Business
Pandemic to populist schemes: K’taka in fiscal soup
Karnataka, which has vibrant automobile, agro, IT, aerospace, textile, biotech and heavy engineering industries, is showing a worrying trend due to impact of pandemic and natural calamities.
Despite being the cradle of startups and known as Silicon Valley of India, Karnataka took a huge hit on the financial resources from 2020-21 till date. The state’s public debt rose to 31.38 per cent between 2019-20 and 2020-21, creating a precarious financial situation.
The result of the pandemic has been such that, according to the 2020-21 finance and appropriation accounts report published by the Comptroller and Auditor General (CAG), the government recorded a drop of Rs 14,535 crore in tax collection.
The total debt of the state went up from Rs 3.19 lakh crore to Rs 3.97 lakh crore, an increase of Rs 78,000 crore, forcing the government to put some ambitious and populist programmes in abeyance.
Losses incurred in SGST, state excise duty, sales tax, stamps and registration and vehicle taxes. However, the non-tax revenue increased marginally from Rs 7,681 crore to Rs 7,894 crore.
According to Ministry of Statistics and Programme Implementation, the growth of GSDP has decreased by 9.28 per cent in 2019-20 and 2.23 per cent in 202-21 from 10.71 per cent in 2017-18 and 11.50 per cent in 2018-19.
The government had to deal with a severe drought situation when it assumed power in 2019, and then adding more woes, half of the state was affected by flood fury. Later, the Covid pandemic further complicated the financial situation of the state. During the tenure of Chief Minister B.S. Yediyurappa, no major populist programmes could be doled out. Presently, his successor Chief Minister Basavaraj Bommai has a tough job in hand as he is to present an election year budget on March 4.
The CAG report also shows that the government had to increase its borrowings. Effectively, the resultant impact has pushed the interest component to Rs 22,666 crore or 14.6 per cent of the state’s revenue receipts which is placed at Rs 1.56 lakh crore. The CAG has also noted that 13 projects of irrigation, 41 of roads, three of bridges and one in others category remained incomplete for over five years.
Ashwathnarayan, state BJP General Secretary, told IANS that as political parties are in the race to woo voters with social welfare schemes and freebies on the lines of Tamil Nadu and Andhra Pradesh, CM Bommai is inclined towards middle class and the upcoming budget is not going to be a fancy budget.
When asked whether the BJP is not under pressure after Delhi Chief Minister Arvind Kejriwal delivered free essential services to people, he said that Delhi is a mini state, it does not include farmers, mass transport system, irrigation projects, law and order system and even medical education. It is more like a municipal corporation area. Free electricity, free water and other populist programmes are not practically feasible in a large state like Karnataka.
Basavaraj Tonagatti, SEBI RIA, Fee-Only Financial Planner, CFP and Finance Blogger, told IANS that If you look at last year’s budget, you can notice that debt servicing increased to 21 per cent from 2019-20 to 2020-21. However, the capital expenditure increased just by around 5 per cent. This shows that the government is borrowing more but not diverting the same towards capital expenditure. It also shows that the government is not spending on creating assets, in particular physical infrastructure like roads, railway lines, factories, ports, etc. “Hence, I hope this year they manage their debt and divert the spending towards capital expenditure,” he said.
Though government is saying everything is fine, private investment has been going down for a long time, consumption is down, unemployment is high.
Abdul Azeez, Honorary visiting Professor of Institute for Social and Economic Change (ISAC), Bengaluru said that the pandemic has decelerated economic growth, increased unemployment and strengthened inflationary pressures, as a result of which the programmes of social justice have taken a hit.
The focus is to encourage consumption. If consumption increases, inflationary pressure will remain high. Already retail inflation has gone up to 6 per cent and wholesale by 11 per cent, he said. The government should think of providing necessary assistance to producers and they should be ensured of supply of electricity and water, he added.
Pavan Srinath, Independent Policy Researcher, said, “we need a growth oriented budget. We need to spend more. In the central budget also, capital expenditure has been increased. There is rural distress, high unemployment, the government should use its capacity to spend more.”
During the Congress regime, when Siddaramaiah was at the helm, he rained sops and freebies on people through bhagya schemes. The freebie blitzkrieg was so much that raised a debate whether these freebies are making people lazy.
Kannada writer S.L. Bhyrappa and Jnanpith recipient Chandrashekar Kambar came down heavily on Siddaramaiah government on Annabhagya scheme. Bhyrappa said, it is not possible to make poor people self-reliant through schemes like Anna Bhagya. The trend is very dangerous.
Chandrashekar Kambar maintained that freebies have made a deep impact on labour attitudes and the farming sector. When you take care of almost all the basic needs of the people — be it food, clothing, shelter, healthcare, children’s education, there is little motivation for work hard. Instead, the government should enable poor people to lead a dignified life, he said.
Rubbishing the criticism, Siddaramaiah said he will continue to implement schemes to bring poor people into the mainstream. Only hungry people will understand what is hunger. However, he suffered defeat in the following general elections.
Business
India Set To Lead The World In 6G, Says Telecom Minister Jyotiraditya Scindia
In a bold declaration at the inaugural address of the Indian Mobile Congress 2024 (IMC) on Tuesday, Union Telecom Minister Jyotiraditya M. Scindia has said that India will lead the world in the adoption of 6G.
In his address at the event, Scindia emphasized that India is now prepared to lead the world in the development of 6G technology.
India’s Technological Rise: From Following to Leading
“It is our belief and commitment that India, which followed the world in 4G and marched with it in 5G, will lead the world in 6G,” Scindia stated.
The minister highlighted India’s remarkable achievements in the telecommunications sector over the last ten years, the country has become a global leader in innovation and technology.
“It’s a fundamental change in approach towards technology development,” he said, attributing this transformation to Prime Minister Narendra Modi’s leadership.
Telecom Sector Growth Under PM Modi’s Leadership
“Prime Minister who has always put people at the heart of progress Sabka Sath, Sabka Vikas Sabka Vishvas aur Sabka Prayas combined with his second motto, One Earth, One Family and One Future. It is combination of these two mottos that leads India under PM Narendra Modi leadership one of the leading sectors in the committee of Nations,” Scindia said.
Scindia underscored government’s initiatives to bridge the digital divide, particularly through the BharatNet program, the world’s largest rural broadband connectivity initiative to connect every panchayat of the nation. Over the past three years, the government has invested more than USD 10 billion and laid 7 lakh kilometres of fiber across rural India.
Digital Payments and UPI: Pillars of India’s Digital Economy
He cited staggering growth in mobile and broadband connectivity, with mobile connections rising from 94 million to 1.16 billion, and broadband users growing from 60 million to 924 million in just a decade. India’s optical fibre cable (OFC) networks has expanded from 11 million kilometers to 41 million kilometres over the last ten years, he added.
The minister further said that this growth is accompanied by the success of India’s digital payment systems, the 4G stack, and the Unified Payments Interface (UPI), which serve as pillars of India’s digital economy are expected to contribute significantly to the global digital infrastructure.
Scindia further noted that the government’s efforts to ensure that policy frameworks keep pace with the rapidly evolving digital landscape. “The recent changes to the Telecommunications act 2023 is a case in point. It has been drawing light upon hither to undressed areas such as a high potential sector of satellite communications, addressing the challenges of the digital leader. The most important being cyber security. The telecom sector much like other growth critical sectors in India is aggressive, is ambitioushe said.
“The telecom sector much like other growth critical sectors in India is aggressive, is ambitious and its outlook in our Journey from Amritkal to Shatabdikal is to lead the world,” Scindia said. By mid-next year, India will have achieved 100 per cent saturation of 4G across the entire country, covering even the most remote villages, the minister said.
He emphasised PM Modi’s vision of India as a first mover in 6G technology, underscoring the nation’s resolve to lead the world in future telecom innovations.
“The attitude put forward by the prime minister of not just embracing, but raising ourselves to becoming the first mover in the 6G technology,” he added.
Business
Indian Markets Gave Better Returns Than China In Last 5 Years, Says Sebi Member
Sebi Whole-time Member Ananth Narayan G on Monday reminded investors that Indian equities have consistently delivered 15 per cent returns over the last 5 years whereas the same has been zero or even negative in China.
Terming the Indian markets “sone pe suhaga” for delivering higher returns for lower risks, Narayan also flagged a few areas of caution for investors and asked them to be conscious of the risks.
“There’s a lot of talk about China markets over the last few days. But over the last five years, while Indian markets have given around 15 per cent compound annual growth rate consistently, Chinese markets are nowhere close to that. It’s almost zero. In fact, in some cases, like in Hong Kong, it’s actually negative,” Narayan said.
Speaking at an event marking the start of the Investor Awareness Week at NSE, Narayan said FY24 was a “remarkable” year for India, with the benchmark indices returning 28 per cent and the volatility just 10 per cent.
“That’s like ‘sone pe suhaga’. It’s like the best of all worlds: low risk and very high return,” Narayan said, underlining that there are side effects of this as well.
Making it clear that it will not be the same going forward and investors should not assume it to be a one-way street, Narayan said such handsome returns can lead to complacency and pointed to a lot of youngsters opening up demat accounts to join the bandwagon.
Educating people about risks is very important, Narayan said, giving the analogy of driving a car. “There has to be a light push on the accelerator to get more investors to provide risk capital for the economic growth, we also need to be aware of risks and use the brakes if need be.” He said that 40 per cent of the small and midcap scrips have shot up by 5 times in the last five years, because of an imbalance between inflow of investor money and supply of new paper.
On its part, the capital markets regulator is trying hard to ensure that fund-raising clearances are done early so that there is a steady stream of quality paper supply in the market.
From a broader, longer-term perspective, Indian markets will only go north from here given the economic growth prospects in the country, Narayan said, issuing specific advice to investors.
Investors need to have the right intermediaries to capitalise on this opportunity presented by India, and not fall for the unregistered and fly-by-night ‘finfluencers’ who might be driven by vested interests, he said.
Using the oft-repeated idiom of “all roads lead to Rome”, Narayan remarked that Rome is not a traveller-friendly place and one may get scammed there as well. Therefore, it is important to seek advice from the right people for the investors, he said.
He also said that it is in investors’ interests to trade less and stay invested for longer for higher returns, and added that studies prove the same.
Sebi, which has flagged certain areas like derivatives recently, is not against speculation or participants taking short-term trades, but it would want investors to understand the risks, Narayan said.
Business
Ratan Tata Rubbishes Rumors Of ‘Critical Health’; Says No Cause For Concern
Tata Group’s Ratan Tata has denied rumours of his critical health that have been reported and have surfaced in the recent hours.
Ratan Tata’s associates took to his official Instagram account to debunk the news of him being ‘Critical’.
In the post, Ratan Tata said, “I am aware of recent rumors circulating regarding my health and want to assure everyone that these claims are unfounded. I am currently undergoing medical check-ups due to my age and related medical conditions.
There is no cause for concern. I remain in good spirits and request that the public and media respect refrain from spreading misinformation.
For more than fifty years, Ratan Tata has led the Indian business community’s entrance hall. The 86-year-old has been suffering from illnesses associated with ageing. Tata has participated in social life to the best of his limited ability despite his health issues.
Recently, on the occasion of Gandhi Jayanti, on October 2, Ratan Tata, expressed his congratulations to the Prime Minister on this occasion. “I congratulate the honourable Prime Minister on the 10-year commemoration of programmes that have benefitted millions in rural India.”
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