Posted at 2:52 PM , on December 29, 2015
The question is; what happens to fiscal deficit next year?
The finance minister was emphatic in underlining that the government will meet its 3.5% fiscal deficit target in the fiscal year 2015-16. He is probably right. At the current juncture, it does look like he will be able to meet the fiscal target for the year 2015-16. There are worries on the disinvestment front. Against the target of Rs.69,500 crore, they have garnered less than half the amount. Even in the collection of direct taxes, the FM has admitted that there may be a shortfall of Rs.40,000 crore. So how will this be bridged? Continue reading
Posted at 5:14 PM , on May 11, 2015
There are concerns, but not as bad as 2013…
As the rupee weakened to a 20-month low of Rs.64.23 / $, the specter of 2013 was raised once again. In that brief period between June 2013 and September 2013, the rupee plummeted from Rs.52 to Rs.70 per dollar. While the rupee has shown a weakening trend of late, it may not be as bad as 2013. Let me explain, why! Continue reading
Posted at 11:37 AM , on April 21, 2015
Why India should be seriously worried…
India’s trade deficit numbers are out and there is room for some real concern. The overall exports for the year were $310 billion and the imports were $448 billion, leaving a trade deficit of $138 billion. That approximately translates into a trade deficit of $11.5 billion per month. But the real story lies in the break-up of these numbers. Continue reading
Posted at 4:59 PM , on April 13, 2015
Actually, I was surprised when Moody’s upgraded India’s outlook on Thursday. Moody’s justification for the outlook upgrade was slightly weird. The reasons offered by Fitch (another rating agency) for not upgrading India’s outlook, is a lot more incisive.
Ease of doing business…
There are many ways to approach this indicator. One way could be to look at the World Bank ranking of the ease of business indicators. India has consistently been ranked at the lowest level within the BBB- category. Another way of looking at it would be the quality of infrastructure. India is still to achieve the quality of infrastructure that Asian nations like Thailand, Malaysia and Korea achieved 3 decades ago. I am not even talking about Singapore, Hong Kong and Japan. What India needs to remember is that poor infrastructure imposes an indirect cost of 1.8% to 2% on the GDP each year. While there has been a lot of hype over infrastructure over the last 20 years, not much has translated into ground-level action. Continue reading
Posted at 7:40 PM , on April 6, 2015
One of the best things that the Indian government did was to ignore the advice of Arvind Panagriya to reject the focus on FF control. The government may end up with a fiscal deficit well below the promised level of 4.1%. That is surely creditable, but how exactly did they do it?
Quite a few challenges…
Let us not forget that the direct tax collections were well short of estimates. In fact, the shortfall in direct taxes may almost be to the tune of $2 billion. Add to that, the government had to urgently release a tranche of central sales tax (CST) compensation to states to seek their support for the Goods & Services Tax (GST) bill. The government had to also pay compensation for the bifurcation of the states of Andhra and Telangana. Considering the fiscal situation of these states, they could hardly be delayed. In a volatile geopolitical scenario, defense could not be compromised and the government had to hike its defense allocation. Continue reading