In her Budget speech for 2021-22, the Finance Minister (FM), Nirmala Sitharaman had proposed setting up of a new Development Financial Institution (DFI) termed the National Bank for Financing Infrastructure and Development (NaBFID). In the following month, it passed a bill to establish the NaBFID, its objective being “to coordinate with the central and state governments, regulators, financial institutions (FIs), institutional investors and other relevant stakeholders, in India or outside India, to facilitate building and improving the relevant institutions to support the development of long-term non-recourse infrastructure financing in India including the domestic bonds and derivatives markets”. The NaBFID will also be involved “in lending or investing, directly or indirectly, and seek to attract investments from private sector investors and...
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Category: Growth & employment
Bank fraud: No fetters on CBI, please!
A sweeping order that the CBI will look only at frauds involving a certain amount, or higher, will send out a wrong signal. It is tantamount to glossing over the wrongdoings Even as the Government is making all efforts to ensure that the Gross Domestic Product (GDP) — after witnessing 8 per cent contraction during 2020-21— returns to a high growth trajectory, it is concerned about the tepid recovery in credit availability which is considered to be the sine qua non of growth. According to the latest data by the Reserve Bank of India (RBI), the annual non-food bank credit growth in January this year was at 5.7 per cent compared to 8.5 per cent in the same period last...
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Bank frauds – no fetters on CBI please
Even as the Government is making all out efforts to ensure that the GDP (gross domestic product) – after contracting by 8% during 2020-21 – returns to a high growth trajectory, it is concerned at the tepid recovery in credit availability which is considered to be the sine qua non of growth. According to the latest data of the Reserve Bank of India (RBI) annualized non-food bank credit growth in January this year was slower at 5.7% compared to 8.5% in the same period last year. Credit to industry, however, contracted by 1.3% in January 2021 as compared to 2.5% growth in January 2020. A major (perceived) bottleneck is the reluctance of bank officials to sanction loans who fear they...
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Vehicle scrappage policy – more incentives needed
On March 18, 2021, the Union Minister for road, transport and highways Nitin Gadkari announced in the Lok Sabha a ‘voluntary’ vehicle scrappage policy which will lay the foundation for what he terms as “the Voluntary Vehicle Fleet Modernization Program and enable Indian automobile industry to more than double its turnover from the present Rs 450,000 crore crore to Rs 1000,000 crore in a few years. Besides, this will have a salutary effect on environment due to mitigated vehicular pollution. Other benefits are expected by way of reduction in fuel consumption (as old vehicles get replaced by more fuel efficient new ones) and cut in import bill; boost to inclusive development as investment flows into setting up of scrapping and...
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Reinvigorating growth: Where is the money?
The FM wants to boost growth, but it will be at the cost of fiscal de-stabilisation. One is not sure whether a sustained, rapid surge will come as a huge resource gap remains Taking a cue from the prescription that the Chief Economic Advisor (CEA), Krishnamurthy Subramanian gave in the Economic Survey: 2020-21 that “the Government should come up with more fiscal measures for short-term support to the economy and businesses”, Finance Minister (FM) Nirmala Sitharaman has gone ahead with some “big bang” measures. She has not just attempted to give a boost to industries and businesses in the short-term but has also given an indication of her intent to put them on a high growth trajectory in the medium to...
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Paratroop reforms on the ground
Of crucial importance is the need to actually execute reforms and make them work on ground zero. Unfortunately, this is not happening Unlike the Economic Survey for 2019-20, which was prepared keeping in mind the ambitious target of achieving a $5 trillion economy by 2024-25, this time around, the overarching theme revolves around demonstrating how brilliantly the Government has managed the Coronavirus pandemic. Through lucid elaboration on the details and modeling with facts and figures — using international as well as inter-State comparison within India, Chief Economic Adviser (CEA) Krishnamurthy Subramanian has given ample justification for the “early” and “stringent” lockdown from March and thereafter calibrated lifting of restrictions from June onward. Tacitly, he has also admitted that this led to compression...
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Tax Talk: Govt must get serious on bringing gas under GST
It will, of course, cause a revenue shortfall for states, but that can be dealt with by hiking the rate of GST compensation cess In these circumstances, it is unlikely that they would let any of these products be taxed at a much lower rate—an inevitability if they are brought under GST. ———————————————— The ministry of petroleum and natural gas (MoPNG) has taken on board a proposal—mooted by the industry during recent pre-budget discussions—to bring natural gas within the ambit of the Goods and Services Tax (GST). This will ensure a uniform tax on gas throughout the country and lower its price for both industrial and domestic use, which may help increase its share in India’s energy mix from the...
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India must stand its ground
All objections raised by the USTR on the DST levied by India on foreign tech firms are baseless. The Govt must not yield to the pressure tactics of the US administration by withdrawing the tax In its findings on the Section 301 probe conducted under the US Trade Act, 1974, the US Trade Representative (USTR) has inter alia concluded that India’s digital services taxes (DST) or the so-called equalisation levy (EL) at the rate of two per cent, unfairly targets US companies. The USTR raised three aspects that, it alleges, are inconsistent with global tax principles: First, the levy on US companies has extra-territorial application; second, DST is a tax on the firm’s revenue, not its income; and third, it subjects US...
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Gas under GST – is government serious?
Reportedly, the Ministry of Petroleum and Natural Gas (MoPNG) has taken on board a proposal mooted by the industry during recent pre-budget discussions to bring natural gas within the ambit of the Goods and Services Tax (GST) thereby ensuring a uniform tax on gas throughout the country. Touted as a major step forward in realizing Union Government’s goal of increasing the share of natural gas in India’s energy mix from the current level of 6.2% to 15% by 2030 by reducing its cost for both industrial and domestic use, the MPNG has indicated that the proposal will be placed before the GST Council (The Council is the all powerful federal body mandated to decide on all GST matters viz. tax...
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Many a slip…
It is natural to expect an economic rebound in FY 2021-22. But it is vital to take a pragmatic view based on an objective assessment of how the situation unfolds on ground zero The green shoots seen in October, in particular the rise in the Index of Industrial Production (IIP) by 3.6 per cent, have prompted agencies to revise their growth assessment for the current financial year (FY) from the minus 9.5-10.5 per cent projected earlier to minus 7.5-8.5 per cent, now. For the FY 2021-22, when the impact of the virus is expected to subside to a large extent due to the availability of the vaccine, it is only natural to expect an economic rebound. However, it is necessary...
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