by admin | May 25, 2021 | Corporate, Corporate finance, Corporate Governance, Economy, Finance, News, Politics
Raipur : Chhattisgarh Chief Minister Bhupesh Baghel on Friday presented a Rs 91,542-crore budget for the financial year 2019-20 in the state Assembly, saying the budget is aimed at welfare of all.
Baghel also holds the Finance portfolio.
Presenting his government’s first budget, Baghel said: “I am presenting this budget with an intent of ‘welfare of all’ and want to assure that will use every penny collected from people’s hard-earned money through taxes for their welfare only.”
“As part of the paddy production promotion plan, the government proposes to allocate Rs 5,000 crore for purchasing the grain from farmers at a price of Rs 2,500 per quintal. The government had decided to waive short-term farm loans, whether it was taken from rural and cooperative banks, or commercial banks in the public sector. Rs 5,000 crore has been proposed for the purpose,” Baghel said.
“Under the ‘Mukhyamantri Khadyan Sahayata Yojana’ (foodgrain assistance scheme), the government has earmarked an amount of Rs 4,000 crore to provide 35 kg rice at subsidised price on every ration card,” he added
The budget also proposes to provide 50 per cent rebate to people on domestic use of electricity…it will come into effect from March 1. This will cost the exchequer an amount of Rs 400 crore,” Baghel added.
The first-time Chief Minister said: “With a fund of Rs 182 crore, an effort has been made to increase the ‘Legislators’ Fund’ to Rs 2 crore from the existing Rs 1 crore.”
An allocation of Rs 45.48 crore has been proposed in the budget for payment as Response Allowance to police officials — Constable to Inspector rank, he added.
Chief Minister also proposed to establish five new Food Parks to boost agricultural production in the state. Rs 50 crore has been earmarked in the budget for the purpose.
“Students from Scheduled Castes/Tribes, Other Backward Castes living in hostel and shelter homes will be entitled to get scholarship of Rs 1,000 every month at pre-matriculate level. Earlier the amount was Rs 900. Similarly, post-matriculate students of related categories will get Rs 700 per month as food allowance which was earlier Rs 500. The scheme will be implemented at a cost of Rs 27.57 crore,” he said.
Moreover, the mid-day meal kitchens will get Rs 1,500 instead of Rs 1,200 every month for their services. The budget has a Rs 26.59 crore provision for this.
The Chief Minister also said: “The compensation amount for the people affected by wild animals has been increased to Rs 6 lakh, which was earlier Rs 2 lakh.”
“For the all-round development of Giraudpuri and Bhandarpuri, an amount of Rs 5 crore is proposed to be allocated, while for the development of Damakheda, a separate amount of Rs 5 crore has been proposed,” the Chief Minister announced.
—IANS
by admin | May 25, 2021 | Interviews
Krishnamurthy Subramanian
By Vishav and Manish Gupta,
New Delhi : Chief Economic Adviser Krishnamurthy Subramanian is not worried about the upward revision of fiscal deficit target for 2019-20 to 3.4 per cent as he believes it will actually come down to 3.1 per cent after the revised GDP numbers are incorporated.
He adds that even based on the previous Gross Domestic Product (GDP) data, the government had missed the target this year by a mere 0.02 per cent which translates to a few thousand crores of rupees.
Subramanian also expresses satisfaction with the efforts taken by the government towards fiscal consolidation and said the country remained fiscally disciplined despite greater devolution of 42 per cent to states and implementation of the Seventh Pay Commission.
“The budgeted estimate for fiscal deficit (for FY19) was 3.34 per cent. The actual number has come to be 3.36 per cent. And as is the practice, it is rounded off to 3.4 per cent. So, actual slippage is 0.02 per cent which is just a few thousand crores,” the Chief Economic Adviser to the Finance Ministry told IANS in a post-budget interview.
He added the 3.36 per cent figure was derived based on the old GDP estimates and had not used the revised estimates which were released last Thursday.
The government had revised the GDP growth rates by 110 basis points from 7.1 per cent to 8.2 per cent for 2016-17 and by 50 basis points from 6.7 per cent to 7.2 per cent for fiscal 2017-18.
“If you use the revised GDP growth rate, we have calculated that the base would be Rs 225 lakh crore for the next year, which will bring down your fiscal deficit to 3.1 per cent,” he stated.
However, the CEA added, “We have to first study those numbers before using them.”
Subramanian said fiscal prudence had been followed “very well” by the government and expressed confidence of continuing on the glide path to reduce fiscal deficit down to 3 per cent by 2021 as per the Fiscal Responsibility and Budget Management (FRBM) Act.
“It is important to keep in mind that the fiscal deficit figures that we have are despite greater devolution of 42 per cent to states and despite the implementation of the Seventh Pay Commission.
“Historically, whenever pay commission recommendations have been implemented, the fiscal deficit number sees a huge jump. But that hasn’t happened. The government is committed to fiscal prudence and I have no worries on that front,” he said.
As for the tax changes brought about in the Interim Budget, which reduced tax liability to zero for income up to Rs 5 lakh, the economist said there was a need to encourage consumption and the government did exactly that by putting higher disposable income in the hands of citizens.
“Given the kind of headwinds that we are facing, especially on globalisation front, it’s very critical for us to build robust buying power in the domestic economy. Therefore, putting disposable income in the hands of the middle class is (important) considering 60 per cent of our growth is consumption-based,” he said.
He said when the consumption goes up, it should have a growth effect as well.
On the debate on lack of jobs in the economy, Subramanian said it was more a problem on the demand side rather than supply front.
“Jobs are outcome of both demand and supply. We keep asking questions on the supply side — are we creating enough jobs? The demand side is actually having people who have ability to take up those jobs.
“It’s done through skilling, which, by its very nature, doesn’t happen overnight. It takes time. That’s where Skill India campaign and investments will start showing their results,” he said.
(Vishav and Manish can be contacted at 1.vishv@gmail.com and manish.g@ians.in respectively.)
—IANS
by admin | May 25, 2021 | Opinions
By Frank F. Islam,
2018 was not a bad year in general for India. GDP growth has been relatively good, the Modi administration has launched several new initiatives, and Indias status and world image has strengthened. The problem is that these are all top-line measures and do not get down to how the Indian people are feeling.
Recent research on this, unfortunately, indicates they are not feeling very happy. India ranked as 133 out of 156 countries on the UN 2018 World Happiness Report (Happiness Report). This was 11 spots lower than India’s 2017 ranking. India’s dismal 2018 ranking placed it far below most developing nations around the world and near the very bottom for the South Asian countries surveyed.
A well-being study released by social science researchers at the end of 2018 revealed that life satisfaction in India dropped by 10 percent from 2006-17. What accounts for India’s poor performance on these assessments?
There is no simple explanation. It is instructive, however, to consider the factors that have the greatest impact on achieving good scores on them.
As noted in the Executive Summary of the Happiness Report, “All the top countries tend to have high values for all six of the key variables that have been found to support well-being: income, healthy life expectancy, social support, freedom, trust and generosity.” The well-being study disclosed that “The life satisfaction of individuals worldwide correlates with income, health, employment, education as well as with positive moods, freedom and beliefs about the benefits of work.”
India obviously does not score well on most of those factors. There are various studies that have highlighted major deficiencies in areas such as income, health, education and employment. There is not a systematic method in place, however, to assess the well-being of India’s citizenry on an ongoing basis.
India, as do most other countries, puts considerable emphasis on measuring GDP growth and tracking other economic indicators routinely and regularly. The assumption is that moving the needle positively on those metrics will cause benefits to flow through to citizens.
That is not the case. As Nobel Prize winning economist Joseph Stiglitz explains, “No single measure can capture what is going on in a modern society, but the GDP measure fails in critical ways we need measures on how the typical individual is doing (measures of median income do a lot better than measures of average income.)”
There are two old proverbs. One states: “What is measured matters.” The other says: “What gets measured gets managed.” By putting a well-being measurement system in place, India would demonstrate that the happiness of its citizens matter and provide the platform for developing and implementing policies for enhancing their life satisfaction.
Given that, I recommend the development of monthly Well-Being Index. Such an Index could be the definitive source for information on the well-being of the Indian citizenry.
Social scientists, economists and statisticians can decide what goes into the Index and its metrics. The important thing is that the Index be developed and put into place as quickly as possible. The reason for this is that the available data and evidence shows that India is moving backward rather than forward in terms of enhancing the happiness and life satisfaction of its people.
The Index results and findings should be released at the same time as GDP reports, so that all concerned individuals and organizations can determine whether the economic growth and progress of the country as a whole is translating into well-being for its citizens. With this information in hand, decision makers can take the actions necessary to ensure that when India does well, all Indians do well.
Mahatma Gandhi famously said: “Happiness is when what you think, what you say, and what you do are in harmony.” Gandhi was correct.
Research shows though that extrinsic factors such as income inequality and an inadequate education can reduce an individual’s potential for achieving happiness. Improving the conditions and the setting for well-being by addressing those factors will enhance a person’s ability to exercise choice and free-will in order to be happy.
Mahatma Gandhi also famously said: “Be the change you want to see in the world.” In this and in the years ahead, I am confident a change that all would like to see is a happier India.
A Well-Being Index would be a starting point for focusing attention on a happier India and bringing Indians together to work in unison on being the change that will be necessary to achieve that end.
(Frank F. Islam is an entrepreneur, civic and thought leader based in Washington DC. The views expressed here are personal.)
—IANS
by admin | May 25, 2021 | Corporate, Corporate finance, Corporate Governance, Economy, Markets, News
New Delhi : Setting aside all conventions with an eye on the coming elections, Finance Minister Piyush Goyal on Friday showered tax sops for the middle class and salaried tax payers including zero tax liability for those with income is up to Rs 5 lakh and announced an annual income support of Rs 6,000 for small farmers and contributory pension for labourers in the demonetization-hit unorganized sector.
Taking the place of an ailing Arun Jaitley, in his 100-minute speech, Goyal also announced raising the Standard Deduction for the salaried class and pensioners from Rs 40,000 to Rs 50,000 and proposed exemption from tax on notional rent on second self-occupied home. This would help families maintaining homes at two locations due to their jobs.
In a big relief for the middle income group, he increased the rebate under Section 87A of the Income Tax Act from Rs 2,500 to Rs 12,500 – the equivalent of 5 per cent tax on Rs 2.5 lakh to Rs 5 lakh slab – and also raised the eligibility criterion for claiming the rebate to Rs 5 lakh from Rs 3.5 lakh earlier. This effectively reduces the tax liability of those with net taxable income upto Rs 5 lakh to nil.
However, tax liability for those with net income above Rs 5 lakh would still start from Rs 2.5 lakh as earlier. The Interim Budget neither changed the existing tax rates or the slabs.
The tax giveaways involve a revenue sacrifice of Rs 23,100 crore a year to benefit more than three crore salary earners and pensioners – Rs 18,400 crore on account of Rs 12,500 tax rebate and other changes and Rs 4,700 crore on account of raising the standard deduction.
In the wake of the BJP’s defeat in the Hindi heartland states in December on perceived stress in agriculture and informal sectors, the Budget came out with a direct income support of Rs 6,000 per annum for small farmers with land-holding size up to two hectares which would be transferred directly into their bank accounts.
The scheme would be funded completely by the Central government and would directly benefit 12 crore farmer families, he said to the cheers of the ruling benches.
Acknowledging reduced returns for farmers due to falling food prices in the international market and declining inflation, Goyal said the scheme would be implemented from December 1 last year for which Rs 20,000 crore has been allocated in the revised estimates for the current fiscal and Rs 75,000 crore in the Interim Budget for the whole of next fiscal.
For the demo-hit unorganised sector, Goyal announced a contributory pension scheme providing for Rs 3,000 per month on attaining 60 year that will benefit 10 crore workers in the unorganized sector.
Those who enter the scheme at 18 years will have to pay a monthly premium of Rs 55 while those who enter at 29 years will have to pay Rs 100 per month till they reach 60. The government will contribute a matching share in the pension account of workers.
This scheme, he said, will be implemented from the current year and a sum of Rs 500 crore has been allocated and more will be given if needed.
In a big relief to pensioners and senior citizens, he also raised the threshold for Tax Deduction at Source (TDS) on interest received on bank deposits from Rs 10,000 to Rs 40,000, and TDS on rent from Rs 180,000 to Rs 240,000.
“Once you account deductions under Section 80(C), middle class tax payers with gross income upto Rs 6.5 lakh will have no need to pay income tax,” he said amidst prolonged thumping of desks by the ruling NDA members who kept shouting “Modi, Modi, Modi”. The Prime Minister was himself seen thumping the desks every time Goyal made fresh announcements.
Taken along with Standard Deduction and other sops like interest paid on home loans, education loans, contribution to National Pension Scheme, medical insurance premium and medical expenses on senior citizens, the effective exemption would go up further.
He said while the changes in the tax structure would be made in the regular Budget, people needed a certainty in their minds in the beginning of the year about what taxes they would have to pay and went on to announce the tax sops in the Part B of his speech.
The budget also stepped up defence allocation which he said will be crossing Rs 3 lakh crore for the first time in 2019-20. “If necessary, additional funds would be provided for securing our borders and to maintain preparedness of the highest order.”
Part of the funding for the agriculture and unorganized sector schemes may come from the Rs 20,000 hike in the RBI and PSU dividends from Rs 54,000 crore in 2018-19.
Turning to macro finance in the budget, Goyal revised the fiscal deficit target for 2019-20 at 3.4 per cent of the GDP, up by 0.1 per cent targeted this year.
“We would have maintained fiscal deficit at 3.3 per cent for 2018-19 and taken further steps to consolidate fiscal deficit in 2019-20. However, considering the need for income support to farmers, we have provided Rs 20,000 crore in the revised estimate of the current fiscal and Rs 75,000 crore in the budget estimates of 2019-20.
“If we exclude this, the fiscal deficit would have been less than 3.3 per cent for 2018-19 and less than 3.1 per cent for 2019-20.”
The Interim Budget pegged the total expenditure for 2019-20 at Rs 27,84,200 crore, up from Rs 24,57,235 crore in the revised estimates of the current fiscal, which is a rise of approximately 13.3 per cent.
At the outset, Goyal said the paralysis of the past had been broken and India solidly put back on track and marching towards growth and prosperity.
The government had succeeded in breaking the back of the “back breaking” inflation which stood at 2.19 per cent in December. “If we had not controlled inflation, our families would have been spending around 35 to 40 per cent more today on basic necessities.”
Critics of the budget said the exercise was one of optics and rhetoric. They raised questions like where the money would come for funding the schemes to benefit farmers and labour in the unorganised sector.
The government may bank on the gross borrowing that has been estimated at over Rs 7 lakh crore but on the direct taxes front contrary to claims of buyoancy and compliance ramping up, there is a defict.
Government sources indicated that all eyes would now be on RBI Governor Shaktikanta Das, who was appointed recently, to come to the aid of the government to come out with an interest rate cut on the back of a benign inflation.
—IANS
by admin | May 25, 2021 | Economy, News
By Sunjay Kapur,
Lets start with the facts. While developing economies lose momentum, Indias momentum seems to tell another story:
* The Reserve Bank of India pegs the growth for FY19 at 7.4 per cent.
* According to the Global Economic Prospects report released by the World Bank, India’s GDP is expected to grow at 7.3 per cent in 2018-19, and 7.5 per cent in the next year.
* India’s growth is projected at 7.5 per cent in 2019 as compared to China’s projected 6.8 per cent as per the International Monetary Fund.
These are facts in the present day global, political, and economic scenario.
Being an interim budget, expectations are riding high from all aspects.
2017-18 witnessed phenomenal growth of brand India in the wake of reforms. Despite increase in oil prices, a weak rupee, and global trade war-like situation, India’s sovereign credit rating touched Baa2; and India ranked 100 among 190 countries assessed by the ‘Ease of Doing Business’ parameter.
This space needs to pick up pace, especially in the automotive sector. Considering that it contributes more than 7 per cent to the GDP, it can be the game changer.
Considering the demonitisation and GST introduction, the recent growth numbers are respectable. To maintain our position, we must maintain growth momentum, push infrastructure investments, and continue to expedite reforms in a big way.
I will keenly watch how the following plans unfurl:
Rationalisation of GST
India, a price-sensitive economy, is at odds with double digit growth. We hope for automobiles to be regulated under a uniform base GST rate, and an additional cess only applicable to luxury vehicles. Currently, automobiles attract peak GST rates of 28 per cent with an additional cess that ranges across the extremely broad spectrum of 1 per cent to 15 per cent depending upon specifications and make of engine. A small engine car to a large one attracts an excise duty that varies from 12.5 per cent to 27 per cent. Those with ground clearance of more than 170 mm attract 30 per cent more excise duty. The existing framework also levies tax rate of 28 per cent and 43 per cent on dealer margins. Naturally, this coupled with high insurance has led to subdued demand over the last three months.
Incentivise EV
In the context of initiatives taken to scale up e-mobility in the country, the sales of e-vehicles are bound to witness a radical turnaround. Envisaging the future as we are, smart or automatic vehicles should also benefit from the tax relief.
Electric vehicles should come under the ambit of a lower rate of taxation, preferably 5 per cent. In addition, to increase viability, road tax can be totally exempted.
Rev up Research and Development
Needless to say, this is an area of exploration that is too important to undermine if we are to move into the future. The initial 200 per cent weighted deduction on R&D spends was reduced to 150 per cent in April 2017.
Vehicle scrapping
It is suggested that the replacement of vehicles registered before the year 2000 should be considered under a one-time incentive scheme. Most of pollution in India, almost 80 per cent and road accidents are caused or attributed to vehicles that are more than 15 years old.
We should look at replacing or easing out pre-2000 registered vehicles. This initiative holds immense potential to spur automotive sales in addition to having a significant impact on reducing perils of pollution, which has been called out multiple times on international platforms.
We as part of the industry propose that the Centre institute one-time incentive; these can be in the form of reduced GST, lower interest rate on car loans, or rebate in road tax for replacement vehicles.
Simultaneously, end of life vehicles (ELVs) recycling is a necessity for our country. The Centre must implement a robust legislative framework for pollution control goals.
As per expert V. Ravichandar, the automobile industry must perform a proactive role by voluntarily discharging their extended producer responsibility (EPR).
The correct implementation will create jobs, conserve resources, save energy, reduce pollution, and mitigate climate change. Recycled aluminum consumes 5 per cent energy, whilst recycled steel consumes 20 per cent of energy. Further, there will be saving with regard to foreign exchange, as effective recovery can reduce import of these metals.
One thing is certain, streamlined GST implementation, and continued positive reform policies are sure to sustain a robust GDP growth. The general sentiment plugs it as a pacifying, populist budget to appease the larger salaried classes and farmers.
(Sunjay Kapur is the CEO of SONA Group & Managing Director of SONA BLW Precision Forgings Limited)
—IANS
