The proposal mooted by finance minister, Arun Jaitely in the Union Budget for 2016-17 to tax 60% of withdrawal from EPF [employees provident fund] and other superannuation funds has caused Modi – government much embarrassment. It faced flak from all quarters including from its own support base forcing Jaitely to withdraw the decision lock stock and barrel. The budget announcement was bandied as anti-salaried class/ common man by all and sundry. But, that is completely out of sync with the DNA of prime minister who – from the day of assuming charge – has consistently vowed to devote every moment of his work to improving the welfare of the 1.25 billion people especially the poor and down-trodden. How could his...
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Category: Infrastructure
2016-17 – budget that helps poor earn decent living
The Union Budget for 2016-17 presented the finance minister, Arun Jaitely on February 29, 2016 carries the imprint of prime minister Modi’s unflinching and genuine commitment to ameliorate the conditions of millions of poor – engaged in farming and other occupations – by creating all right conditions to enable them do productive work and earn good income. Driven by latter’s pledge to double farmers income by 2022 [75th year of Independence], the former has unveiled a plethora of initiatives/steps to bring about a structural transformation in the way farming is conducted and agricultural produce is marketed. Boost to farmers income & rural employment The measures that will enhance farmer’s capability to increase yield include a mammoth capital spend of Rs...
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Prabhu puts Indian Railways on fast track
Prior to Modi taking charge 20 months ago, successive political establishments have used Indian Railways to pander to their respective constituencies [play vote bank politics] making grandiose announcements on new trains and reducing passenger fares. They showed unconscionable apathy towards the impact of such largesse on the finances of this behemoth and its ability to deliver on quality services to users and expanding its asset base for meeting requirements of growth. The net result of this cumulative populism has been increasing operating ratio [proportion of revenue used on expenses] touching close to 100 in some years and measly sums left for investment in maintenance, augmentation, modernization and safety of assets. The governments of the day also denied it requisite budgetary...
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Free basics – a ploy to dominate web space
A likely recommendation of Telecommunication Regulatory Authority of India [TRAI] rejecting differential pricing for data services and zero rating – a practice where internet service providers [ISPs] do not charge customers on data for select applications that they use [this was implemented by Airtel last year but forced to abandon following public outcry] – or ‘free basics’ another nomenclature for zero rating [started by Facebook about an year ago under its earlier incarnation Internet.org] has caused much consternation amongst telecom service providers [TSPs] and social networking platforms. In what could ruffle many feathers, Facebook chose the medium of a ‘discussion paper’ floated by TRAI inviting comments from public to launch a high voltage publicity campaign in support of its ‘free...
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India’s growth narrative – hits Rajan’s speed breaker
While, presenting the budget for 2015-16, finance minister, Arun Jaitely had taken a conscious decision to deviate from the fiscal consolidation road-map drawn by his predecessor and reiterated by him in budget for 2014-15. Accordingly, he fixed the fiscal deficit target as 3.9% of GDP as against 3.6% as per the road-map. The rationale behind this decision was to give a big boost to public investment in infrastructure viz., roads, highways, rails, power, port, airport etc in the backdrop of sluggish investment by the private sector [groaning under heavy debt and low margins]. The idea was to resurrect growth and push it in to double digit orbit. For 2016-17, in view of industry clamoring for continued boost in public spending...
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PSUs dividend – an order ingrained in archaic mindset
Faced with a massive shortfall in resource mobilization from disinvestment of shares in central public sector undertakings [PSUs] [Rs 40,000 crores] and proceeds from direct taxes [Rs 50,000 crores], Modi – government has issued a diktat to all PSUs to help it avoid slippage in fiscal deficit target of 3.9% of GDP set in the budget for the current year. It has directed them to give a minimum dividend of 30% of profit after tax [PAT] or 30% of government equity whichever is higher. PSUs having substantial free reserves and capability to make good profits on a sustained basis are required to give special dividend and issue bonus shares. As regards their capital expenditure needs, it goads them to increase...
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Have Indian banks plunged in risk zone?
An increasingly stressed financial system continues to haunt Modi – government. The more it endeavours to address the maladies afflicting the scheduled commercial banks [SCBs] [through a host of initiatives such as “Indradhanush” and recapitalization of public sector banks [PSBs]], the more grievous these become. A semi-annual Financial Stability Report [FSR] recently released by RBI governor, Raghram Rajan makes it official. The gross non-performing assets [NPAs] [bad loans which do not yield any return] of all SCBs increased from 4.6% of gross advances as in March, 2015 to 5.1% in September, 2015 and are projected to increase to 5.4% by September, 2016. The restructured standard advances as percentage of gross advances [these are potentially bad loans but salvaged by relaxing...
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Economic policies – NDA versus UPA
Some time back, Arun Shourie a senior minister in the then NDA [National Democratic Alliance] government under Vajpayee [1998-2004] and erstwhile member of BJP observed that the economic policies being followed by Modi – government are just a continuation of UPA [United Progressive Alliance] plus the “cow’ [a euphemistic reference to sacred animal worshiped by majority Hindu community in India]. Shourie’s view is shared by many thinkers. UPA – dispensation II [2009-2014] had pushed the country towards economic paralysis with all key indicators i.e. growth [manufacturing in particular], inflation, fiscal deficit, current account deficit [CAD], foreign exchange reserves and infrastructure etc showing dismal trend. In this backdrop and since, Modi is also following the same policies, they aver that outcomes...
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Continue rate cut
ECONOMIC GROWTH : Having made a good head start (though belated), the RBI must not stop as there is potential for another 50-75 basis points reduction Prior to the fourth bi-monthly monetary policy review on September 29, RBI Governor Raghuram Rajan had come under unprecedented pressure to cut the policy repo rate [interest rate at which the apex bank lends money to commercial banks] to help government’s efforts in giving a fillip to the economy and putting it on a higher growth trajectory. Almost all stakeholders – industry and commerce, investors, experts/ economists – were unanimous in demanding a cut. While refraining from taking any position [lest this be misconstrued as interference in RBI’s autonomy], the government had nonetheless given...
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Add 100% FDI to the cart
Allowing 100% FDI in e-tail will make it easier for tax authorities to bring e-com firms under the tax net. In 2012, the UPA had permitted 51% FDI in multi-brand retail (MBR) with riders. The riders included sourcing 30% of requirements from small enterprises, a minimum investment of $100 million, besides giving full leeway to states on whether to grant permission or not. The policy was as bad as saying ‘no’ to FDI in MBR. The Modi government has continued with that policy decision. Finding that the direct route of entering MBR was choked, foreign investors have been looking for opportunities to make inroads. They found one in e-commerce where business was growing leaps and bounds. How did they manage...
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