The unprecedented increase in international prices of complex fertilizers primarily di-ammonium phosphate (DAP) as well as raw materials – phosphoric acid and ammonia used in their production – has sent shock waves through the industry. At the beginning of the year, when the prices were up 60 per cent to 70 per cent over last years’ level, the government was in deep slumber. Even as the cost of supplying a bag (50 kg) of DAP went up from Rs 1,700 last year to Rs 2,400, it kept the subsidy unchanged at the last years’ level of Rs 500. As a result, its maximum retail price (MRP) increased from Rs 1,200 to Rs 1,900 inviting farmers’ wrath. The Centre responded by...
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News & Media
Tax cuts alone won’t help rein in oil prices
Given the fast pace of vaccination and substantially diminished effect of COVID-19, the GDP is expected to register growth close to 10 per cent On November 3, 2021, the Union Government notified reduction in central excise duty (CED) by Rs 5 per liter on petrol and Rs 10 per liter on diesel. Seen in isolation, these cuts may appear to be significant. However, when viewed in the backdrop of the unprecedented increase affected by the Narendra Modi Government ever since it assumed office, this is small. In May 2014, the CED on petrol was Rs 9.8 per liter whereas on diesel it was Rs 3.8 per liter. As on November 2, 2021, it was Rs 33 per liter on petrol...
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Power sector: Missing the wood for the trees
One gets a sense that discoms are not honouring their commitments with regard to lifting quantities mentioned in the Power Purchase Agreements On October 30, 2021, the Ministry of Power notified two sets of rules under Electricity Act, 2003 viz. Electricity (Timely recovery of costs due to Change in Law) Rules, 2021, and Electricity (Promotion of generation from renewable sources of energy by addressing Must Run and other matters) Rules, 2021.The stated objective of the rules is to inter alia sustain economic viability of the electricity sector and ease financial stress of various stakeholders. An idea of the stress can be gauged from the losses incurred by power distribution companies (discoms) — the most crucial link in the supply chain....
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The OECD tax deal is unfair to India
As for distribution of profit for the purpose of taxing rights, the agreement allocates to the ‘source’ country the taxing rights only to the extent of 25 per cent of the profit In July 2021, the G7 meeting of Finance Ministers of advanced economies agreed on a framework to tax multinational companies that stands on two pillars, a global minimum corporate tax rate of 15 per cent and secondly, “reaching an equitable solution on the allocation of taxing rights, with market countries awarded taxing rights on at least 20 per cent of profit exceeding a 10 per cent margin for the largest and most profitable multinational enterprises”. Meanwhile, 136 countries, including India, were involved in the efforts being made by...
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The truth about the money trap
Shshank Saurav’s book, Anatomy of Black Money, is a good read for all those who want to get a sense of how cheats are defrauding India of its limited resources without getting lost in financial jargon, writes Uttam Gupta There is an inherent tendency among criminals and other dubious operators to conceal income generated from illegal activities such as smuggling, drug trafficking, proceeds of corruption in public offices etc from the eyes of the Government and its agencies whom they have reason to fear. However, people tend to hide even income earned from legitimate sources with the sole intent of avoiding payment of tax or any other levies such as stamp duty, registration charges, market fee etc. The income concealed...
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The fuel crisis could be a wake-up call
The Government should look for long-term solutions to correct the current situation of heavy reliance on imports and reduce these to 10-15 per cent During 2014-15, Coal India Limited (CIL) — a public sector undertaking (PSU) — had produced 494 million tons (MT). This was a record 32 MT higher than during 2013-14 and higher than a cumulative increase of 31 MT in the previous 4 years. In 2015, this prompted Prime Minister Modi to set a target of 1500MT for 2019-20. Of this, 1000 MT was to come from CIL and remaining 500 MT from private firms. During 2019-20, India produced around 730 MT with CIL contributing 685 MT. Forget the target, the production fell much short of the...
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Time to reform pricing, subsidy regimes
From October 1, the price of natural gas (NG) on supplies from fields given to Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) on a nomination basis, as well as those given under the New Exploration and Licensing Policy (NELP), has been increased from the current $1.79 per million British thermal units (mBtu) to $2.9 per mBtu – up by $1.1 per mBtu. Going further, the price will rise to $5.93 per mBtu from April 2022 and $7.65 per mBtu from October 2022. Under the NG pricing guidelines in vogue since November 2014, this price – known as the administered price mechanism (APM) — is a weighted average of the price prevailing at four international locations — the...
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The Air India sale : Better late than never
Persistent neglect of Air India for over a decade and even during the period when its sale was under consideration has cost the exchequer dear On June 28, 2017, the then Finance Minister, the late Arun Jaitely, had announced the ‘in-principle’ decision of the Union Cabinet for strategic divestment of Air India (AI) and five of its subsidiaries. Over 50 months there after, on September 8, 2021, the Government has informed about its decision to privatise AI and its 100 percent subsidiary, Air India Express Limited (AIEL) and its 51 percent share in Air India Air Transport Services Limited (AIATSL). The iconic Maharajahas gone back to the hangar of the Tata Group almost 68 years after the company was nationalized...
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Why Modi does not repeal the farm laws
The farm laws will open up multiple options for farmers, enabling them to realise a price of their choice which could be even more than MSP Even as Prime Minister Narendra Modi has demonstrated resilience while navigating other reform measures, he has refused to budge on the three farm laws despite the nearly 10-month-long protest by farmers demanding their repeal. The “Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India”, SAS in short, released by the National Statistical Office (NSO), covering the period July 2018 to June 2019, reveals widespread dissatisfaction among farmers with the price realized from sale of their produce; it varies depending on the commodity. The shares of farmers dissatisfied are...
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Public stockholding initiative at WTO
India wants the upcoming 12th Ministerial Conference in Geneva to take up ‘total exemption for support to public stockholding for food security’ In the run up to the 12thWorld Trade Organization (WTO) Ministerial Conference scheduled to be held from November 29, 2021, India has made two submissions. One, subsidies given for maintaining food security programs of developing countries should be allowed without any limit and two, member countries who give trade distorting farm subsidies in excess of $10 billion should eliminate them within three years. India runs a mammoth program of public stockholding for food security purposes. Under it, agencies of the Government like the Food Corporation of India (FCI) buy agri-produce such as wheat, rice/paddy, coarse cereals from farmers...
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