The 13th Ministerial Conference of the World Trade Organisation held in Abu Dhabi in February 2024 ended in a deadlock. However, the Union Minister for Commerce and Industry, Piyush Goyal, who led the Indian delegation, was “completely satisfied.” On the contentious issue of finding a permanent solution to India’s public stock-holding (PSH) programme for food security, he was alluding to the so-called ‘peace clause’ sanctioned at the 9th MC held in Bali (2013), and that arrangement stays. Does it help? Under the PSH programme, government agencies, such as the Food Corporation of India (FCI), buy agricultural produce such as wheat, rice/paddy, and coarse cereals from farmers at the minimum support price (MSP) and give it free to India’s poor under...
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Income inequalities hamper sustainable growth
While the nation’s GDP is poised to surge by 7.6 per cent in the current financial year, concerns loom large over the sluggish pace of private consumption During the current financial year, the Indian economy is expected to register a growth of 7.6 per cent in real gross domestic product or GDP. Coming on top of growth of 9.1 per cent during 2021-22 and 7.2 per cent during 2022-23, India’s performance is spectacular. Emboldened by this trend and Modi’s commitment to pursue economic reforms with greater vigour during its third term, analysts are hoping for growth of above 7 per cent on a sustainable basis. But, there is a catch. Private consumption which accounts for as much as 55 per...
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RBI maintains status quo despite inflation optimism
RBI’s commitment to ‘last-mile disinflation’ has prompted a continued tight monetary policy stance, raising questions about its impact on economic growth On April 5, 2024, announcing the decisions taken by the six-member Monetary Policy Committee (MPC) in its first bi-monthly meeting of the current financial year (FY), Governor Shaktikanta Das observed “The elephant has now gone out for a walk and appears to be returning to the forest. We would like the elephant to return to the forest and remain there on a durable basis,” Das was using the elephant analogy to characterise the trajectory of retail inflation as represented by the Consumer Price Index (CPI). Having scaled to a high of 7.8 per cent in April 2022, CPI has...
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Address the root cause to stabilise food prices
The Bharat brand scheme aims to stabilise prices for consumers and ensure fair compensation to farmers. However, its impact will be limited due to State laws Last year in July, the Union Government launched a Scheme of selling chana dal at a subsidised rate under the Bharat brand call it Bharat Chana. This was followed by launch of Bharat Atta in November 2023 and Bharat Rice in February 2024, Under the Scheme, the Food Corporation of India (FCI) – a central agency whose prime responsibility is to procure, store and distribute food grains to meet the needs of beneficiaries covered under the National Food Security Act (NFSA) – buys the cereals from the farmers and sells to the National Agricultural...
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Sustainable agriculture with nano-fertilisers
As India gears up to ramp up production of nano-fertilisers, questions arise regarding the technical feasibility and logistical implications of transition Recently, the Union Minister for Chemicals and Fertilisers Mansukh Mandaviya stated “Consumption of urea this fiscal is likely to be 8 percent less than in FY 2022-23 due to the use of its liquid nano variant. Because of this and higher domestic production, import of urea, the soil nutrient that accounts for 70 per cent of the fertiliser subsidy bill, declined more than a fifth on year in 2023. Further spread of nano urea consumption and the start of a new large urea plant (Talcher in Odisha) by September 2023 would lead to elimination of imports in two-three years”....
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Debunking claims of fiscal discrimination
Opposition-ruled States, especially southern States, have raised concerns about discriminatory treatment in the current system of fiscal resource sharing between the Centre and the States Various Opposition-ruled States especially from south India have complained of ‘discrimination’ and ‘unfair’ treatment under the present scheme of sharing financial resources between the Union Government and the States. Article 270 of the Constitution provides for the sharing of net tax proceeds collected by the Union government with the States. The taxes that are shared include corporation tax, personal income tax, Central GST (Goods and Services Tax) of CGST, the Centre’s share of the Integrated Goods and Services Tax (IGST), CED on petroleum products excluding the cess and surcharge levied by the Centre etc. All...
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Rationalise and simplify GST
The GST Council has to make crucial decisions regarding inclusion of petroleum products and streamlining tax slabs to fortify the robustness of the GST system A Group of Ministers (GoM) set up by the GST (Goods and Services Tax) Council is currently reviewing the new tax regime with a focus on ‘simplification’ and ‘rationalisation’ as key objectives. GST is a single nationwide tax that subsumes within it more than a dozen taxes of the pre-GST era. Applied all over India, it has a provision of set-off for tax paid on inputs also known in common parlance as input tax credit (ITC). This makes the system free from the cascading effect of tax on tax besides encouraging businesses to report all...
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Detach PSU share sale from budget
If the government’s intent was not to view it as an exercise in balancing the budget, as stated by the finance secretary, then it made no sense to fix a target. Yet, setting a target for boosting non-tax revenue receipts means that it hasn’t shed its age-old stance of linking this exercise with the budget. At a briefing following the presentation of the interim budget for the financial year 2024-25 by Finance Minister Nirmala Sitharaman on February 1, Finance Secretary TV Somanathan stated that the “government no longer views disinvestment — fancy nomenclature for sale of Union government shareholding in central public sector undertakings (CPSUs) — from the perspective of balancing the budget”. The statement is out of sync with...
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The practice of offering freebies must stop
Not too long ago, poll freebies used to be an exception. But now it has become a norm with almost every other party promising it Barely a week before the Election Commission of India (ECI) is set to announce the schedule for the polls for Lok Sabha elections when the Code of Conduct will come into force, the Aam Aadmi Party (AAP) has given yet another dose of mesmerizing voters in Delhi with freebies – an acronym for “something given free of charge” – a bizarre practice it started in the February 2020 elections.In the budget for the financial year (FY) 2024-25 presented by the Delhi finance minister Atishi in the assembly on March 4, 2024, she announced the Mukhyamantri...
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WTO deadlock over agricultural subsidies
At the WTO Ministerial Conference, India stood firm on its stance on public stock-holding programme, drawing strong opposition from the developed countries The 13th ministerial conference (MC) of WTO (World Trade Organisation) held on February 26-29, 2024 in Abu Dhabi has ended in a deadlock. This is because India leads about 80 countries—the G33 including India, African, Caribbean and Pacific countries, together called ACP—on – on one hand and the European Union (EU) and the USA representing the developed countries on the other didn’t budge from their respective pre-meditated positions. On the most important issue of finding a permanent solution to the public stock-holding (PSH) programme for food security, India’s stance was vehemently opposed by the USA/EU. Currently, under India’s...
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