The 80 crore people the Govt currently targets for giving subsidised foodgrain under the Food Security Act includes millions of higher-income beneficiaries who don’t deserve it The Finance Minister, Ms Nirmala Sitharaman, announced a Rs 1,70,000 crore package under the PM-Gareeb Kalyan Scheme (PMGKS) to address the plight of tens of millions of workers in the “informal” sector affected by CoviD-19, on March 26. The most crucial component of this package was giving five kg of rice/wheat per person per month for “free” to around 80 crore people through the public distribution system (PDS), plus one kg of preferred and region-specific choice of pulse per household for three months. To understand the full implications of the relief — estimated to cost...
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News & Media
Coronavirus scar to haunt economy for long
In a span of less than a week, there have been three sets of official announcements enumerating the measures to alleviate the problems faced by industries, businesses and workers due to the economic disruption caused by COVID-19. The first two were made by Finance Minister Nirmala Sitharaman on March 24 and 26 and the third by the RBI Governor Shaktikanta Das on March 27. On March, the FM announced reliefs for industries and businesses which are largely ‘procedural’. These include extending the date for filing returns [income-tax, GST, customs, excise and statutory filings under Companies Act], reducing interest chargeable on delayed payments, exemption from penalty, increasing threshold of filing under the Insolvency and Bankruptcy Code [IBC] etc. The firms have...
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A mixed bag
While some of the relief measures announced by the FM are just financial jugglery, the remaining items offer some concrete benefits to the poor In his address to the nation on March 19, Prime Minister Narendra Modi announced the setting up of an Economic Response Task Force (ERTF) under the Union Finance Minister (FM), Nirmala Sitharaman to come up with a package of measures to alleviate the problems faced by industries, sectors, businesses and workers due to the economic disruption caused by Covid-19. The most seriously affected sectors, such as aviation, transport, hospitality, tourism, retail, micro, small and medium enterprises (MSMEs), are looking for a host of concessions such as additional interest subvention (for instance, MSMEs are demanding three-five per...
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Stop using fuel taxes as milch cow
High excise duty and VAT on fuel results in high inflation, higher subsidy payments on fertilisers, food, etc, and low international competitiveness of Indian goods. Centre is desperate to grab any opportunity available to garner additional revenue. Therefore, it has hiked the duty. ———————————————————————————————— In the wake of widespread destruction of demand triggered by Covid-19, failure of OPEC and non-OPEC suppliers to agree to a production cut, and the two front-line exporters from the respective groups viz. Saudi Arabia and Russia vying to capture the shrinking market, the price of crude oil has plunged to less than $30 per barrel. Leveraging this, in sync with its past practice of mopping up the oil bonanza, the Modi government has yet again...
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A system failure
The bailout given to Yes Bank, using public money, emboldens banks to continue with their game plan. The Govt and the RBI must do everything to give a body blow to this attitude Much before the crisis at the beleaguered Yes Bank reached a flashpoint [when the Reserve Bank of India (RBI) on March 5, 2020, superseded its Board, appointed ex-Chief Finance Officer (CFO) of the State Bank of India (SBI) as its administrator and imposed a moratorium for a month on critical operations such as sanction of fresh loan, renewal of existing loans, Rs 50,000 ceiling on withdrawal of money per account] some depositors had already sensed it coming. They withdrew about Rs 18,000 crore during the first six...
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Caught in a cleft stick
Though Govt policy disallowed e-commerce platform owners from direct selling, the fine print permitted them to do so through a subsidiary or JV. And they have been doing so Any announcement of foreign direct investment (FDI) is normally welcome in view of its contribution to capital formation, accelerating economic growth and adding to the foreign exchange kitty. Deviating from this normal practice, last month, the Union Minister for Commerce and Industry, Piyush Goyal was dismissive about the decision of the Amazon boss to bring a few billion dollars into India. He felt that Jeff Bezos was bringing money to make up for the huge loss the company was incurring in its operations in the country. Losses or gains are intrinsic to any...
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Telecom industry on the brink; Trai, banks need to play proper role
In an order delivered on October 24, 2019, the Supreme Court (SC) directed the telecom service providers (TSPs) to pay ‘unpaid’ dues towards license fee and spectrum usage charges (SUC) to the department of telecommunication (DoT). In doing so, the SC accepted DoT’s interpretation that adjusted gross revenue (AGR) (license fee and SUC is charged as a percentage of AGR) includes – apart from telecom services revenue – revenue from non-telecom services such as rent, profit on the sale of fixed assets, dividend, interest etc. Given the inherent character of the order with focus on including revenue from non-telecom services as well, it requires even companies such as Gas Authority of India Limited etc (they had taken licenses for setting up their...
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Fiscal slippage: The denial syndrome
Despite the govt window dressing numbers, it is expected to exceed FY20’s fiscal deficit target. Reforms are urgently needed to improve the Budget’s financial health. In the Union Budget for FY21, finance minister Nirmala Sitharaman revised the fiscal deficit (FD) for FY20 to 3.8% of GDP—up from the budget estimate (BE) of 3.3%. In absolute terms, the RE is Rs 7.66 lakh crore, against a BE of Rs 7 lakh crore. Sitharaman explained away the slippage by invoking the recommendations of the NK Singh committee on review of the Fiscal Responsibility and Budget Management (FRBM) Act, which permits breach of the target in case of “far reaching structural reforms with unanticipated fiscal implications”. The justification is untenable as, during the...
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End the chemical epidemic
The P and K nutrients supplied by non-urea fertilisers are as vital as N supplied by urea. Yet, India is facing an increasing imbalance in the NPK use ratio For decades, farmers in India have been resorting to indiscriminate and excessive use of chemical fertilisers such as nitrogen (N), phosphate (P) and potash (K) besides a host of secondary and micro-nutrients. This is leading to deterioration in soil health, an adverse impact on the environment and imperiling public health. The mother soil is the repository of these nutrients and the precise quantum in any given location depends on their stock to begin with, i.e. when farmers started cultivating the land (say 100 years ago or even earlier), addition from application...
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No big deal
Staying clear of the optics and bonhomie on display all through the US President’s recent visit to India , one gets a sense that the road to even a limited trade deal is thorny Prior to the maiden visit of US President Donald Trump to India, there was a sense of dejection about the possibility of the US and India signing even a limited trade deal, leave aside a major one. This is to be seen in the backdrop of the absence of United States Trade Representative (USTR) Robert Lighthizer from the delegation. Earlier, too, Lighthizer had cancelled a visit to New Delhi when he was scheduled to wrap up discussions on a trade agreement. However, the mood was buoyant at the...
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