Tag: Finance Minister Nirmala Sitharaman

Centre’s fiscal deficit touches 58.9% of full year target at end-Jan

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

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The central government’s fiscal deficit in end-January worked out at 58.9 per cent of the annual budget target for 2021-22, according to official data released on Monday. The fiscal deficit was 66.8 per cent of Revised Estimate (RE) of 2020-21 during the corresponding period of the last fiscal.

Fiscal deficit—total money spent by the government in excess of the total income earned—is closely tracked by the bond markets and has implications for interest rates in the system.

In actual terms, the deficit was Rs 9,37,868 crore at the end of January 2022 against an upwardly revised annual estimate of Rs 15.91 lakh crore, according to the data released by the Controller General of Accounts (CGA).

The country’s fiscal deficit is projected to be higher at 6.9 per cent this fiscal ending March 2022 as against 6.8 per cent estimated earlier.

The total receipts of the government in end-January were Rs 18.71 lakh crore or 85.9 per cent of the Revised Estimates (RE) for 2021-22. The collection was about 80 per cent of the RE of 2020-21 in the corresponding period last fiscal.

The tax (net) revenue so far was at 87.7 per cent of the RE of 2021-22. It was 82 per cent of RE 2020-21 in the corresponding period of last fiscal. In actual terms, the net tax revenue stood at Rs 15.47 lakh crore during April-January 2021-22.

The CGA data further said the central government’s total expenditure at end-January stood at Rs 28.09 lakh crore or 74.5 per cent of this year’s RE. It was 73 per cent of RE in the corresponding period.

The fiscal deficit of the government for 2022-23 is estimated to be Rs 16,61,196 crore. The Revised Estimate for 2021-22 indicate a fiscal deficit of Rs 15,91,089 crore as against the Budget Estimate of Rs 15,06,812 crore.

The fiscal deficit for 2020-21 was 9.3 per cent of the Gross Domestic Product (GDP).

In her Budget 2022 speech Union Finance Minister Nirmala Sitharaman had said that the government had pegged the fiscal deficit for 2021-2022 at 6.9 percent of GDP and at 6.4 percent of GDP for 2022-23.

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

Centre cancels weekly auction of government bonds; here’s why

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

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The Centre has announced the cancellation of this week’s auction of government bonds, which was slated to take place on February 11. The decision, which was taken in consultation with the Reserve Bank of India, comes as the Centre sees a weak cash position. The move has been seen as an indicator of the government not wanting to allow bond yield rates to climb even higher than the highs that it is currently witnessing.

“On review of the Government of India’s cash position, it has been decided, in consultation with Reserve Bank of India, to cancel auction of all the Securities scheduled to be held on February 11, 2022 as per the calendar for issuance of Government of India Dated Securities during Second Half of the current Financial Year,” Ministry of Finance said in a statement on Monday evening.

What does this mean?

The government had earlier planned to auction Rs 24,000 crore worth of debt through bond issuance, according to the schedule on the RBI calendar. Around Rs 10,504 crore of this amount was already sold last week, according to auction results published by the RBI on Friday.

But the government may have halted the sale of further bonds as bond yields inched to 6.95 percent on Friday before settling as 6.88 percent at close. This was after bond yields hit a two-and-a half-year high of 6.89 percent on Thursday.

Higher yields mean that the debt burden on the government increases as a result of the bond. The government is looking to keep yields in check and one way of doing this is to restrict further bids of bonds for the time being. The method seems to be already effective as bond yields have started to dip as a result.

The bond yields had seen a jump of 20 basis points (bps) after Finance Minister Nirmala Sitharaman announced during the Budget presentation last week that the Centre would undertake a massive borrowing programme of Rs 14.95 lakh crore in the upcoming fiscal.

Read Also | Explained: How rising bond yields impact stock markets

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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

India to soon have battery swapping policy for EVs, a concept popular in China, Europe

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

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

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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

Budget 2022: Tax evaders cannot get loss set off on undisclosed income, says FM Nirmala Sitharaman

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

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As part of its continuing efforts to make tax evasion unattractive, the government has said that losses in previous years cannot be set off against tax liabilities on undisclosed income.

“Presently, there is ambiguity regarding set off, of brought forward loss against undisclosed income detected in search operations,” Finance Minister Nirmala Sitharaman said in her Budget speech on Tuesday.

“It has been observed that in many cases where undisclosed income or suppression of sales etc. is detected, payment of tax is avoided by setting off, of losses. In order to bring certainty and to increase deterrence among tax evaders, I propose to provide that no set off, of any loss shall be allowed against undisclosed income detected during search and survey operations,” she added.

Sitharaman clarified that any surcharge or cess on income and profits were not allowable as business expenditure. Her comment was in the context of some courts ruling that health and education cess can be treated as business expenditure.

“Income-tax is not an allowable expenditure for computation of business income. This includes tax as well as surcharges,” Sitharaman said.

“To reiterate the legislative intent, I propose to clarify that any surcharge or cess on income and profits is not allowable as business expenditure,” she said.

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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

Union Budget 2022: FM Sitharaman boost to infra projects; 25,000 km roads to be constructed in 2023

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

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Finance Minister Nirmala Sitharaman in her Budget 2022 speech announced a slew of investments on infrastructure. On February 1, the finance minister said, “PM Gati Shakti is driven by seven engines i.e. roads, railways, airports, ports, mass transport, waterways and logistics infra. All seven engines will pull forward the economy in unison. Supported by energy transmission, IT communication, bulk water and sewerage and social infra.”

To boost the infrastructure sector, Sitharaman has allocated Rs 20,000 crore for national highway expansion. “In 2023, 25,000 km additional national highways will be constructed,” she said.

She also announced an allocation of Rs 44,000 crore on Ken Betwa river project.

Follow our LIVE blog here for all the latest updates on Union Budget 2022.

Presenting the Union Budget 2022-23, Sitharaman said the government would lay the foundation for economic growth through public investment as the country is on the road to recovery amid the COVID-19 pandemic.

Apart from the highway expansion programme, she said that 400 new trains will be manufactured over the next three years.

According to the Economic Survey presented in Parliament on January 31, India needed to spend approximately $1.4 trillion over the next three to four years to achieve its ambitious $5 trillion GDP by financial year 2025.

The Economic Survey mentioned that although India pumped in $1.1 trillion on infrastructure between 2008 until 2017, it now needed to step up infrastructure investments substantially.

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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

Budget 2022: When and where to watch Finance Minister Nirmala Sitharaman’s speech live

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

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Finance Minister Nirmala Sitharaman will present the Union Budget 2022 at 11 am on February 1, 2022 in Parliament. This will be her fourth budget presentation. The FM will be presenting a paperless budget this year as well, after she ditched the traditional ‘Bahi Khata’ that she had carried along with her in previous budgets. She had carried a Made in India tablet to present her budget last year, amid the COVID-19 pandemic.

Catch all the latest updates on the 2022-23 Union Budget here.

When and where to watch Finance Minister Nirmala Sitharaman’s Budget Speech LIVE?

The Budget 2022 will be presented on February 1 at 11 am. It will be telecast live on Lok Sabha TV (Sansad TV) the official parliament channel and on Doordarshan. You can click here to watch the Budget Speech LIVE on CNBCTV18.com at 11 am. The speech can be viewed on Twitter and YouTube as well.

The 2022-23 Union Budget session of Parliament commenced on January 31 with President Ram Nath Kovind’s address to both Houses. Following the president’s speech, Sitharaman tabled the Economic Survey 2021-22 in Parliament. The survey has forecast an 8% to 8.5% economic growth for the FY22-23.

Brief history of India’s Union Budget

The first budget in Independent India was presented by then Finance Minister RK Shanmukham Chetty on November 26, 1947. Since then, there have been 73 annual budgets, 14 interim budgets and four special or mini budgets.

Even as Budget speeches last for close to the two hours, Sitharaman has delivered lengthy speeches so far. In 2020, she spoke for 2.40 hours. Although her speech commenced at 11 am, she ended it around 1:40 pm, despite a few pages remaining as the speech was incomplete. She had broken her own 2019 record of making India’s longest Budget speech.

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

Union Budget 2022: Date, time and other key details

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

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-with agency inputs

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

View | Union Budget 2022: FM needs to rein in rising fiscal deficit, address key industry issues

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

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With the Union Budget for the 2022-2023 financial year being announced in a few days, the ICRA estimates that the Government of India’s total expenditure at Rs 38.2 trillion. With the economic recovery lacking durability, it is imperative to kick-start the investment cycle, create employment opportunities and improve domestic demand.

With a view to take care of capital expenditure and infrastructure spending, the Union Budget 2022 should ring-fence the funds that can realistically be absorbed by the aforementioned expenditure. Such spending can be partly financed through a further pruning of centrally-sponsored schemes and central sector schemes.

In terms of the expectations of key sectors, the Union Budget may address some of the pending demands and concerns to broaden economic growth.

For the automotive sector, continued focus on rural infrastructure development and greater allocation for income support schemes may continue. Besides, emphasis on technology adoption, green vehicles adoption, local manufacturing to achieve ‘Make in India’, a thrust on sustainability technology are likely. The second wave of Covid-19 in Q1FY22 has derailed the sector’s demand recovery, which will need to be boosted through tax and other incentives. Also rising cost of ownership and the semiconductor chip shortage need to be addressed. Further announcements to promote local manufacturing in relation to production-linked incentives (PLI) cannot be ruled out.

Also read: Government’s focus on ‘Atmanirbhar Bharat’: An area to watch out for automotive sector

In the banking and finance sector, more clarity on impending privatisation of IDBI Bank and two PSBs will be welcome. While further capital infusion in PSBs in FY2023 is unlikely after the Rs. 3.36 trillion infusion over the past six years, operationalisation and scaling-up of the National Asset Reconstruction Company Limited (NARCL) and the National Bank for Financing Infrastructure and Development (NABFID) will help channelise more resources to productive sectors. Liquidity/funding schemes for non-banking financial companies (NBFCs), which account for 25 percent of the credit exposure in the country, will have to be examined. Also, the creation of a permanent re-finance window from the RBI should be looked into. The Budget is expected to continue with some of the liquidity and guarantee schemes to ensure near-term funding availability for the NBFCs and to provide guidance on the medium-term support framework for the sector. The Housing for All Scheme too is likely to continue.

In the agri sector, enhanced support for improving farmers’ income is likely. Budgetary allocation to meet the estimated fertiliser subsidy outgo of Rs 1,300-1,400 billion for FY23 amid elevated international prices may be necessary. Clarity on the roadmap for improving domestic production of phosphatic fertilisers through policy changes is required. In addition, rationalisation of the import duty on phosphoric acid, ammonia and natural gas to improve competitiveness of the domestic fertiliser industry is necessary.

Also read: Budget 2022: Food and fertiliser subsidies likely to remain on higher side

Of the more significant sectors, infrastructure needs increased budgetary allocation for various sub-sectors and the NHAI for timely implementation of the National Infrastructure Pipeline (NIP). Further, steps to ensure long-term funds and capital infusion to the NABFID and the National Investment and Infrastructure Fund (NIIF) are likely to play an important role. Steps to attract private sector investments, including speedier resolution of claims/disputes etc., will go a long way in improving private sector sentiments, which is expected to play a crucial role in the NIP. The Government may allow select infrastructure companies/finance companies to raise long-term funds in the form of Infrastructure Bonds/Tax-free Bonds.

In the oil and gas segment, rationalisation of cess, which currently stands at an ad-valorem rate of 20 percent, needs to be considered. Also, there is a need for creation/provision of a floor for domestic gas prices governed by the modified Rangarajan formula, as the cost of producing gas is higher than the price of gas. The industry has been demanding exemption of royalty, cost petroleum and profit petroleum from GST levy and exemption of exploration and development activities. The crude oil, natural gas and petroleum products have to be brought under the GST cover to avoid stranded taxes. To encourage use and consumption of LNG, customs duty on imported LNG should be reduced.

Also read: Budget 2022: Seek measures to boost domestic oil and gas production, says Cairn India CEO

In the real estate sector, continuation and expansion of income tax benefits for housing loans can improve affordability. Further, increased budgetary allocations for housing schemes such as Pradhan Mantri Awas Yojana (PMAY) and concessions on income from renting of housing properties and removing taxation on notional rental income can further boost demand for new properties. More augmentation of budgetary allocation for the SWAMIH fund will support completion of the large stalled real estate projects in the country. The government could do well if it sped up the process of unlocking land bank with the PSUs and government agencies. On the commercial real estate front, more initiatives towards improving the ease of access to debt capital and enhance retail participation can channel more investments into this segment.

ICRA estimates the GoI’s fiscal deficit at Rs 15.2 trillion or 5.8 percent of the GDP in FY23. Adding the state governments’ fiscal deficit, which is expected to rise to 3.5 percent of GSDP (cap set by 15th Finance Commission), in light of the planned ceasing of GST compensation, implies a general government deficit of ~9.3 percent of GDP in FY23, requiring gross market borrowings of Rs 22.6 trillion. This is likely to put pressure on yields in the bond markets.

— The author, K Ravichandran, is Chief Ratings Officer, ICRA Limited.

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