Will Indian Budget last till December..? 74 % is over

In signs of deterioration of the country's financial situation, the government's fiscal deficit has risen to Rs 3.07 lakh crore, or 74 per cent of the Budget estimates, in the first seven months of 2011-12.

According to the Controller General of Accounts (CGA) data, the government's fiscal deficit went up to Rs 3.07 lakh crore, or 74.4 per cent of the Budget estimates at the end of October, as non-tax revenue growth declined.

The Centre's fiscal deficit -- gap between overall expenditure and receipts -- was 42.6 per cent of the estimates in the same period last year.

For 2011-12 fiscal, the government has estimated a deficit of Rs 4.12 lakh crore or 4.6 per cent of GDP.

The rise in fiscal deficit is mainly on account of lower mobilisation of non-tax revenue compared to same period last year when it had mobilised over Rs 1.08 lakh crore on account of 3G and BWA spectrum auctioning.

The revenue receipt stood at over Rs 5.39 lakh crore during the seven-month period against the Budget estimate of Rs 7.89 lakh crore for the entire fiscal. This is 45.5 per cent of the estimates.

At the end of September, non-tax revenue collection has stood at 54.4 per cent of Budget estimates, compared to 119 per cent in the same period a year ago.

The government has so far mobilised just Rs 1,145 crore from disinvestment. This is far less than the target of Rs 40,000 crore set for the entire fiscal.

Disinvestment plan of the government has been hit due to uncertainty in the stock market fuelled by global economic slowdown.

Meanwhile, the revenue deficit, the difference between revenue earned and expenses, during April-October this year stood at Rs 2.43 lakh crore, or 79 per cent of the budget estimates.

Comments :

As Write, so much is being written about and spoken about the Governments lethargy and Tactlessness that no more words can define them. 

It seems that, Mr Singh is showing Aloofness and High handedness with the opposition. He cannot now be said as Economist only. 

The F. D. I. in Retail is hated policy and more so a politically incorrect timing. 

It seems that, Dr. Singh will soon be replaced from the top job. Who will be Next..? that's the Q for 2012

Indian Budget deficit to rise to 5.5 %..?

The finance ministry on Friday sought Parliament’s approval for a net additional expenditure of Rs. 56,848.46 crore, which will take the fiscal deficit way past the budgeted 4.6% of gross domestic product (GDP).

Submitting the second supplementary demand for grants, the ministry projected a gross additional expenditure of Rs. 63,180.24 crore. Out of that, the government plans to meet Rs. 6,330.8 crore of expenditure through savings on the money already allocated to various departments.

The additional expenditure is a sign of pressure on government finances and indicates that a revenue shortfall is for real, said D.K. Joshi, chief economist at credit rating agency Crisil Ltd.

“As there is no revenue buoyancy, the government has to meet the additional expenditure through higher market borrowing,” he said. Concerns of additional government borrowing pushed up yields in the government securities market. The yield on the 10-year benchmark paper rose to 8.84% in intra-day trading before ending the day at 8.81%, higher than Thursday’s close of 8.79%.

In the first supplementary demand for grants in August, the government had projected an additional gross expenditure of Rs. 34,724 crore, entailing a net cash outgo of Rs. 9,016.06 crore.

In September, the government announced that it will borrow an additional Rs.52,872 crore from the market in the second half of 2011-12, raising its borrowing programme for the fiscal to Rs. 4.7 trillion.

The government had budgeted to borrow Rs. 4.17 trillion for the current fiscal. The government, which has already borrowed Rs. 2.5 trillion in the first half of the fiscal, will now borrow Rs. 2.2 trillion in the second half. Crisil has projected the fiscal deficit at 5.2% of GDP, which may need to be revised upwards, Joshi said.

M. Govinda Rao, director at the National Institute of Public Finance and Policy, said he expects the fiscal deficit at 5.5% of GDP for the current fiscal.

On Tuesday, finance minister Pranab Mukherjee said the government will find it hard to meet the 4.6% target in the year to March because any belt-tightening may hit jobs and slow economic growth even further. The economy is expected to grow 7.6% this year, down from 8.5% in the last fiscal.

“This is a difficult target, given the deterioration in the global economy and its impact on India over the last three-four months,” Mukherjee told the Lok Sabha. “We have to be careful not to overdo ourselves in reaching this target, since that can have an excessive slowing-down impact on growth.”

Indian Deficit is at 8.6% with 10% Inflation

India's combined fiscal deficit --of both the Centre and states--during 2011-12 could be as high as 8.6% of the GDP and any further slippage could risk a credit downgrade and loss of business confidence, says a report.

According to global research firm Macquarie, consolidated fiscal deficit of the country including off-budget items like food, oil and fertiliser is likely to be around 8.6% amid slowing revenue growth and "lack of expenditure management by the government".

Macquarie further warned the country's fiscal deficit already remained high and any further slippage can increase the risk of "credit rating downgrade and loss of business confidence". It said the Indian government needs to adhere to the path of fiscal correction.

"We believe that the government needs to stick to its commitment of fiscal consolidation and curtail expenditure growth to create a room for private investments," the report said.

The overall fiscal deficit in financial year 2010-11, excluding the 3G spectrum receipts stood at 9%, it said.

"This, in an environment of weak global capital markets, could result in higher cost of capital and further crowding out of private investments and thus slower growth," it said.

Moreover, high fiscal deficit is also the main culprit responsible for high inflation, Macquarie said.

Empirical estimates suggest that a 1 per cent increase in level of fiscal deficit could cause about a quarter of a percentage point increase in the WPI.

Inflation has remained above the RBI's comfort zone of 5-5.5% over the last 22 months and has averaged over 9% during this period.

fiscal space for manoeuvrability is no longer available. Finance Minister

Union Finance Minister Shri Pranab Mukherjee’s Address at the National Development Council Meeting

Union Finance Minister Shri Pranab Mukherjee addressed the National Development Council Meeting in New Delhi today. Following is the text of his address: “It is my privilege to address the meeting of the National Development Council, convened to consider the Approach Paper to the Twelfth Five Year Plan. I would like to congratulate the Deputy Chairman and the Members of the Planning Commission for the work undertaken in preparing this Paper. 2. The renewed uncertainty in the global economy, due to sluggish US growth and worsening of the Euro-zone sovereign debt crisis and weak business sentiments and persisting high inflation at home, poses considerable challenges to the task of making a five-year plan. The fact that this task has been done well and the Approach Paper is before us for consideration is commendable. 3. In the last decade, the Indian economy moved to a higher growth path. Between 2005 and 2008, the economy grew at around 9.5 per cent per annum. This made India one of the fastest growing nations in the world. The global financial crisis brought the growth down to 6.8 per cent in 2008-09, though even then India remained a growth leader in the world. This was followed by a strong recovery and the Indian economy grew by 8 and 8.5 per cent in the subsequent two years. Data for the first quarter of 2011-12 indicate a growth rate of 7.7 per cent. While there may be some moderation in growth in the current fiscal, the fundamentals of the economy are intact and the medium-term growth prospects remain buoyant. 4. Over the last two decades the Indian economy has become increasingly integrated with the global economy. It is indeed a matter of pride that the world views India today as a major driver of growth. But globalization also has a downside. It means that when the world sneezes, India runs the risk of catching a cold. Not surprisingly, the economic crisis in Europe and the slowdown in the US are impacting us adversely. As an important contributor to the global growth process, we are playing an increasing role in the international policy arena. In my intervention in the G 20 meet held recently in Paris, I highlighted the spill over effects of the policies of advanced economies. I pointed out that the strong injections of liquidity by Central Banks seem to have done little to stimulate lending and borrowing. Instead we are witnessing negative consequences, especially on asset and commodity prices that have strengthened inflation in emerging markets. 5. Let me at the outset say that I endorse the overall theme of the Approach Paper to the Plan, namely, “Faster, Sustainable and More Inclusive Growth”. It captures well the aspirations of ordinary Indians. There are, however, several issues that we need to focus on, I intend to briefly touch upon some of these. Growth target for the Plan  6. While making a plan, it is important to be realistic and not get carried away by flights of fancy. At the same time, when we make a plan in the midst of a difficult economic situation, it is easy to be over-pessimistic. We have to remind ourselves that a plan is not like a Budget. The horizon for a plan is much longer and we must look beyond the immediate concerns. The Approach Paper outlines two alternative growth scenarios - 9 per cent and 9.5 per cent. There are good reasons, as has been outlined in the document before us, to pitch for a 9 per cent average growth for the plan period. Yet we need to retain a certain flexibility in our planning to consider raising the growth target to above 9 per cent, should the global environment improve and we make good progress in strengthening our domestic growth drivers in the initial years of the Twelfth Plan. We have achieved 9 per cent plus growth prior to the global slowdown. Our ability to deepen and broad-base the inclusion of the marginalised and vulnerable segments of our society in the economic mainstream, hinges crucially on sustaining buoyancy in our resource mobilisation and sustaining high growth path. 7. It is also important that more of this growth takes place in the backward areas of our country. There is already evidence that some of the slow growing states in the past have improved their performance in the recent years. This trend should be further reinforced. The objective of making growth more inclusive cannot be realised unless we are able to narrow down the regional imbalances and disparities. Fiscal consolidation  8. The budgetary support for the 11th Plan was targeted at Rs 16.08 lakh crore in nominal terms and has been fully financed by the Government. However, this was possible at high fiscal costs. After bringing down the fiscal deficit to 3.3 per cent of GDP in 2007-08 we had to breach fiscal targets and incur fiscal deficit of 7.8 per cent and 6.5 per cent of GDP in 2008-09 and 2009-10 respectively. The fiscal impact of these deviations will be felt in years to come in terms of high debt servicing requirements. We could afford this deviation to tide over the global economic crisis without any solvency concerns only because of the fiscal space we had created during the period 2004 to 2008. That fiscal space for manoeuvrability is no longer available. 9. Our recent experience has shown that sustained high growth and fiscal consolidation can be mutually reinforcing. The fiscal consolidation path as envisaged in the Medium Term Fiscal Policy Statement in the Budget 2011-12 has to be followed. As Finance Minister, I stand committed to this path of fiscal consolidation. However, I do recognize that to sustain growth along with fiscal consolidation, we will have to take our due diligence beyond monitoring the quantitative parameters. The quality of expenditure and its multiplier effect on growth must get our attention. 10. The States’ finances have been improving steadily in recent years. The fiscal consolidation brought about through implementation of the Debt Consolidation and Relief Facility in the Twelfth Finance Commission award period, 2005-10, has been built upon through higher devolutions under the Thirteenth Finance Commission award. Plan assistance to the States through the Centrally Sponsored and Centrally administered schemes has also expanded over the years. The States’ share in central taxes has been showing an upward trend: this share was 29.5 per cent during the Eleventh Finance Commission period (2001-2005); it was raised to 30.5 per cent during the Twelfth Finance Commission period (2005-2010) and currently stands at 32 per cent for the period 2010-15. The current Finance Commission award also aims to fulfil identified specific needs of States through grants of nearly Rs.28,000 crore over the next four years. 11. The flow of resources to the local bodies has been stepped up and made more buoyant during 2010-15, as the Thirteenth Finance Commission has linked grants to local bodies with the quantum of taxes collected by the Union Government. Reforms at the local body level have been incentivized through additional grants. The local body reforms have been uneven across States, but I am sure that the States are working at strengthening local bodies through improved devolution of funds and functions. The capacity of local bodies has to be enhanced by making higher devolutions through the State Finance Commissions. 12. These steps, and the States’ own efforts, have led to improvement in the States’ aggregate fiscal parameters. There has been a decline in the aggregate debt to GDP ratio for the States from 28.4 per cent in 2007-08 to an estimated 23.7 per cent in 2011-12. The estimated aggregate fiscal deficit of States in 2010-11 was 2.5 per cent of GDP, which was within the FC-XIII target of 2.6 per cent. The 2011-12 Budget Estimates of the States show an aggregate fiscal deficit of 2.2 per cent of GDP, which is well within the target of 2.5 per cent set by FC-XIII. The aggregate revenue surplus of States in 2011-12 is about 0.3 per cent, again ahead of FC-XIII projections. It is expected that the improved fiscal health of the States will result in their taking up more responsibilities for developmental activities at the State level, particularly in bridging the infrastructure gap during the Twelfth Plan period. 13. One area of concern which some States need to address relates to tax revenues of States’. The States’ tax to GSDP ratios show wide variations. In the 2008-09 actuals, the tax to GSDP ratios of General Category States ranged from 4.1 per cent to 9 per cent, with the average being 6.7 per cent. The top two States had tax to GSDP ratios of 9 per cent and 8 per cent and the bottom two 4.1 per cent and 4.2 per cent. These ratios point towards the need for more work by many States to rationalize tax rates, improve compliance and widen the tax base. Infrastructure Development  14. In the Eleventh Plan, the investment target in infrastructure was about Rs 20.5 lakh crore, with an attendant objective of increasing the share of private sector in the total investments, from around one-fourth to one-third. We have been successful in scaling-up infrastructure investments. According to Planning Commission estimates, in the first four years of the current Plan, the infrastructure investment will be around Rs.15.26 lakh crore. Gearing up to sustain the momentum during the next plan period commencing in 2012, would be a greater challenge. Issues like land acquisition, environment clearance and resettlement and rehabilitation will have to be addressed to de-risk both green-field and brown-field project development. We have to be focused on creating an enabling environment to facilitate investments. 15. A major challenge in this context would be to manage the funding requirement of the sector. We have to collectively plan for meeting the investment target of US $ 1 trillion during the Twelfth Plan, with half of the proposed investment coming from the private sector. Power sector  16. In the context of Power generation, the recent concerns relate to supply constraints regarding fuel, coal and natural gas. Issues like land acquisition, deteriorating health of the state electricity boards and environmental clearances have also been adversely affecting this sector. On the distribution front, the efficiency as measured by the aggregate technical and commercial (AT & C) losses remains woefully low. On date the losses, on an average, exceed 40%. This is not acceptable. The operational efficiency of the distribution utilities has to be improved. The States will have to review and revise the tariffs regularly to ensure the financial health of these utilities. Urgent action is needed on both fronts to ensure that the cumulative losses of utilities do not ultimately devolve on State Governments. 17. I have recently reviewed the progress of the power projects requiring funding of Rs.5000 crore or more from Indian banks. A large number of cases are held up because of the delay in obtaining clearances from State Governments and some departments of the Government of India. While I am working with my colleagues at the Centre, I strongly urge Chief Ministers to set up a mechanism for according early clearance to such projects. GST and DTC  18. We have initiated two major steps in the area of tax reforms. The first pertains to the DTC and the second to the Goods and Services Tax (GST). The DTC Bill was introduced in August, 2011 and has been referred to the Parliamentary Standing Committee. I am hopeful that the Committee will submit its report by the Winter Session of the Parliament, and thereafter we would seek to get the legislation passed during the Budget session. By amalgamating several taxes levied by the Centre and the States at different stages of the value chain, the GST would mitigate cascading and make Indian industry competitive in domestic as well as international markets. It would also improve compliance and make the level of taxation transparent to the end consumers. The introduction of GST requires a Constitutional Amendment to enable the Centre to levy a tax on the distribution of goods beyond the manufacturing stage and to empower the States to levy a tax on supply of services. A Constitutional Amendment Bill to this effect has already been introduced and is currently with the Parliamentary Standing Committee. I seek full cooperation of the States in supporting this Constitutional Amendment Bill to pave the way for the early introduction of GST. Food Security  19. Ensuring the food and nutritional security for all Indians is the collective responsibility of the Centre and the States. After initial consultations with States, Ministries, expert advisory bodies and other stake holders, the Department of Food and Public Distribution has prepared a draft National Food Security Bill. 20. The draft Bill has been sent to all States and Union Territories and the Central Ministries for their comments and suggestions. It has also been put on the website of the Ministry of Consumer Affairs, Food and Public Distribution. So far, only a few States and UTs have sent their comments. Since this is an important legislation, I request the States to send their views at the earliest to help us finalize the bill for introduction in the Winter Session of the Parliament. 21. The implementation of the Food Security Act will be the joint responsibility of the Centre and States. Both have to work together to procure the required quantity of food grains and ensure distribution of the food grains to the beneficiaries through an effective delivery system. 22. Revamping the PDS is a necessary pre-requisite for the effective implementation of the proposed National Food Security Act. The Supreme Court has also directed an end-to-end computerization of PDS. The Task Force under Shri Nilekani is working on direct transfer of subsidy that will eliminate leakages and will minimize the distortion of prices. As soon as this is available the States/UTs should draw up a time bound action plan for computerization of Supply Chain Management. APMC reforms  23. It is important to reduce the gap between producer prices and retail consumer prices through an efficient supply chain management. The APMCs were established to protect the interest of farmers. However, in reality, the APMC system has led to monopolistic behaviour and reduced the choices available to small farmers. Reforms in APMC Act could play an important role in reducing the supply side constraints. I would urge upon this august gathering to consider these proposals on merits without any delay. Plan Size and Centrally Sponsored Schemes  24. There is at present excessive focus on plan size and greater demands for resources. What is important is the plan outcomes; there is a need to correlate outlays with outcomes. The number of Centrally Sponsored Schemes needs to be rationalized. There has been some progress on this front over the years but there is scope for much more streamlining of these schemes. 25. Let me take this opportunity to make an appeal to all our leaders, cutting across party lines and regional identities. No matter which party each of us belongs to, our first commitment must be to India. As politicians we like to win elections. Let me confess that I too like to win elections. But our own election victory must never take precedence over India’s victory. I say this because there are some important reforms, which need legislative action and cannot be brought in by an executive order. We all agree that reforms like this are important for India’s development and can happen only if we all work together. We must remind ourselves that if India wins, we all win.” ***

RBI raises bond issuance by Rs 52782 crs Yields rockets

Issuance Calendar for Marketable Dated Securities for October-March 2011-12

It has been decided to continue with the practice of releasing indicative calendar for issuance of Government of India dated securities, enabling institutional and retail investors to plan their investment efficiently and at the same time, providing transparency and stability to the Government securities market. Keeping in view the shortfall in other financing items, it has been decided to increase the Government market borrowing through dated securities provided in the Union Budget 2011-12 by ` 52,872 crore. The market borrowing through dated securities during the second half (i.e. October-March 2011-12) would be ` 2,20,000 crore, instead of `1,67,128 crore. Accordingly, the following indicative calendar for issuance of Government of India dated securities for the second half of the fiscal year 2011-12 (October 1, 2011 to March 31, 2012) is being issued in consultation with the Government of India. Calendar for Issuance of Government of India Dated Securities (October 1, 2011 to March 31, 2012) Sr. No. Week of Auction Amount in`Crore Security-wise allocation 1 October 3-7, 2011 15,000 i) 5-9 Years for ` 3,000-4000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 15-19 Years for ` 2,000-3,000 cr. iv) 20 Years & Above for ` 3,000-4,000 cr. 2 October 10-14, 2011 13,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 15-19 Years for ` 3,000-4,000 cr. 3 October 24-28, 2011 15,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 15-19 Years for ` 2,000-3,000 cr. iv) 20 Years & Above for ` 3,000-4,000 cr. 4 October 31-November 4, 2011 13,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 15-19 Years for ` 3,000-4,000 cr. 5 November 7-11, 2011 13,000 i) 5-9 Years for ` 3,000-4000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 20 Years & Above for ` 3,000-4,000 cr. 6 November 14-18, 2011 13,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 15-19 Years for ` 3,000-4,000 cr. 7 November 21-25, 2011 13,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 20 Years & Above for ` 3,000-4,000 cr. 8 November 28-December 2, 2011 13,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 15-19 Years for ` 3,000-4,000 cr. 9 December 5-9, 2011 13,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 20 Years & Above for ` 3,000-4,000 cr. 10 December 19-23, 2011 12,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 4,000-5,000 cr. iii) 15-19 Years for ` 2,000-3,000 cr. 11 January 2-6, 2012 15,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 15-19 Years for ` 2,000-3,000 cr. iv) 20 Years & Above for ` 3,000-4,000 cr. 12 January 9-13, 2012 12,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 15-19 Years for ` 2,000-3,000 cr. 13 January 23-27, 2012 12,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 20 Years & Above for ` 2,000-3,000 cr. 14 January 30-February 3, 2012 12,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 15-19 Years for ` 2,000-3,000 cr. 15 February 6-10, 2012 12,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 4,000-5,000 cr. iii) 20 Years & Above for ` 2,000-3,000 cr. 16 February 13-17, 2012 12,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 5,000-6,000 cr. iii) 15-19 Years for ` 2,000-3,000 cr. 17 February 20-24, 2012 12,000 i) 5-9 Years for ` 3,000-4,000 cr. ii) 10-14 Years for ` 4,000-5,000 cr. iii) 20 Years & Above for ` 2,000-3,000 cr. As hitherto, all the auctions covered by the calendar will have the facility of non-competitive bidding scheme under which five per cent of the notified amount will be reserved for the specified retail investors. As in the past, the Government of India/ Reserve Bank will continue to have the flexibility to bring about modifications in the above calendar in terms of notified amount, issuance period, maturities, etc. and to issue different types of instruments depending upon the requirement of the Government of India, evolving market conditions and other relevant factors after giving due notice. J. D. Desai Assistant Manager Press Release : 2011-2012/500

India Fiscal deficit doubles, Revenue deficit rises 4 times

The central government's fiscal deficit surged more than two-fold to Rs 2.2 lakh crore during the first four months of the current fiscal, on account of low revenue realisation and higher expenditure.

The deficit was Rs 90,915 crore in April-July period of 2010.

Fiscal deficit, the gap between overall expenditure and receipts, in the first four months of the financial year is almost 55% of the Budget estimate of Rs 4.12 lakh crore for 2011-12, as per the latest data of the Controller General of Accounts (CGA).

The rise in Centre's fiscal deficit is on account lower tax mobilisation compared to the same period last fiscal.

The revenue receipt stood at Rs 1,37,155 crore during the period against the Budget Estimate (BE) of Rs 7,89,892 crore for the entire fiscal. This is just 17.4 per cent of the BE.

At the same time, the non-tax revenue collection has declined sharply to 18.4% compared to 84.9% in the same period a year ago.

The non-tax revenue stood at Rs 23,077 crore as against the Budget Estimate of 1,25,435 crore. Besides, the government has mobilised just Rs 1,145 crore from disinvestment, although the target of the entire fiscal is Rs 40,000 crore. Disinvestment plan of the government has been hit due to uncertainty in the stock market fuelled by global economic slowdown.

Meanwhile, the revenue deficit, the difference between revenue earned and expenses, during April-July this year stood at Rs 1.94 lakh crore, which is almost four times more than the figure of Rs 50,075 crore in the first four months of 2010-11.

The latest number is 63.4% of the Budget Estimate of Rs 3.07 lakh crore.

The Huge differential over Year-O-Year, is due to Exceptional gains in 3G spectrum Sale. Indian government is experiencing the Losses Due to short fall due to reduction in Indirect taxes on Crude Oil and Petroleum Products on One hand, and falling Tax collection due to ' Slowing Economy'. Apart, the disinvestment programme is hugely off the Track, due to depressed Stock Prices. The Direct taxes rose, while its 1st tranche in June 2011. The rising Inflation, Stagnating Growth from June 11 onwards may have its effect in September 2011, direct tax receipts. The Government had estimated an budget shortfall to 4.6%. Many had envisaged the Indian Budget to miss the lower estimations

A Letter to Deficit : Post to Rs 6641.30 cr losses

The annual expenditure of the Department of Posts was 13,307.95 crore during FY11, almost double its revenue of 6,962.33 crore, government data showed. 

This has "resulted in a deficit of 6,345.62 crore," Minister of State for Communications and IT Sachin Pilot said in a written reply to the Lok Sabha. 

Similarly, in FY10, while the Department earned 6,266.30 crore, it spend 12,908 crore. 

The department's deficit had jumped over 80% to 6,641.30 crore in 2009-10 from 3,593.09 crore in 2008-09 on account of the implementation of the Sixth Pay Commission's recommendations. 

The government has been working on revamping the Indian postal service. Internet connectivity to post offices and turning post offices to full-fledged banks are some of the initiatives being worked on to give the humble post office a radical makeover. 

Replying to another question, Pilot said the government has approved the IT modernisation project for the Department of Posts for computerisation of post offices. "This will involve establishment of required IT infrastructure and development of required software applications with an outlay of 1,877.2 crore," Pilot said. 

The IT project is expected to be implemented by 2012-13, subject to the availability of funds, he added. 

The department has a network of 1.55 lakh post offices in the country, the largest in the world, of which more than 1.39 lakh are in rural areas.


NOTe: Indian Telecom Revolution and Courier services have been the biggest adversaries of the Postal Department. The postal services mostly now used by the Business services and government agencies, who Both can afford the higher charges. Of Course, the Postal relevance was felt by me, when I remained away in different part of the country, The extent of losses is too much and if one account for real services to the rural poor, the cost would be too High 

Indian Indirect tax collection rise on One time Adjustment

Four months into the new fiscal, the indirect tax collections are holding up well, suggesting that the slowdown is yet to impact tax collections materially. Indirect tax collections in July were up 16.4% from a year ago. In the April-July period the kitty was up 27% from a year ago. 

"Overall central excise and Customs collections show economic activity is good," Central Board of Indirect Taxes Chairman S Dutt Majumdar said. "We are confident of meeting the indirect tax target," he said. 

It was feared that the sharp drop in industrial growth in the current fiscal will considerably dent indirect tax revenues, pegged at about Rs 4 lakh crore, a rise of 17.3% over the revised estimates of 2010-11. Industrial output grew only 5.7% in April-May 2011-12 from a year ago and within that manufacturing, most relevant from excise collection perspective, expanded only 6%. 

The numbers are particularly encouraging considering that the government had removed the import duty on crude and lowered that on petroleum products to cushion the consumers from the impact of the high international crude prices. It had also lowered excise on diesel. The loss on account of reduction in excise on diesel alone was Rs 1,600 crore in July, Majumdar said. 

The duty reduction, the government said, would cost over Rs 49,000 crore in full fiscal. The impact this year will be less at about Rs 35,000 crore. Customs collections have remained robust despite the abolition of import duty on crude as imports have remained robust, rising over 36% in the first quarter of the current fiscal. 
"Economic activity remains strong but is slowing down, though there is conflicting data coming out, making it difficult to connect the dots," said Crisil chief economist DK Joshi. Both the indirect taxes and the direct taxes arm of the finance ministry have been on the overdrive to boost collection. 

The smart rise in the service tax collections is due to one such measure, though it will be only a one-time kicker and not a step up in total tax collections. At the beginning of the current financial year the department had changed the 'point of taxation' rules for services to align it with that applied to goods. 
Under the changed rules, service tax will be levied on an accrual basis and not on when it is paid. This will mean that in many cases the tax would come to the government earlier than it would in the cash system, providing a one time step up service tax revenues. 

Any review of indirect tax collections is now expected only in December when the budget preparations for the next fiscal begin in earnest.

It will be interesting to note that government had preponed its bond issuance to August from September. and Finance ministry and Specifically, Mr Basu, in his Funny Ways, keeps assurance of Budget Deficit intact. Its important to note that all this ' Wizards' were assuring about Inflation, from end of 2010 to May2011.Then, turned there coats, about it. With regular sermons about, Inflation should come down and finally, all in a Dock