The ailments afflicting PSBs won’t go away so long as majority ownership and control remain with the Government. There is a dire need to unshackle them and grant autonomy to the management The Reserve Bank of India (RBI) has recommended to the Centre a reduction in shareholding of the latter in six top Public Sector Banks (PSBs), namely the State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BOB), Canara Bank, Union Bank of India (UBI) and Bank of India (BOI) to 51 per cent in the next 12-18 months. At a recent meeting with the Ministry of Finance (MOF), the RBI had argued for reduction in stake to 26 per cent. But, observing that this might...
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News & Media
Crushing the competition
The regulator itself refuses to see that competition is being crushed, and even when it sees, its ruling is stayed by appellate authorities—thus, the increasing dominance of digital giants is inevitable. Amazon, some allege, uses the data of products on its e-commerce platform to decide what to sell under its own brand. Big Tech firms such as Google, Facebook, Amazon, and Apple have come under the radar of many governments, including that of the US, Australia, and France, for trying to steamroll competition by either buying competitors out or pushing other vendors to avoid working with them. Here is a glimpse of how they allegedly misuse use their dominant position. Google’s search engine is accused of stealing content with the goal...
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Snap the stranglehold
The only way to avoid delay and expedite the process of privatisation of Central PSUs is to unshackle them from bureaucratic red tape Finance Minister Nirmala Sitharaman has announced the broad contours of the Narendra Modi Government’s plans on privatisation of Central Public Sector Undertakings (CPSUs). A CPSU is defined as an undertaking in which the Union Government has shareholding of more than 50 per cent and by virtue of this, exercises majority ownership and control (there were 249 operating CPSUs as on March 31, 2019). Its privatisation means the shareholding of the Centre will be brought down to below 50 per cent. Before we look at the plan and how the Government goes about implementing it, it may be worthwhile to...
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Time to be honest
Modi has done everything to make life easier for the taxpayer. Now, it is for the latter — especially those who have not been paying taxes as currently only 1.5 crore of 130 crore Indians comply — to reciprocate Dubbed as a transformative tax reform, on August 13 Prime Minister Narendra Modi launched a ‘Transparent Taxation: Honouring The Honest’ platform via video-conferencing. The main aim of this reform was best captured in the following statement by Modi, “Honest taxpayers play a crucial role in national development. When the life of an honest taxpayer is simplified, he progresses, which leads to the progress of the nation too.” The resources garnered by collecting cess from the people, who regularly pay their taxes, are the...
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Bailout or blowout?
When the wheels of the economy on ground zero are stuck and there is little demand for credit, lowering of interest rates will not help in any way Following marathon deliberations of the Monetary Policy Committee (MPC) over three days, the Reserve Bank of India’s (RBI’s) Governor, Shaktikanta Das, made four important announcements under the central bank’s bi-monthly monetary policy review on August 6. First, Das warned that India’s real Gross Domestic Product (GDP) growth is set to contract in 2020-21 but did not give a specific forecast. He also cautioned that “while an early containment of the Covid-19 pandemic may impart an upside to the outlook, a more protracted spread of the pandemic, deviations from the forecast of a normal monsoon...
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Uniform transport tariff for gas – a flawed idea
Speaking at the launch of the nation’s maiden online gas trading platform by Indian Gas Exchange (IGX), petroleum minister Dharmendra Pradhan alluded to “a new pipeline tariff policy that will replace existing practice of seven different pipeline operators charging separate rates and customers away from gas source paying more than those nearer to source.” Petroleum and Natural Gas Regulatory Board (PNGRB) Chairman DK Saraf was even more specific when he spoke of a “single rate across pipelines so as to make the price of fuel uniform for customers across the country.” According to the minister, “the new policy will help bring down the cost of natural gas, make it affordable in every part of the country and facilitate development of...
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Powerless power sector
The much-touted power reforms have not taken off as netas remain in election mode. As a result, industries continue to pay high tariff and discoms continue to report losses Under the Atmanirbhar Bharat Abhiyan scheme unveiled in May, Finance Minister Nirmala Sitharaman had promised a special loan of Rs 90,000 crore to fledgling power distribution companies (discoms) to enable them to clear their dues to independent power producers (IPPs) and generators in the public sector viz. National Thermal Power Corporation (NTPC) and so on, subject to their implementing certain reforms. The Government is now keen on hiking the loan amount to Rs 1,25,000 crore and relaxing reform conditions. This is not the first time that discoms are in dire financial...
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A ‘bad bank’ is a bad idea
With the Govt having recapitalised PSBs with Rs 2,65,000 crore in the last three financial years alone, it makes no sense to pump in more of the taxpayers’ money into NPAs Even as the efforts made by the Narendra Modi Government — including an asset quality review (AQR) by the Reserve Bank of India (RBI), enactment of the Insolvency and Bankruptcy Code (IBC), amendment of the Banking Regulation Act (BRA) and massive capital infusion in public sector banks (PSBs) — were beginning to yield results in terms of reduction in non-performing assets (NPAs), the crisis triggered by Covid-19 has turned the clock back. According to a report by India Ratings and Research (Ind-Ra), the impact of the pandemic and the associated policy...
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The case for a 15% tax rate for India Inc
A uniform tax rate of 15% (17.1% with add-ons) will, among other things, minimise tax litigation that arises largely due to multiple interpretations of a plethora of exemptions and deductions in tax legislation. Besides that, exemptions/incentives make the Indian law cumbersome to a point whereby it makes any prospective investor scary. A major factor affecting India’s ability to attract foreign investment for long has been the high rate of corporate tax. In 2018-19, the rate of tax on domestic companies was 30%. Including surcharge and cess, the total tax incidence is 34.9%. This made India an outlier as the corporate tax rate in other countries is much lower; for example, the US (21%), the OECD average (21.4%), China (25%), Vietnam...
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FDI through front door
The Govt must allow 100 per cent FDI in retail as this will level the playing field for all, eliminate discretion of bureaucrats whose writ is all-pervasive and help small traders On April 22, the California-based US internet giant, Facebook, announced its decision to buy 9.99 per cent stake in Jio Platforms Limited (JPL) paying more than Rs 43,450 crore. JPL is a 100 per cent subsidiary of Reliance Industries Limited (RIL) and has in its fold a wide spectrum of businesses such as wireless broadband, home broadband, enterprise broadband, narrowband, internet-of-things businesses, a bouquet of digital applications, e-commerce and so on. This was followed by a flurry of investments with big names such as General Atlantic, Silver Lake, Qualcomm, Intel,...
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