Economics of Poverty
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Page 1 Govt to borrow Rs 2.68 lakh crore in H2 as fiscal deficit on track2 States’ gross fiscal deficit stayed within 3%: RBI5 The link between jobs, farming and climate6 Creating jobs for young India9 Govt must not sacrifice rise in farm incomes at altar of short-term consumer interest12 Trust deficit: On Punjab and Maharashtra Co-operative Bank issue15 India has over 6 lakh rogue drones; agencies analysing sky fence, drone gun technology17 If we delay, we will pay, IRCTC promises Tejas passengers20 IRDAI issues new guidelines on standardisation of exclusions in health insurance22 Indian states’ rising debt seen posing challenge in medium term24 The brick and mortar of FDI 2.026 MAT credit not available to companies opting for lower corporate tax rate29 Accommodative stance indicates policy rate could go below 5% handle31 Forex reserves scale record high of $434.6 billion33 The current crisis at PMC Bank serves the country a warning35 Finance Minister to inaugurate national tax e-assessment centre37 A road to economic revival runs through agriculture38 The wrong way out41 The great disruption of 201643 Stirring up the truth about Zero Budget Natural Farming44 Govt needs to simplify, rationalize?labour laws to make them effective47 China has pulled ahead of India on far more than the economy49 The minimum wage solution51 It is still an amber light for road safety54 The efficiency promise of the bankruptcy code57 The policy way out59 A tax policy that could work61 ‘FASTags will work as Aadhaar, track vehicles’64 Gujarat brings out new port policy66 Easing poverty68 An economics for the poor69 Financial stability and the RBI71 Economics of poverty: On Economic Sciences' Nobel74 A gangrenous wound that could block India’s economic recovery76 A fine balance to use science tools in economics78 China’s economic future is not as bright as it was till recently80 A Nobel prize that gives us hope82 Five years of Make in India84 The third Nobel laureate’s India link86 A cost-effective way to power generation88 Page 2 Source : www.economictimes.indiatimes.com Date : 2019-10-01 GOVT TO BORROW RS 2.68 LAKH CRORE IN H2 AS FISCAL DEFICIT ON TRACK Relevant for: Indian Economy | Topic: Issues relating to Mobilization of resources incl. Savings, Borrowings & External Resources NEW DELHI: The government has stayed with the borrowing plan for the fiscal, as announced in the budget, sending a strong signal that it will try and meet the fiscal deficit target despite a sharp cut in corporate tax rate that is expected to cost Rs 1.45 lakh crore. It will borrow Rs 2.68 lakh crore in the second half of the fiscal, having borrowed Rs 4.42 crore in the first half, of the total planned Rs 7.1 lakh crore for FY20, the finance ministry said on Monday. “Rs 2.68 lakh crore borrowing indicates that the fiscal glide path as indicated in the budget is being maintained,” said economic affairs secretary Atanu Chakraborty on Monday, at a media briefing. Separately released data on Monday showed better fiscal deficit for April-August, at 78.7% of the budget estimate for FY20, much better than 94.7% for the same period last year. The decline in growth to a six-year low of 5% and the subsequent measures to lift growth have raised concerns that government may miss the target for FY20. The government did not say if it would go ahead with maiden overseas sovereign borrowing announced in the budget. The Rs 2.68 lakh crore borrowing in the second half, 37.75% of the total gross borrowing, will be spread over 17 weekly auctions of Rs 16,000 crore each. The last two auctions will be Rs 14,000 crore each. Experts have said that government’s move to maintain budgeted borrowing levels showed commitment to maintaining the fiscal glide path but it faced an uphill task. “The government is determined to keep fiscal deficit in check and for that I think they will have to push divestment… and maybe other sources of revenue like asset monetisation etc.” said DK Joshi, chief economist at Crisil. “We expect a shortfall relative to the budgeted target for FY2020 for the tax revenues,” said Aditi Nayar, principal economist ICRA, adding that the situation will become clearer by end of the third quarter. Final borrowings will depend on shortfall in revenues and flows into small savings scheme. Yield on 10-year government bond fell by 4 basis points and closed at 6.7% on Monday. A basis point is onehundredth of one per cent. The government had cut basic corporate tax rates in a move that is expected to have an impact of Rs 1.45 lakh crore on the government’s revenue collections. SOVEREIGN BORROWINGS Finance minister Nirmala Sitharaman had, in her budget speech, said the government would start raising a part of its gross borrowing programme in external markets in external currencies. However,crackIAS.com there was no further clarity on this during Monday’s briefing. “We need very careful calibrations and deliberations before it enters in the market. The work on that is presently going on to work out the structures and various pros and cons and it is a process which is long,” secretary said. “For this year, all borrowing of the government will presently be in rupee- denominated bonds.” FISCAL DEFICIT India’s fiscal deficit stood at Rs 5.54 lakh crore at the end of August, which is 78.7% of the budgeted estimate of Rs 7.03 lakh crore for the current fiscal year, or 3.3% of the gross domestic product (GDP). Total government spending during the period was Rs 11.75 lakh crore, Page 3 9.75% higher than the year-ago figure of Rs 10.71 lakh crore. Capital expenditure, however, slowed in the current financial year at 40.3 % of the budget estimate against 44.1% in the year- ago period. Total receipts in April-August remained at Rs 6.21 lakh crore, 29.8% of the budget estimate for the full fiscal. NEW DELHI: The government has stayed with the borrowing plan for the fiscal, as announced in the budget, sending a strong signal that it will try and meet the fiscal deficit target despite a sharp cut in corporate tax rate that is expected to cost Rs 1.45 lakh crore. It will borrow Rs 2.68 lakh crore in the second half of the fiscal, having borrowed Rs 4.42 crore in the first half, of the total planned Rs 7.1 lakh crore for FY20, the finance ministry said on Monday. “Rs 2.68 lakh crore borrowing indicates that the fiscal glide path as indicated in the budget is being maintained,” said economic affairs secretary Atanu Chakraborty on Monday, at a media briefing. Separately released data on Monday showed better fiscal deficit for April-August, at 78.7% of the budget estimate for FY20, much better than 94.7% for the same period last year. The decline in growth to a six-year low of 5% and the subsequent measures to lift growth have raised concerns that government may miss the target for FY20. The government did not say if it would go ahead with maiden overseas sovereign borrowing announced in the budget. The Rs 2.68 lakh crore borrowing in the second half, 37.75% of the total gross borrowing, will be spread over 17 weekly auctions of Rs 16,000 crore each. The last two auctions will be Rs 14,000 crore each. Experts have said that government’s move to maintain budgeted borrowing levels showed commitment to maintaining the fiscal glide path but it faced an uphill task. “The government is determined to keep fiscal deficit in check and for that I think they will have to push divestment… and maybe other sources of revenue like asset monetisation etc.” said DK Joshi, chief economist at Crisil. “We expect a shortfall relative to the budgeted target for FY2020 for the tax revenues,” said Aditi Nayar, principal economist ICRA, adding that the situation will become clearer by end of the third quarter. Final borrowings will depend on shortfall in revenues and flows into small savings scheme. Yield on 10-year government bond fell by 4 basis points and closed at 6.7% on Monday. A basis point is onehundredth of one per cent. The government had cut basic corporate tax rates in a move that is expected to have an impact of Rs 1.45 lakh crore on the government’s revenue collections. SOVEREIGN BORROWINGS Finance minister Nirmala Sitharaman had, in her budget speech, said the government would start raising a part of its gross borrowing programme in external markets in external currencies. However, there was no further clarity on this during Monday’s briefing. “We need very careful calibrations and deliberations before it enters in the market. The work on that is presently going on to work out the structures and various pros and cons and it is a process which is long,” secretarycrackIAS.com said. “For this year, all borrowing of the government will presently be in rupee- denominated bonds.” FISCAL DEFICIT India’s fiscal deficit stood at Rs 5.54 lakh crore at the end of August, which is 78.7% of the budgeted estimate of Rs 7.03 lakh crore for the current fiscal year, or 3.3% of the gross domestic product (GDP). Total government spending during the period was Rs 11.75 lakh crore, 9.75% higher than the year-ago figure of Rs 10.71 lakh crore.