India scores better than global average on budget transparency
MUMBAI: India scored slightly better than the global average when it comes to budget transparency, according to results of the Open Budget Survey (2017) released on January 30.
With a rank of 53 among 115 countries covered by the survey, India’s score of 48 out of 100 for transparency (as against the global average of 43), showed an improvement of 2 percentage points over the 2015 index.
Every two years, the International Budget Partnership (IBP), using over a hundred indicators, assesses budget transparency based on the amount, level of detail and timeliness of budget information made available to the public.
Results of the Open Budget Survey (2017), highlight that the global average score of budget transparency has declined by 2 percentage points from 45 in 2015 to 43 in 2017. It reflects that 89 out of the 115 countries fail to make sufficient budget information publicly available. IBP states that this failure undermines the ability of citizens to hold their government to account for managing public funds.
Countries like New Zealand and South Africa (with scores of 89 each) topped the charts whereas Saudi Arabia scored one or for that matter Qatar and Yemen scored a zero indicating that no budget information being available in the public domain. The average score for South Asian countries (Afghanistan, Bangladesh, India, Nepal, Pakistan and Sri Lanka) was 46, an increase of 5 percentage points over the 2015 survey results.
To improve budget transparency, IBP suggests that India should draft and publish a pre-budget statement and mid-year review. Pre budget statements are published by nearly 50 countries, including India’s neighbour – Afghanistan. It should also increase the information in the budget proposals by providing detailed information on the financial position of the government and extra-budgetary funds. India should also provide more information, such as comparisons between planned revenue and actual outcomes and a comparison between the original macroeconomic forecast and actual outcomes.
In terms of public participation, the Open Budget Survey (2017) gave India a score of 15 out of 100, denoting that few opportunities are provided to the public to engage in the budget process. Interestingly, this score is above the global average of 12. For improving public participation, IBP suggests introduction of a pilot mechanism (such as social audits) to enable the public and government officials to exchange views on national budget mattes during monitoring of the national budget implementation.
Among India’s neighbours, Nepal had the highest score of 24 on the public participation parameter. India tied with Afghanistan with a score of 15. Bangladesh followed with a score of 13.
In terms of budget oversight, India obtained a score of 48. The IBP said that the legislature and supreme audit institution (which is the Comptroller and Auditor General – CAG) provide weak oversight during the planning stage of the budget cycle and limited oversight during the implementation stage of the budget cycle.
Budget 2018: What bollywood expects from Mr. Jaitley
MUMBAI: Finance Minister Arun Jaitley will on Thursday present the union budget, where the government is expected to try and woo rural voters and small businesses as the country heads into a season of elections. The entertainment industry is not likely to be a big priority.
The Film & Television Producers Guild of India, the industry’s apex body, recently made several suggestions in a presentation to the finance ministry, chief among them that tax benefits should be given to all multiplexes built in non-metro cities, which have a lower density of cinema screens. As of now, multiplexes built till 2005 in such areas don’t have to pay tax on 50 per cent of their revenue.
“In order to curb the scarcity of screens for viewing films and to cater to the demand of cinema viewers, it is essential to extend benefit… to multiplexes constructed after 2005,” the document said.
The paper said piracy, which is rampant in India, could be curbed if theatre density was increased. Apart from piracy, the film industry’s woes have been compounded by falling internet data costs in a booming smartphone market and the increasing popularity of streaming services.
The Guild’s demands also include abolition of the Minimum Alternate Tax on Special Economic Zones to help the setting up and development of media hubs.
The film industry, one of the most heavily taxed in the country, has been lobbying for years for tax breaks, without much success. Entertainment tax used to be as much as 45 per cent in some states before the introduction of the nationwide goods and services tax (GST) last year.
With the introduction of GST, entertainment tax was placed under the highest tax slab of 28 per cent. The Guild cited Bollywood’s “soft power” as a reason why movie tickets should be taxed lower, but its suggestions were not considered. Bollywood is not recognized as a formal industry by the Indian government, and doesn’t get the tax subsidies that some other formal industries are eligible for.
ONGC buys govt’s entire 51.11% stake in HPCL for Rs 36,915 cr
NEW DELHI: State-owned Oil and Natural Gas Corp (ONGC) said it has bought government’s entire 51.11 per cent stake in oil refiner HPCL for Rs 36,915 crore.
In a regulatory filing, ONGC said it bought 77.88 crore shares in Hindustan Petroleum Corp Ltd (HPCL) for Rs 473.97 per share.
The acquisition was done in an off-market deal, it said.
“The transaction is in furtherance of the Government’s objective to combine the various central public enterprises to give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders and create an oil major which is able to match the performance of international and domestic private oil and gas companies,” it said.
The price paid is higher than Rs 396.50 closing price of HPCL on the BSE.
The transaction will help the government cross its annual sell-off (disinvestment) target for the first ever time.
ONGC has borrowed money from a clutch of banks to fund the deal.
Through this acquisition, ONGC will become India’s first vertically integrated ‘oil major’ company, having presence across the entire value chain. The integrated entity will have advantage of having enhanced capacity to bear higher risks and take higher investment decisions etc.
In this process, ONGC has acquired significant mid-stream and downstream capacity and will attain economies of scale at various levels of operations.
With a turnover of Rs 2,13,489 crore and profit of Rs 6,502 crore during 2016-17, HPCL ranks at 384th in Fortune Global 500 and 48th in Platts 250 Global Energy Companies.
HPCL markets around 35.2 million tonnes of petroleum products with a market share of about 21 per cent and is number one lube marketer in the country. It has refineries in Mumbai and Visakhapatnam and a joint venture refinery at Bhatinda.
It owns the biggest Lube refinery in India and the second largest cross country product pipeline network of about 3,500 km. HPCL has a vast marketing network spread across the length and breadth of the country with terminals, depots, LPG bottling plants, lube blending plants, aviation fuel stations and around 15,000 petrol pumps.
ONGC is the largest producer of crude oil and natural gas in India, contributing around 70 per cent of domestic production.
As India unveils union budget, all eyes on fiscal deficit target
NEW DELHI: As India’s government gets set to unveil its 2018-19 budget on Thursday, all eyes will be on whether the authorities stay the course on containing the fiscal deficit, or whether they throw caution to the wind with a populist set of spending priorities.
Facing discontent at home over falling farm incomes and a backlash following policy initiatives that have dented growth, Prime Minister Narendra Modi will be aiming to woo rural voters and small business owners in the last full budget before a general election that must be held by May 2019.
While economic growth has been slowed by the botched rollout of a nationwide goods and service tax (GST) in 2017, and a shock move to ban high value currency notes in late 2016, investors have so far looked beyond the setbacks, perceiving the initiatives as positive long term.
Benchmark 10-year bond yields have fallen 135 basis points and the NSE share index has surged 55 percent since Modi took power in May 2014.
To keep investors on side however, Modi will have to convince them that he plans to keep to his word on working towards reining in the fiscal deficit.
A Reuters poll this week showed most economists expect a 3.2 percent deficit in 2018-19, as the government looks to increase investments in areas such as agriculture. Anything much beyond that, however, may draw a swift sell-off in the markets.
Investors were already spooked this week after India’s Chief Economic Advisor Arvind Subramanian, in an economic survey ahead of the budget, suggested “a pause” in the fiscal consolidation path, while the government attempts to reinvigorate growth.
Indian shares fell for a second consecutive session on Wednesday, as investors opted to book profits ahead of the budget, with markets trading near all-time highs.
The benchmark 10-year bond yield closed flat at 7.60 percent on Wednesday, but it is up 13 basis points from its close on Friday after Subramanian’s comments.
Income tax 2018: Salary class hopes for higher income tax exception limit
NEW DELHI: Finance Minister Arun Jaitley will present the Union Budget 2018 for the fiscal year 2018-19, February 1, in the Parliament.
The salaried and individual class have high hopes and expectations for higher income tax exception limit from the Finance Minister.
It is highly anticipated that income-tax slab rates for year 2018-19, which is to be announced on February 1 during the Budget Session of Parliament, will up the exemption by at least Rs 50,000 to Rs 3 lakh from the current Rs 2.5 lakh limit.
In the previous Budget Session (Union Budget 2017), Jaitley reduced the tax rate for individual assesses with income between Rs 2.5 lakh and Rs 5 lakh to 5 per cent from the FY 2014-15 rate of 10 per cent.
The FY 2014-15 rebate under Section 87A of the Income-tax Act, 1961, was also reduced to Rs 2,500 from Rs 5,000 for those earning between Rs 2.5 lakh and Rs 3.5 lakh.
Hence, as a combined effect, the tax burden on those earning up to Rs 3 lakh became nil, and for those in the Rs 3 lakh to Rs 3.5 lakh bracket became Rs 2,500 during FY 2016-17.
This is going to be the last full-fledged budget to be presented by the Narendra Modi-led NDA government, and the first one post the roll out of the GST.
FY16 gdp growth revised up to 8.2%, fy17 unchanged at 7.1%: CSO
NEW DELHI: The Central Statistics Office on Wednesday revised the Gross Domestic Product (GDP) growth rate for 2015-16 to 8.2 per cent from the earlier estimates of 8 per cent and kept the 2016-17 growth unchanged at 7.1 per cent.
The real GDP or GDP at constant (2011-12) prices for the years 2016-17 and 2015-16 stands at Rs 121.96 lakh crore and Rs 113.86 lakh crore respectively, showing growth of 7.1 per cent during 2016-17 and 8.2 per cent during 2015-16, the CSO said in a statement.
In terms of real GVA (gross value added), it said the GVA at constant (2011-12) basic prices grew 7.1 per cent in 2016- 17, as against a growth of 8.1 per cent in 2015-16.
According to advance GDP estimates of CSO, the GVA growth on 2011-12 price was estimated at 6.6 per cent for 2016-17.
The CSO released the first revised estimates of national account for 2016-17 along with second revised estimates for 2015-16 and third revised estimates for 2014-15 (with base year 2011-12).
Under the third revision, the CSO has estimated GDP growth in 2014-15 at 7.4 per cent from earlier estimates of 7.5 per cent.
The CSO said that the first revised estimates for 2016-17 have been compiled using industry-wise/institution-wise detailed information instead of using the benchmark-indicator method employed at the time of release of Provisional Estimates on May 31, 2017.
GCPL Q3 net up 22%; appoints fifth woman director
MUMBAI: Godrej Consumer Products (GCPL) has reported a consolidated net profit of Rs 430 crore in the December quarter of fiscal year 2018, a 22% increase as compared to Rs 352 crore in the corresponding quarter last fiscal.
Consolidated total income increased 6% to Rs 2,666 crore as compared to Rs 2,505 crore during the period.
On a standalone basis, GCPL’s Q3 net profit increased 29% from Rs 232 crore to Rs 299 crore, while total income rose 11% from Rs 1,296 crore to Rs 1,444 crore.
In an announcement to the stock exchanges on the quarterly results, GCPL said sales for the quarter ended December 31, 2017 is net of Goods and Service Tax (GST), however, sales till period ended June 30,2017 and comparative period is gross of excise duty.
GCPL also announced that its Board of Directors has approved the nomination of Pippa Tubman Armerding as director, effective immediately. Armerding’s appointment is expected to enable GCPL leverage her expertise and perspectives in guiding the company’s growth in Africa. Armerding, who is currently director of the Harvard Business School Africa Research Office, will be the fifth woman director on the GCPL Board.