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When Narendra Modi talked about the “empty coffers” left behind by the UPA, P Chidambaram, who was in charge of the coffers till 26 May 2014, claimed this was nonsense. He claimed he was leaving Rs 26,510 crore in cash for the Modi administration in contrast to the negative cash balance left behind by the previous NDA government in 2004.
Chidambaram said: “The opening cash balance on June 1, 2004, just after NDA government demitted office, was negative Rs 2,730 crore. On the other hand, the opening cash balance on June 1, 2014, just after UPA demitted office, was Rs 26,510 crore. We do not subscribe to the empty coffers theory but for the sake of argument, we would like to ask who left behind an empty treasury.”
Perhaps, the former finance minister was being too clever by half. He, of all people, should know the difference between leaving a positive “cash balance” and huge unpaid liabilities which will have to be paid by the next government.
A “cash balance” makes no sense if you have unpaid bills. Its like keeping money in the bank while accumulating huge debts on your credit card. The cash balance is thus notional and fictitious.
The government today (30 June) released the fiscal deficit figures for April-May 2014 which show the real state of the exchequer. According to a Reuters report, in just the first two months of this year – April and May, when the UPA was holding the fort – the fiscal deficit soared to 45.6 percent of the whole year’s budgeted figure.
In April and May, the fiscal deficit touched Rs 2,40,837 crore as against Chidambaram’s budgeted figure of Rs 5,28,631 crore budgeted in his interim budget for the whole of 2014-15.
This means his successor Arun Jaitley, who has a drought and an Iraq oil situation to contend with, will have to get by with just Rs 2,87,794 of deficit leeway for the remaining 10 months of this year. If this is not empty coffers, one wonders what is.
If we deduct Chidambaram’s positive “cash balance” of Rs 26,510 crore as on 1 June from the April-May fiscal deficit figure, we would still end up with a fiscal deficit net of the cash balance at Rs 2,14,327 crore. This would be a high 40.5 percent of the whole year’s fiscal deficit target. Last year, the fiscal deficit for the same period was 33.3 percent.
If you spend 40 percent of your year’s deficit target in two months, what are you essentially leaving for the next government beyond empty coffers?
And remember, this fiscal deficit may also be fictitious, since Chidambaram is known to have cooked his books.
According to the data released today (30 June), net tax receipts were at Rs 28,651 crore while expenditures were in the region of Rs 2,80,000 crore – that is, net tax receipts were just a tenth of total government expenses. Even assuming in an election year the government had to spend more than usual in April and May, and tax refunds are high, this is a disastrous gap.
That’s not all. The eight core sector industries reported just 2.3 percent growth in May, against 4.2 percent in 2013. Core industries include coal, power, crude oil, fertiliser, natural gas, steel, cement, and petroleum refining, and they account for 38 percent of the Index of Industrial Production. This suggests that industrial production may continue to head downhill in the initial months of the NDA government as well.
Chidambaran not only leaves “empty coffers” but a decelerating revenue base and a gutted economy.
This level of fiscal deficit means Jaitley has very little leeway in raising expenses for pet schemes without upsetting the rating agencies. He will have to drastically up the revenues from asset sales to increase capital spending and revive the economy.
* Location swap to boost offshore holdings
* Gold from RBI vaults to be sold on local market - sources
* Eases supply squeeze following gold import curbs
If estimates are overshot by 300%, this looks like another instance where the EOW needs to use IPC 409 to investigate the finance ministry. There must be another side to the story.
I'm confused.Austin wrote:India central bank seeks to swap gold to improve reserves quality
* Location swap to boost offshore holdings
* Gold from RBI vaults to be sold on local market - sources
* Eases supply squeeze following gold import curbs
MUMBAI, July 2 (Reuters) – India’s central bank said on Wednesday it has sought quotes from banks to swap gold in its own vaults for international-standard gold (What does "international-standard gold mean?? Are the gold bars held by central banks different from what RBI holds?), aiming to improve the management of its reserves.
The Reserve Bank of India said the operation would “standardise the gold available with RBI in India with respect to international standards” and the gold acquired would be delivered to its overseas custodian, the Bank of England (Why are these thugs acting as custodian?? Is it Ecuador style liquidity trade with Goldman Sachs??)
By holding gold reserves in London, the RBI would gain flexibility to mobilise them if needed to defend the currency (Does it mean Rajan is anticipating liquidity crunch?? Umhh!!). It shipped some of its gold holdings to Britain in 1991 as part of a series of emergency measures to tackle a financial crisis
ndia’s chemical industry has an immense potential to become a reliable exporter of quality products, a top government official said as he stressed on the need for companies in the sector to comply with environmental norms for sustainable growth.The meet was called to take stock of preparations for the largest event of chemicals and petrochemical industry in India. The chemicals industry is expected to grow at 11 per cent per annum and reach a size of $224 billion by 2017 from the current $108.4 billion, the representatives said.Speciality chemicals is the fastest growing segment in the industry. These are high value, low-volume chemicals known for their end-use applications and performance enhancing properties, the senior IAS officer said.There is an immense potential for increasing consumption within the country and make India a reliable exporter of quality chemicals, he added.“India Chem is an important platform for networking, exchange of ideas, creation of awareness of new products and technologies, and exploration of possibilities for enhancement of trade,” Pal said. The event provides an excellent opportunity for the industry to showcase its capabilities and strengths to the world. “The focus for this year’s event will be on growth with emphasis on sustainability and green chemistry,” he said.Pal said the work on setting up a Petroleum, Chemicals and Petrochemical Investment Region (PCPIR) at Dahej in adjoining Bharuch district, about 90km from Vadodara, is in the final stages of implementation.The project, approved in 2009, seeks to attract investments worth Rs 70,000 crore, he added.Addressing the gathering, Deepak Mehta, Chairman of FICCI Committee on Chemicals Industry, spoke about delay in getting approval from environmental authorities
(Jairam Mahish) for setting up units.
two points:udaym wrote:I'm confused.
MUMBAI, July 2 (Reuters) – India’s central bank said on Wednesday it has sought quotes from banks to swap gold in its own vaults for international-standard gold (What does "international-standard gold mean?? Are the gold bars held by central banks different from what RBI holds?), aiming to improve the management of its reserves.
The Reserve Bank of India said the operation would “standardise the gold available with RBI in India with respect to international standards” and the gold acquired would be delivered to its overseas custodian, the Bank of England (Why are these thugs acting as custodian?? Is it Ecuador style liquidity trade with Goldman Sachs??)
By holding gold reserves in London, the RBI would gain flexibility to mobilise them if needed to defend the currency (Does it mean Rajan is anticipating liquidity crunch?? Umhh!!). It shipped some of its gold holdings to Britain in 1991 as part of a series of emergency measures to tackle a financial crisis
India's new government will seek to raise up to a record $11.7 billion in asset sales in its maiden budget this week, a senior government source said, bolstering state finances and buying time for structural reforms to revive a weak economy.
The privatization target could reach 700 billion rupees, almost equal to all proceeds over the last four years, in a budget Prime Minister Narendra Modi hopes will launch the growth and jobs agenda that in May won him India's biggest election mandate in three decades. The budget is due on Thursday.
"The finance ministry has approached different ministries to increase the divestment target," said the senior official with direct knowledge of the budget process. The previous government had penciled in sell-off proceeds of 569 billion rupees ($9.5 billion).
The 63-year-old premier has made a decisive start by naming a streamlined cabinet, approving a slew of infrastructure projects and embarking on what promises to be a whirlwind first year of trade diplomacy.
One of the best news so far, Great fillip to manufacturing industries. These laws date back to Independence with their roots in British laws tabled in the 1800's. Makes it hard for desi manufacturing industries to grow.(Idiotic rules like Govt clearance must be had when Downsizing-The clearance is rarely granted)Suraj wrote:Labour reforms are coming:
India's Modi eyes first labor overhaul in decades to create jobsPrime Minister Narendra Modi has set in motion the first major revamp in decades of India's archaic labor laws, part of a plan to revive the flagging economy, boost manufacturing and create millions of jobs.
Successive governments have agreed labor reform is critical to absorb 200 million Indians reaching working age over the next two decades, but fears of an ugly union-led backlash and partisan politics have prevented changes to free up labor markets.
Now, with the benefit of a single party majority in the lower house of parliament for the first time in 30 years, laws that date back to just after the end of British rule are set for an overhaul. Officials at the labor ministry say this is a top priority in the government's first 100 days in office.
India has a forest of labor laws, including anachronisms such as providing spittoons in the work place, and are so complex that most firms choose to stay small. In 2009, 84 percent of India's manufacturers employed fewer than 50 workers, compared to 25 percent in China, according to a study this year by consultancy firm McKinsey & Co.
Finance minister Arun Jaitley and his UK counterpart George Osborne on Tuesday agreed on a Pound one billion line of credit for infrastructure project developers in India who are keen to avail credit for importing inputs from UK at competitive rates, a joint India-UK statement issued here said.
Jaitley and the UK Chancellor of the Exchequor also agreed to collaborate on developing India's corporate bond market and to exchange tax related information automatically from 2017.
The proposed line of credit is from UK Export Finance (UKEF) to support Indian infrastructure projects such as the Bengaluru-Mumbai Economic Corridor (BMEC), said the statement.
“Also, 10 global banks are in discussions with UKEF to deliver government funded loans through a £3bn direct lending scheme, with more banks expected to join them in the coming weeks. This will provide competitive finance to purchasers of UK exports in India,” said the statement.
Also, design of a London based infrastructure debt fund that would invest in India's infrastructure projects is also on the cards.
Both the finance ministers also agreed on co-operating on issues of tax evasion. The two countries would begin exchanging tax information on an automatic basis from 2017. The decisions were taken at the seventh round of India-UK economic and financial dialogue held in the capital. The next round of discussions would be held in 2015 in London.
April-May revenue deficit at 54% of Budget targetFinance Minister Arun Jaitley said on Tuesday that efforts would be intensified to recover uncollected taxes of past years and that government's fiscal deficit needs to be kept at an acceptable level through expansion of economy and tax buoyancy rather than by contracting expenditure.
The minister said while replying to supplementaries during Question Hour in the Rajya Sabha that fiscal prudence was required to prevent extra borrowing to finance current expenditure. Jaitley's statement comes closer to his maiden budget scheduled for Thursday, which is unlikely to contain many populist measures.
"And, the current acceptable level, which by the FRBM Act, is that you have to move towards a fiscal deficit of 3%," said the minister. The interim budget for 2014-15 had projected a fiscal deficit of 4.1% for the current year, down from the revised estimate of 4.6% for 2013-14. The level of fiscal deficit during the current year up to May is Rs 2,40,837 crore, which is 45.6% of Budget Estimate of 2014-15, the minister said.
The minister said he would personally have been happier if the containment of fiscal deficit takes place by expansion of the economy, by greater tax buoyancy and by greater tax collection, rather than by contracting expenditure. [/b]
The Centre's revenue deficit - the excess of non-capital expenditure over non-capital revenues - constituted about 54 per cent of the interim Budget target for FY15 in just two months of the financial year, presenting a reality check for Finance Minister Arun Jaitley ahead of the Budget. As a percentage of Budget estimate (BE), the revenue deficit stood at a six-year high in the first two months of the current financial year.
The revenue deficit stood at Rs 2.05 lakh crore in April-May against Rs 3.82 lakh crore projected for the entire financial year by Chidambaram. It constituted 85 per cent of the fiscal deficit in the first two months. For the entire financial year, the revenue deficit was projected to account for 72 per cent of the fiscal deficit.
BRICS Bank about to take off. We should try to get the headquarters established in New Delhi.Russia, China, India Ready to Launch Rival to World Bank
By Damien Sharkov
The long-awaited BRICS development bank is expected to finally be launched next week, Russian finance minister Anton Siluanov confirmed today.
The joint project will see the emerging economic powers of Brazil, Russia, India, China and South Africa establish an alternative to the World Bank, in an attempt to ensure economic stability should the U.S. dollar continue to fluctuate.
The ‘New Development Bank’ project will see each of the founding countries contribute $2 billion to the bank’s funds over the next 7 years, with the bank’s maximum capital set at $100 billion.
Non-BRICS countries will be invited to join as members once the New Development Bank opens for lending in 2016, said Siluanov.
The bank’s stated aim is to keep emerging economies stable, serving as a counterweight in the case of disruptive capital outflow. The project presents a new step away from economic dependence on the U.S. by the BRICS countries.
The launch of the New Development Bank comes after growing mistrust by BRICS leaders of the World Bank, which they have accused of being too concerned with the Euro-Atlantic economic agenda.
The bank will be launched at a BRICS summit in Fortaleza, Brazil next week, said Siluanov, with all but the decision on the main headquarters’ already agreed.
The two options currently being considered are Shanghai or New Delhi, reported ITAR TASS. Russia has stated no preference but will aim to retain involvement by dominating at the managerial level.
Siluanov also confirmed that plans for a separate BRICS project, planned as an alternative to the International Monetary Fund. A joint contingency currency pool between the five BRICS countries is on the agenda at Fortaleza, which would see a further $100 billion become available to any member in proportional installments.
"In current conditions of capital volatility, it is important for our countries to have this buffer in addition to the International Monetary Fund," Siluanov said.
The pool will become available in 2015 and will see each BRICS country putting in as much of a proportion of the total capital as it would be allowed to withdraw, except for China and South Africa, the largest and smallest contributor, respectively.
China will only be able to access half of its $41 billion, while South Africa will be able to withdraw twice the amount of its $5 billion investment. Russia, India and Brazil will each chip in $18 billion from their foreign exchange reserves and be able to withdraw all of it back.
"It is to be a mechanism that could react swiftly to capital outflow by offering swap operations... in dollars," said Siluanov.
The BRICS development bank was first discussed as a possibility in 2012 but progress has been slow, marred by disagreements over the organisation’s funding and leadership.
However India and China have both recently suffered slumps due to volatility in their foreign exchange markets, as cheap dollars flooded the market last year, prioritising the need for a more self sufficient BRICS union.
Similarly Russia’s increasingly austere trade relations with the US over the crisis in Crimea has seen it increase its efforts to establish economic ties elsewhere.
http://www.newsweek.com/russia-china-in ... ank-258058
Plus No change in tax rate; exemption limit raised by Rs 50,000Seeking to boost household savings, the government on Thursday hiked the exemption limit for investments by individuals in financial instruments to Rs 1.5 lakh.
Presently the investments and expenditures up to a combined limit of Rs 1 lakh get exemptions under Sections 80C, 80CC and 80CCC of the Income-Tax Act.The savings rate has come down from over 38 per cent of GDP in 2008 to 30 per cent in 2012-13.
The financial instruments which enjoy exemption include life insurance premium, public provident fund, employees provident fund, National Savings Certificates, repayment of capital on home loan, equity linked saving schemes sold by mutual funds and bank FDs of five year maturity.
Are you mixing up the transfer of gold in 90s with the current step? The current step from the news seems to suggest converting non-International-Standard gold reserve into IS gold reserve, at the same time reduce gold smuggling. IIRC, the 90s gold transfer was to get loan/cash since we were at record low forex reserves.chandturakhia wrote:Austin wrote:India central bank seeks to swap gold to improve reserves quality
>>>> Reason Why I want Madhu Dandavate to be remember............
BRICS bank to be headquartered in ShanghaiRoyG wrote:BRICS Bank about to take off. We should try to get the headquarters established in New Delhi.
There is nothing innovative, no big bang items, lost opportunity. /sarc offGus wrote:Budget discussion?
Au contraire! I am loving this budget. The focus is on infrastructure (more roads, acquire land before awarding contract, etc.), quality education (IITs and IIMs), improving cities (mid-size ones), increasing investment (more FDI), increasing domestic savings (80c, etc.), fiscal prudence (reduced deficit and no lavish tax reduction) See comparison herehanumadu wrote: There is nothing innovative, no big bang items, lost opportunity. /sarc off
Sirjee, that was a post made in sarcasm.Uttam wrote:Au contraire! I am loving this budget. The focus is on infrastructure (more roads, acquire land before awarding contract, etc.), quality education (IITs and IIMs), improving cities (mid-size ones), increasing investment (more FDI), increasing domestic savings (80c, etc.), fiscal prudence (reduced deficit and no lavish tax reduction) See comparison herehanumadu wrote: There is nothing innovative, no big bang items, lost opportunity. /sarc off
I think the focus is on delivering rather than promising. Remember that a budget is just a proposal (promises) made with a lot of fanfare. Delivering it is a totally different issue. Just look at the disinvestment targets made in last 10 years and how many were achieved. I believe Modi's philosophy is to promise small but deliver, make incremental progress but deliver, keep some of the social programs of previous government but deliver on them more efficiently. To me the real judgement about this budget will come at the end of this fiscal year.
Sirjee, that was a post made in sarcasm.[/quote]hanumadu wrote:
Karan M wrote:DRDO budget up by 77%!! Finally some good thinking by GOI!! Good change from the previous Govt.
Rs 9298 Crores @ $1.5 Bn from approximately $800 Mn levels earlier
http://indiabudget.nic.in/ub2014-15/eb/sbe27.pdf
Agreed RoyG, that is why I wroteRoyG wrote:Eh, the big change in defense is going to come from Indian industry slowly moving in. DRDO budget raise is ok, especially for strategic missile development, disruptive tech, etc. but on the whole nothing is going to beat a competitive university system and the private sector working together. Indian industry also needs to replace the OFB and other PSU's which are just not producing quality items for the individual soldier. Next gen ballistic helmets and patkas, rifles, grenades, ammo vests, bullet proof vests, boots, etc. Manufacturing side needs to move away from government control and into private hands wherever possible and the procurement process needs to be streamlined.
However there are areas where DRDO (read Govt) has to put money and that is why this 77% is very good news.49% FDI in defence combined with removal of license requirement of 100s of defences items a few days back is going to go a long way to revolutionize desi MIC.
Aren't Volvos produced in a factory not far from Bangalore??.Singha wrote:JNURM was instrumental in helping blr get its showpiece and calling card over other metros - the network of Volvo buses. blr has a lot more volvos than marcopolo or tata/AL buses. perhaps the only city in india with so many comfortable high end public buses.
Yes, its on Old Madras Road IIRC.chetak wrote:Aren't Volvos produced in a factory not far from Bangalore??.Singha wrote:JNURM was instrumental in helping blr get its showpiece and calling card over other metros - the network of Volvo buses. blr has a lot more volvos than marcopolo or tata/AL buses. perhaps the only city in india with so many comfortable high end public buses.
May be saving entry and other taxes.
It should have been Rs 108 crores .Theo_Fidel wrote: BTW it also seems like Rs 100 crore has become a talisman for this budget.
100 crore for metro in Lucknow & Ahmedabad?
100 crore for training rural youth. Assume this is the ITI thing. Kinda pointless amount really.
100 crore for DMIC smart cities. What the...
100 crore modernize madrassa's. Really...
100 crore for virtual classrooms. What...
