The revision of the gas pricing formula is in line with the recommendations of the Kirit Parikh committee but the government is silent on deregulating prices from 2027 The shift to link the price of natural gas with the crude oil price is unwarranted as natural gas is not a replacement for crude oil. The government made two significant changes in the revised pricing policy for domestic natural gas produced from legacy fields. One, it linked the price of natural gas to the basket of Indian crude oil instead gas prices at global hubs. Two, it introduced the concept of a price band. Legacy fields are nomination fields, blocks given under New Exploration Licensing Policy (NELP) and pre-NELP blocks. It...
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News & Media
Inflation versus growth: RBI’s dilemma
Too much reliance on monetary policy instruments such as a hike in repo rate is of little help Having already increased the repo rate or RR (interest rate at which the Reserve Bank of India lends to banks) by a cumulative 2.5 per cent in the past 11 months, the RBI’s six-member Monetary Policy Committee (MPC) on April 6 voted unanimously to keep it unchanged at 6.5 per cent. However, RBI Governor Shaktikanta Das pledged to hike the RR again if needed, saying the decision to pause was “for this meeting only”. In 2016, the Government put in place an institutionalised framework, the MPC, to formulate monetary policy and determine the key interest rates. It mandated the RBI to fix...
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Mess in Delhi’s power distribution business
The problem can be eradicated only if the State Government liberates the three discoms from its controls and gives them the much-needed freedom In 2018, the Delhi Electricity Regulatory Commission (DERC) issued an order requiring the Delhi Government to give subsidies to its preferred consumers, primarily households, ‘directly’ by crediting it to their bank account using the direct benefit transfer (DBT) mechanism instead of routing it through the three power distribution companies (discoms) namely BSES Rajdhani Power Limited (BRPL), discom for South & West Delhi; BSES Yamuna Power Limited (BYPL) — discom for Central & East Delhi; and North Delhi Power Limited (NDPL) — discom for North Delhi which is the existing practice. The order was never implemented and is...
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Reforming the capital gains tax a smart move
It is perfectly justified if the rich class is made to pay more which, in turn, helps the Government provide services to the poor In the Finance Bill, 2023 passed by the Lok Sabha on March 24, 2023, an amendment relates to a change in the tax treatment of capital gains from non-equity or debt mutual funds (DMF). This has led to consternation in the investor fraternity including high net-worth individuals (HNIs), corporate, and so on who argue this will undermine efforts to deepen the bond market which is crucial for financing the long-term development needs of the economy. They also say such a change should have been introduced in the Union Budget. This would allow for thorough discussion in...
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Fine tune PM-KISAN to be efficacious
The inclusion of ineligible persons on the beneficiaries list of PM-KISAN raises concerns and undoes the very purpose the scheme was launched for A significant decline in the number of farmers receiving income transfers under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) Scheme from 104 million during 2021-22 to 80 million during 2022-23 and a corresponding reduction in payment from Rs 67,032 crore in 2021-22 to Rs 57,646 crore in 2022-23 has caused much consternation. Launched by Prime Minister Narendra Modi on February 24, 2019, and made effective from December 1, 2018, PM-KISAN is a Central Sector Direct Benefit Transfer (DBT) Scheme under which the Union Government. It provides an income support of Rs 6,000 a year to farmers with...
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Fiscal target gliding away from its path
To reset the targets at a significantly relaxed level and then claim that fiscal numbers are well on track looks amusing In the Union Budget for 2022–23, Finance Minister Nirmala Sitharaman kept the Budget Estimate (BE) for the fiscal deficit (FD) at 6.4% of GDP. She described this as ‘advancing on the road to fiscal consolidation,’ citing the target of 4.5 % to be achieved by 2025–26 (this was announced in her budget speech for 2021-22). As per the revised estimate (RE) given while presenting the budget for 2023–24, she has precisely achieved this number. For 2023–24, she has kept the target at 5.9%, and for 2025–26, one would get the sense that the Union government is proceeding at the...
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Administrative measures can’t curb misuse of fertiliser subsidies
Routing the subsidy through manufacturers and keeping the selling price of fertilisers artificially low, makes diversion of subsidised fertilisers profitable for dubious players The availability of fertilisers at an ‘artificially’ low price is very tempting to all stakeholders in the supply chain. (File image) About 41 percent of fertiliser subsidy is diverted to non-agricultural uses including smuggling to neighbouring countries, 24 percent is consumed by larger farmers and another 24 percent is spent on inefficient producers, the Economic Survey 2015-16 noted. That essentially means that just about 11 percent of the subsidy goes to small and medium farmers. The Union government subsidises fertiliser sales to keep input costs low for farmers. Diversion to purposes other than farming is a misuse...
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Bring petroleum products under GST
The Finance Minister should proactively engage with states to speed up the process of taxing petroleum goods under the GST Finance Minister Nirmala Sitharaman has exhorted the states to give their concurrence for fixing the tax rate for five petroleum goods—crude oil, natural gas (NG), petrol, diesel, and aviation turbine fuel (ATF)—under the Goods and Services Tax (GST) to enable the GST Council to give its stamp of approval to this pending proposal. GST is a single nationwide tax with a provision for set-off tax paid on inputs. It subsumes within it more than a dozen taxes from the pre-GST era, namely central excise duty (CED), service tax, and sales tax/value added tax (VAT). Besides, a host of local taxes...
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Fertiliser Subsidy: Scrap pricing scheme and decontrol urea
Bureaucrats are micro-managing the operations of urea plants through the New Pricing Scheme. This is the surest way to scuttle any initiative to cut costs and improve efficiency The genesis of NPS lies in the Union government asking manufacturers to sell urea to farmers at a low ‘uniform’ price. (Representative Image) In the context of the debate over increasing fertiliser subsidy, a major issue that often escapes public attention is the New Pricing Scheme (NPS) for urea. The genesis of NPS lies in the Union government asking manufacturers to sell urea to farmers at a low ‘uniform’ price unrelated to the cost of production and distribution, which is higher, and its promise to reimburse them the differential amount as a subsidy....
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Let FDI in retail come from the front door
Allowing FDI in retail would be in the best interest of consumers as this will enable all retailers to compete with one another on equal terms Following complaints from consumers and traders against “widespread cheating and unfair trade practices” by e-commerce marketplaces such as Amazon and Flipkart, the Union government intends to amend consumer protection rules to bar these firms from (i) selling their private labels on their platforms; (ii) make them liable for frauds committed by a seller; (iii) prohibit them from having their logistics chain for supply-chain management. The marketplace is a platform where vendors sell their products to consumers even as its owner merely acts as a facilitator by providing services such as booking orders, raising invoices,...
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