Category: Deccan Herald

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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Synchronise fund release with need

Efficient fund utilisation is crucial, and the government must judiciously identify the beneficiaries, ensuring the removal of fictitious claimants The Union government implements numerous welfare programmes to achieve various socioeconomic goals and national priorities. This is primarily done through central schemes (CS) fully funded and executed by the government and through centrally sponsored schemes (CSS) funded both by the Centre and states in varying proportions, such as 90:10, 60:40, and so on. These schemes are implemented by the states. The total expenditure of the Centre in FY 2022–23 on these schemes was Rs 1,620,000 crore (Rs 1,208,000 crore on 740 CSs; Rs 412,000 crore on 50 CSSs), constituting 41% of the total budget spending of Rs 3,940,000 crore. Efficient fund...
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All talk no action on fossil fuel phase-out

With no concrete steps to move away from fossil fuels, are countries really serious about net zero commitments? Climate activists protest against fossil fuels at Dubai’s Expo City during the United Nations Climate Change Conference COP28 in Dubai.Credit: Reuters Photo The recently concluded 2023 United Nations Conference of the Parties (CoP28) in Dubai has pledged to “transition away from fossil fuels in energy systems in a just, orderly, and equitable manner, accelerating action in this critical decade, to achieve net zero by 2050 in keeping with science.” ‘Net zero’ refers to a scenario in which the emission of greenhouse gases (GHGs) into the atmosphere equals their removal. In the past, indiscriminate and excessive use of fossil fuels, a generic term...
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MSP guarantee is bad economics

Yet, political parties give because it helps them win elections. MSP representative image. Credit: DH File Photo In the recently concluded state assembly elections, among the various guarantees made by the BJP—Modi’s guarantees—a significant commitment is a hefty increase in the minimum support price (MSP) for paddy and wheat offered to farmers in Madhya Pradesh and Chhattisgarh. In MP, the party promised an MSP of Rs 3,100 per quintal for paddy, a 42% increase from the current Rs 2,183 per quintal fixed by the Centre. For wheat, the promised MSP is Rs 2,700 per quintal, a 27% rise from the existing Rs 2,125 per quintal. In Chhattisgarh, a commitment was made to procure paddy at an MSP of Rs 3,100...
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G7 sanctions slip through the cracks

Russia is the third-largest producer of crude oil, with over 12 per cent of global crude production, and the second-largest exporter after Saudi Arabia. An oil and gas industry worker walks during operations of a drilling rig at Zhetybay field in the Mangystau region, Kazakhstan. Credit: Reuters Photo The reports of the US Treasury Department imposing sanctions on two ship owners in October 2023 for allegedly transporting Russian oil at $75 and $80 per barrel, while relying on US-connected service providers, demonstrate a feeble attempt to achieve the lofty goal set by the G7 in mid-2022. The group, consisting of the United States, Germany, France, Britain, Italy, Canada, and Japan, aimed to punish Russia for its military actions against Ukraine by...
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Fix the flaws in fertiliser taxation

When the government spends heavily from its budget to make fertilisers available to farmers at a fraction of their cost, it seems senseless to tax them or the RMs used for making them. The Standing Committee on Chemicals and Fertilisers has recommended that the Centre propose to the GST Council to reduce tax rates on fertilisers from the current 5%. It has also sought a reduction in GST on raw materials (RMs) used in the making of fertilizers. Currently, RMs such as sulfuric acid and ammonia are levied 18% GST, while phosphoric acid attracts 12%. The present structure of taxing fertilisers and RMs used for making them has three major flaws. 1. To make fertilisers affordable to farmers, the government...
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Self-reliance in fertilisers

Potash (K), and phosphate (P) are among the three major plant nutrients (the third being nitrogen or ‘N’) needed for increasing the production of foodgrains and other agricultural products. Their requirements are met mostly from imports. A farmer sprinkles fertiliser on paddy crop in Koppal district. The enactment of two laws, viz. the Mines and Minerals (Development and Regulation) Amendment Act, 2023, and the Offshore Areas Mineral (Development and Regulation) Amendment Act, 2023, in the monsoon session of Parliament bodes well for the Indian fertiliser sector. While the first law paves the way for the auction of critical minerals such as potash and phosphate blocks for exploration and processing in India, the second law provides a fixed 50-year production lease for offshore minerals....
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Rethinking Universal Basic Income and subsidies

There is a compelling case for disbanding all existing forms of support and replace them by what may be termed as ‘Unconditional Basic Income’ or the UBI system. During an interaction organised by the Confederation of Indian Industry (CII) last month, Chief Economic Advisor V Anantha Nageswaran dismissed the idea of Universal Basic Income (UBI) in India. He expressed concerns that UBI might create create ground for “perverse incentives,” discouraging people from actively seeking income-generating opportunities. As a result, he believes that UBI should not be priority in the near future. Drawing comparisons with developed countries, the current CEA highlights that these nations have limited room for increasing economic growth and creating income generating opportunities. Consequently, their governments have established social...
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Don’t block sale of fertiliser PSUs

The fertiliser ministry’s concern about securing adequate supplies is unwarranted Pursuant to the government’s approach to privatisation of Central Public Sector undertakings, or CPSUs, as announced in the 2021–22 Budget, the Department of Public Enterprises (DPE) and Niti Aayog have identified 176 CPSUs in the non-strategic sectors. They have recommended that over 60% of them, or 106, be wound up, while the rest, considered “viable units,” should be privatised. Fertilisers are placed in the non-strategic category. Accordingly, the DPE and Niti Aayog have recommended the privatisation of all nine CPSUs, including Madras Fertilizers (MFL) and National Fertilizers Limited (NFL), which are under the administrative control of the Ministry of Chemicals and Fertilisers. However, the latter has opposed it. But why...
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Can Nano propel fertiliser reforms?

In this backdrop, let us look at the long-pending reform that was recommended by several committees in the past Successive governments have not initiated meaningful reforms in the fertiliser sector due to the significant gap between the cost of fertilisers and the price paid by farmers. Consider this: Currently, the cost of supplying a 45 kg bag of urea, the most widely used nitrogen fertiliser, is Rs 2650, against only Rs 240 paid by the farmer. In the case of diammonium phosphate, or DAP, the cost of a 50 kg bag is Rs 4000, against Rs 1350 paid by farmers. The excess cost over the price of Rs 2410 in the case of urea and Rs 2650 for DAP is paid...
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