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With debt of Rs 2.82L cr, incoming govt faces daunting task in Punjab

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With a whopping public debt of Rs 2.82 lakh crore, the incoming government in one of the most fiscally stressed states, Punjab will be faced with the daunting task to usher in much-needed economic reforms as a major component of government earning and borrowing is meant for servicing debt rather than capital expenditure.

Twenty per cent of the annual budget is being spent only to pay the interest on the loans.

As per the latest findings of the Comptroller and Auditor General of India, the state’s financial crisis is set to worsen with the debt likely to reach Rs 3.73 lakh crore by 2024-25.

Government officials told IANS that the state’s debt has increased by Rs 1 lakh crore in the past five years under the current Congress government now led by Chief Minister Charanjit Singh Channi, largely owing to populism.

When this government took over the reins in 2017, it got the legacy of a Rs 2.08 lakh crore debt left by the decade-long rule of the Shiromani Akali Dal-BJP in the state.

An official familiar with the matter told IANS that political compulsions and populist announcements have been taking a huge toll on the state’s finances and this may surge the debt beyond the projected Rs 2.82 lakh crore.

Finance Minister Manpreet Badal in his last budget speech for this fiscal projected the total revenue receipts at Rs 95,257 crore. However, the state has never managed to achieve more than 80 per cent of its revenue target.

Also approximately 40 per cent of the state’s total estimated revenue receipts of Rs 95,257 crore for the current fiscal would go into debt servicing.

As per the budget estimates of an outlay of Rs 168,015 crore for 2021-22, the outstanding debt is likely to be Rs 273,703 crore in 2021-22, which is 45 per cent of the GSDP.

The total outstanding debt of the state as on March 31 is projected at Rs 252,880 crore, which is 42 per cent of the GSDP for 2020-21 and the outstanding debt is likely to be Rs 273,703 crore in 2021-22, which is 45 per cent of the GSDP.

Besides a major component of earnings and market borrowings go into debt servicing, the revenue goes into unproductive expenditure like disbursement of salaries, pensions and power subsidies for the farmers.

Also, say officials, the Covid-19 pandemic has caused a significant deterioration in public finances, adding to pre-existing strains. Also businesses in the state are reeling because of a sluggish economy and poor liquidity.

As per the recent memorandum by the state to the Centre for extending the Goods and Services Tax (GST) compensation, Punjab says being an agrarian economy it was deriving a significant portion of its revenue from the agriculture sector in the pre-GST era by imposition of tax on agricultural produce (mainly foodgrains).

This was realized in the form of the levy of Purchase Tax on agricultural produce at the rate of five per cent of the minimum support price (MSP) of produce collected from the purchaser of such produce.

In addition, an Infrastructure Development Fee at the rate of three per cent was also levied on purchase of foodgrains. The state collected Rs 3,094 crore in 2015-16 from the Purchase Tax and Infrastructure Development Fee alone, i.e. 16.55 per cent of its total tax revenue of Rs 18,692.89 crore during that year.

With the implementation of GST, both the Purchase Tax and Infrastructure Development Fee on foodgrains have been subsumed in the GST.

Since the GST is a destination-based tax and agricultural produce is largely exempted under it, Punjab has experienced a permanent loss of a significant portion of the state revenue.

However, the saving grace for the government is the first half of this fiscal with a hefty increase in revenue from the pre-Covid levels.

The GST revenue comprising state goods and services tax (SGST) and integrated goods and services tax from April to September of 2021 was Rs 7,851 crore, which is 67.55 per cent more than in the corresponding period of 2020, and 54 per cent more than in the pre-pandemic year of 2019-20.

But the area of concern for authorities now is ending GST compensation from the Centre on June 30, unless it is extended by the GST Council, leaving the state to fend for itself thereafter.

A report by the Group of Experts (GOE) led by noted economist Montek Singh Ahluwalia, set up by Chief Minister Amarinder Singh to revive Punjab’s economy, recommended measures like reducing average cost of government debt, banning recruitment in police and bringing pay scales of government employees on par, among others.

The panel in its report to aid medium and long-term revival strategy was categorically clear that unless measures are taken to correct the fiscal situation over the next few years, it will not be possible to achieve the objective of restoring Punjab to its pre-eminent position.

The experts suggested rationalisation of power subsidies given to farmers that is 1.9 per cent of its GDP and grew from Rs 5,670 crore in 2019-20 to Rs 7,180 in 2020-21.

Ahead of the polling for the Assembly elections on February 20, the opposition Aam Aadmi Party (AAP) had accused the previous Akali-BJP and current Congress government of plunging Punjab into debt.

“With the population of 3 crore, today every individual in Punjab has a debt of Rs 1 lakh. Every child who is born in Punjab already has a debt of 1 lakh rupees on them right after their birth,” AAP leader Raghav Chadha told the media.

SAD President Sukhbir Badal, the man known for micro poll management for his now own controlled century old party with the focus on farmers’ interests and justice for them, said Punjab and Punjabis are in a crisis.

“The Congress government did nothing for five years. It reneged on each and every promise made to the people be it complete farm loan waiver, Rs 2,500 per month unemployment allowance, jobs for each household and increase in social welfare benefits.

“It also stalled all development work but simultaneously presided over a sand and liquor mafia and looted the state exchequer. It was due to this that the state’s debt has increased by Rs 1 lakh crore in the last five years alone.”

All the parties were banking on freebies to woo the electorate.

The AAP has promised Rs 1,000 for all women, while the Congress has assured Rs 1,100 per month for needy women. The SAD-BSP alliance has promised Rs 2,000 per month to all women heads of BPL families.

Two-time Chief Minister and former Congress leader Amarinder Singh in his election campaignin stressed Punjab “needs the Centre’s support for its economic revival, which his party, the Punjab Lok Congress, in alliance with the BJP would help achieve.”

The state has no money for development, which will remain a far cry under the false promises of parties like the Congress, AAP and SAD, who were not willing to work in coordination with the Centre, he stressed.

Business

India Set To Lead The World In 6G, Says Telecom Minister Jyotiraditya Scindia

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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.

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Indian Markets Gave Better Returns Than China In Last 5 Years, Says Sebi Member

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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.

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Ratan Tata Rubbishes Rumors Of ‘Critical Health’; Says No Cause For Concern

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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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