As the Government continues to provide free foodgrain to over 800 million people, a closer look reveals troubling patterns of misuse, policy distortion, and an urgent need for reform. The question now is not whether food should reach the poor — but how best to do it without enriching the corrupt Last year, the Indian Council For Research On International Economic Relations (ICRIER) released a Study titled ‘Rationalising Public Distribution System in India’ saying there was grain leakage under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) of 20 million tons entailing an estimated annual fiscal cost of around `70,000 crore to the central exchequer. Under the PMGKAY, the Union Government asks the Food Corporation of India (FCI) and other...
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Articles
Record RBI dividends: A boon for the Govt, but at what cost?
The RBI is recalibrating its provisioning norms to sustain high payouts, raising concerns about its long-term financial prudence and independence. Is the central bank slowly turning into a fiscal backstop for the Government? For the financial year (FY) 2023-24, the Reserve Bank of India (RBI) Board approved a record dividend transfer of Rs 210,000 crore to the central Government. This was reflected in the accounts of the latter for the FY 2024-25. This amount was 2.4 times the dividend transfer of about Rs 87,400 crore made by the RBI for FY 2022-23 and available for use by the Centre during FY 2023-24. Even when compared to the provision of about Rs 80,000 crore made by Sitharaman in the interim budget...
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Crack the whip to rescue discoms and energise reform
The time has come for the Modi Government to decisively untangle the sector from entrenched political interference, empower regulators, and open the door to private competition. Without bold, top-level reforms, India’s power ambitions may remain stuck in the dark The Government think-tank NITI Aayog has initiated a study on the working of the Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commissions (SERCs) with particular emphasis on critical aspects such as ‘autonomy’, ‘role clarity’, ‘capacity’ and ‘accountability’. The intent is to undertake systemic changes in their approach and functioning to address the impending challenges of (i) maintaining the viability of power systems; (ii) attracting private investment and (iii) protecting public interest. The CERC is the central commission for purposes...
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Self-reliance in natural gas: Clearing hurdles in the way
The share of natural gas in India’s energy mix has barely moved, reaching only 6.7 per cent. Achieving a boost will require scaling up indigenous output, lowering import dependence, and establishing a supportive policy and regulatory framework Delivering the 75th Independence Day (ID) address on 15th August 2021, Prime Minister Narendra Modi vowed to achieve self-reliance in energy production by boosting the gas-based economy. He wished the share of natural gas (NG) in the total energy mix to go up from subsisting at around 6 per cent to 15 per cent by 2030. He reiterated this at India Energy Week (IEW) held on February 11-14, 2025. Presently, the share is a mere 6.7 per cent. The only way to reach...
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Don’t undermine oil self-reliance to fund fertiliser subsidy
The Government should focus on curbing systemic inefficiencies in the fertiliser subsidy regime. Funding fertiliser subsidy by oil money undermines the Fund’s core purpose of boosting domestic oil and gas capabilities, jeopardising long-term energy security for short-term fiscal optics The Government should focus on curbing systemic inefficiencies in the fertiliser subsidy regime. Funding fertiliser subsidy by oil money undermines the Fund’s core purpose of boosting domestic oil and gas capabilities, jeopardising long-term energy security for short-term fiscal optics. For the first time, in the nearly five-decade history of implementing the Fertiliser Subsidy Scheme, the Union Government has decided to dip into the Oil Industry Development Fund (OIDF) to finance a portion of the subsidy requirement under the Scheme. The amount...
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Trump’s ‘tariffs’ trigger global trade turmoil
US President Donald Trump imposed sweeping new ‘reciprocal tariffs’ ranging from 10 per cent to 49 per cent on imports from nearly 60 countries, The move risks igniting retaliatory measures worldwide, with early signs of deepening economic strain already visible in the tit-for-tat tariff war with China Issuing an executive order citing “national emergency” on April 2, 2025, US President Donald Trump slapped additional customs duties branded as “reciprocal tariffs” (RTs) — in the range of 10 — 49 per cent — on nearly 60 countries including India, which faces a 26 per cent extra levy on most products across industrial and farm categories. While a 10 per cent baseline duty is applicable from April 5, 2025, the full additional...
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Delhi budget: Big push for capital spending
In her first budget as Chief Minister and Finance Minister of Delhi, Rekha Gupta has taken bold steps to increase capital expenditure, signalling a shift towards infrastructure-led growth In the Budget for the National Capital Territory (NCT) of Delhi for the financial year (FY) 2025-26 presented on March 24, 2025, Rekha Gupta the Chief Minister (she also holds the finance portfolio) has done ‘heavy lifting’ by substantially boosting capital expenditure even while making some smart moves to lower the burden of its poll pledges. At the outset, let us take a look at FY 2024-25. For the FY 2024-25, Atishi the then finance minister under the AAP Government had budgeted for total expenditure (TE) of Rs 76,000 crore including revenue...
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Resurrect farm reforms
Agricultural marketing is currently governed by the respective state laws under the APMC (Agricultural Produce Market Committee) Act. A committee set up by the Ministry of Agriculture (MoA) in June 2024 has proposed a national policy framework for the marketing of agricultural produce, along with measures to ensure remunerative prices for farmers. The measures include 1. Allowing direct farm-gate purchases of agricultural commodities by bulk buyers 2. Declaring warehouses, silos and cold storages as “deemed market yards” (DMYs) 3. Establishing and operating multiple e-trading platforms, including e-NAMs (electronic national agriculture market) in the private sector. Agricultural marketing is currently governed by the respective state laws under the APMC (Agricultural Produce Market Committee) Act. These laws vary widely across states, hindering the...
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The ailing discoms need structural changes
India’s power distribution companies (discoms) remain trapped in a cycle of mounting losses. Can the government’s latest ‘Reforms-Linked, Result-Based Scheme for Distribution’ (RLRBSD) aims to curb inefficiencies and improve their financial health The power distribution companies (discoms) stand at the core of the power supply and distribution network in the country. Mostly owned and controlled by State Governments, they buy electricity from the generating companies (gencos) and supply it to the consumers. Yet, invariably, the financial health of discoms has been a matter of serious concern. According to a report by the Lok Sabha’s Standing Committee, the accumulated losses of discoms increased from Rs 545,000 Crores in financial year (FY) 2020-21 to Rs 584,000 Crores in 2021-22, Rs 647,000 Crores...
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Spiralling food subsidy: The urgent need for reform
India’s food subsidy bill continues to rise despite budget projections suggesting otherwise. Without structural reforms in procurement and distribution, the financial strain on the exchequer is set to escalate, raising concerns about the long-term sustainability of India’s food security programmes In the Union Budget for 2025-26, Finance Minister Nirmala Sitharaman has allocated Rs 203,420 Crore for food subsidy which is a marginal three per cent increase from the revised estimate (RE) for the current financial year (FY) at Rs 197,000 Crore. The RE for FY 2024-25 by itself is lower than the budget estimate (BE) of Rs 205,250 Crore she had fixed while presenting that budget on July 23, 2024. Food subsidy payments during FY 2023-24 and FY 2022-23 were...
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