Had there been a free market scenario, the industry would have come under serious strain. But that is not to be as fertilisers are under control The crisis in Ukraine following invasion by Russia has sent shock waves through out the world economy. In India, even as the steep rise in energy import bill will affect almost all sectors of the economy, the impact on fertilizers will be more pronounced. At the outset, let us capture a few relevant facts. Despite prognostications by successive governments during the last four decades or so that India would become self-reliant in fertilizer availability and putting in place policies aimed at achieving the goal, even today, the country remains preponderantly dependent on imports for...
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Category: Pioneer
Corporate governance — Sebi’s volte face
A reform measure cannot be held hostage to the whims and fancies of those who decide not to comply with the reform order Based on the recommendations of Uday Kotak committee on corporate governance (2018), the stock markets watchdog, Securities Exchange Board of India (SEBI) had asked listed companies to separate the positions of Chairperson and Managing Director (MD)/Chief Executive Officer (CEO). The requirement was mandatory. The companies were required to implement the order by April 2020. However, based on representations received from the industry, an additional two years was given for compliance. In April last year, SEBI chairman Ajay Tyagi goaded them to ensure that the April 2022 deadline is not missed. Now, that even this deadline is barely...
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Rationalising the nation’s direct taxes
The Government should rationalise direct taxes to address anomalies between PIT and corporate tax at one level and capital gains tax at another Ever since, the commencement of its second term, Modi Government has showered benevolence on the corporate sector by giving relief in income tax but when it comes to personal income tax (PIT), it has not matched the expectations. On September 20, 2019, Finance Minister (FM) Nirmala Sitharaman had announced steep reduction in the rate of corporate tax for “new entities” incorporated from October 1, 2019 in the manufacturing sector and start production by March 31, 2023 from the existing 25 percent to 15 percent. Such companies won’t have to pay minimum alternate tax (MAT). Furthermore, the tax...
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The Budget’s food subsidy conundrum
The subsidy currently covers 800 million and is meant for the poor. Heavily subsidised food is for the very poor. How can 2/3rd of Indians be very poor? In the Union Budget for 2022-23, the Modi government has allocated Rs 207,000 crore for food subsidy which is Rs 79,000 crore less than the actual expenditure of Rs 286,000 crore during 2021-22 as per the revised estimate (RE). Under the National Food Security Act (NFSA), 2013, the Union Government directs the Food Corporation of India (FCI) and other state agencies to procure food from the farmers at MSP (minimum support price) and organize its distribution to a mammoth population of 800 million people through an elaborate network of fair price shops...
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Budget 2022-23: Avoid a debt trap
‘Demand recession’ is inevitable if Government does not reform taxation, subsidy administration, unshackle farmers and ruthlessly tackle corruption The Union Budget for 2022-23 provides for capital expenditure of Rs 750,000 crore which is a jump of over 35 percent from the budget estimate (BE) of Rs 554,000 crore for 2021-22 (revised estimate (RE)for the current year is Rs 604,000 crore which is more or less close to the BE when we exclude Rs 50,000 crore given to Air India Asset Holding Company Limited AIAHCL where the debt of now divested Air India resides). Considering that the BE for current year was 26 percent higher than the RE of Rs 439,000 crore during 2020-21, this sounds impressive. However, when seen in...
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Income inequalities: Tackle the root cause
Irrespective of the nature of business and sector affiliation, they are structured to result in concentration of income in the hands of owners According to the Oxfam report, “Inequality Kills’’, released ahead of the World Economic Forum’s Davos Agenda early this month, the collective wealth of India’s 100 richest people in 2021 hit a record high of `5700,000 crore ($775 billion) while the number of Indian billionaires grew from 102 to 142. During the pandemic, the wealth of these billionaires increased from `2300,000 crore ($313 billion) in March 2020 to `5300,000 crore ($719 billion) in November 2021. At the same time, the income of 84 percent of households declined and the share of the bottom half of the population in...
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Fertiliser DBT stymied by lobbies for years
When a subsidised product is not available in the marketplace, the dubious characters will have nothing to prey upon It is budget time. After two years of splurge, Finance Minister Nirmala Sitharaman has alluded to a return to fiscal consolidation. A major area meriting attention is fertilizer subsidy which jumped from `80,000 crore during 2019-20 to `134,000 crore during 2020-21 and is likely to be `140,000 crore during 2021-22. Fertilizer subsidy arises because the Union Government wants manufacturers/imports to sell fertilizers to farmers at a low maximum retail price, unrelated to the cost of production and import and distribution, which is much higher. In case of urea, it exercises mandatory control on MRP and reimburses the manufacturers for the excess...
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Delink disinvestment & budgetary exercise
The lengthy and cumbersome process of approval and bureaucratic red tape undermines the disinvestment process With the financial year ending in two months, the Government is no close to meeting the target of Rs 175,000 crore from disinvestment of Central Public Sector Undertakings set in the Union Budget for 2011-2022. It has so far realized less than Rs 10,000 crore. Even after adding around Rs 100,000 crore, being the expected proceeds from sale of its 10 percent shares in Life Insurance Corporation of India, (on the premise that it goes through before the year-end), there will be a whopping shortfall of Rs 65,000 crore. This is not new. It is a continuation of a trend seen during the previous six...
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FDI in retail: The conundrum persists
The way forward is to legitimize Foreign Direct Investment in Indian online retail along with 100 per cent FDI in offline retail without any riders In 2020, the Department of Consumer Affairs, in the Ministry of Consumer Affairs, Food and Public Distribution issued the Consumer Protection (e-commerce) Rules, under Section 101of the Consumer Protection Act, 2019.The rules require all e-commerce entities that are not established in India, but intending to operate here to register with the Department for Promotion of Industry and Internal Trade in the Commerce Ministry, bar affiliated entities from selling on e-commerce platforms and restricting ‘flash sales’, and disallow seller from using the name or brand associated with that of marketplace e-commerce entity for promotion of goods....
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The tale behind putting off key power reforms
DBT and de-licensing of electricity distribution hold the key to extricate the sector from morass and make power available to consumers at affordable rates In the draft Electricity (Amendment) Bill, 2021, there were four provisions— direct benefit transfer (DBT), de-licensing of the electricity distribution business, creation of the Electricity Contract Enforcement Authority (ECEA) for adjudication of contract disputes, and a single choice committee for appointment of chairman and members of state and central tariff regulators. Reportedly, the Central Government has dropped all four. While the third and fourth proposals are procedure-oriented aimed at ensuring effective enforcement of contracts, the first two are revolutionary reforms. If implemented in letter and spirit, they have the potential to drastically improve the Indian power...
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