Tag: Union Budget 2020

Direct tax collections fall 5.3% to Rs 9.56 lakh crore

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

As the financial year comes to a close and fiscal pressures mount on the government, the direct tax collections continue to fall despite receipt of the last tranche of advance tax which traditionally gives a leg up to the tax collections.

According to government sources privy to the developments told CNBC-TV18, that direct tax collections during this fiscal, as of today, have slipped to 5.3 percent.

“Direct tax collections as of today stand at Rs 9.56 lakh crore from April 2019 till date as against Rs 10.09 lakh crore during the same period last year. Of this Rs 9.56 lakh crore, the government has received corporate tax of Rs 5.16 lakh crore and income tax of Rs 4.27 lakh crore,” government sources requesting anonymity told CNBC-TV18.

It was in the Union Budget 2020 when the government had revised the tax collections target downwards to Rs 11.70 lakh crore for the current fiscal from Rs 13.35 lakh crore cited earlier. The government had rationalised the tax collections targets noting the revenue forgone on account of the reduced corporate tax rate of Rs 1.45 lakh crore.

Even as the government was calling Rs 11.70 lakh crore a modest target to be achieved, government sources said the targets now look far from being achievable even if the finance ministry includes the cushion of bulk tax receipts coming from the Vivad Se Vishwas Scheme.

In the Budget, union finance minister Nirmala Sitharaman had announced the introduction of the Vivad Se Vishwas Scheme, which would give relief to taxpayers who would want to end their legacy tax disputes provided they pay up as per the scheme contours.

Though the Vivad Se Vishwas scheme has been passed by both the Houses of the Parliament, the scheme is yet to be notified. Only after notification, the scheme will be open for taxpayers to take benefit and also help government shore up its coffers.

Meanwhile, government sources added that the “current decline in tax collections is due to poor economic activity, businesses have reported less advance tax after adjusting their earlier liabilities.”

On a region-wise break -up of the tax collections, government sources said Kanpur remained the worst-performing jurisdiction with “tax collections slipped by 19 percent to Rs 22,242 crore from April 2019 till date as against Rs 27,379 crore during the same period last year.

On the contrary, Nagpur has performed the best. “Tax collections in Nagpur region grew by 33 percent to Rs 5,131 crore from April 2019 till date as against Rs 3,853 crore during the same period last year,” government sources added.

The traditional top garner Mumbai has also witnessed a decline in collections. “Collections slipped by 6.7 percent in Mumbai region to Rs 2.92 lakh crore from April 2019 till date as against Rs 3.13 lakh crore during the same period last year,” sources quoted earlier said.

Similarly, Delhi saw a decline of 8.7 percent to Rs 1.39 crore during April 2019 till date as against Rs 1.53 during the same period last year. Bengaluru saw a decline in collections of 5.6 percent to Rs 1.04 lakh crore from April 2019 till date this fiscal, as against Rs 1.10 lakh crore during the same period last year.

However, Hyderabad saw a little growth of just about one percent, with collections coming to RS 53,680 crore from April 2019 till date as against Rs 53,075 crore during the same period last year,” sources privy to the developments told CNBC-TV18.

What now remains to be seen is how soon the government notified the Vivad Se Vishwas Scheme and how many taxpayers take the benefit of ending their legacy disputes and cough up to the tax collections helping the North Block to meet the daunting target of Rs 11.70 lakh crore.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Fiscal deficit touches 128.5% of Budget estimate by January-end, says govt data

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

India’s fiscal deficit touched 128.5 percent of the whole year Budget target at January-end, said the Controller General of Accounts (CGA) on Friday. The deficit during the same period during 2018-19 was 121.5 percent of that year’s Revised Budget Estimate (RE).

In actual terms, the fiscal deficit or gap between the expenditure and revenue stood at Rs 9,85,472 crore. The government had targeted to restrict the fiscal deficit at Rs 7,66,846 crore during the year ending March 31, 2020.

While presenting the Union Budget to Parliament earlier this month, Finance Minister Nirmalal Sitharaman had raised fiscal deficit target to 3.8 percent of the GDP from 3.3 percent pegged earlier for 2019-20 due to revenue shortage.

As per the CGA data on monthly accounts, revenue receipts during April-January were at Rs 12.5 lakh crore or 67.6 per cent of the RE for 2019-20. This compares with 68.3 percent of the RE in the previous fiscal.

Total receipts were at 66.4 per cent of RE as against 67.5 percent in the year-ago period.

The CGA further said that total expenditure at January-end was Rs 22.68 lakh crore or 84.1 percent of RE, higher than 81.5 percent in the corresponding period of the last fiscal.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Investors pour in Rs 1.2 lakh crore in mutual fund schemes in January

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Investors pumped Rs 1.2 lakh crore into various mutual fund schemes in January, after pulling out a massive Rs 62,000 crore in the preceding month, primarily on account of infusion in liquid and overnight schemes.

Mutual fund inflows will gather further momentum in the coming months, Union Asset Management Company CEO G Pradeepkumar said.

According to data by the Association of Mutual Funds in India (Amfi), the net inflow of Rs 1.2 lakh crore was witnessed in mutual fund schemes last month as compared to an outflow of Rs 61,810 crore in December. Fund managers attributed the growth in asset base to a strong inflow of around Rs 1.09 lakh crore in debt-oriented schemes.

Among debt-oriented schemes, liquid funds, with investments in cash assets such as treasury bills, certificates of deposit and commercial paper for the shorter horizon, received flows worth about Rs 59,683 crore, the highest among the fixed-income segment last month.

In addition, overnight funds, which invest in securities with maturity of one day, received an inflow of about Rs 22,652 crore.

“On the fixed-income side, one of the noticeable trends is a shift away from liquid funds toward overnight funds. With the introduction of exit load in liquid funds and certain additional restrictions that will come into effect from April 1, 2020, we expect this trend to continue,” Pradeepkumar said.

The open-ended equity and equity-linked saving schemes witnessed an infusion of Rs 7,877 crore, while there was an outflow of Rs 330 crore in close-ended equity plans, taking total equity inflows to Rs 7,547 crore last month. In December, net inflows in such schemes stood at Rs 4,432 crore.

Small-cap, mid-cap and large-cap funds saw inflows of Rs 1,073 crore, Rs 1,798 crore and Rs 1,154 crore, respectively, in January. It is interesting to note this flow is well spread between the category of funds such as large-cap, mid-cap and multi-cap, among others.

During January 2020, Nifty Midcap 100 and Nifty Smallcap 100 rose 5.31 percent and 6.71 percent, respectively.

“With overall sentiments improving on the back of softer crude oil prices and lower interest rates as also unconventional steps taken by RBI recently has led to expectations of further softening of interest rates. These factors should help to sustain the growth in equity markets in the near term,” Pradeepkumar added.

“With the Union Budget 2020 and subsequent RBI policy leading several structural changes, we will continue to stay optimistic on the market outlook. The retail investors may continue investing in the markets through SIPs (systematic investment plans) while staying balanced in their investing approach between different asset classes,” said Sundeep Sikka, ED and CEO of Nippon Life India Asset Management.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Nirmala Sitharaman says economy in recovery mode, cites increase in FDI & GST collection

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Union finance minister Nirmala Sitharaman on Tuesday said the economy is not in trouble and green shoots are visible with the country moving towards a
$5 trillion economy.

Listing initiatives taken by the government, she said, increasing foreign direct investment (FDI), rise in factory output and over Rs 1 lakh crore GST collection in the past three months are indications of green shoots in the economy.

“There are seven important indicators which show that there are green shoots in the economy…economy is not in trouble,” she said while replying to a debate on the union budget in Lok Sabha.

Referring to visible indicators of green shoots, the finance minister said the forex reserve is at an all-time high and the stock market is upbeat.

“Global sentiment is in favour of India. Foreign investors continue to show confidence in India and that is why the country has attracted a net FDI of $24.4 billion in April-November 2019-20 as against $21.2 billion in the same period the previous year,” she said.

Net foreign portfolio investment (FPI) in April-November 2019-20 was positive at $12.6 billion as against $8.7 billion in the same period last fiscal.

She further said the gross GST (Goods and Services Tax) revenue collected in January 2020 grew at 12 percent while in November 2019, it was 6 percent.

“So there is steady growth and therefore negative growth, which it showed in September and October, has been corrected and we are on a positive growth trajectory and this will obviously bring in greater and newer investments to the economy and it will also reduce the business cost,” she added.

There are seven green shoots based on which the economy now very clearly moving forward, she added.

The finance minister said the government’s focus is on four engines of growth which include private investment, private consumption, public investment and exports.

With regard to public investment, she said, the government in December announced a National Infrastructure Pipeline. It envisages investment of Rs 103 lakh crore for infrastructure development across the country in the next four years (till 2024-25), she said.

To boost consumption, the government has increased the Minimum Support Price of all mandated Rabi and Kharif crops for 2019-20.

The Minister also took a dig at Congress leader P Chidambaram while referring to the fiscal deficit numbers during the UPA regime.

The fiscal deficit was higher “when the economy was managed by competent doctors,” she quipped.

Chidambaram on Monday said in the Rajya Sabha that the “economy was perilously close to collapse and was being attended by incompetent doctors.”

Sitharaman in Budget raised fiscal deficit target to 3.8 percent of the GDP from 3.3 percent pegged earlier for 2019 -20 due to revenue shortage.

The government has used ‘escape clause’ under the Fiscal Responsibility and Budget Management (FRBM) Act which provides it leeway for relaxation of fiscal deficit roadmap during time of stress.

Replying to the opposition charge of the government overshooting fiscal deficit target prescribed in Fiscal Responsibility and Budget Management (FRBM) Act, she said the Narendra Modi government has always respected FRBM Act every year and kept the discipline of FRBM Act.

Referring to various initiatives to boost consumption, she said the government has increased Minimum Support Price, introduced a pension scheme for traders, lowered GST rates abolished Dividend Distribution Tax and corporate tax.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

At current growth level, real GDP would not touch $5 trillion by 2025: Congress

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The NDA government has not defined whether the $5 trillion economy it aims to achieve is real GDP or nominal, senior Congress leader P Chidambaram said on Saturday and claimed real GDP would not touch the figure at the current growth level by 2024 or 2025.

Chidambaram, who spoke on the union budget at a meeting organised by the party in Hyderabad, hit out at the government for allegedly proving to be incompetent in managing the economy. “Firstly, the Modi government has still not defined whether $5 trillion is real GDP or nominal.

Secondly, while Modi keeps on saying 2024, the economic survey, in the introduction, the goalpost has been shifted from 2024 to 2025. Be that as it may, at the current level of growth, real GDP will not touch $5 trillion either by 2024 or 2025,” the former finance minister said.

Chidambaram was replying to a query on the government’s ambitious target of $5 trillion economy.

Interacting with the audience, he said the NDA government should not “clutter” the tax structure by seeking to introduce separate systems, one giving exemptions and other not.

Asked by a member of the audience whether there is a possibility of the government withdrawing various tax exemptions leading to the common man not having options to save money and tax, he felt that there was still confusion within the government on the matter.

“Even if all the income taxpayers opt for the new system, the maximum benefit will be Rs 40,000 crore. What is Rs 40,000 crore when India’s GDP is almost 2.7 trillion dollars,” he said. The impact would be so minimal that it won’t make a big difference, he claimed.

Noting that the IT exemptions are savings, he said their withdrawal would lead to a decline in the savings habit which is not good for the country.

“More than anything else, I don’t think the tax structure should be cluttered like this. You don’t have anywhere a tax structure, system A, system B, system A for exemptions…without exemptions. I think it is cluttering up the tax system. I would not have done it. The sooner they clarify what their intention is, the better,” he said.

On the proposed disinvestment in LIC, he said there was no clarity whether the government would list or disinvest the insurance behemoth.

“Without clarity about whether they are listing or disinvesting. I cannot comment on it. But on LIC, unless they convince me why they want to disinvest, our present position is we are deeply suspicious of their motives to disinvest LIC,” he said.

Chidambaram, who lashed out at the union budget for allegedly failing to lead the economy on the path of progress and job creation, alleged that the Modi government was like a helpless doctor who failed to diagnose the illness of a patient and treat him effectively.

“Altogether, the bottom line is we have a patient who is extremely ill. The doctor has proved himself incompetent. Diagnosis of the doctor is hopelessly wrong,” he said.

People who diagnosed the illness correctly like Dr Arvind Subramanian, former Chief Economic Adviser, were allowed to go from the government, he said.

“Not having diagnosed the illness of the patient, the doctor is helpless. The least the doctor can do is to say…I am sorry. We made mistake, will Dr Manmohan Singh come and advise us,” he said.

Asked whether it is true that the country spends one percent GDP to keep 950,000 troops in Kashmir, he said there were more troops there than necessary.

“I think we are keeping many, many more troops in Kashmir than I would ever accept as necessary. I think it is wrong. We should thin out our troop’s deployment in Kashmir. More than that, I think we should give back the freedom to the people of the Kashmir valley,” Chidambaram said.

Slamming the Centre for invoking the Public Safety Act against former Jammu and Kashmir chief ministers Mehbooba Mufti and Omar Abdullah to keep them in detention for up to a further two years, he said “there cannot be a greater outrage, a greater assault on liberty than what they have done.

I think all of us should collectively pray for that the freedom of the people of Kashmir, the 75 lakh people of Kashmir valley, is restored,” he added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

The muddle through syndrome in Indian defence

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Union finance minister Nirmala Sitharaman presented the union budget for FY2020-21 on the floor of the Parliament on February 1, 2020. While the budget is still undergoing autopsy by policy analysts and opinionmakers, the most disappointing of the sectors, that were allocated resources, has been ‘national defence’.

Union budget for national defence for FY2020-21 stood at Rs 4,71,378 crore ($70 billion approximately), out of which budget for the armed forces and DRDO stood at Rs 3,23, 053 crore ($46 billion), defence pensions accounted for Rs 1,33,825 crore ($19 billion) and civil expenditure was Rs 14,500 crore ($2.1 billion).

Under the normal convention, the finance minister lays out details of the defence budget and also makes a reassuring statement that additional resources would be provided to the ministry of defence as and when required. Neither happened this time, data on national defence were simply put in the budget papers.

On the surface and analysed purely from available data, the budget for the national defence this year has been disappointing, having registered a very negligible increase of less than Rs 7,000 crore from previous year’s revised estimates, although allocations for defence pensions have skyrocketed from previous year’s Rs 1,12,080 crore to Rs 1,33,825 crore this year.

While defence pensions have witnessed impressive growth over the years, it is disheartening to see the budget for capital expenses (primarily used for equipment modernisation) has been stagnant at Rs 1,13,734 crore this year (previous year’s revised estimates stood at Rs 1,10,394 crore).

Growing pension liabilities have visibly impacted equipment modernisation efforts for the past few years, with a growing 30 percent gap between ‘committed liabilities’ (money earmarked for previous weapon and equipment purchases) and modernisation budget. Efforts to trim revenue as well as pension liabilities and correspondingly increase capital the outlays to make Indian forces a ‘lean, mean fighting machine’ have failed, rather the opposite trend is visible for the past few years. This is not only alarming but also worrisome, to say the least.

Resources allocations for national defence may appear deficient, but a larger picture of cumulative resources devoted toward meeting all spectrum security challenges paint a different story. Resources for national defence (MoD), internal security (MHA), resources for military and security dimensions for atomic energy and space together account for a quarter of central government expenditure. Allocations for J&K and Ladakh (approximately Rs 37,000 crore) have added new dimensions as a reasonable amount of these will be spent for security purposes. Important to note here is that even such a reasonable allocation has happened under trying economic circumstances.

Three fundamental questions are placed and possible answers attempted here: a) Is India witnessing an era of ‘muddle through syndrome in national defence’?; b) if the answer is yes, is this phase likely to continue well into future?; and c) what are the measures India ought to make in order to take its military might further? Answers to each one of these questions would always be predictively subjective, even when microdata is available and bulk of national defence and security-related data are not available for obvious reasons. In any case, India has always been a data-deficit state, unlike its Western counterparts.

Yes, India is muddling through in its defence sector. Resources allocations actually appear reasonable, but imbalanced priorities heavily weighed in favour of revenue and pension liabilities that call for more structural reforms within the sector. Yes, the phase is likely to continue in the near future unless the imbalance is corrected, but equally importantly, there is a dire need to reduce import dependency and enhanced domestic production. Even if a global economic turn around happens and so does Indian economic scenario, which is highly unlikely, a sudden spurt in defence expenditure would bring in accompanying aspirational demands. A caution is thus warranted.

Three sectors – higher defence organisations and mechanisms; equipment and services-led modernisation; and domestic production – all of which are undergoing ideational and structural reforms must continue with defined objectives. Financial resources are critically important in appropriating such objectives, but judicious applications of resources are what Indian defence planners need the most.

The author is a New Delhi based independent defence analyst and is associated with the Society for the Study of Peace and Conflict, a New Delhi based research outfit.

Read Deba Mohanty’s columns here 

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

LIC says looking to unlock value in IDBI Bank ahead of mega IPO

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Life Insurance Corporation (LIC) is keen to unlock value in IDBI Bank in the run-up to the insurance behemoth’s IPO, which is likely to happen in FY21, its chairman M R Kumar said on Friday.

Presenting the budget, union finance minister Nirmala Sithraman had said the government would sell a part of its 100 percent holding in LIC through an IPO in the next fiscal year.

Later, finance secretary Rajiv Kumar said the government could divest up to 10 percent in LIC, which has an enterprise value of Rs 36 lakh crore. The government aims to garner Rs 90,000 crore from the listing of LIC and stake dilution in IDBI Bank in the next fiscal out of the total disinvestment target of Rs 2.10 lakh crore.

In January 2019, LIC picked up 51 percent stake in IDBI Bank, making it the majority shareholder of the lender. The Irdai regulations bar an insurance company from holding more than 15 percent in any listed entity. However, Irdai has given some exemption to LIC in regard to its holding in IDBI Bank.

LIC chairman Kumar said though Irdai has not fixed any timeline for LIC to reduce its stake in IDBI Bank, the Reserve Bank of India has given a 12-year timeframe.

“We would not want to wait that long, especially when we are also going to be listed, but we have to find some ways to unlock value in IDBI Bank,” Kumar told reporters here on Friday.

He said once the bank comes out of the lending restrictions imposed by the RBI under the Prompt Corrective Action (PCA) framework and becomes profitable, the bank would be able to attract investors.

“Once they come out of the PCA and start lending again, I believe that their profitability will go up substantially and also attract investors,” he said.

IDBI Bank, which is under PCA framework since May 2017, had met RBI in January to seek lifting of the operational restrictions, PTI had earlier reported.

The lender had made a presentation to the RBI on its improved financial position. The government holds 47.11 percent stake in IDBI Bank, while 51 percent is with LIC. This leaves practically nothing for investors, as its floating shares are only 3 percent of the paid-up equity.

Sitharaman had said the government would want to tap the retail investor segment to sell its stake completely.

Kumar said the stake sale by the government in IDBI Bank will help bring in more retail investors. “Once the stake sale happens, people will show more interest in the scrip, because as of now with 51 per cent with us and over 47 (per cent) with the government, there is hardly any free float to give value to shareholders,” Kumar said.

When asked about the IPO’s timing, Kumar refused to give any timeline. “Yes, the finance secretary was on record saying listing will happen in the H2 of FY21. We have to work it out. I don’t know how long it takes for the very simple reason that we are doing for the first time,” he said.

Finance secretary Rajiv Kumar had on Sunday said the LIC IPO may be done in the second half of FY21. The LIC chairman said the listing would need some legislative changes in the LIC Act. “Basic amendment to the LIC Act would be required,” he said.

Explaining further, the corporation’s appointed actuary Dinesh Pant said, “LIC (Act) has got a Section 24 where the entire fund of the corporation is a controlled fund which is under one fund. So how will be now be bifurcated? There is Section 28 about dividend distribution and so all those things have to be taken care of.”

He also said it needs to be seen how Section 37, which talks about the sovereign guarantee, is amended. Spelling out the priorities in the run-up to the listing, he said the focus would be on creating the right perception in the market and to work on the process of valuation. He also said the policyholders and employees will not have any impact due to the listing.

Earlier this week, nearly 1 lakh employees of the corporation staged an hour-long walkout against the IPO plans.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

The problem with the allocation for education in Union Budget

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

“By 2030, India is set to have the largest working-age population in the world. Not only do they need literacy but they need both job and life skills,” said finance minister Nirmala Sitharaman in her budget speech on Saturday. Soon after, she said the government has earmarked Rs 99,300 crore for the education sector.

At first blush, apportion of this kind of money underscores the government’s seriousness about quality education. It increased funds for the sector by 5 percent from a year ago.

Government think-tank NITI Aayog’s CEO Amitabh Kant said that it’s not possible for India to grow over a long period of time and create jobs without a massive focus on nutrition, health and education.“Learning outcomes must improve radically… getting better quality teachers is critical,” he said at CNBC-TV18’s townhall with budget architects.

From the total kitty for education, Rs 3,000 crore has been set aside to develop the skills of Indians. Again, this is an acknowledgement that the most effective route for employment generation is education.

Remember, the government’s efforts to make India a manufacturing and export hub through the Make in India initiative has been hobbled by a severe shortage of skilled workers. Decades of neglect in education and training have left scores of industries with a deficit of skilled labourers.

“The specific recognition of skill development will reduce the gap between education and employability, which is likely to create a multiplier effect on India’s GDP,” said Nitish Jain, President, SP Jain School of Global Management.

Now, urban local bodies will provide one-year internships to engineers and a so-called Project Preparation Facility for infrastructure projects will recruit young engineers and management graduates.

So far so good.

Reading the fine print

But the devil is in the detail. The allocation to education in the government’s total spending has actually shrunk to 3.3 percent (budgeted estimate) this year from 3.5 percent a year ago.

Compare this to an Organisation for Economic Co-operation and Development (OECD) country. Members of this grouping of nations — mostly developed ones from Europe — spend an average of 4.5 percent. Not only has this kind of allocation fostered growth, but it has also spurred employment, studies show.

Dr Akhil Shahani of The Shahani Group that manages Thadomal Shahani Centre For Management said considering the urgent need for reaping India’s demographic dividend, the government should have at least allocated 5 percent of budgetary expenditure for improving our education system.

That apart, turns out that the government itself hasn’t provided more funds. Instead, it has proposed exploring the channels of external commercial borrowing (ECB) and FDI by education institutions, said the finance minister.

Independent, non-profit think-tank CBGA (Centre for Budget and Governance Accountability) is not pleased with this approach.  “The education budget has got its priorities wrong,” said Protiva Kundu of CBGA. Its budget analysis report said the draft National Education Policy emphasised the need for higher public investment and called for doubling the government’s spending over 10 years.

Yet, ECB and FDI routes have been preferred over public investment. This is not the right approach, according to experts and the government’s own findings.

The draft National Education Policy (NEP, 2019) emphasised the need for higher public investment, calling for doubling the government’s spending over 10 years.  The government has taken the eye off education in terms of investments compared with other developing states such as Sri Lanka and China, say experts.

It is alright to propose ECB and FDI routes to raise money to invest in education, but this should have been in addition to public investment, they said. If the government does not mention public investment, which has been recommended by the draft national education policy, it means it doesn’t consider education to be as important as the other sectors that get public investment, said Kundu.

At the CNBC-TV18 townhall, Kant said the government has done a lot of delegation on higher education. “All universities which have a score above 3.5 by UGC (University Grants Commission) have got complete autonomy to hire teachers. In due course, we should be able to get some outstanding colleges and universities.”

But what about school education?

The budget speech made no mention of the Right To Education (RTE). “The SMSA (Samagra Shiksha Abhiyan) Scheme for school children has remained underfunded. According to the Parliamentary Standing Committee report, the ministry of finance had approved an outlay of Rs 34,000 crore in 2018-19 and Rs 41,000 crore in 2019-20 for SMSA. However, in 2018-19, the Budget allocated a total of Rs 30,892 crore and Rs 36,322 crore in 2019-20,” said CBGA’s Kundu.

This year, a third of the SMSA budget will be financed through the education cess, collected as part of direct taxes.

Experts are concerned by two aspects here. One, the government’s direct tax collections are hardly kosher. Two, the poor record in using the cess. A Standing Committee report showed that of the Primary Education cess collected from 2004-05 to 2016-17, 6.8 percent was unspent, according to the latest figures available.

If the government is indeed committed to achieving its goals for ‘Aspirational India’, it will have to move education higher up on its priority list. ‘Education and skills’ deserve a higher share — and priority — in the government’s expenditure.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow