In his budget speech for 2016-17, finance minister, Arun Jaitley had announced the government’s intent to review Fiscal Responsibility and Budget Management (FRBM) Act with a view to make the target flexible to make it range bound instead of a fixed number as had been the position hitherto under the extant Act in vogue since 2003. Accordingly, a committee under NK Singh was set up to examine this issue besides revamping of the Act. The committee recommended a fiscal deficit target of 2.5% of gross domestic product (GDP), revenue deficit of 0.8%, a combined centre-state debt ceiling of 60% and a central debt ceiling of 40% by fiscal 2022-23, under a six-year medium-term fiscal roadmap. It also recommended a fiscal...
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News & Media
PUBLIC STOCKHOLDING IS A PRIORITY ISSUE
India’s current aggregate measurement support must not lull us into a state of complacency as the scenario may change, putting us in a vulnerable zone. Hence, the focus has to be on changing the rules of the game to make them fair and equitable The 11th World Trade Organisation (WTO) ministerial held in Buenos Aires during December 10-13, 2017 failed to produce even a declaration — a bare minimum for any such conference. The reason for the failure was diametrically opposite stance taken by the US and India. While the latter pressed for finding a permanent solution for public stockholding programmes for food security — the most contentious issue under the Doha Development Round (DDR) — the former did not even allow...
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GST Council should drop idea of 1% tax on online sales
The decision of the GST Council, the all-powerful body to decide the tax architecture and rates on various items, to require e-commerce companies to levy 1% tax on all transactions made on their platforms has led to widespread consternation. So much so, it was forced to defer its implementation indefinitely. But the idea is not new. Even under the erstwhile state sales tax/VAT (value-added tax) dispensation, the Karnataka commercial taxes department had directed e-commerce companies to deduct 1% of the money payable to the merchant towards tax and remit the same to the department. The merchant/dealer, in turn, could claim credit or refund on this amount while discharging his liabilities. The move was triggered by tens of thousands of dealers...
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Soil health: change NPK balance through incentives
Delivering the 38th edition of his ‘Mann ki Baat’, Prime Minister Narendra Modi said, “Can our farmers take a pledge to bring down urea use by half by 2022? If they use less urea in agriculture, the fertility of the land will increase. The lives of farmers will start improving.” Modi made the statement in the backdrop of ‘World Soil Day’ on December 5 and the deteriorating health of soil the world over, a key factor contributing to this being the excessive use of urea. The positive correlation between excessive use of urea and the erosion in soil health is an incontrovertible fact proven by several studies and finds repeated reference in official documents, including the Economic Survey that is...
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NPAs – crack the whip on defaulters
BAND-AID SOLUTIONS WON’T WORK
The cost of supplying fertilisers has increased due to a hike in cost of feedstock/raw materials, rupee depreciation, capital cost, transport and so on 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 fertiliser subsidy in the year 2016-17. It also approved that, in future, Department of Fertilisers (DoF) would avail the SBA with concurrence of Department of Expenditure (DoE). Faced with fertiliser subsidy arrears of around Rs 35,000 crore by end of financial year 2016-17, Union Minister for Chemicals and Fertilisers, Ananth Kumar had in January, 2017 sought from the Finance Ministry SBA for Rs 20,000 crore. Against this, DoF...
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Anti-profiteering Authority: an unworkable mechanism
In mid-November, the Union Cabinet approved setting up of a National Anti-profiteering Authority (NAA) under the Goods and Services Tax (GST) so as to ensure that the benefit of lower taxes reaches consumers. If a consumer feels that the reduction in the incidence of tax under GST is not being passed on, she can register a complaint with the authority. The anti-profiteering mechanism provides for setting up of a ‘screening committee’ at the state-level and a ‘standing committee’ at the national level. The complaints will be first sent to ‘screening/standing committee’, depending on whether it is of local nature or of national import. If the complaint has merit, the respective committee would refer the case for further investigation to the...
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Reining in bogus claims
Subsidy reforms: even Modi won’t take that risk
Recently, Delhi Chief Minister Arvind Kejriwal vehemently opposed the hike in fares for travel by Metro Rail and offered to share the financial burden equally with the Union government to ensure that commuters are not affected. About three years ago, he had decided to give heavily subsidised power to households consuming up to 400 units a month. Then, too, he vowed to bear its financial burden out of the state budget. Kejriwal is not alone in giving subsidies using taxpayers’ money. During the last five decades of governance – be it at the Centre or in the states – successive political establishments have built a super-structure of subsidies, such as on fertilisers, food, kerosene, LPG, irrigation, power, credit, seeds, etc....
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RBI OBSESSION WITH INFLATION HINDERING RECOVERY
The Reserve Bank of India has yet again cautioned the Government against excessive public expenditure as it could lead to fiscal consolidation and prove to be inflationary In its fourth bi-monthly monetary policy review for the current year (announced on October 4), the Reserve Bank of India (RBI) has kept the policy rate (rate at which the central bank lends money to commercial banks) unchanged at 6.0 per cent. This has come as a rude shock to industries and businesses especially the small and medium enterprises (SMEs) which were anxiously looking forward to a cut for giving a much-needed fillip to growth. The SMEs are at the core of Prime Minister Narendra Modi’s agenda for promoting growth, creating jobs and increasing income....
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