The union power minister, RK Singh has convened a meeting of state power ministers to discuss comprehensive reforms in the power sector to discuss among others measures (i) to uphold sanctity of power purchase agreements [PPAs] between generators and state electricity boards [SEBs]/power distribution companies [PDCs]; (ii) curbing wasteful electricity consumption; (iii) remove cross-subsidy surcharge and (iv) direct benefit transfer [DBT] of power subsidy. Before discussing the reforms at the outset, it is important to take cognizance of the problems facing the sector and the source of their origination. First, SEBs/PDCs, the life-line of power sector are incurring huge losses – a phenomenon seen for over two decades. Unable to make timely payments to power generators – public sector undertakings...
More No comments
Blog
GST – single rate, key to harnessing its potential
In its meeting held on November 9/10, 2017, GST Council has brought about a major restructuring of GST architecture. It has moved 180 items from the 28% slab [178 to 18% and 2 to 12%] leaving only 50 items in the highest slab. Besides, there has been some shuffling of items in other slabs: 19 items from 18% [13 to 12% and 6 to 5%]; 8 items from 12% to 5% and 6 items from 5% to zero. The exodus of items en mass from the 28% slab – a large number of these being items of common use such as detergents, soaps, shampoos, chocolates, nutrition food etc shows that there was something fundamentally wrong in designing architecture in the...
More No comments
Demonetization – Modi changed goal post, really!
The opposition parties observed November 8 – the day demonetization was announced by Prime Minister, Modi last year – as a black day. It has castigated the government for changing the goal post if only to camouflage its alleged failures. A senior member of the Congress observed that increase in search and seizure, de-registration of shell companies, increase in the number of persons filing income-tax returns, digitalization etc have nothing to do with demonetization. They aver that the original objective of the exercise was only to destroy the black money which has not been achieved. Nothing could be farther from the truth. True, the government had estimated that Rs 300,000 crores won’t come back to the system thereby representing a...
More No comments
Unshackle farmers from subsidy and control raj
Dr Ramesh Chand, Member [Agriculture], NITI [National Institute for Transforming India] Aayog – the new incarnation of erstwhile Planning Commission – has reiterated that prime minister’s commitment to double farmers’ income by 2022 is doable. The average income of a farmers’ family in India is about Rs 6400 per month, but the variations across states are huge. For instance, in Punjab the average income is a high of Rs 18,000 per month, in Bihar, Odisha and Jharkhand, it is less than Rs 5000 per month. This may point towards the possibility of increasing farmers’ income manifold [even more than 100%]. If, farmers of Punjab can do it, there is no reason why those in other states cannot come up. But,...
More No comments
Fertilizer subsidy arrears – shun band-aid solutions
The Cabinet Committee on Economic Affairs (CCEA) has accorded the ex-post facto approval for special banking arrangement [SBA] for Rs 10,000 crore for payment of outstanding claims on account of fertilizer subsidy in the year 2016-17. It also approved that, in future, Department of Fertilizers [DoF] would avail the SBA with concurrence of Department of Expenditure [DoE]. Faced with fertilizer subsidy arrears of around Rs 35,000 crore by end of financial year 2016-17, the union minister for chemicals and fertilizers Ananth Kumar had in January, 2017 written to the finance minister asking for SBA for Rs 20,000 crore to provide loan to cash starved fertilizer companies at reasonable rates. Against this, Department of Fertilizers [DoF] was allowed to raise a...
More No comments
Targeting Modi – lacks substance
In a first ever, we have a prime minister, who on taking charge declared himself as ‘Pradhan Sewak’ and has been working relentlessly [he works 18-20 hours] in the service of 125 crore people. Yet, Modi’s critics hell bent on showing him in poor light interpret the statement trivially to argue ‘so what, almost every leader who occupies this coveted position works that long and there is nothing special about him’. They are making a grave mistake. Juxtaposing deliverable [as they see] versus promises, their blast is on 4 counts: (i) where is Rs 15 lakh that Modi had promised to be deposited in the account of every Indian; (ii) demonetization was a disastrous policy decision that brought miseries to...
More No comments
Want subsidy reforms – hold simultaneous elections
Recently, Arvind Kejriwal, Chief Minister, Delhi vehemently opposed the hike in fare for travel by Metro Rail and even offered to sharing the financial burden equally with union government to ensure that commuters are not penalized. About 3 years back, he had decided to give heavily subsidized power to households consuming up to 400 units a month. Then, also he vowed to bear its financial burden from the state government budget. Kejriwal is not alone in giving freebies using tax payers money. During the last 5 decades of governance – be it at the center or states – successive political establishments have built a super-structure of subsidies such as on fertilizers, food, kerosene, LPG, irrigation, power, credit, seeds etc. When given...
More No comments
NPAs – crack the whip on defaulters
Union finance minister, Arun Jaitely during press conference held on October 24, 2017 announced a massive recapitalization of public sector banks [PSBs] to the tune of Rs 211,000 crores in two years viz. 2017-18 and 2018-19. Of this, Rs 135,000 crores will come from so called ‘recapitalization bonds’, Rs 58,000 crores via raising capital from the market and Rs 18,000 crores as budgetary support. Under the project ‘Indradhanush’ launched in 2015, Jaitely had provided for Rs 70,000 crore over a 4 year period viz. Rs 25,000 crores each during 2015-16/ 2016-17 and Rs 10,000 crores each during 2017-18/2018-19 . As per that road-map, the provision for third and fourth year being Rs 20,000 crores – already factored in budget calculations...
More No comments
Simplicity goes for a toss in Modi’s GST
An overarching rationale behind the Goods and Services Tax [GST] – introduced on July 1, 2017 – was two-fold. (i) give boost to tax revenue and (ii) relief to consumers by way of lower prices. The initial indications do not seem to be encouraging. First, there are about 65 million businesses in so called ‘informal’ sector. They transact mostly in cash and do not maintain records, hence were able to escape payment of tax. Even in the ‘formal’ sector, retailers doing their purchases and sales in cash were avoiding payment of sales tax/value added tax [VAT]. All of this would add up to billions of transactions remaining outside tax net. Further, since apart from excise duty [paid by manufacturer at...
More No comments
Has Modi kept his pledge on jobs?
Modi – government has come under flak for not redeeming its pledge made in the election manifesto to provide 20 million jobs every year. On the face of it, the charge may stick as the actual job creation during the last three years of its stint is a few hundred thousand. But, on a closure look, it turns out that during the last 7 decades since independence, if there is any political dispensation that has worked sincerely and with full dedication for solving problems facing the people including unemployment, it is the present government. All those watching the actions of Team Modi ‘objectively’ and ‘dispassionately’ will not reach any other conclusion. On jobs, which depend on expansion of economic activity...
More No comments