Bharat Rakshak

Yagnasri wrote:So we are increasing taxes at the same time when petrol prices are likely to go up in a big way. Politically very hard to defend.

Oil Shock Risks Becoming ‘Nightmare’ for India’s Central Bank
Anup Roy and Vrishti Beniwal


(Bloomberg) -- The Ukraine war’s impact on global supply chains could force India’s central bank to raise its inflation forecast, but may leave little scope for it to tighten monetary policy amid a deteriorating global growth outlook, according to economists.

The surge in edible and crude oil prices are bound to feed into headline inflation, which has already breached the upper tolerance limit of the Reserve Bank of India’s 2%-6% target range. While the RBI has blamed supply side shocks for the spike, higher prices will nevertheless eat into disposable incomes of consumers, the backbone of the economy that has yet to fully start spending after the pandemic.

“This is the policy maker’s nightmare -- risk of persistent inflation, alongside a very uneven and unsatisfactory growth,” said Ananth Narayan, senior India analyst at Observatory Group, an economic and political advisory firm.

With crude prices over $100 a barrel and amid geopolitical uncertainty, Narayan sees it possible for retail inflation to average 6% next fiscal year beginning April -- instead of the 4.5% forecast by the RBI. India, which relies on imports to meet about 85% of its oil needs, is expected to let pump prices rise once key state elections wrap up this month.

“Inflation numbers purely based on oil prices could head higher if the government decides to pass on even half of the impact,” said Soumya Kanti Ghosh, an economist at State Bank of India.

A 10% increase in retail prices of gasoline, diesel and liquefied petroleum gas could result in a 50 to 55 basis point rise in headline consumer prices over the course of a year, according to estimates by Saugata Bhattacharya, chief economist at Axis Bank Ltd.

Still, the central bank may stay away from raising interest rates as it reconciles its roles of fighting inflation, supporting growth and managing the government’s debt issuance. The global market volatility following Russia’s invasion of Ukraine is already upsetting India’s budget math, stoking concerns the administration may need to rely on additional borrowings to make up for any shortfall.

Prime Minister Narendra Modi’s government is rethinking the timing of its proposed share sale in Life Insurance Corp., which could deprive it of revenue and enlarge a budget deficit that’s already one of the widest in the world.

Although India has, for now, ruled out borrowing more this fiscal year to bridge the gap, its debt plan for the year beginning April 1 is at a record, making cheaper interest rate an imperative.

“Sharp rise in energy prices and pass through impact of other commodity prices will create more challenges for growth-inflation dynamics,” said Soumyajit Niyogi, associate director at India Ratings and Research. “Though the global central banks could still go for monetary tightening, domestically RBI is expected to continue with wait and watch policy.”

More Risks

Crude is not the only problem. Record cooking oil prices in global markets are complicating the job of policy makers. The sharp rise in prices of commodities has started seeping into domestic prices, with cooking oil prices, particularly that of sunflower oil, rising by as much as 25 rupees (33 cents) a liter. Ukraine and Russia account for about 80% of world sunflower oil cargoes.

Prices of commercial liquefied petroleum gas were revised up by 105 rupees at the start of this month, while cooking gas prices are expected to witness a sharp revision in April. India’s most popular dairy brand Amul hiked milk prices by 2 rupees a liter this month, citing higher costs for energy, packaging, logistics and cattle feed. Meanwhile, home appliances companies are citing intensive supply chain disruptions to raise prices.

The crude oil price shock can shave off as much as 60 basis points of economic growth in India, according to Anubhuti Sahay, Mumbai-based South Asia chief economist at Standard Chartered Plc.

Despite price pressures, the RBI has maintained an accommodative stance to support growth, drawing criticism from some quarters that it could fall behind the curve. Jayanth Rama Varma, the lone dissenter among India’s monetary policy setters, has said the central bank’s inflation-targeting credibility is at risk if it keeps policy loose for too long.

Governor Shaktikanta Das, however, said in a speech Friday that the RBI has acted in line with its domestic growth-inflation dynamics.

suryag wrote:Ambar ji - please throw in some statistics to substantiate your "feels like 2010" comment, without data this is like those useless whatsapp forwards high on rhetoric/punch dialogues and low on substance.

hgupta wrote:India needs to create an independent smartphone OS with its own App Store to avoid the blackmail and vulnerability of having its entire smartphone ecosystem being subjected to U.S. hegemony and hamfisted approach of control. Otherwise India would be forever at the mercy of US and that’s not a good situation to be in.

rajkumar wrote:

hgupta wrote:India needs to create an independent smartphone OS with its own App Store to avoid the blackmail and vulnerability of having its entire smartphone ecosystem being subjected to U.S. hegemony and hamfisted approach of control. Otherwise India would be forever at the mercy of US and that’s not a good situation to be in.

Not worth it. Microsoft tried and failed. Apple App Store & Android App store have too much of a head start

India had 8.22 crore taxpayers, which include individuals and corporates, in 2019-20, Finance Minister Nirmala Sitharaman informed the Rajya Sabha on Tuesday. "Total number of taxpayers for AY 2020-21 is 8,22,83,407. The projected total population of the country as on March 1, 2021 was 136.30 crore," Sitharaman said.

The number of taxpayers include persons who pay income tax and corporate tax and who have either filed a Return of Income or in whose case tax has been deducted at source.

Sitharaman further said the government has implemented the non-filers monitoring system (NMS) which assimilates and analyses in-house information as well as transactional data received from third-parties to identify such persons/entities who have undertaken high value financial transactions with potential tax liabilities but have not filed their returns.

"The (tax) department seeks to bring more non-filers into the tax net by formulating region-specific strategies by the field authorities for identifying potential non-filers, holding of outreach programmes to encourage voluntary compliance and extensive use of mass media for creating awareness, issuing statutory notices to enforce compliance, simplification in income-tax returns and filing process to encourage voluntary filing," she said.
Further, e-mails and SMS reminders are issued to taxpayers to file ITRs and pay their due taxes.

Ministry of Finance @FinMinIndia
Net Direct Tax collections for the F.Y. 2021-22 at Rs. 13,63,038 crore showing a growth of over 48.4%
Read more https://pib.gov.in/PressReleaseIframePa ... ID=1807004

Mohandas Pai @TVMohandasPai

Congrats to FM @nsitharaman @FinMinIndia @narendramodi @PMOIndia
on exceeding even the increased RE by 1.15l cr! Unbelievable tax collections this year @PiyushGoyal
Time for big reform on personal tax now

vijayk wrote:CNBC-TV18
@CNBCTV18News

Govt beats FY22 direct tax collection estimate by over Rs 1 lakh crore. The mop-up as of March 17 stands at Rs 13.6 lakh crore. @ShereenBhan speaks to CBDT Chairman JB Mohapatra

Mort Walker wrote:

vijayk wrote:CNBC-TV18
@CNBCTV18News

Govt beats FY22 direct tax collection estimate by over Rs 1 lakh crore. The mop-up as of March 17 stands at Rs 13.6 lakh crore. @ShereenBhan speaks to CBDT Chairman JB Mohapatra

If it is more than estimates, then the government needs to refund that money, or at least significantly reduce taxes in other areas such as fuel for this FY. No government of any political party should collect more taxes than needed.

chetak wrote:

Surya Kanegaonkar
@suryakane
Working in the energy industry, modeling the impact of prices and supply/demand on industrial and retail customers, I can safely say
@HardeepSPuri and GOI’s decision to buy Russian oil will ensure inflation is managed and industries remain globally competitive. Fantastic move.

Surya Kanegaonkar @suryakane
The Petroleum & Natural Gas Ministry far exceeded expectations even under
@dpradhanbjp. During the pandemic, they bought oil at $20-30/barrel and rented storage facilities in the US, KSA and UAE, saving $ billions. Today, they’re actively staying ahead of the inflation curve.

Prasad wrote:Oil prices are already at near all-time highs. People are looking forward to the govt reducing fuel prices. Let's not forget that apart from commodities, fuel-induced inflation is also directly impacting millions of poor folks in India. Hook or crook, cheaper fuel is a damn necessity for us. Europeans can war amongst themselves for all we care. Virtue signalling about democracy and hyooman rights is all
good for western europe and the us.

vimal wrote:
All this should make Sauds really nervous!