Budget credit positive for India Inc, fiscal challenges remain: Moody's

 The path toward the government’s medium-term deficit target of 4.5% of GDP by FY25 remains undefined.

Rating agency Moody’s said the government’s Budget for FY 2022-23, with emphasis on capital expenditure to support growth, is credit positive for non-financial companies, financial institutions, but poses long-term fiscal challenges for the sovereign. There is continued emphasis on rising capital expenditure to sustain growth momentum near term, as the economy continues to rebound from its coronavirus (Covid-19) pandemic trough, the rating agency said in a report. India’s sovereign rating is “Baa3 stable”.

The conservative Budget 2022 assumptions leave room for the government to respond to prevailing macroeconomic and pandemic risks over the next year. However, the path toward the government’s medium-term deficit target of 4.5 per cent of Gross Domestic Product (GDP) by FY25 remains undefined. India’s Budget, presented on February 1, 2022, projects a narrowing in the central government deficit to 6.4 per cent of GDP in FY22 from an estimated 6.9 per cent in FY21….

Union Budget 2022: Real estate sector hails it as a growth-inducing budget

 Finance Minister Nirmala Sitharaman on Tuesday tabled the Union Budget for FY 2022-23

Highlighting the role of the real estate sector in India’s economy, industry experts termed the Union Budget 2022-23 as a growth-inducing budget. Finance Minister Nirmala Sitharaman on Tuesday tabled the Union Budget for FY 2022-23. During the budget speech, Sitharaman announced the completion of 80 lakh homes under Pradhan Mantri Awas Yojana (PMAY) and also informed that for this, allocated Rs 48,000 crore under PMAY for urban and rural in FY23. The demand for affordable housing has been increasing in the past few years.

Aditya Kushwaha, CEO and Director, Axis Ecorp said, “The real estate sector is the backbone of the economy and will play a pivotal role in this Amrit Kaal. The budget 2022 is growth-inducing and does the heavy lifting by sharply increasing capital expenditure. On the real estate aspect, the annual budget reinforces the Government’s focus on affordable housing.”

He said the government has also announced an outlay of Rs 20,000 crore toward Gati Shakti for integrated planning and coordinated implementation of infrastructure connectivity projects. In the budget 2022-23, there was also an emphasis on sustainable development with climate action being one of the central themes.

Budget 2022 should boost consumption via tax breaks, fuel tax cuts: Report

 In a pre-budget report, India Ratings said it expects the new budget to consolidate and strengthen the plan set out in the last budget

The forthcoming budget needs to delay fiscal consolidation, instead should focus more on supporting the pandemic battered-economy and boost consumption demand by offering income tax soaps and cutting fuel taxes, says a report.

In a pre-budget report, India Ratings said it expects the new budget to consolidate and strengthen the plan set out in the last budget, rather than trying out new things by continue with the revenue and capital expenditure pattern of FY’22 to provide stability and consolidation to the past/ongoing efforts, and to focus on boosting demand by generating employment opportunities in areas/sectors that have been impacted more by the pandemic.

The report therefore expects the finance minister to delay fiscal consolidation and make it to be a gradual and calibrated process, thus ensuring the necessary fiscal support that the economy needs is available till the recovery acquires its own momentum.Calling for tax reliefs to households to boost demand as the purchasing power of households was badly hit since the pandemic, the report said this could be done through some income tax reliefs and lowering taxes on oil products as higher fuel prices has been driving up inflation…Budget 2022

TCS spend on employees is justified: Tata Sons chairman N Chandrasekaran

Chandrasekaran said sometimes specialist skills don’t depend on the qualifications but on the employee’s experience

Tata Consultancy Services (TCS) shareholders cheered the company’s movement to the spot ahead of IBM in market cap at the 24th annual general meeting on Thursday, though many of them were apprehensive of the rising employee cost, especially retaining some staff beyond the age of 60 and even in some cases 72. Some of them raised concerns that the company may be splurging a lot of money given that over 100 employees now earn more than Rs 1 crore towards salary.

Tata Sons Chairman N Chandrasekaran, however, justified the employee costs. “It’s not correct to say that the company is paying too much to the top management. If you see, TCS management deserves a lot of credit across the board for producing excellent results and the company would like to reward them,” he said.

Chandrasekaran, who had a long stint at the TCS helm before taking over as the chairman of Tata Group, said sometimes specialist skills don’t depend on the qualifications but on the employee’s experience. “Some employees have been requested to work with us despite crossing their retirement age,” he said, “because of the value addition they offer to a very complex organisation”. While the company will not compromise on the industry leading employee cost to revenue ratio, they will seek to optimise cost further, he said.

Among other top concerns the shareholders raised were about the need to have more clarity on digital revenues and various technology areas within the new technology services to which the company attributes 28 per cent of its revenues.

Why PM Modi seems to have given up on hopes of transforming India

Modi’s promise of a new political economy, one oriented around the private sector, productivity and growth was illusory

Budget 2019 Highlights: India’s Prime Minister Narendra Modi is in a spot of trouble. He has to face reelection in a few months amid growing dissatisfaction with his government’s performance; he’s likely to use every lever available to eke out a win. One such lever, unfortunately, was the interim federal budget that his lame-duck government presented last week, to keep official machinery running till the next government can come in with a mandate and make decisions about taxation and spending. As many of us feared, Modi broke with bipartisan convention: He used the occasion essentially to launch his election appeal to India’s voters. And, unfortunately, it’s one that they have heard before.

The big news in the interim budget was that Modi intended to give smallholders a small annual income to supplement their earnings. Many other countries support their farmers similarly; India, in fact, uses a complex system of agricultural subsidies that is both inefficient and, arguably, breaches World Trade Organization rules. But, Modi’s intent in introducing the scheme at the very last moment — in fact, past the very last moment — isn’t to reform agricultural policy; he’s clearly hoping to address his rising unpopularity in rural areas. To some degree, his hand was forced: The main opposition Congress Party had announced plans for a minimum income guarantee just a few days earlier.

Modi didn’t stop there; he had a bunch of other goodies in the budget to throw to undecided voters, including a tax cut for low earners. As a consequence, the government won’t make its fiscal deficit target for the financial year and shifted its target for the next year by an even greater margin. The worst part is that there isn’t really any great crisis that would justify breaching fiscal rules, only electoral considerations…Read More

To bridge fiscal deficit, RBI likely to pay govt $5.8 bn interim dividend

The dividend could help Prime Minister Narendra Modi’s administration bridge a widening budget deficit following a drop in tax collections

Interim Budget 2019: The Reserve Bank of India (RBI), having changed management last month following a clash with the government, is likely to transfer an interim dividend of Rs 300-400 billion ($4.32 billion-$5.8 billion) to the government by March, according to three sources with direct knowledge of the matter.

The dividend could help Prime Minister Narendra Modi’s administration bridge a widening budget deficit following a drop in tax collections, and would come after the government pushed the RBI for the additional funds ahead of a national election due by May.

Read Source: Business Standard or BS

Former finance ministry official Shaktikanta Das was appointed as the new governor of the Reserve Bank of India (RBI), following resignation of Urjit Patel last month amid tensions over the dividend payout and other issues.The government and RBI have now appointed a panel to look into the issue around the sharing of the RBI’s reserves.

“We are absolutely sure that an interim dividend of more than 300 billion rupees would be paid before March end,” one of the sources told Reuters.The RBI did not respond to an email seeking comment, while the Finance Ministry declined to comment.

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