e-commerce majors viz. Amazon, Flipkart are giving huge discounts, selling exclusive brands [including their own] and controlling inventory of sellers etc – all of which is prohibited under the extant policy on foreign direct investment [FDI]. Promising action, the minister for commerce and industry, Piyush Goyal has already ordered collection of data on their financials, business model and operating practices. Meanwhile, it is necessary to analyze whether the FDI rules are really being flouted....
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