For lowering fuel taxes, the Centre and States need to see how tax revenue from other sources can be boosted. If they don’t, then consumers will have to pay high fuel prices perennially Faced with skyrocketing prices of petrol and diesel, (with petrol crossing the Rs 100-mark in Sri Ganganagar), Prime Minister Narendra Modi has blamed the erstwhile UPA regime for not doing enough to increase domestic production, thus making India vulnerable to rising international prices, while Minister for Petroleum and Natural Gas Dharmendra Pradhan has urged oil exporting countries to exercise restraint while fixing the price of crude. However, their arguments don’t enthuse. With the pricing of oil products being linked to international prices (even domestic refineries are paid...
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Category: Pioneer
Stop the back door bailout of banks
Why not give the capital directly from the Budget instead of following a circuitous route, setting up new institutions and adding to administrative and overhead costs? In the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman has proposed setting up of a bad bank. Crafted as an asset reconstruction company (ARC), it will bundle up all the non-performing assets (NPAs) of banks, buy these at a negotiated (albeit discounted) price and sell them to investors such as private equity funds, alternative investment funds (AIFs) and so on, by putting a turnaround plan in place. An asset management company (AMC) will work on a detailed turnaround-cum-execution plan. The banks plan to transfer nearly Rs 2,00,000 crore of bad loans to the ARC. Every...
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CPSU privatisation an uphill task
The Centre should de-bureaucratise the process of running PSUs. This should be done even before privatisation is taken up Under a big bang approach to privatisation announced in the Union Budget, Finance Minister Nirmala Sitharaman has divided the Central Public Sector Undertakings (CPSUs) in two broad categories i.e. strategic and non-strategic. Whereas the former is broken up into four subgroups: Atomic energy, space and defence; transport and telecommunications; power, petroleum, coal and other minerals; banking, insurance and financial services, the latter includes all other sectors such as hotel and tourist services, industrial and consumer goods, trading, marketing and so on. As per the plan, all PSUs in non-strategic sectors will be privatised and all loss-making enterprises in this category will be closed....
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Time for Govt to make a clear-cut choice
If the Centre allows gas producers to charge what they want, one shudders to even think of where the fertiliser and power subsidy bill will reach The State-owned Oil and Natural Gas Corporation (ONGC) is forming a new wholly-owned subsidiary company with the objective of sourcing, marketing and trading natural gas. The company is already into exploration and production of gas (besides crude oil) which it sells to a variety of industries manufacturing fertilisers, power, chemicals, petrochemicals, CNG, gas for household consumption and so on. So what has prompted it to set up a separate company solely for the purpose of trading and marketing of gas? It is not a simple case of business restructuring, but an attempt to circumvent control...
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The Govt should avoid a Catch-22 situation
Team Modi should legitimise direct selling by foreign companies in Indian retail — not just online but also offline — without any riders In view of the complaints by the Confederation of All India Traders (CAIT) regarding blatant violation of the Foreign Direct Investment (FDI) policy and the Foreign Exchange Management Act (FEMA), 1999, by Amazon and Walmart-owned-Flipkart, Union Commerce Minister Piyush Goyal alluded to it while issuing a clarification to ensure that the e-commerce sector works “in the true spirit of the law.” Earlier in December 2020, the Ministry of Commerce had asked the Reserve Bank of India (RBI) and the Enforcement Directorate (ED) to take necessary action against these global e-commerce giants. The above actions may not enthuse when viewed...
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How about reining in food subsidy?
Even as the Govt has mustered courage to give a truthful account of the money it spends on food subsidy, there is nothing on the horizon to indicate that this will be reined in In the Union Budget for 2021-22, Finance Minister (FM) Nirmala Sitharaman has given a pleasant surprise. This has to do with the Government’s decision to discontinue with the decades-old practice of so-called “off-Budget liabilities” this time around. “Off-Budget liabilities” is a fancy nomenclature used by governments to denote transfer of certain expenses incurred by the Union Government to the books of its agencies tasked with the implementation of its welfare schemes. This helps the former show lower expenses on its own books, thereby, helping it bring down fiscal...
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Reinvigorating growth: Where is the money?
The FM wants to boost growth, but it will be at the cost of fiscal de-stabilisation. One is not sure whether a sustained, rapid surge will come as a huge resource gap remains Taking a cue from the prescription that the Chief Economic Advisor (CEA), Krishnamurthy Subramanian gave in the Economic Survey: 2020-21 that “the Government should come up with more fiscal measures for short-term support to the economy and businesses”, Finance Minister (FM) Nirmala Sitharaman has gone ahead with some “big bang” measures. She has not just attempted to give a boost to industries and businesses in the short-term but has also given an indication of her intent to put them on a high growth trajectory in the medium to...
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Paratroop reforms on the ground
Of crucial importance is the need to actually execute reforms and make them work on ground zero. Unfortunately, this is not happening Unlike the Economic Survey for 2019-20, which was prepared keeping in mind the ambitious target of achieving a $5 trillion economy by 2024-25, this time around, the overarching theme revolves around demonstrating how brilliantly the Government has managed the Coronavirus pandemic. Through lucid elaboration on the details and modeling with facts and figures — using international as well as inter-State comparison within India, Chief Economic Adviser (CEA) Krishnamurthy Subramanian has given ample justification for the “early” and “stringent” lockdown from March and thereafter calibrated lifting of restrictions from June onward. Tacitly, he has also admitted that this led to compression...
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India must stand its ground
All objections raised by the USTR on the DST levied by India on foreign tech firms are baseless. The Govt must not yield to the pressure tactics of the US administration by withdrawing the tax In its findings on the Section 301 probe conducted under the US Trade Act, 1974, the US Trade Representative (USTR) has inter alia concluded that India’s digital services taxes (DST) or the so-called equalisation levy (EL) at the rate of two per cent, unfairly targets US companies. The USTR raised three aspects that, it alleges, are inconsistent with global tax principles: First, the levy on US companies has extra-territorial application; second, DST is a tax on the firm’s revenue, not its income; and third, it subjects US...
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Stop chasing a mirage
The Govt needs to pursue disinvestment, including privatisation, as an objective by itself instead of linking it to revenue receipts and meeting the fiscal target The Department of Investment and Public Asset Management (DIPAM) is in a war of words with the Ministry of Finance (MoF) over the proceeds of disinvestment of the Government’s shareholding in Central Public Sector Undertakings (CPSUs) during 2020-21. The point raised by the DIPAM is that out of the Rs 2,10,000 crore target fixed in the Union Budget, a big slice of Rs 90,000 crore, was thrust upon it by the MoF as being the projected proceeds from the sale of 10 per cent shares in the Life Insurance Corporation (LIC) and its residual stake...
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