The Modi Government has made unstinted efforts to make the defaulters pay up and also ensured that no new NPAs are created As per the information shared by the Reserve Bank of India (RBI) in reply to the RTI question, scheduled commercial banks (SCBs) had written off non-performing assets (NPAs) – an acronym for loans that have gone bad – worth over Rs 10,57,000 crore in the last five years. This amount is often cited by the opposition in particular, the grand old party (GOP) to lambast Modi – government for having given what they term as ‘loan waiver’ to big industrialists and businessmen. Has Modi granted favours to the big-wigs? To address this, we need to answer two fundamental...
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Category: Pioneer
Has free ration become a political compulsion?
Under ‘open-ended’ procurement, Govt buys from farmers unlimited quantities at MSP. Apart from high stocks, this adds to the food subsidy bill substantially Addressing a poll rally in Chhattisgarh, Prime Minister Narendra Modi has announced an extension of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) free ration scheme for another five years. Launched in April 2020 to deal with the situation triggered by the Covid-19 pandemic, PMGKAY provided 5 kg of rice or wheat per person per month for “free” to 820 million, as well as 1 kg of pulses per family per month to people covered under the National Food Security Act (NFSA). Run for three months initially, the scheme got six extensions till December 31, 2022. On...
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Sanctions on Russia are counterproductive
In a globally interdependent world, actions that severely restrict the flow of goods and services across national boundaries are bound to be counter-productive In a bid to punish Russia for its military action against Ukraine, in June 2022, leaders of G7 viz., the United States, Germany, France, Britain, Italy, Canada and Japan had vowed to explore the feasibility of measures to bar imports of Russian oil at price above a certain level. In September 2022, their finance ministers (FMs) said: “We confirm our joint political intention to finalise and implement a comprehensive prohibition of services, which enable maritime transportation of Russian-origin crude oil and petroleum products globally. Providing those services would only be allowed if the oil and petroleum products...
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Aim at a tax-to-GDP ratio of 20 per cent
Buoyant tax collections hold the key to keeping up the tempo of investment in building infrastructure and funding welfare schemes In the past, invariably, the revised estimate (RE) for the relevant financial year (FY) fell short of the budget estimate (BE). During the last two years, the position has reversed with RE exceeding the BE. In fact, the trends during the first six months of the current FY point toward the Modi – government doing a hat–trick. Look at the gross tax revenue (GTR) which includes gross direct tax revenue (GDTR), GST collection, central excise duty (CED) and customs duty (CD) – net of refunds. During 2021-22, the BE for GTR was Rs 22,20,000 crore. Against this, the RE (mentioned...
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Do not tinker with national pension scheme
The increase in life expectancy and rise in the cost of living further reinforces the need for assured monthly income for a decent life in old age Stung by the Opposition States, including Rajasthan, Chhattisgarh, Jharkhand, Himachal Pradesh and Punjab reverting to the old pension system (OPS) and these parties promising the same in the impending state elections as also in Lok Sabha elections next year, the Union government is considering to amend the national pension scheme (NPS) to ensure that its benefits to the employees covered under it are more or less at par with the OPS. This will be at the cost of sacrificing fiscal prudence. The pension provides a person with a monthly income when he is...
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Rethink rationale for food subsidy
Most of its actions in implementing the food subsidy scheme are out of sync with the changing times and lead to leakages and corruption The NITI Aayog has invited bids for a Central Coordinating Agency that can study the effectiveness of its National Food Security Subsidy scheme. The Agency will hold the mandate to suggest ways to better the scheme. It will also suggest ‘whether, and how, the scheme can be rationalised or closed’. However, the government’s move to continue the supply of free food grains under the National Food Security Act (NFSA) beyond the current FY gives the contrary signal. In fact, most of its actions in implementing the food subsidy scheme are out of sync with the thought...
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State doles can put discoms at risk
Discoms will be profitable only when they are unshackled from state controls and electricity distribution is deregulated Even as the Central government is making all-out efforts to remove the financial distress of power distribution companies or discoms (situated at the core of the power supply chain, they procure electricity from power generating companies or gencos and distribute it to the consumers) and restore them to robust health, actions of the state governments undermine these efforts. The financial distress of discoms arises fundamentally due to their inability to generate enough revenue to pay for the electricity they buy. For over two decades, they have been incurring losses year after year. They have funded these losses by borrowings from banks and other...
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Solving the public stockholding riddle
The EU countries want India to be more transparent about its public stockholding (PSH) program and put in place safeguards to prevent illegitimate exports In a meeting of the Committee on Agriculture (CoA) of the World Trade Organization (WTO) – held on October 2, 2023, in Geneva, the European Union (EU) agreed to consider India’s demand for a permanent solution to public stock-holding (PSH) programme for food security. This is a significant change of stance since March 2023, when the EU along with the USA and Canada had challenged it. India has urged WTO members to start text-based negotiations on the issue “as soon as possible, preferably in the senior official meeting scheduled during October 23-24, 2023”. Under text-based negotiations,...
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Rationalise taxes on fertilisers
The cost of making fertilisers available to farmers by itself is substantially higher than the price the Govt wants them to pay, ideally, it should not levy any tax In its report laid in Parliament on August 9, 2023, the Standing Committee on Chemicals and Fertilizers has recommended that the Union Government should propose to the GST Council to reduce tax rates on fertilizers from the current 5 per cent. Initially, fertilizers were placed under the 12 per cent slab. However, following representation made by various states, the tax rate was reduced to 5 per cent. Now, the Committee wants this to be reduced further. It has also asked the Government to “consider favourably the proposal to lower GST on...
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Regulatory boost to self-sufficiency in energy
Modi Government is giving considerable policy support for the exploration of hydrocarbons so that investors can earn assured return on their investments Delivering the 75th Independence Day address, Prime Minister Narendra Modi set the country a target to achieve self-reliance in energy production by boosting the gas-based economy (besides giving a push to electric mobility and hydrogen production). Modi wants the share of natural gas (NG) in the total energy mix to go up from the current around 6 per cent to 15 per cent. Currently, India imports 50 per cent of its NG requirement. This is because domestic production is hovering around a low of 28.6 – 34 billion cubic metres (bcm) in 2020-21 to 2021-22 (down from a...
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