The Union Budget for 2020-21 presented to the Parliament by the Finance Minister, Nirmala Sitharaman on February 1, 2020, confirms apprehension that the actual fiscal deficit [FD] for 2019-20 would exceed the budget estimate [BE] by a significant margin. Sitharaman puts it at 3.8% of GDP [gross domestic product] against the target of 3.3%. However, she has justified this deviation in terms of the recommendation of the NK Singh committee on review of the Fiscal Responsibility and Budget Management [FRBM] Act [2003] which permits breach of the target in case of “far reaching structural reforms with unanticipated fiscal implications”. For 2020-21, the finance minister has provided for FD of 3.5% as against 3.0% as stipulated under the FRBM Act. Here...
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Category: Regulatory environment
Long on vision, short on means
The credibility of the fiscal consolidation glide path has been dented which is also reflected in the Sensex falling by over 1,000 points after the Budget announcements The Union Budget for 2020-21 presented to the Parliament by Finance Minister (FM) Nirmala Sitharaman on February 1 confirms apprehensions that the actual fiscal deficit (FD) for 2019-20 would exceed the Budget Estimate (BE) by a significant margin. Sitharaman puts it at 3.8 per cent of the GDP against the target of 3.3 per cent. However, she has justified this deviation in terms of the recommendation of the NK Singh Committee on review of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 which permits breach of the target in case of “far-reaching structural reforms...
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Will SC uphold minority shareholders’ rights in Tata Sons case at Bombay House?
In a landmark judgment last month, the National Company Law Appellate Tribunal [NCLAT] held as illegal the decision of Tata Sons Limited [TSL] in its board meeting on October 24, 2016 to remove Cyrus Mistry from his position as chairman of TSL as also from the boards of three group companies — Tata Consultancy Services [TCS], Tata Motors Ltd [TML], Tata Steel Ltd [TSL]. The NCLAT directed immediate reinstatement of Mistry. The tribunal also held illegal the decision of TSL shareholders at the AGM in September 2017 to convert TSL from extant ‘public limited company’ status to a ‘private limited company’ and change its name from TSL to Tata Sons Private Limited [TSPL] by amending the Articles of Association [AoA]. On January...
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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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IBC framework – springboard to 5 trillion dollar economy
In the midst of raging controversy over the Citizenship Amendment Act [CAA] [2019] and fear over the impending National Register of Citizens [NRC] capturing headlines in the media, a positive news for the economy went unnoticed. This relates to improvement in the health of the banking system. According to the annual report on ‘trends and progress of banking in 2018-19’ released by the Reserve Bank of India [RBI], the gross non-performing assets [GNPA] – a euphemism for loans turning dud – expressed as percentage of total loans declined from a high of 11.2% during the financial year [FY] 2017-18 to 9.1% during FY 2018-19. During the current year, this has remained stable at 9.1 per cent as of September-end, 2019. Correspondingly,...
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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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Minority shareholders’ rights at Bombay House – will SC uphold?
In a landmark judgment delivered on December 18, 2019, the National Company Law Appellate Tribunal [NCLAT] has held as illegal the decision of Tata Sons Limited [TSL] in its Board Meeting held on October 24, 2016 to remove Cyrus Mistry then Chairman, TSL as also from the board of three Group companies viz. Tata Consultancy Services [TCS], Tata Industries Limited [TIL] and Tata Teleservices Limited [Maharashtra]. It has also declared appointment of N Chandrasekran as Chairman, TSL [it followed removal of Mistry] illegal. It has directed immediate reinstatement of Mistry. The Appellate Tribunal has also held as illegal the decision of TSL shareholders in the AGM held on September 21, 2017 to convert itself from extant ‘public limited company’ status to...
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Digital Revolution – challenges and way forward
Having missed the first and second industrial revolution of 19th century and early 20th century respectively [courtesy 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’ policies which were not conducive to embracing technology], India is now in the forefront of the fourth industrial revolution – a digitally driven. The digital revolution is the shift from mechanical and analogue electronic technology to digital electronics which began anywhere from the late 50s to the late 1970s with the adoption and proliferation of digital-computers and digital record keeping that continues to the present day. The last five years have seen massive proliferation of affordable mobile...
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Growth hit by ‘fear’ and ‘distrust’ – really!
In the wake of further deceleration in GDP [gross domestic product] growth to 4.5% during the second quarter ending September 30, 2019 on top of a low of 5% during first quarter ending June 30, 2019, the former Prime Minister, Dr Manmohan Singh has launched a virulent attack on Modi – government squarely blaming the latter for what he terms as ‘disastrous policies’ and creating a palpable climate of ‘fear’ and ‘distrust’ in our society. While, delivering his valedictory address at the national conclave on economy organized by the New Delhi based Rajiv Gandhi Institute for Contemporary Studies, Dr Singh observed:- “There is a palpable climate of fear in our society today. Many industrialists tell me they live in fear...
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Giving push to second generation reforms
A section of the commentators is always on the prowl looking for the slightest opportunity to lambast Modi – dispensation irrespective of the state of the economy. During the first four years of its first term i.e. 2014-15 to 2017-18 when GDP [gross domestic product] figures were promising, they blamed the government for fabricating data. But, when the numbers were not so promising as during 2018-19 and first half of current year, they target it for allegedly doing great damage to the economy, loss of jobs and income earning opportunities. Unfortunately, in this blame game that gets hyper-publicity in the media, some of the transformative reforms undertaken by this government – reforms that will have lasting effect for generations in...
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