During debate in the last session of parliament, Sitaram Yechury [CPM] and other members alleged that while, the government had no qualms in waiving loans worth hundreds of thousand crores given to industrialists/corporate, it showed little inclination to extend the same relief to farmers who are unable to pay back loans for no fault of theirs [courtesy, drought/poor rainfall or untimely rains]. The treasury benches responded saying loans given to corporate are not waived; instead they are written-off. To a layman, write-off and waiver would appear to convey the same meaning i.e. in both, lender decides not to recover the amount from the borrower. Yet, Reserve Bank of India [RBI] and finance ministry would want us to believe that write-off...
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Category: Growth & employment
3 years of Modi rule – too early to look for jobs
On completion of three years in office, even as Team Modi gears itself to celebrate with focus on disseminating to public at large its achievements, opposition parties [mainly Congress] have projected a counter narrative purportedly to show it in poor light. Picking on BJP’s promise of creating 10 million jobs every year, they point towards a few hundred thousand jobs generated during the last 3 years to proclaim that the performance of this government is dismal. Coming from a party whose own record on all crucial economic parameters [including jobs] was abysmal, such criticism is laughable. During a decade [2004-2014] of UPA rule led by Congress, employment increased by a meager 15 million which is one-fourth of an increase of...
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GST – old wine in a new bottle
With India getting ready for launch of Goods and Services Tax [GST] – the most revolutionary reform ever undertaken since independence – in just over a month from now i.e. July 1, 2017, while expectations run high with the political class, corporate and investors [including foreign investors] seeing big gains, it is time to introspect whether this will deliver on the intended outcomes. The GST architecture that has finally emerged – after a series of brainstorming sessions by all powerful GST Council – is hamstrung by a number of inhibiting features which could impede realizing the full potential of this reform in terms of boost to GDP [gross domestic product], buoyancy in tax revenue, lower inflation and increase in competitiveness...
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Rating agencies are biased but, India needs to introspect
The chief economic adviser [CEA] to Government of India [GOI], Dr Arvind Subramanian has lambasted international rating agencies for their continuing to give low sovereign rating to India despite surging growth, substantial improvement in its macro-economic fundamentals and reforms gathering momentum. At the same time, they continue to give high ratings to countries such as China despite deceleration in growth, deteriorating macro-economic fundamentals and fiscal situation [for instance, debt to GDP ratio in China is 250% as against 69% in India]. Even in developed countries viz. USA, France, Spain, UK etc debt to GDP ratio is well above 90% and yet, they enjoy high rating. The rating assigned by these agencies not merely reflects on relative standing of India vis-à-vis...
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Modi’s surgical strike on NPAs
For an economy that is considered to be the brightest spot on the global platform, a major area of concern is high level of non-performing assets [NPAs] of banks especially public sector banks [PSBs]. As on December 31, 2016, gross NPAs of PSBs were Rs 606,000 crores of which Rs 100,000 crores were added during April-December 2016. For private sector banks, as on December 31, 2016, gross NPAs were Rs 70,321 crore of which about Rs 22,000 crores were added during April-December 2016. Total stressed assets, which comprise gross NPAs as well as restructured standard advances [a euphemism for NPAs given a lease of life by relaxing the terms of payment such as extending repayment tenure, lowering interest rate, conversion...
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Minority shareholders short-changed by Tata
The National Company Law Tribunal (NCLT) has turned down a request from the Shapoorji Pallonji Group [SPG] vide heir two investment outfits viz. Sterling Investment Corporation and Cyrus Investments to initiate action against Tata Sons for ‘oppression of minority interest and mismanagement’. It was done on the ground that the group does not have minimum shareholding of 10% needed to make such an appeal. SPG holds 18.4% shares of Tata Sons which is significantly higher than the 10% threshold. But, its holding plummets to a mere 2.17% once preference shares are also included in computation. Preference shares by nature are entitled to special privileges in regard to dividend payment vis-à-vis equity shares but these carry much lower voting rights or...
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Trump’s ‘hire local’ juggernaut – smashes Indian IT
An senior official of the Trump Administration has lambasted three leading Indian IT companies viz. Tata Consultancy Services [TCS], Infosys and Cognizant Technologies for resorting to ‘trickery’ for allegedly grabbing most of H1-B visas issued by the US Citizenship and Immigration Services [USCIS]. HI-B visas are issued to foreigners who have ‘theoretical’ and ‘technical’ expertise in specialized areas to work in local [read American] companies for temporary period. United States issues 85,000 such visas every year — 65,000 hired from abroad and 20,000 from those enrolled in US universities/colleges. Due to the heavy demand, USCIS which runs the program, receives several time more applications than it can grant and uses an electronic lottery to pick the ones that will go...
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SAVING THE RURAL JOB SCHEME FROM DEATH
Modi has pressed all the right buttons to ensure that MGNREGS becomes an instrument of promoting his Government’s inclusive development agenda In a stunning revelation, Amarjeet Sinha, Secretary, Ministry of Rural Development (MoRD), revealed that the Government had cancelled nearly 10 million fake ‘job cards’ under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Including the fake beneficiaries struck off from the scheme earlier, the total number of such cards cancelled thus far is more than 31 million. Under MGNREGA — a flagship welfare scheme launched by erstwhile UPA dispensation in 2005 — ‘guaranteed’ employment is provided to a member of a poor family in rural areas for a minimum of 100 days in a year and wage paid...
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Aadhaar use for nation building – vetoed by judiciary
Vide the Finance Bill for 2017-18, the union government amended the Income Tax Act [1961] by inserting Section 139AA to make seeding of PAN number with Aadhaar mandatory. Henceforth, for financial year 2016-17 [assessment year 2017-18] onwards, it won’t be possible to file IT return using PAN not authenticated with Aadhaar. Further, no fresh PAN will be issued unless the applicant submits his/her Aadhaar number. The validity of the above amendment has been challenged in the Supreme Court [SC] who has questioned government’s decision to make Aadhaar card mandatory in view of its earlier order to make it ‘optional’. At the outset, it is important to ask as to why the government was forced to take such a decision. It...
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Why PMGKY was a fiasco?
Within a month of historic and revolutionary decision of demonetization [scrapping of 1000/500 rupee notes] announced by prime minister Modi on November 8, 2016, the government launched an ambitious scheme called Pradhan Mantri Garib Kalyan Yojna [PMGKY] on December 16, 2016 ending on March 31, 2017. The scheme was contemplated in the backdrop of an unprecedented amount of cash held by the public in these high denomination currency notes having been deposited in banks. The perception of the authorities – very rightly so – was that this could not be pure transaction money kept by public to meet routine requirements [or savings of housewives, they normally keep in cash]. Considering that the amount deposited in excess of Rs 200,000/- in...
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