News Analysis India

Tag: Finance ministry

  • In a first, RBI considers using images of Rabindranath Tagore, APJ Abdul Kalam on banknotes

    Express News Service

    NEW DELHI: One of Bengal’s greatest icons, Rabindranath Tagore, and India’s 11th President, APJ Abdul Kalam, also known as the Missile Man, are reportedly in the race to make it to the country’s banknotes alongside M K Gandhi.The Father of the Nation’s watermark figure occupies the pride of place on all denominations of Indian currency notes. However, the Finance Ministry and the Reserve Bank of India (RBI) are also reportedly considering using the watermark figures of Tagore and Kalam on a new series of banknotes of some denominations.

    This is the first time that RBI is considering using the images of famous personalities other than Mahatma Gandhi on the banknotes.The RBI and the Security Printing and Minting Corporation of India (SPMCIL), which is under the Finance Ministry, are learnt to have sent two separate sets of samples of Gandhi, Tagore and Kalam watermarks to IIT-Delhi Emeritus Professor Dilip T Shahani, who has been told to choose from the two sets and present them for final consideration by the government. 

    Government sources said that a final decision on picking one or all the three images will be taken at the “highest levels of the government”.  According to sources, the designing the three watermark samples had official sanction. No firm decision has yet been taken, but the move is afoot to explore possibilities of including watermarks of multiples figures on currency notes. 

    There is global precedence: different denominations of US dollars carry portraits of some of the Founding Fathers such as George Washington, Benjamin Franklin, Thomas Jefferson, Andrew Jackson, Alexander Hamilton and a few 19th century presidents, including Abraham Lincoln.Professor Shahani, who is examining the watermarks, specialises in Electromagnetic Instrumentation. He was conferred with the Padma Shri by the Modi government in January this year. 

    Top government sources revealed that sometime in 2017, one of nine RBI internal committees, which were formed to recommend new security features for a fresh series of banknotes, submitted its report in 2020, proposing that besides Gandhi the watermark figures of Tagore and Kalam should also be developed for inclusion in all currency notes barring the `2,000 note whose printing had already stopped. 

    In 2021, the RBI issued instructions to its Mysore-based Bharatiya Reserve Bank Note Mudran Pvt Ltd and the SPMCIL’s Security Paper Mill at Hoshangabad to design their own sets of the watermark samples. Subsequently, the RBI and SPMCIL sent their samples to Shahani for him to examine them. Shahani has had several rounds of discussions with officials on the “finer aspects” of the samples.

  • Finance Ministry to nix tax exemptions to rationalise rate

    Express News Service

    NEW DELHI:  The Union finance ministry, which has started work on Budget 2022-23 and is reviewing both personal and corporate tax exemptions, has hinted that it might roll back some concessions for industry. The ministry is currently assessing both the economic costs and benefits of schemes before taking a call on what to keep and what to nix, sources said. 

    A senior official told this paper that this is in line with the government’s policy to broaden the tax base by reducing rates and letting go of exemptions. “Some exemptions were withdrawn in the last Budget and the review process is on for the rest. A few tax breaks that will expire soon won’t be renewed,” the official added. 

    While he declined to name any scheme, it is learnt that the capital gains tax exemption for investing in startups, which expires in March 2022, may not be renewed. Ditto with the basic customs duty and IGST exemptions for export-oriented units. 

    In its letter seeking suggestions for the upcoming Budget, the ministry urged industrialists to back their recommendations with economic justification. “It would not be feasible to examine suggestions that are either not clearly explained or supported by justification…” the letter read. 

  • DA hike to 31 per cent effective from July 1: Finance Ministry

    By PTI

    NEW DELHI: Dearness Allowance for central government employees has been hiked to 31 per cent of the basic pay from 28 per cent with effect from July 1, 2021, the Finance Ministry said.

    In an office memorandum, the Department of Expenditure, under the Finance Ministry, said the term ‘basic pay’ means the pay drawn as per the 7th pay commission matrix and does not include any other type of pay like special pay, etc. the Dearness Allowance payable to central government employees shall be enhanced from the existing rate of 28 per cent to 31 per cent of the basic pay with effect from July 1, 2021,” said the office memorandum dated October 25.

    The hike will also apply to civilian employees paid from the Defence Services, while in respect of Armed Forces personnel and Railway employees, separate orders will be issued by the Defence and Railways Ministry, respectively.

    The Union Cabinet had last week approved a 3 per cent hike in dearness allowance (DA) for central government employees and dearness relief (DR) for pensioners over the 28 per cent existing rate.

    The decision will benefit about 47.14 lakh central government employees and 68.62 lakh pensioners.

    In July this year, and DA rate was increased from 17 per cent to 28 per cent.

    With a 3-per cent hike now, the DA rate will become 31 per cent.

    The combined impact on the exchequer on account of the Dearness Allowance and Dearness Relief would be Rs 9,488.70 crore.

    Following the COVID pandemic outbreak, the government had frozen the three additional instalments of the DA and DR, which were due from January 1, 2020, July 1, 2020, and January 1, 2021.

    The freeze was lifted from July 1, 2021, and the DA, DR rate was hiked by 11 percentage points to 28 per cent.

  • Any subsequent Covid wave to be mild, impact of second wave muted: Finance ministry

    By Express News Service

    NEW DELHI:  The finance ministry has brushed aside the fears of next wave of pandemic and said that any subsequent waves will be mild in impact, if the country sustains the momentum of vaccination programme.

    “Having antibodies reduces the probability of acquiring serious illnesses, as is borne by studies. So, any subsequent waves are expected to be mild in their impact on hospitalisations and deaths. However, it is imperative that Covid-appropriate behaviour and due protocol is followed,” the monthly economic report released by the financial ministry said.

    The report added that the impact of the second wave is muted and the economy has started recovering, as suggested by various economic indicators. The finance ministry said the movement of high frequency indicators in July clearly point towards a broad-based economic revival. PMI Manufacturing sharply rebounded to expansionary zone in July emerging from the previous month’s contraction. GST collection also reclaimed its Rs 1 trillion plus territory in July signifying increased business and consumer activity. Rail freight in July hit a record 18.3% growth.

    The surge in economic activity in July was further corroborated by trends in Kharif sowing, fertilizer sales, power consumption, vehicle registrations, highway toll collections, e-way bills and digital transactions. Latest available data on growth of eight core industries, auto sales, tractor sales, port traffic, air passenger traffic also indicate improvement from the contraction induced by the second wave.

    “With the second wave abating in most  parts of the country and state governments lifting the restrictions in  phases, there are visible signs of economic rejuvenation since second half of May. This resonates with the expectation that the impact of the second wave will be muted,” the report said, adding the rebound in economic indicators and the muted impact of the second wave is corroborated by upward revision of RBI estimates for real GDP growth in Q1 of 2021-22 to 21.4% from its June estimate of 18.5%.

  • Finance Ministry issues order to implement Cabinet decision on DA, DR hike from July 1

    By PTI
    NEW DELHI: The Finance Ministry on Tuesday issued an order to implement the Cabinet decision to hike Dearness Allowance for central government employees to 28 per cent from July 1.

    Last week, the Union Cabinet had approved an 11 percentage point hike in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners with effect from July 1, benefitting more than 48 lakh central government employees, and 65 lakh pensioners.

    With this, the new DA rate will be 28 per cent, up from 17 per cent. In an office memorandum, the Department of Expenditure under the Finance Ministry said the DA payable to central government employees shall be enhanced from the existing rate of 17 per cent to 28 per cent of basic pay.

    Centre issues notification for revised rates of Dearness Allowance. Copy of memorandum. @NewIndianXpress @TNIEBiz pic.twitter.com/MpLcrfZMR1
    — Anuradha Shukla (@anu1122) July 20, 2021

    The increase subsumes the additional instalments arising on January 1, 2020; July 1, 2020, and January 1, 2021.

    “These orders shall also apply to the civilian employees paid from the Defence Services Estimates,” it said, adding for Armed Forces personnel and Railway employees separate orders will be issued by the respective ministries.

    In April last year, the Finance Ministry had put on hold an increment in dearness allowance (DA) till June 30, 2021, due to the COVID-19 pandemic. The rate of DA from January 1, 2020, to June 30, 2021, was 17 per cent.

  • Debt-to-GDP ratio swells to 58.73 per cent for FY 2020-21

    By Express News Service
    NEW DELHI:  In another sign of the country’s worsening fiscal situation, the Central government’s total debt at the end of financial year 2020-21 has reached 58.73 per cent of the GDP, the highest since 2007-08 when the debt-to-GDP ratio was 58.86 per cent.

    The government’s total debt reached Rs 116.2 lakh crore as on 31 March 2021, registering a 6.36 per cent jump in the January-March quarter, according to a finance ministry report. At the end of December 2020, total debt stood at Rs 109.2 lakh crore.

    In 2019-20, the ratio was 48.6 per cent. The government’s total market borrowings also exceeded the revised budget estimate of Rs 12.74 lakh crore for FY21. The government had to borrow Rs 13.20 lakh crore to finance a part of the fiscal deficit of Rs 18.21 lakh crore. Rest of the fiscal deficit is financed by money collected through small savings schemes and external assistance. 

    During the January-March quarter of 2020-21, the Centre issued government bonds worth Rs 3,20,349 crore against Rs 76,000 crore in the year-ago quarter. Consequently, the rate at which the government borrowed during the fourth quarter also increased from 5.68 per cent in the October-December 2020 quarter to 5.80%. 

    “Yields on government securities hardened in the secondary market due to increase in supply of G-secs during the quarter. Further, hardening of yields was more on the short end of curve due to increase in weekly borrowing and also announcement of resumption of normal liquidity operations by the RBI,” the Finance Ministry report said. 

    Public debt

    The country’s total public debt (Centre and States) is likely to have touched 90 per cent of the GDP in 2020-21, the highest ever recorded. In 2019-20, the total public debt to GDP ratio was 70 per cent.

  • Relaxing cap of Rs 2 lakh in cash transaction for COVID treatment being considered, Centre tells HC

    By PTI
    NEW DELHI: The Centre informed the Delhi High Court on Friday that relaxation in cap of Rs 2 lakh cash transactions for COVID-19 treatment in hospitals is under “active consideration”.

    A bench of Justices Vipin Sanghi and Rekha Palli asked the Finance Ministry counsel to apprise it of the development on Monday.

    The counsel said the issue has been raised and it was under active consideration and some orders are likely to be passed in this regard during the day.

    The high court was hearing a plea seeking suspension of Section 269ST of the Income Tax Act which puts a bar on a person from receiving an amount of Rs 2 lakh or more, other than bank cheque, draft or electronic clearing system.

    Petitioner Manisha Gupta, in her plea, said during the COVID-19 pandemic, the cap on cash transaction beyond Rs 2 lakh is creating a roadblock in the treatment of patients at the hospitals as hospitals are refusing to accept over and above the capped amount which in its turn is delaying the necessary treatment for the patient.

    Senior Advocate Sacchin Puri, appearing for the petitioner, submitted that persons suffering from COVID-19 are facing serious inconvenience on account of refusal of hospitals to accept cash beyond Rs 2 lakh towards the treatment.

    The plea, filed through advocates Praveen K Sharma, Dhananjay Grover and Kamil Khan, said the patients are critical and if necessary treatment is not provided to them for want of payment of money, it would amount to violation of Article 21 (right to life) of the Constitution.

    “Second wave of COVID-19 is a case of national emergency and during these extraordinary times it is in the interest of people of this country that the cap on cash transactions be suspended for the time being only for the purposes of hospitalisation and treatment of a COVID-19 patient,” it said, adding that the provision under the law be suspended till May 31 or till any further date.

  • ‘Orders issued by oversight’: Government withdraws cut in small savings rates

    By Online Desk
    Finance Minister Nirmala Sitharaman on Thursday morning said that the government is withdrawing the cut in small saving rates.

    Sitharaman, in a tweet, said that the overnight order was issued by oversight and has been withdrawn, further adding that the interest rates on small savings will be retained at the level of fourth quarter of last financial year.

    Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021.Orders issued by oversight shall be withdrawn. @FinMinIndia @PIB_India
    — Nirmala Sitharaman (@nsitharaman) April 1, 2021

    The government on Wednesday had announced a cut in interest rates on small savings schemes, including NSC and PPF, by up to 1. 1 per cent for the first quarter of 2021-22 in line with falling fixed deposit rates of banks.

    The interest rate on Public Provident Fund (PPF) was reduced by 0.7 per cent to 6.4 per cent while National Savings Certificate (NSC) was cut by 0.9 per cent to 5.9 per cent. 

    The steepest fall of 1.1 per cent was effected in the one-year term deposit.

    The new rate was brought down to 4.4 per cent as compared to 5.5 per cent.

    Interest rates for small savings schemes are notified on a quarterly basis.

    Once restored, PPF and NSC will carry an annual interest rate of 7.1 per cent and 6.8 per cent, respectively.

    One year term deposit scheme to earn a higher interest rate of 5.5 per cent during the first quarter of the current fiscal while the girl child savings scheme Sukanya Samriddhi Yojana account will earn 7.6 per cent as against reduced rate of 6.9 per cent.

    Accordingly, the interest rate for the five-year senior citizens savings scheme would be retained at 7.4 per cent.

    The interest on the senior citizens’ scheme is paid quarterly.

    Interest rate on savings deposits to be restored at 4 per cent annually from the reduced rate of 3.5 per cent.

    Term deposits of one to five years will fetch interest rate in the range of 5.5-6.7 per cent, to be paid quarterly, while the interest rate on five-year recurring deposits will earn a higher interest of 5.8 per cent as against the reduced 5.3 per cent.

    The rollback was announced as Bengal and Assam are voting in the second phase of their respective assembly elections.

    (With PTI Inputs)