In a globally interdependent world, actions that severely restrict the flow of goods and services across national boundaries are bound to be counter-productive In a bid to punish Russia for its military action against Ukraine, in June 2022, leaders of G7 viz., the United States, Germany, France, Britain, Italy, Canada and Japan had vowed to explore the feasibility of measures to bar imports of Russian oil at price above a certain level. In September 2022, their finance ministers (FMs) said: “We confirm our joint political intention to finalise and implement a comprehensive prohibition of services, which enable maritime transportation of Russian-origin crude oil and petroleum products globally. Providing those services would only be allowed if the oil and petroleum products...
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Category: Pioneer
Aim at a tax-to-GDP ratio of 20 per cent
Buoyant tax collections hold the key to keeping up the tempo of investment in building infrastructure and funding welfare schemes In the past, invariably, the revised estimate (RE) for the relevant financial year (FY) fell short of the budget estimate (BE). During the last two years, the position has reversed with RE exceeding the BE. In fact, the trends during the first six months of the current FY point toward the Modi – government doing a hat–trick. Look at the gross tax revenue (GTR) which includes gross direct tax revenue (GDTR), GST collection, central excise duty (CED) and customs duty (CD) – net of refunds. During 2021-22, the BE for GTR was Rs 22,20,000 crore. Against this, the RE (mentioned...
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Do not tinker with national pension scheme
The increase in life expectancy and rise in the cost of living further reinforces the need for assured monthly income for a decent life in old age Stung by the Opposition States, including Rajasthan, Chhattisgarh, Jharkhand, Himachal Pradesh and Punjab reverting to the old pension system (OPS) and these parties promising the same in the impending state elections as also in Lok Sabha elections next year, the Union government is considering to amend the national pension scheme (NPS) to ensure that its benefits to the employees covered under it are more or less at par with the OPS. This will be at the cost of sacrificing fiscal prudence. The pension provides a person with a monthly income when he is...
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Rethink rationale for food subsidy
Most of its actions in implementing the food subsidy scheme are out of sync with the changing times and lead to leakages and corruption The NITI Aayog has invited bids for a Central Coordinating Agency that can study the effectiveness of its National Food Security Subsidy scheme. The Agency will hold the mandate to suggest ways to better the scheme. It will also suggest ‘whether, and how, the scheme can be rationalised or closed’. However, the government’s move to continue the supply of free food grains under the National Food Security Act (NFSA) beyond the current FY gives the contrary signal. In fact, most of its actions in implementing the food subsidy scheme are out of sync with the thought...
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State doles can put discoms at risk
Discoms will be profitable only when they are unshackled from state controls and electricity distribution is deregulated Even as the Central government is making all-out efforts to remove the financial distress of power distribution companies or discoms (situated at the core of the power supply chain, they procure electricity from power generating companies or gencos and distribute it to the consumers) and restore them to robust health, actions of the state governments undermine these efforts. The financial distress of discoms arises fundamentally due to their inability to generate enough revenue to pay for the electricity they buy. For over two decades, they have been incurring losses year after year. They have funded these losses by borrowings from banks and other...
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Solving the public stockholding riddle
The EU countries want India to be more transparent about its public stockholding (PSH) program and put in place safeguards to prevent illegitimate exports In a meeting of the Committee on Agriculture (CoA) of the World Trade Organization (WTO) – held on October 2, 2023, in Geneva, the European Union (EU) agreed to consider India’s demand for a permanent solution to public stock-holding (PSH) programme for food security. This is a significant change of stance since March 2023, when the EU along with the USA and Canada had challenged it. India has urged WTO members to start text-based negotiations on the issue “as soon as possible, preferably in the senior official meeting scheduled during October 23-24, 2023”. Under text-based negotiations,...
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Rationalise taxes on fertilisers
The cost of making fertilisers available to farmers by itself is substantially higher than the price the Govt wants them to pay, ideally, it should not levy any tax In its report laid in Parliament on August 9, 2023, the Standing Committee on Chemicals and Fertilizers has recommended that the Union Government should propose to the GST Council to reduce tax rates on fertilizers from the current 5 per cent. Initially, fertilizers were placed under the 12 per cent slab. However, following representation made by various states, the tax rate was reduced to 5 per cent. Now, the Committee wants this to be reduced further. It has also asked the Government to “consider favourably the proposal to lower GST on...
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Regulatory boost to self-sufficiency in energy
Modi Government is giving considerable policy support for the exploration of hydrocarbons so that investors can earn assured return on their investments Delivering the 75th Independence Day address, Prime Minister Narendra Modi set the country a target to achieve self-reliance in energy production by boosting the gas-based economy (besides giving a push to electric mobility and hydrogen production). Modi wants the share of natural gas (NG) in the total energy mix to go up from the current around 6 per cent to 15 per cent. Currently, India imports 50 per cent of its NG requirement. This is because domestic production is hovering around a low of 28.6 – 34 billion cubic metres (bcm) in 2020-21 to 2021-22 (down from a...
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Simultaneous polls are the way forward
Frequent elections impose enormous social and economic costs on the nation, which leads to corruption and disruption The Union Government has set up a committee under the chairmanship of the former President of India, Ramnath Govind to examine holding simultaneous elections to the Lok Sabha (LS), state assemblies, panchayats and other local bodies. Even as the committee has kicked off the deliberations (its first meeting is scheduled for September 23, 2023) the idea is being staunchly opposed by many political parties. The opposition isn’t new as in 2019 when Prime Minister Narendra Modi convened a meeting on June 19 that year to discuss ‘One Nation, One Election’ (ONOE), it was boycotted by about 50 per cent of the parties who...
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Time for 100 per cent FDI in retail sector
One hundred per cent Foreign Direct Investment should be permitted to all retailers, online or offline, big or small, for the growth of this sector During discussions with representatives of e-commerce firms and a domestic traders’ body viz. Confederation of All India Traders (CAIT) held on August 2, 2023, the Department for Promotion of Industry and Internal Trade (DPIIT) in the Ministry of Commerce and Industry made a presentation on the ‘fundamentals’ of the proposed e-commerce policy. The policy is being deliberated since 2018. The DPIIT highlighted seven salient features of the proposed policy: unambiguous demarcation between the marketplace model where foreign direct investment (FDI) is allowed and inventory model where FDI is prohibited; making the policy congruent with the...
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