In favour of withdrawing separatists' facilities: Parrikar

Jan 6: India’s Finance Ministry has delivered a challenge to its revenue collectors: meet tax targets despite $20 billion of corporate tax cuts.

Through a video conference on Dec. 16, officials were exhorted to meet the direct tax mop-up target of 13.4 trillion rupees ($187 billion), a government official told reporters. Collection in the eight months to November grew at 5% from a year earlier, against the desired 17%.

The missive shows Prime Minister Narendra Modi’s urgent need to buoy public finances in a slowing economy where April-November tax collections were half the amount budgeted. Authorities withheld some payments to states and have capped ministries’ expenditure as the fiscal deficit ballooned beyond the target.

The government’s efforts to maintain its deficit goal goes against advice from some quarters, including central bank Governor Shaktikanta Das, who urged more spending to spur economic growth.

It’s uncertain though how much room Modi’s administration has to boost expenditure, given that it may already be borrowing as much as 540 billion rupees through state-run companies, a figure that isn’t reflected on the federal balance sheet. Uncertainty about public finances pushed up sovereign yields in November and December, compelling Das to announce unconventional policies to keep costs in check.

“This is not a time to conceal the fiscal deficit by off-budget borrowing or deferring payments,” said Indira Rajaraman, an economist and a former member of the Reserve Bank of India’s board. “If they were to stick to the target, that would be catastrophic because there is so much pump-priming that is needed right now.”

GDP grew 4.5% in the quarter ended September, the slowest pace in more than six years as both consumption and investments cooled in Asia’s third-largest economy. Only government spending supported the expansion, piling pressure on Modi to keep stimulating.

S&P Global Ratings warned in December it may downgrade India’s sovereign ratings if economic growth doesn’t recover. Government support seems to be waning now, with ministries asked to cap spending in the final quarter of the financial year at 25% of the amount budgeted rather than 33% allowed earlier. This new rule will hamstring sectors including agriculture, aviation and coal, where not even half of annual targets have been disbursed.

As the federal government runs short of money, it’s been delaying payouts to state administrations.

Private hospitals have threatened to suspend cash-less services to government employees over non-payment of dues, while a builder informed the stock exchange about delayed rental payments from no less than the tax office itself.

India is considering a litigation-settlement plan that will allow companies to exit lingering tax disputes by paying a portion of the money demanded by the government, the Economic Times newspaper reported Saturday.

The move will help improve the ease of doing business besides unlocking a part of the almost 8 trillion rupees ($111 billion) caught up in these disputes. The step, which is being considered as part of the annual budget, could also bridge India’s fiscal gap.

Finance Minister Nirmala Sitharaman has refused to comment on the deficit goal before the official budget presentation due Feb. 1.

A deviation from target, if any, “will need to be balanced with a credible consolidation plan further-out,” said Radhika Rao, an economist at DBS Group Holdings Ltd. in Singapore.

Mumbai, Mar 4: BJP leader Devendra Fadnavis on Tuesday said Maharashtra Chief Minister Uddhav Thackeray should not give "vague" replies on the 5 per cent Muslim quota issue and declare "with courage" that his government will not bring law granting reservation to the minority community.

Mr Fadnavis made the remark after Mr Thackeray, during a press conference earlier in the day, said he has not yet received the proposal regarding giving quota to Muslims and that the Shiv Sena-led government is yet to take any decision on it.

Mr Thackeray made the comments after Maharashtra Minority Affairs Minister Nawab Malik recently said in the legislative council that thestate government will provide 5 per cent quota to Muslims in education.

Mr Malik, an NCP leader, had also said the state government will ensure that a legislation to this effect is passed soon.

The NCP and the Congress, both proponents of Muslim quota, are constituents of the Sena-led Maha Vikas Aghadi government.

Asked about Mr Thackeray's remarks on the issue, Mr Fadnavis said instead of making comments at the press conference, the chief minister should make a statement in the legislature which is currently having its budget session.

The Leader of the Opposition in the assembly said that Mr Malik's opinion is the official position of the government as the minister had talked about giving quota in the council.

"So, instead of making vague comments in the press conference, the chief minister should say in the council that it is not his view (the one expressed by chief minister).

"The chief minister gave vague answers during the press conference, saying the proposal has not come to him. Your minister (Malik) only has said it," Mr Fadnavis told reporters outside the legislature building complex.

The BJP leader maintained there is no provision in the Constitution for religion-based reservation in government jobs or education.

"Say with courage that you will not give the quota, that the Constitution doesn't accept quota based on religion. Hence, we (the government) will not bring law granting quota," the former Chief Minister said.

Mr Fadnavis claimed that if given within the 50 per cent ceiling set by the Supreme Court, the Muslim quota will affect the existing reservation granted to OBCs.

"And if given outside it, it will affect Maratha quota," he added.