News & Media

Centre’s fiscal outlook isn’t rosy

In the Union Budget 2024, the government has set a fiscal deficit target of 4.9 per cent of the gross domestic product, which is 0.2 per cent less than the 5.1 per cent target fixed in the Interim Budget. In fixing that target, the finance minister had assumed a dividend receipt of Rs 80,000 crore from the Reserve Bank of India from the latter’s operations during the financial year 2023-2024 to be available for use by the Centre during the FY 2024-2025. In May, the RBI approved a mammoth dividend transfer of Rs 210,000 crore to the Centre, which is Rs 130,000 crore higher than the provision of Rs 80,000 crore in the Interim Budget. Taking nominal GDP of around...
More Comments are closed

Reforming the personal income tax regime

In the Budget for 2024-25, Finance Minister has made the ‘new regime’ of personal income tax more appealing, while continuing to rationalise the capital gains tax structure In the Union Budget for 2024-25, Finance Minister Nirmala Sitharaman has endeavoured to make the ‘new regime’ of personal income tax (PIT) a bit more attractive besides continuing the process of ‘rationalising’ and ‘simplifying’ the structure of capital gains tax (CGT) that was started in her budget for FY 2023-24. Sitharaman had introduced the new PIT regime in the Budget for 2020-21. Even while retaining a 5 per cent tax for annual income in the Rs 250,001-Rs 500,000 range (as under the old regime before 2020-21), on income higher than Rs 500,000, the...
More Comments are closed

Budget is pro-growth but stability concern remains

Major expenditure items may go out of control, raising concerns about the budget’s feasibility; moreover, the Government’s gross tax revenue target of Rs 38.40 lakh crore is overly ambitious On top of a GDP (gross domestic product) growth of 8 per cent plus for three consecutive years, the Union Budget for FY 2024-25 presented by Finance Minister Nirmala Sitharaman on July 23, 2024, has all the ingredients to sustain the momentum during the current year as well. For the current year, she has proposed capital expenditure at Rs 1111,111 crore, which is 17 per cent higher than the revised estimate (RE) for FY 2023-24.In her Budget for 2019-20, she had laid a roadmap for catapulting the Indian economy to US$5...
More Comments are closed

Income tax amendment promises relief for MSMEs

The biggest problem faced by small enterprises is delayed payment of their dues by large enterprises as it results in a shortage of working capital severely impacting their production An amendment to the Income Tax Act, introduced through Finance Act 2023, and effective from April 1, 2024 stops businesses from claiming tax deductions for payments beyond 45 days to the Micro, Small and Medium Enterprises (MSMEs) for supply of goods and services has caused much consternation. The MSMEs are ancillary units engaged in the production, manufacturing and processing of goods and commodities (mostly intermediate goods) which are supplied to large enterprises or master units. These units operate on a small scale and are further categorized into micro, small and medium enterprises...
More Comments are closed

India narrowly escapes fiscal catastrophe

India needs to strengthen its economic health with sustainable fiscal policies for long-term stability; state guarantees only put it in a perilous situation After the Lok Sabha elections 2024 on June 4, the Center narrowly escaped plunging into a state of ‘fiscal catastrophe’. Even as Modi–-led BJP failed to secure an absolute majority on its own, it garnered the support of 293 MPs including 53 from its allies under the National Democratic Alliance (NDA) and formed the Government. On the other hand, the I.N.D.I.A bloc led by the grand old party (GOP) namely Congress cobbled up a total of 234 MPs. A swing of just 38 from NDA to I.N.D.I.A bloc could have enabled the latter to catapult itself to...
More Comments are closed

The cost of freebies and the legal quagmire

Despite a Supreme Court ruling highlighting the impact of freebies on election fairness, political parties continue to leverage public funds for electoral gain In the Maharashtra Budget for 2024-25 presented by Deputy Chief Minister Ajit Pawar, the BJP-led MahaYuti has announced financial assistance of Rs 1,500 per month for eligible women between 21 to 60 years of age, a stipend up to Rs.10,000 per month for youth in industrial and non-industrial sectors, electricity bill waiver for farmers etc. Unambiguously, these are freebies – an acronym for something given by the State free of charge – aimed at garnering votes during the State assembly elections later this year. In a July 2013 order in S Subramaniam Balaji vs Government of Tamil...
More Comments are closed

Sans political will, power theft persists

According to then Union Power Minister R K Singh, AT&C losses were previously as high as 27%. For example, if 100 units of electricity leave power dispatch centres and 27 units are stolen and not paid for. The Centre is planning to launch a new scheme to help power distribution utilities (discoms) cut technical losses through “transition-financing” of necessary capital expenditures. Discoms, mostly owned and controlled by state governments, are at the  core of the power supply and distribution network in the country. They buy electricity from generating companies (gencos) and supply it to consumers. Technical losses, specifically aggregate technical and commercial (AT&C) losses, often mean power theft. According to then Union Power Minister R K Singh, AT&C losses were...
More Comments are closed

Focus shifts to prudent public wealth management

The new Govt is overhauling India’s disinvestment policy. It is supporting non-profit enterprises, and maintaining a strong presence of State-run firms in strategic sectors The new National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi is reviewing the existing disinvestment policy to shift its focus from selling central public sector undertakings (CPSUs) to ‘prudent public wealth management (PWM), supporting not-for-profit enterprises, and ensuring strong presence of state-run firms in strategic sectors’. A CPSU is an undertaking in which the Union government has majority share holding meaning it holds more than 50 percent of its shares. Disinvestment is fancy nomenclature for sale of these shares to private investors. When, disinvestment results in reduction of the government’s shareholding in the...
More Comments are closed

Water crisis in Delhi is entirely man-made

The ruthless exploitation of natural endowments and that too when resources are being put to misuse is unconscionable The gravity of water crisis facing Delhiites has forced the Delhi government to approach the Supreme Court (SC) seeking its intervention to direct neighboring states Haryana, Uttar Pradesh, and Himachal Pradesh (HP) to provide additional raw water supply to the national capital. Initially, the SC directed HP to release 137 cusecs of raw water which translates to 70 million gallons per day (MGD) of more water for the city. It also asked Haryana to make arrangements for ensuring its free flow to Delhi. But, now with HP claiming that it can’t release more than what it is already giving (70 MGD), the...
More Comments are closed

Populism cripples revival of discoms

The twin problems of AT&C losses and under-recoveries on sale to certain households or farmers in some States have existed for close to a quarter century The Centre is planning to launch ‘another’ scheme to enable public sector power distribution utilities (discoms) to cut technical losses via “transition financing” of the required capital expenditure. The discoms stand at the core of the power supply and distribution network in the country. Mostly owned and controlled by State Governments, they buy electricity from the generating companies (call them gencos) in the public sector such as National Thermal Power Corporation (NTPC) etc and gencos in the private sector commonly referred to as independent power producers (IPPs) and supply to the consumers. Technical losses...
More Comments are closed