India Budget 2021 News and Discussion

[yensoy]

^^^^ The post-inflation returns on above printing has to pencil out. They did that in China spectacularly, invested in themselves by borrowing heavily from their own people, yet managed to keep inflation in check (other than real estate inflation) because the money was used wisely in building infrastructure, subsidising productive industries, pushing exports, improving education & skilling, and ensuring public safety. No reason why we can't replicate it but it is a big bet with potential short term pain felt by some parties affected by reforms. Even a basic reform of the public food procurement process can't be taken without massive upheaval and political fallout, so it seems.

[Suraj]

The interest outgo problem is being addressed by the government switching the EPF from a defined benefit plan (i.e. 'you get x% return on the money' to a defined contribution plan, where people can put more money in, but where returns are more market driven, reflected in the large ETFs that EPFO invests in. E.g. 401Ks are defined contribution plans, since the rules say how much you can put in a year, but your returns are dependent on what you invest it in, and what's available to invest in.

I haven't looked at how much of total return on EPFOs portfolio or the general Indian market is driven by capital appreciation vs dividend and interest income. The tax rule appears to specifically target the latter, not capital gains. That's probably an effort to push people into capital gains driven choices in their portfolio as opposed to 'safe' fixed return gilt options that the government has to budget for.

[Mollick.R]

X post.......
Exclusive | Govt won't own or fund 'Bad Bank’, loans worth Rs 2.25 lakh crore to be shifted to new entity

The government is preparing to bring stressed assets worth Rs 2.25 lakh crore under the proposed ‘Bad Bank’. The entity which will be entirely funded and managed by commercial banks, said two top bureaucrats in an exclusive interaction on February 2. As per the plan, bad loans above Rs 500 crore will be brought under the entity from 68-70 accounts, they said. The entity will be floated soon.
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The funding will be done by banks from both the private sector and the public sector, they said. It is not clear what is initial capital estimated for setting up the Bad Bank.

Read full article from MoneyControl
https://www.moneycontrol.com/news/busin ... 33831.html

[Vips]

Sitharaman becomes the first Finance Minister to come clean on food subsidy⁠— a loophole that hid billions of dollars earlier.

The Food Corporation of India (FCI) funds its loss on account of food subsidy, with loans from the National Small Savings Fund, which is the money owed to the country’s small depositors.

The Food Corporation of India (FCI) sells food grains to ration card holders at a nominal price that is much lower than what it pays the farmers. FCI funds this loss it incurs, on account of food subsidy, with loans from the National Small Savings Fund, which is the money owed to the country’s small depositors.

The debt is accounted as one owed by FCI, and not the government, even though FCI is fully owned by the government.

This is one of the many ways in which India’s Finance Ministers have hid the real state of the country’s finances for years.

However, Sitharaman has put a stop to this practice. “We have explained everything and we have not brushed anything under the carpet,” Sitharaman said.

[Kati]

Need some reliable info on the latest PF matter.
Commies are spreading lies that the contributions exceeding 2.5 lakhs is going to be taxed by the GoI. But I believe it is the interest only to be taxed.
Thanx in advance.

[Srutayus]

Shekar Gupta did a good talk on this budget.https://www.youtube.com/watch?v=2SUI_eX6rWE&t=939s
He is still enough of a journalist to rise above his personal prejudices and his deplorable set of "friends."

[Mort Walker]

The Dearness Allowance for military, police and central government employees will be reinstated in July 2021. Does anyone here have any information on that? A lot of JCOs rely on that for their families. It needs to be restored ASAP.

[vipins]

The Dearness Allowance for military, police and central government employees will be reinstated in July 2021. Does anyone here have any information on that? A lot of JCOs rely on that for their families. It needs to be restored ASAP.

AFAIK , DA is not stopped, only increment on DA was freezed.

[LakshmanPST]

The Dearness Allowance for military, police and central government employees will be reinstated in July 2021. Does anyone here have any information on that? A lot of JCOs rely on that for their families. It needs to be restored ASAP.

The rate of DA was freezed for all Central Govt. Employees... Normally, DA is revised every three months... That revision exercise has been stopped...
The increment normally will be around 1-2% of basic only... Not much difference individually...

[Mort Walker]

^^^Thanks. What about military, paramilitary and central police forces?