In a span of less than a week, there have been three sets of official announcements enumerating the measures to alleviate the problems faced by industries, businesses and workers due to the economic disruption caused by Covid – 19. The first two were made by the Finance Minister [FM], Nirmala Sitharaman on March 24 and 26, 2020 and the third by the Governor, Reserve Bank of India [RBI], Shaktikanta Das on March 27, 2020. On March 24, 2020, FM announced reliefs for the industries and businesses, which are largely ‘procedural’. These include extending the date for filing returns [income-tax, GST, customs, excise and statutory filings under Companies Act], reducing interest chargeable on delayed payments, exemption from penalty, increasing threshold of...
More
Comments are closed
Category: Growth & employment
Corona attack on Union’s fragile finances
In his address to the nation on March 19, 2020, Prime Minister, Narendra Modi announced the setting up of an Economic Response Task Force [ERTF] under the union finance minister, Nirmala Sitharaman to come up with a package of measures to alleviate the problems industries, sectors, businesses and workers are facing due to the economic disruption caused by Covid – 19. The nerve shattering Covid – 19 has come at a time when the union government is facing a huge shortfall of about Rs 200,000 crore in the tax collection vis-à-vis even the revised estimate [RE] of Rs 1400,000 crore for 2019-20 [when compared to budget estimate, the shortfall is much higher at Rs 400,000 crore] and staring at substantial...
More
Comments are closed
Caught in a cleft stick
Though Govt policy disallowed e-commerce platform owners from direct selling, the fine print permitted them to do so through a subsidiary or JV. And they have been doing so Any announcement of foreign direct investment (FDI) is normally welcome in view of its contribution to capital formation, accelerating economic growth and adding to the foreign exchange kitty. Deviating from this normal practice, last month, the Union Minister for Commerce and Industry, Piyush Goyal was dismissive about the decision of the Amazon boss to bring a few billion dollars into India. He felt that Jeff Bezos was bringing money to make up for the huge loss the company was incurring in its operations in the country. Losses or gains are intrinsic to any...
More
Comments are closed
Telecom industry on the brink; Trai, banks need to play proper role
In an order delivered on October 24, 2019, the Supreme Court (SC) directed the telecom service providers (TSPs) to pay ‘unpaid’ dues towards license fee and spectrum usage charges (SUC) to the department of telecommunication (DoT). In doing so, the SC accepted DoT’s interpretation that adjusted gross revenue (AGR) (license fee and SUC is charged as a percentage of AGR) includes – apart from telecom services revenue – revenue from non-telecom services such as rent, profit on the sale of fixed assets, dividend, interest etc. Given the inherent character of the order with focus on including revenue from non-telecom services as well, it requires even companies such as Gas Authority of India Limited etc (they had taken licenses for setting up their...
More
Comments are closed
Fiscal slippage – the denial syndrome
In the Union Budget for 2020-21, Finance Minister, Nirmala Sitharaman revised the fiscal deficit [FD] for 2019-20 to 3.8% of GDP – up from the budget estimate [BE] 3.3%. In absolute term, the RE is Rs 766,500 crore against BE Rs 700,000 crore. Sitharaman has explained away the slippage in terms of recommendation of the NK Singh committee on review of the Fiscal Responsibility and Budget Management [FRBM] Act which permits breach of the target in case of “far reaching structural reforms with unanticipated fiscal implications”. The justification is untenable as during the year, there was no reform measure that can be put in the category of ‘far reaching structural reforms’. The government could slip further even from the revised...
More
Comments are closed
Reduce the income gap
The solution doesn’t lie in more sops, fiscal incentives and so on. There is need for change in the way our industrialists do business and netas and babus conduct themselves Successive Governments have remained obsessed with accelerating economic growth without caring about how it impacts income distribution, forget any attempt to internalise this crucial aspect in development strategies. They believe that the fruits of growth will automatically percolate to the lowest strata of society. Nothing could be farther from the truth. This is evident from a piece of research, Time to Care, released by rights group Oxfam ahead of the 50th Annual Meeting of the World Economic Forum (WEF) held in Davos (Switzerland) from January 21-24. According to the study, India’s richest one...
More
Comments are closed
Make your choice
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...
More
Comments are closed
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...
More
Comments are closed
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...
More
Comments are closed
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...
More
Comments are closed