No one wants fiscal deficit to go up /
widen / get worse
Certainly not Shri Surjit Bhalla , Member PM – Economic Advisory
Council ( #PMEAC )
His views are reported in
Business Line ( 18 Oct ) as follows :
“ Govt may stick to fiscal deficit target, says EAC’s Surjit Bhalla “
The government is likely to stick to its fiscal
deficit target of 3.2 per cent of GDP, and may
accelerate sales of government stakes in lenders and other companies as part of
an effort to recapitalise banks, said Surjit Bhalla, a member of the Prime Minister’s
Economic Advisory Council, on Tuesday.
The government has
already used up nearly all of its budget for the current fiscal year, and tax revenues are
expected to fall far short of initial expectations. At the same time, economic growth has
slowed, sparking calls for more stimulus.
But Bhalla said the
government had stuck to its fiscal
deficit targets over the past three years and is expected to do so this
year as well.
The central bank has
warned that missing the fiscal
deficit target could lead to a spike in inflation, hurting
macro-economic stability. Indian stocks slid last month on reports that a stimulus package worth up to
₹50,000 crore might be in the works — one that would widen the
deficit to 3.7 per cent of GDP.
Economic growth
slipped to its lowest level in three years in the first quarter, logging an
annual rate of 5.7 per cent, but Bhalla said there were
signs of recovery.
“I am more
optimistic on the economy than I was two weeks ago,” he said, adding that last
week’s industrial output and export data suggested fears about a slowdown were
exaggerated.
He said GDP growth
could be close to 6.5 per cent for the fiscal year — although that forecast is
lower than the central bank’s latest estimate of 6.7 per cent.
Bhalla said the Council's views on the fiscal deficit has been communicated to
the government by its chairman Bibek Debroy.
Bad loans in the banking
sector hit a record ₹9.5 lakh crore at the end of June, with stressed loans as a percentage of total
loans at 12.6 per cent, the highest level in at least 15 years.
That represents a major
problem for Asia’s
third-largest economy, as provisions eat into profits and new lending is choked
off. The bulk of the sector’s bad loans are held by the 21 state-run banks.
For
a layman like me , Fiscal Deficit means :
Excess of government’s EXPENDITURE
over its REVENUE ,
in a given year
Spending more than what you earn ?
What our parents told us never to do when it came to managing household budget ?
Here
are some ways to bring down “ Fiscal Deficit “ :
# Spend
less
# Earn more
# Simultaneously , spend less and earn more
“ Spending less “ is out of
question . That would further slow down the economy !
If anything , the
crying need right now is to “ SPEND MORE / MUCH MORE “ – in order to boost the Economy
Govt needs to
spend Rs 350 Lakh*Crores on Infrastructure in next few years
That
leaves us with the following options to “ RAISE /
INCREASE REVENUE “ :
# Increase Taxes ( - horror of horror – considering that all kinds
of elections are around the corner ! Who wants to commit political hara-kiri ? )
# Borrow money from wherever you can ( did not Japan give a loan
of Rs 1 lakh*crore at nearly zero per cent interest ? Why worry about Public Debt going up ?
Let the public worry about that – just as public is worrying about those bank NPAs getting neutralized by Central Government through RE-CAPITALIZATION , using tax collected from you / me ! )
Since these are not “
Viable Options “ , I request Shri
Bhalla ( - and other members of PM-EAC ) , to consider my following blog
/ suggestion / email :
Tuesday, 2 February 2016
TIME IS NOW !
Quoting from a news-report ( HT / 02 Feb 2016 ) :
At a recent World
Economic Forum summit in Davos, Shri Arun Jaitley had said , India needs some
additional growth engines , indicating that the focus would shift to reviving PRIVATE investments
Senior Govt officials said," The incentives could be in the
nature of TAX CONCESSIONS
"
DIPP Secretary , Amitabh Kant added
, " For the Indian economy to continue to grow, it has to be on the
back of DOMESTIC
PRIVATE SECTOR investments ..... for a continuous
robust growth , investments from the PRIVATE SECTOR , have to be ramped up "
Let us not keep fooling ourselves !
Prey ! From where do the so called PUBLIC SECTOR investments
come from ?
It is PRIVATE
MONEY ! Just re-routed by governments , using yours and mine
tax money !
That is, whatever
gets left ( of that tax
money ) after expenses of running the government
Apart from that ,
* Re-routing
tax money through PUBLIC
SECTOR investments, is a very slow / cumbersome process
* Persons who
manage those investments are rarely made " accountable " for profits / dividends
* Since
tax-payers do not get immediate benefits from such re-routing , it gives rise
to tax evasions
* Tax evasions lead to generation of BLACK MONEY and CORRUPTION
And no political
party would advocate " raising of taxes " so that , on 29
Feb 2016 , Shri Jaitley could
allocate
* ONE TRILLION
DOLLARS ( Rs 70 lakh*crore ) each to , Piyush Goyal / Suresh Prabhu / Nitin Gadkari / Ravi
Shankar Prasad / Uma Bharati / Venkaiah Naidu / Rajiv Pratap Rudy etc
and
* TEN TRILLION DOLLARS each to , Manohar
Parikar ( Defense ) and Nirmala Sitharaman ( Make in India )
WHERE CAN
WE FIND THAT GROWTH-ENGINE ?
In my email ( 08 April 2014 ) , I wrote to Shri Narendra Modi :
* Create Infrastructure SPVs
* Allow people to invest in these directly and make " returns (
interests / dividends ) " , tax free
* Amnesty Scheme for funds
invested in such SPVs
( no questions asked as to the source of funds invested )
* An " INVERSE TAX " regime for Personal Income Tax ( with decreasing tax-rates for each
higher slab )
Later emails recommended :
* Encourage CREATION of WEALTH by total abolition of Personal Income Tax
* Decreasing Corporate Income Tax
, linked to number of permanent employees
I hope Shri
Jaitleyji does not treat these as POPULIST measures and keep tinkering with
80ccg / 80dd / 80ddb / 80e / 80g /80gg /80ggc / 80tta / 80u /
24b ....etc !
Time now is for
embracing ,
TRANSFORMATIONALIST measures
It is time for the Butterfly to emerge from its cocoon !
18 Oct
2017
