In the Union Budget presented on July 5, 2019, the government has come up with ‘overseas sovereign borrowing plan’ to meet the funding requirements of an ambitious investment program that involves a spend of Rs 100,00,000 crore [US$ 1.4 trillion] over the next 5 years to make India US$ 5 trillion economy by the year 2024-25. During the current year, it is aiming to raise US$ 10 billion from this source. For now, its intent is to go for US$ 3 – 4 billion the contours for which are expected to be finalized by September, 2019. Currently, there is surplus liquidity and benign interest rate environment in the international market [courtesy, the Federal Reserve of the USA keeping interest rate...
More
No comments
Category: Growth & employment
Growth a priority, finally
The RBI has lived up to people’s expectations by cutting the repo rate. It should avoid being glued to inflation. Instead, the interest rate policy should propel growth In its bi-monthly monetary policy report, announced on June 6, the Reserve Bank of India (RBI) reduced the repo rate/the policy rate (rate at which the RBI lends money to commercial banks) from the subsisting 6.0 per cent to 5.75 per cent. Together with a reduction of 0.25 per cent, each notified in the previous two reviews (February and April ), it has cut the rate by 0.75 per cent in less than six months. In another significant move, the RBI has changed its policy stance from hitherto being “neutral” to “accommodative.” Whereas a...
More
No comments
‘One Nation, One Election’ – brooks no delay
The idea of ‘One Nation, One Election’ mooted by the Prime Minister, N Modi is being staunchly opposed by a big section of the political class even before the deliberations are kicked off [a meeting convened by the government on June 19, 2019 was boycotted by about 50% of the parties who were invited]. A major ground for their opposition is that this will be an onslaught on the federal polity. The critics opine that in a scenario of simultaneous poll to both the parliament and all the state assemblies, the national issues will dominate over the state specific subjects. This may yield fortuitous benefit to the dominant national party as the voter won’t be able to clearly articulate his/her...
More
No comments
Draw the line on tax evasion
While there can be no two opinions on the overarching need to increase funding for start-ups, the Government must not do anything which compromises its fight against black money. The DCF valuation method is not sustainable and must be challenged In a major ruling that will have a profound impact on the way companies are taxed, the Income Tax Appellate Tribunal (ITAT) has upheld the validity of the Discounted Cash Flow (DCF) method for arriving at the fair market value of a company’s share. The order says “the DCF method is recognised; though it is not an exact science and can never be done with arithmetic precision.” The order needs to be viewed in the backdrop of tax demands raised...
More
No comments
RBI gives priority to growth, finally
In the bi-monthly monetary policy review announced on June 6, 2019, the Reserve Bank of India [RBI] has reduced the repo rate/the policy rate [rate at which the RBI lends money to commercial banks] from subsisting 6.0% to 5.75%. Seen in juxtaposition with reduction of 0.25% each notified in the previous two reviews [February and April 2019], the banking regulator has thus brought about a cut of 0.75% in a span of less than six months. In yet another significant move, the apex ban has changed its policy stance from hitherto ‘neutral’ to ‘accommodative’. Whereas, a neutral stance carries with it the possibility of reduction as well as increase [it may even connote no change], an accommodative stance can only mean...
More
No comments
Crossing environment hurdle under Modi era
On May 7, 2019, the ministry of environment and forest [MoEF] released a compilation of official documents on environment impact assessment [EIA] related issues. It encapsulates crucial notifications or office memoranda on the guidelines/procedures for environmental clearance for projects across industrial sectors. The compilation covers the period between December 2014 and January 2019 under the present dispensation led by prime minister, N Modi. The document looks mundane but is a window to see through momentous changes which have helped transform the economic landscape of India and have been greatly instrumental in putting the economy on to a high growth trajectory. To get an idea as to how, let us take a look at some of the key changes. On March...
More
No comments
The job loss theory – a hoax
For more than an year, Congress has been running a orchestrated campaign to dent Modi’s image, its main focus being on the allegation that ‘he had failed to deliver on his promise of generating 20 million jobs every year’. At the outset, it is important to ascertain whether the prime minister really promised 20 million jobs a year? While, he stressed on creating jobs – a major poll plank of the party he leads viz. BJP – the figure found no mention neither in its election manifesto nor in any of his speeches. So, from where did this come? Delivering a speech in 2013, Modi had taken potshot at the then UPA – regime for closure of factories all over...
More
No comments
Incentivise, don’t destroy business
The Government’s brazen attempt to increase the profits of MSMEs by letting them retain a good portion of tax collected from consumers is illogical The Goods and Services Tax (GST) Council has adopted a liberal stance towards small businesses, keeping in mind their potential to generate employment and increase workers’ income. The bearing is particularly reflected in its decision to (i) exempt businesses having a turnover below a certain threshold of Rs 4 million from registering under GST and paying tax; (ii) allowing a manufacturer having a turnover less than Rs 15 million opt for ‘composition scheme’ under which he will pay tax @1 per cent and face minimal compliance viz returns to be filed quarterly against monthly for regular assesees; (iii)...
More
No comments
GST – incentivize small but not at exchequer’s cost
The Goods and Services Tax [GST] Council – all powerful body which has the mandate to develop the GST architecture and determine tax slabs, rates etc – has adopted a liberal stance towards small businesses keeping in mind their huge employment generating potential and increasing income of the workers. The liberal stance is particularly reflected in (i) exempting businesses having turnover below a certain threshold Rs 2 million from registering under GST and pay tax; (ii) allowing a trader/manufacturer having turnover less than Rs 10 million to opt for ‘composition scheme’ under which it pays tax @1% and faces minimal compliance viz. returns to be filed quarterly against monthly for regular assesses; (iii) bring service providers under composition scheme under...
More
No comments
Where are the funds?
The Congress has assured regular income for the poor but how will it identify the beneficiaries? And won’t the NYAY scheme burden the economy? During its over five decades of rule, the Congress institutionalised the culture of doles in the name of its much trumpeted garibi hatao (poverty alleviation) programme even as majority of the people continued to remain poor. Even Prime Minister Modi continued with doles but changed the narrative with a pledge to empower the poor, create jobs and increase their income to ensure that these benefits reached the beneficiaries in full. Besides, under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme, his Government is giving Rs 6,000 per year to 120 million small and marginal farmers. With general elections...
More
No comments