GKA THOUGHTS – Page 13 – Gopal Krishna Agarwal

Budget focused on wealth creation, business, agri

March 2, 2020

Budget 2020 can be best described as epoch making. Finance Minister Nirmala Sitharaman has kept in mind all segments of the economy. The budget brings to life Prime Minister Narendra Modi’s vision of achieving $5 trillion economy by 2024, with sabka saath sabka vikas.

The government has not got bogged down by resource constraints and has continued with its push for spending on infrastructure and for asset creation. It has taken care that the government’s social welfare schemes have sufficient funds allocation and can continue on the path of benefit to the last person (Antyodaya). Though the fiscal deficit targets have been relaxed but the government gives a fiscal consolidation path and has also, for the first time, annexed a list of off-budget borrowing in the budget document and settled a very significant debate about transparency in government borrowing. All previous governments were resorting to off budget borrowing like oil bonds, etc., but were not disclosing it. The FM has estimated a nominal GDP growth rate of 10% for the coming year, keeping inflation below 4% our real GDP growth will be above 6%.

The budget focuses on wealth creation, pro business policy and minimal government intervention under the Economic Development Theme of the Budget. For resource generation it has desisted from increasing direct or indirect taxes. The government has reiterated its commitment of recognising and honouring the honest taxpayer and is taking care of unwarranted harassment by tax authority by bringing accountability in the tax administration. The announcement of the Taxpayer’s Rights Charter within the statute is an important step in this direction. The provision for the statutory taxpayer’s right exists only in three other countries worldwide.

Direct personal tax slabs have been changed to benefit the middle-income segment and taxpayers up to the income level of Rs 15 lakh will benefit if they opt for the new regime of personal tax. The FM has also promised that many tax concessions enjoyed currently by individual taxpayers will be incorporated in the new regime, depending upon the nature. Taxpayers, who do not have business income, can revise the option on yearly basis. Income accruing to NRIs in zero tax countries like UAE will be taxed on income generated in India only, a logical step to fill the gap in taxation.

Deposit insurance for the scheduled banks has been increased to Rs 5 lakh from the current level of Rs 1 lakh only per depositor, about which there was very little awareness amongst the general public. This will help in building more confidence in the banking industries, bringing transparency. The government has also announced to bring law for resolution in the financial sector similar to the Insolvency and Bankruptcy Code (IBC).

The cooperative sector gets the benefit of lowering of tax structure as in the case of reduced taxes for corporate sector, helping farmers’ producer organizations (FPO), milk cooperatives and other charitable institutions operating under the cooperative structure. Even registration for charitable organizations under 80G and 12A has been made online provisionally, so that they face less harassment and can start their activities early.

The agriculture sector has been sufficiently provided for, with 16 new initiatives announced under the Aspirational India theme for the rural/agricultural sector. The budget also provides for gap funding for new hospitals in the aspirational districts for servicing the Ayushman healthcare scheme and make provision for drinking water. The state governments’ concerns on two months’ pending transfer under GST has been duly met through the consolidated fund, and its commitment to compensate the states for increased 14% revenue every year in future has been provided through compensation cess. This settles one of the contentious issues under GST. For devolution of funds to the states, the FM has accepted the interim report of the 15th Finance Commission, which incorporates provisions of increased efficiency in state finances for revenue transfer from the Centre.

Stressed assets under MSMEs have been given an extended one-year time period for resolution and the limit to go to resolution mechanism under the SARFASI Act has been reduced to Rs 100 crore from earlier Rs 500 crore.

The requirement for tax audit has been increased to a turnover of Rs 5 crore from Rs 1 crore earlier. MSME also meets its demand for invoice financing under TReDS. The start-up ecosystem gets several hand-holding supports like payment of taxes for ESOPs only at the point of sale. The GIG economy, involving technological development, gets a big push from the government. The education sector has several reforms for connecting academics to industries, providing them with industrial internship and skilling etc., setting of online educational facilities and the new police and Cybercrime University are important developments. Employment through the National Recruitment Agency for non-gazette posts will smoothen the employment process and make it completely transparent.

Under the theme of economic development, government provides for all the important sectors like technological textile centres, power, renewable energy, connectivity like airports, seaports and railways. The Finance Minister worked out a mechanism for the ambitious plan of investment of Rs 103 lakh crore under the National Infrastructure Pipeline (NIP), identifying 6,500 projects through the Centre, state and foreign direct investments (FDI).

The budget has announced 100% tax exemption to interest, dividend and capital gains income in respect of investment made in infrastructure and other notified priority sectors before 31 March 2024 with a lock-in period of three years. Government has also opened up its bond markets in rupee denomination, for investment from foreign sovereign debt funds, securing against exchange fluctuations, a concern shown earlier for sovereign debt funds. The financial markets’ long-pending demand for abolition of dividend distribution tax (DDT) has been accepted.

Government has also taken care of the inverted duty structure, which has seeped into the domestic industry under the Free Trade Agreement (FTA) from ASEAN countries. It also protects domestic industries from dumping from countries like China, securing domestic industries through clauses like country of origin and safeguard duties.

The faceless appeal provision and “Vivad se Vishwas” scheme will help resolve long pending tax disputes in tax administration and will also release funds for the government. The disinvestment road map will help reduce government dependence on tax revenue and improvement of primary and secondary bond markets. Increasing foreign debt investment limit commercial papers from 9% to 15% will help reduce dependence of the corporate sector on bank finance alone.

Gopal Krishna Agarwal,

National spokesperson on BJP on economic affairs,

Development for all

February 7, 2020

By Gopal Krishna Agarwal,

Budget covers financial, development concerns

The Centre has not been bogged down by the resource constraints and has continued with its spending on infrastructure and asset creation. It has taken care to ensure that the social welfare schemes of the government have been allocated sufficient funds and are able to continue on their path of benefit to the last man. Though the fiscal deficit targets have been relaxed, the government has mapped out a fiscal consolidation path, annexed a list of off-budget borrowing, and settled a very significant debate about transparency in government borrowing. The Finance Minister has set a nominal GDP growth rate of 10 per cent for the coming year, a 4 per cent inflation target and a 6 per cent real GDP growth target.

The Budget focuses on wealth creation, but for resource generation, it has kept away from increasing taxes. The government has reiterated its commitment of recognising and honouring honest taxpayers and taking care of unwarranted harassment by the tax authority, bringing accountability in the tax administration. The announcement of the incorporation of the taxpayers’ rights charter within the statute is an important step in this direction. Such a provision for taxpayers’ rights exists only in three other countries worldwide.

Direct personal tax slabs have been changed to benefit the middle-income segment. Deposit insurance has been increased to 5 lakh to help build more confidence in the banking sector.

The agriculture sector has been sufficiently provided for in 16 initiatives announced under the ‘Aspirational India’ theme.

The financial market’s long-pending demand for the abolition of the dividend distribution tax has been met. Stressed assets under MSMEs have been given a one-year extension for resolution. The startup ecosystem gets several handholding measures, such as allowing for payment of taxes for ESOPs only at the point of sale.

The education sector saw several reforms for connecting academics to industries, providing them with industrial internships, online education facilities, and a new ‘police and cybercrime university’. Employment through the national recruitment agency will streamline the process and ensure transparency.

Under the theme of economic development, the government provides for all the important sec tors, like technological textile centres, power, renewable energy, and for connectivity through airports, seaports and railways. The Finance Minister has worked out a mechanism for the ambitious plan of investment in the 103-lakh crore National Infrastructure Pipeline (NIP), identifying 6,500 projects.

The Budget also provides for gap funding for new hospitals in aspirational districts for servicing the Ayushman Bharat healthcare scheme.

The government has also opened up its bond markets for foreign sovereign debt investments, in rupee denomination to secure against exchange fluctuations, a concern shown for sovereign debt funds.

The government has also addressed the inverted duty structure that has seeped into the domestic industry under free trade agreements. It also protects domestic industries from dumping and clauses like value addition. The cooperative sector saw a lowering of taxes, similar to the corporate sector. Measures to remove discrimination and removing fear in the corporate sector have been hailed across every section. The faceless appeal system, disinvestment roadmap and improvement of the primary and secondary bond markets will help reduce dependence of corporate sector on bank finance alone. MSMEs’ demand for invoice financing under TReDS has also been met.

The writer is national spokesperson of BJP on economic affairs

सबरीमाला मंदिर विवाद – धर्म या राजनीति

November 22, 2019

भारतीय संविधान के अनुसार हिन्दु मंदिरो में स्थापित मूर्तियों को जुडिशियरी परसन का दर्जा दिया गया है। प्राण प्रतिष्ठित मंदिरों में मुर्तियो को जमीन आदि का मालिकाना हक भी प्राप्त है। उनके अपने अधिकार एवं नियम है। जो हिन्दु धर्म में आस्था रखते है उन्हे उन नियम कानूनो को मानना चाहिए, अगर हिन्दु धर्म में आस्था नहीं है तो मंदिर में जा कर क्या दर्शाना चाहते है। इस तरह के आंदेलन कर हिन्दु मान्यताऔं, संस्कृति और परम्पराओं को ठेस पहुचाने का उदेश्य ही नजर आता है। दूसरी महत्वपूर्ण बात है कि धर्म के आधार पर व्यक्तिगत आस्था की स्वतन्त्रता केवल वहीं तक सीमित रहती है जब वह अन्य किसी के अधिकार क्षेत्र में बाधक ना हो। सबरीमाला मंदिर में प्रवेश के विशेष नियम अन्य किसी के कार्यो में कोई रुकावट नही डालते है। इसलिए सबरीमाला मंदिर में प्रवेश के विषय को पारसी महिलाओं के विवाहेतर अधिकार और बहावी मुसलमानो में Female Genital mutilation जैसी प्रथाओं से तुलना नहीं की जा सकती। क्योकि उन विषयों में जोर जबरदस्ती का मामला आता है।

भारत में कई ऐसे मंदिर है जहां पुरुषों का प्रवेश नहीं है, गुरुद्वारा में सर पर कपड़ा बांध कर जाया जाता है। सभी धर्मो में कई ऐसी मान्यताए है जिनका हटाना अच्छा नहीं होगा क्योकि उनके पिछे धार्मिक मान्यताएं है और इनको छेड़ने से सिर्फ अशांति फैलती है। सबरीमाला मंदिर ऐसी ही पौराणिक मान्यताओं को दर्शाता है जिससे छेड़ छाड़ नहीं होना चाहिए। ऐसे कई लोग सामने आए है जिनका धर्म में तो विश्वास नहीं है और फिर भी इस मंदिर में प्रवेश करने की जिद कर रहे है। ठीक है आपका धर्म में विश्वास नहीं है लेकिन दूसरो के विश्वास को ठेस पहुचाने का अधिकार भी आपको नहीं है। हिन्दु धर्म में सभी देवी देवताओं को उनके मूल रुप में ही पूजा जाता है जैसे मथुरा में भगवान कृष्ण की पूजा बाल गोपाल के रुप में होती है क्योकि वे उसी रुप में वहां स्थापित हुए है। ठीक उसी प्रकार भगवान अयप्पा बाल ब्रह्मचारी थे इसीलिए उनकी पूजा पुरुषो द्वारा की जाती है। इन सभी बातों को लोगों को समझना एवं मानना होगा।

कहा जाता है कि मक्का मदिना के बाद सबरीमाला मंदिर विश्व का दूसरा सबसे बड़ा तीर्थ है। तो क्या इसकी परम्पराओं को मानने वाले जनमानस को ठेस पहुचाना सही है। सूप्रीम कोर्ट ने 7 सदस्यो वाली संविधानिक बैंच को केस रेफर करके ठीक हि किया है। कोर्ट इन सभी विषयो को ध्यान में रखकर ही अपना फैसला देगी ऐसी हम आशा करते है।

गोपाल कृष्ण अग्रवाल

राष्ट्रीय प्रवक्ता भाजपा

Employment – The Indian Perspective

June 5, 2019

Gopal Krishna Agarwal,

India had 51.52 per cent of population in the working age (15-64 years) in 2016 according to the World Bank. This high ratio of working to non-working age population, places our country in the position to reap the demographic dividend, if we are able to gairifully employ this population. Keeping this in mind and also the fact that employment is poverty alleviating, employment generation has been one of the biggest focus areas of the current government.

Data collection on employment and job growth in India is not satisfactory. The National Sample Survey Organization (NSSO) conducts primary survey on various indicators of labour force and is the most important source of data but his survey is conducted after a gap of five years. Thus. it cannot serve as an effective input for policy making in the areas of labour and employment. There are other primary and secondary sources that provide a snapshot of the employment situation during the interim period but they are not comprehensive in nature.

Labour Market: Structural Regidities

Any assessment of the performance of government must be done in the background of the unemployement challenge that our economy faces. According to official statistics, proportion of person in the laböur force declined from 43 per cent in 2004-05 to 39.5 per cent in 2till-12, with a sharp drop in female participation rate from 29 per cent to 21.9 per cent. Unemployment problem is challenging in India because it emerges from structural rigidities of our labour market, scarcity of capital and low skill levels of our labour force. The present government has tried to tackle each one of these problems.

Critical issue

lndian labour laws are considered compter and restrictive. One of its defining characteristîcs is job security of workers covered undor it. Complexité also implies huge compliance burden for the companies. As a consequence of this, the .labour to capital mtio is low despite the fact that India is a labeur abundant and capital scarce country. Rigidities in the labonr market have alno ensured that the employment elasticity of lndian economy has remained low. Accoiding to, an Intemationa) Labour Organisation (ILO) report, the employment elasticity oflndian œonomy is0.IS pement. Tberefore, GDP growth docsnot leadto commensufate employment generation without focused apptoaeh. Overhang of l8 bour supply also results in lower wage rates, affecting the quality of employment., We also suffer from disguised employment in the farm sector, therefore providing alternative employment in rural areas is very important, along with time bound target of doubling of farmer’s income.

Addressing Labour Market Rigidities

ln order to address the problem of labour market rigidity, the government initiated a series of steps The most important is the introduction of ‘Fixed term contract’ employment in certain employment intensive industries like textiles. lt allows employers to hire workers for a pre-defined fixed term with a proportionate share of all the benefits to which any permanent worker is entitled, boosting employment in industries that experience seasonality in production and the employment generated would be formal in nature. Under the new ‘Pradhan Mantri Rojgar Protsahan Yojna’ Government of IndÏa is paying the full employer’s contribution Towards EPF and EPS from IST April 2018 onwards thus encouraging new employment.

lndia has an entrepreneurial culture, which is stultified due to non-availability of capital. According to the NSSO survey of 2013, there are 5.77 crore small businesses, mostly proprietorships, running manufacturing, trading or service activities but only 4 per cent of such units are able to access institutional Finance. The government launched its ambitious scheme of MUDRA (Micro Units Development Refinance Agency) to provide collateral free loan of Rs. 50,000 to 10 lakhs for non-agricultural purpose. As on 29^th June, 2018 the total loan disbursed under the scheme is Re.5, 95,056.15 crore to over. 13 crore individuals.

Employment Generation through Ease of Doing Business

Under the rubric of ‘ease of doing business‘ (EODB) the Labour Ministry has undertaken a number of steps to reduce the compliance burden of the industry. According to the Economic Survey for the year 2017-18, government has numerous technology-enabled transformative initiatives such as Shram Suvidha Portal, Universal Account Number and National Career Service Portal in order to reduce the complexity burden and better accountability for enforcement. Under Ease of Compliance, the government bas pruned the number of registers mandatory for all establishments to be maintained under nine central acts to just five from 56, and the relevant data fields to 144 from 933.

Focus on MSME

The biggest beneficiary of the improved EODB is the Micro, Small and Medium Enterprise (MSME) Sector., This sector produce 40 per cent of India’s GDP and employs a higher number of people per unit of capital employed. One of the first steps that the present govemment toök after coming to office was to form a taskforce to recommend steps to facilitate the growth of MSMEs. A number of its suggestions like, easier registration and exchange-traded platform for bill discounting has already been lmplemented. The problems of delay in payments have been addressed by ‘MSME Samadhun’, allowing registering complaints online and through Delayed Payment Act. Government e-market portal (GeM) and public Procurement website is providing better access to markets. Credit is being facilitated by Price Minister’s Employment Generation Programme (PMEGP), Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE), ASPIRE Fund of Funds .and Smalll industrial Development Bank of lndia (SIDBI). As a result of thèse steps, MSME sector is doing well and generating considerable employmeñt. India’s potential for growth in the services sector, catering to such a .large population is being encounged by Ata1 Innovation Mission hand holdñig through Start-Up portal.

Skilling the Worh Force

India faces a paradoxical situation; it has a large labour force, engaged in how productivity jobs and the industrial sector complaining that it is unable to meet its requirement because of the skill gap. Skilling had been on the radar of governments for the last few yearn but the present government has taken the goal of skilling India’s labour force to a completely different level. Ministry of Skill Development añd

Entrepreneurship launched its flagship scheme Pradhan Mantri Kaushal Vikas Yojana (PMKVY) in 2015, under which close to 50 lakh candidates (19 lakhs under PMKVY 1 + 27.5 lakhs under PMKVY 2016-2020 so far) have been trained across the country. PMKVY targets to train one crore youth by 2020. Most of the discussion around the unemploymentsituation in India is based on anecdotal évidence, as the data collection about it is not very comprehensive. Government of lndia is also working on generating high frequency data on employment generation and other mechanisms to plug the information gap. Towards this employees’ Provident Fund Organization (EPFO), Employees’ State Insurance Corporation(ESlC) and the Pension fund Regulatory and Development Authority (PFRDA) released monthly payroll data for the first time for the formal sector to facilitate analysis of new and continuing employment.

Quantity VS Quality of Jobs

A lot of debate has been on the quantity of jobs but much less on the quality, which is equally important.

India faces a paradoxical situation it has a large labour force engaged in low productivity jobs and the industrial sector complaining that it is unable to meet its requirement because of the skill gap. 93 percent of India’s labour Force works informally About 80 percent of it works in the informal sector and the remaining is employed informally in the organized sector of the economy. This mean that the worker has little access to social security and hence these jobs are rightly considered to be poor quality jobs. Due to steps like demonetisation, GST, reduced regulatory burden and financial assistance for PF and ESI, a large part pf the informal sector is getting formalised, improving the quality of jobs.

The noise about lack of jobs does not square with facts that have bearing on employment generation. For example: the government has spent massive amount on infrastructure, which generates highest employment per unit of money spent. Government’s estimated budgetary and extra budgetary expenditure on infrastructure. for 2018-19 has been increased to Rs 5.97 lakh crore against estimated expenditure of Rs 4.94 lakh crore in 2017-18. The Union budget (or the year 2018-19, for the time had discussed number of job- man days that would be created under various government spending schemes like construction of toilets under Swachh Bharat Mission, rural and urban houses under Pradhan Mantri Awas Yojana, rural roads under Pradhan Mantri Gram Sadak Yojana and National Highways etc. In his budget speech, the Finance Minister said that the total amount to be spent by various ministries would be Rs 14.34 lakh crore (including extra-budgetary and non-budgetary resources of 11.98 lakh crore) and this expenditure would create employment of 321 crore-person days. We see that a number of steps have been initiated by the government which together, are likely to have a tangible impact on the employment situation in the country.

Pharmaceutical Industry in India- the Sunrise Sector

October 8, 2018

Indian pharmaceutical sector could be the next IT industry for our economy, both its ability to leverage our skilled manpower and to emerge as a global powerhouse. According to a report, in 2017 the pharmaceutical sector in India was valued at US$ 33 billion and in May 2018, the Indian pharmaceutical market grew at 10.8 per cent year-on-year. The country’s pharmaceutical industry is expected to expand at a CAGR (compound annual growth rate) of 22.4 per cent over 2015–20 to reach US$ 55 billion and is likely to be among the top three pharmaceutical markets by incremental growth and 6th largest market globally in absolute size. India contributes the second largest share of pharmaceutical and biotech workforce in the world.

The row over faulty hip-resurfacing system provided in India by Johnson & Johnson shows shortcomings in the legal and institutional mechanism to deal with quality issues in pharmaceutical industry. This episode has made it abundantly clear that global pharmaceutical companies would continue to treat Indians as second rate patient-customer. The conduct of Central Drugs Standard Control Organisation (CDSCO) in the whole affair also leaves much to be desired. India should use this experience to plug gaps in the legal and institutional framework applicable to the pharmaceutical industry and ramp up the working of the CDCSO. All these will bode well for the domestic pharmaceutical industry and place it on a firmer footing.

Generic drugs form the largest segment of the Indian pharmaceutical sector. A generic drug is a medication created to be the same as an already marketed brand-name drug in dosage form, safety, strength, route of administration, quality, performance characteristics, and intended use. Generic drugs tend to cost less than their brand-name counterparts because generic drug applicants do not have to repeat animal and clinical (human) studies that are required of the brand-name medicines to demonstrate safety and effectiveness. The market for the generic drug has been accelerated by increasing number of patent expiration of branded drugs and government initiatives in all the countries. Increasing prevalence of chronic diseases and ever-rising cost of hospitalization and medicines are responsible for the growth of generic drugs market.

India is the largest provider of generic medicines globally in terms of volume. Indian pharmaceutical sector industry supplies over 50 per cent of global demand for various vaccines, 40 per cent of generic demand in the US and 25 per cent of all medicine in UK. Presently over 80 per cent of the antiretroviral drugs used globally to combat AIDS (Acquired Immuno Deficiency Syndrome) are supplied by Indian pharmaceutical firms. Around 40.6 per cent of India’s US$ 16.8 billion pharmaceutical exports in 2016-17 were to the American continent, followed by a 19.7 per cent to Europe, 19.1 per cent to Africa and 18.8 per cent to Asian countries.

Apart from the global demand for Indian pharmaceutical products increase in the size of middle class households coupled with the improvement in medical infrastructure and increase in the penetration of health insurance in the country will also influence in the growth of pharmaceuticals sector. In this context National Health Protection Scheme (NHPS), also known as ‘Aayushman Bharat’ which seeks to provide insurance cover to 10 crore families for an amount of Rs. 5,00,000 is expected to be a watermark for the Indian pharmaceutical industry. A vastly improved access to medical facilities under this scheme to the hitherto excluded population is expected to provide a significant boost to the domestic health service and pharmaceutical industry.

Another threat emerges from manufacturing practices of some of the domestic pharmaceutical companies. As of 2016 there were around 10,000 generic manufacturers in India, of which only 1,400 were WHO GMP (Good Manufacturing Process) –compliant and only 523 of them were US FDA-approved. Now that the Indian companies have captured a significant part of the global generic drug market, it faces a very intense international scrutiny regarding its systems and processes. Any instance of poor manufacturing by one company is likely to attract global attention and affect the brand equity of Indian pharmaceutical industry as a whole. It is time that CDSCO sets higher benchmarks for quality standards for the drug and pharmaceutical industry.

A serious threat to the Indian pharmaceutical industry comes from its global counterparts. The big international pharmaceutical companies and their governments have been trying to lobby with the Indian government to make patent protection more stringent despite the fact that both compulsory licensing and prohibition of ever greening, provided under the Indian Patents Act, 1970, are valid under the TRIPS agreement of the WTO. It should not surprise us that India regularly figures on the ‘Priority Watch List’ of the Office of the United States Trade Representative (USTR) for providing ‘weak’ intellectual property protection. The annual ranking by ‘Global Innovation Policy Centre’ of the US Chamber of Commerce also ranks India poorly for its IPR climate. Any change in Indian IPR law made under foreign pressure will prove to be detrimental to the interest of the domestic companies. Another threat emerges from manufacturing practices of some of the domestic pharmaceutical companies. As of 2016 there were around 10,000 generic manufacturers in India, of which only 1,400 were WHO GMP (Good Manufacturing Process) –compliant and only 523 of them were US FDA-approved. Now that the Indian companies have captured a significant part of the global generic drug market, it faces a very intense international scrutiny regarding its systems and processes. Any instance of poor manufacturing by one company is likely to attract global attention and affect the brand equity of Indian pharmaceutical industry as a whole. It is time that CDSCO sets higher benchmarks for quality standards for the drug and pharmaceutical industry.

Regulatory complexity is another obstacle faced by the Indian pharmaceutical industry. One of the most commonly cited reason for the growth of Indian Information Technology industry is the lack of governmental interference. While such a scenario is not possible for the pharmaceutical industry considering it literally deals with matters of life and death, the regulatory burden can certainly be reduced. Currently, five ministries of the Government of India are involved in regulating drug and pharmaceutical industry. ‘Price control’ under which the Government fixes the maximum price that can be charged for a medicine also needs to strike a fine balance between the health interests of the consumers and the financial health of Indian pharmaceutical companies.

The bulk import of cheaper Active Pharmaceutical Ingredients (API) from China has led to an evisceration of the Indian manufacturing capacity in the sector. In order to ensure the long term health and independence of the Indian pharmaceutical industry, it is required that instances of dumping of API from China are quickly identified and remedial measures taken. It is equally important that issues that hobble Indian manufacturing are removed.

Gopal Krishna Agarwal

National Spokesperson of BJP on Economic Affairs

Member Board of Governors Indian Institute of Corporate Affairs (IICA)

gopalagarwal@hotmail.com

Petroleum Pricing in India – Economics override political expediency

October 6, 2018

Petroleum prices are always a contentious issue. Historically, political expediency overrode economic considerations. Central government has some compelling reasons not to interfere into market forces, which are currently being effected by global factors.

India imported 256.32 million metric tonnes of crude oil and petroleum products in 2017-18 and paid Rs. 6,52,896 lakh crore. The import dependence of India in the case of crude oil is over 80 percent. Further the Indian basket of Crude Oil represents a derived basket comprising of Sour grade (Oman & Dubai average) and Sweet grade (Brent Dated) of Crude oil processed in Indian refineries in the ratio of 72.38:27.62 during 2016-17. The price of Indian crude oil basket was $106.85 per barrel (1 barrel=159 litres) in May, 2014. It fell down to $39.88 per barrel in April 2016 and has gradually increased since then and is around $78 per barrel.

It is also important that we look into the tax structure and petroleum prices. On 3^rd September 2018, the price build-up for Diesel and Petrol in Delhi was as follows:

Sl. No.	Description	Unit	Petrol	Diesel
1.	C&F (Cost & Freight) Price (Moving average basis)	$/bbl	84.20	90.59
2.	Average Exchange rate	Rs/$	70.22	70.22
3.	Price Charged to Dealers (excluding Excise Duty and VAT)	Rs/Ltr	39.21	42.85
4.	Add : Excise Duty	Rs/Ltr	19.48	15.33
5.	Add : Dealer Commission (Average)	Rs/Ltr	3.63	2.51
6.	Add : VAT (including VAT on Dealer Commission)	Rs/Ltr	16.83	10.46
7	Retail Selling Price at Delhi- (Rounded)	Rs/Ltr	79.15	71.15

(Data from Indian Oil Corporation Limited)

With every dollar increase in the international price of crude oil, the cost of petrol and diesel in India increases by Rs. 0.50/ litre and a fall in the exchange rate of Indian rupee against US dollar increases the cost of petrol and diesel in India by Rs. 0.65/ litre.

The revenue generated by the taxes on petroleum products is very important for both the Central as well as State Governments. The contribution to central and state exchequer by the petroleum section is significant and in the last few years is as follows:

Year	2014-15	2015-16	2016-17	2017-18 (P)
1.	Contribution to Central Exchequer (in crore) through Tax/ Duties on Crude oil & Petroleum products	1,26,025	2,09,354	2,73,225	2,84,442
2.	Contribution to State Exchequer (in crore) through Tax/ Duties on Crude & Petroleum products	1,60,526	1,60,114	1,89,587	2,08,893
3.	Total Contribution of Petroleum Sector to Exchequer through Tax/ Duties (1+2)	2,86,551	3,69,468	4,62,812	4,93,335

We have to remember that, 42% of the Basic Excise Duty collection at the Centre is given to State governments for infrastructure and welfare programs and 60% of the balance 58% of the Basic Excise Duty collection is spent on Centrally Sponsored Welfare Schemes in the States i.e. total amount transferred to States is (42+34.8)= 76.8 percent. And every one rupee reduction in central duty leads to a loss on about Rs 14000/= crores to the central exchequer.

Earlier, Under Administered Price Mechanism (APM), petrol /diesel prices were not market linked and prices were being modulated, the steep increase in international prices of oil used to exert severe pressure on the oil marketing companies (OMCs). The retail prices of these commodities were kept below the cost resulting in large under-recoveries for OMCs. From the year 2004-05 to 2013-14, the total under-recoveries was Rs. 8,53,628 crores and there was significant subsidies for the same.

Year	Under-recovery (crore)	Cumulative Total (crore)
2004-05	20,146	20,146
2005-06	40,000	60,146
2006-07	49,387	1,09,533
2007-08	77,123	1,86,655
2008-09	1,03,292	2,89,947
2009-10	46,051	3,35,998
2010-11	78,190	4,14,188
2011-12	1,38,541	5,52,729
2012-13	1,61,029	7,13,759
2013-14	1,39,869	8,53,628

The subsidies for these under recoveries, during the period of 2004-08 when the international crude prices were increasing rapidly, proved grossly insufficient. Since the fiscal position of the Government was already precarious, it could not increase the subsidy to this sector. The UPA government then resorted to issuance of ‘oil bonds’ to the OMCs. These interest-bearing bonds called, The Oil Bonds were not even reflected on the balance sheet by the UPA Government, resulting in artificial measurement of the burgeoning fiscal deficit.

Between 2005-06 and 2009-10, the Oil Bonds worth Rs. 1,42,202 crore were issued by the Government with rate of interest ranging from 7.33 percent to 8.4 percent per annum repayable up to 2024-25 by successive governments. Oil companies have either sold these bonds or used them as collateral to raise cash. OMCs have sold oil bonds worth Rs 1,24,536 crore and had to bear a loss of around Rs 5,000 crore in selling of these bonds at discounted rate because the bond market did not have much appetite for these bonds. Till date the Government has repaid around Rs. 70,000 crore to the holders of these bonds and out of this amount, only Rs. 10,000 crore (approx) has gone into the repayment of the principal component and the rest towards the interest obligation. Thus the outstanding principal amount on these bonds is Rs. 1,30,000 crore. Most of these bonds will be matured by 2024-25, putting heavy burden on current as well future governments.

An important part of the solution to the problem can be focusing at the alternative energy source. In the year 2015-16, the source wise share in consumption of energy was as follows:

Sl. No.	Source	Share ( in percentage)
1.	Coal and Lignite	46.28
2.	Crude Petroleum	34.48
3.	Electricity from hydro, nuclear and other renewable sources	12.75
4.	Natural Gas	6.49

Therefore the policy of the Shri Narendra Modi government is to move towards renewable sources of energy. But one cannot readily switch between them and other sources of energy. To make our economy less dependent on oil would be a long drawn process, which can be accelerated by conducive government policies. Modi Government is working on this long-term solution.

It is evident than in order to reduce our dependence on imported oil, we need to generate more energy from coal and lignite, which we have in abundance and also focus on electricity generation from hydro and other renewable sources like wind and solar. Since the government is focussed on having 1 GWh of installed solar capacity by 2022, we will see an increase in its share in the source wise energy share in the coming years. Till then economic prudence should override political expediency.

Gopal Krishna Agarwal

National Spokesperson of BJP on Economic Affairs

Member Board of Governors Indian Institute of Corporate Affairs (IICA)

gopalagarwal@hotmail.com

Is Good Economics Bad Politics!

October 5, 2018

Economics relates to allocation of resources to various segments of the economy. It can tell you the methodology or the means of allocation of resources for enhancing production, efficiency in distribution and equitable consumption. There is always a tradeoff between competing demands in any economy as the resources are limited. Good economics implies following such economic policies that pushes the ‘Production Possibility Curve’ outwards. Politics can broadly be understood as the means to the political power. Success in politics is achieved by taking steps that increases the possibility of winning elections.

Good Economics ensures larger benefits to the large population. And if political parties work towards the wellbeing of large sections of society winning elections thereby, it is good economics and good politics. The effective communication with the electorate about the outcome of economic decisions and level of awareness & education of the citizens, determine, whether good economics is good politics.

In a democracy, where demands are generated by different stakeholders, there is a political cost to every decision. Technocratic prescriptions can ignore the political economy but a politician will always keep an eye on the political consequences of any economic policy.

Political cost to economic decisions can be reduced through better communication skills of leadership; successful leaders are generally good orators. Cost reduction can also be achieved by increased educational outreach and higher level of awareness amongst the electorate. The time frame for impact assessment of economic decision will also determine the correlation between the economic decision and its political cost. Because the result of some of the steps taken by the government might take years to be reflected in changed ground realities, but the elections have to be won every five years. In India the problem is further compounded by the fact that we have multiple elections at the Centre and the States.

At times, powerful interest groups with high stakes in maintaining status quo, exists within a Nation. Their own compulsions take precedence over economic decisions leading to bad politics. Sometimes divisive forces in a society raise their head and bog down the decision making process of the state, creating chaos. Existence of strong public institutions and pillars of democracy is a safeguard for decision-making process. The selection criterion for the right candidate by the electorate at the elections, influences the considerations for decisions of the political parties. In an ideal democracies good economics is always good politics, but rarely such situations exists, otherwise how you can explain farm loan waivers and subsidies instead of investing resources in infrastructure for better quality of life.

Mostly, the form of governance and prevalent political structure, determine, whether good economics is good politics. Nations should build sustainable institutions to; safeguard

minority interest and maintaining balance of power between pillars of governance and holding free & fare elections. Countries spending on education, transparency, information sharing and disclosers establish a healthy and a vibrant political system. Then alone a positive relationship between good economics and good politics is sustained.

By Political System we mean a system of government. Political System is a complex system of categories involving the question of who should have authority and ownership of resources and what the government’s influence on its people and economy should be? And Political Structure refers, to institutions or groups and their relations to each other, their pattern of interaction within political systems and to regulations, laws and the norms present.

Out Constitution specifically says that Political Democracy has no meaning till we achieve Economic Democracy. Economic Democracy means that the benefits of economic development reach to all the segments of society, across caste, religion and geography. This equity can only be achieved by good economics.

In a mature and just nation, Good Economics is Good Politics; Economic Democracy and Political Democracy coexist in an efficient governance model. If this healthy relationship is non-existent, then there is lot to be desired from the institutions, government, political parties and the citizens, all taken together.

Gopal Krishna Agarwal,

National Spokesperson for Economic Affairs, BJP

Email: gopal.agarwal@bjp.org

NRC: The Soul of Assam Accord

October 1, 2018

Opposition parties are once again looking for political opportunities in a situation, which has the risk of blowing up because of their incendiary rhetoric. Every attempt is being made to create a crisis where it does not exist. It is grossly premature right now to speculate on the future of the people who are being authoritatively identified as illegal immigrants. Religion, region and caste have always affected politics but governance has to be above it.

A perfectly legitimate exercise by the Assam government under an Assam accord has now led to a deplorable and condemnable reaction from the opposition parties. The Congress Party and its national president Rahul Gandhi must make his stand clear on the issue of illegal immigrants from neighboring countries. Historically, both Mrs. Indira Gandhi and Mr. Rajeev Gandhi had committed, that post 25th March 1971 migrants would be detected, identified and deported. It was the Congress that had agreed to the preparation of NRC but later did nothing in this matter because these immigrants were mostly Muslims and it cultivated this group as its vote bank.

For its vote bank, Congress was encouraging illegal immigrants left, right and center. It also tried to subvert Foreigners Act 1946 by bringing Illegal Migrant Determination by Tribunal (IMDT) Act, 1983 which was stuck down by The Supreme Court in 2005 in the case filed by the present Chief Minister of Assam, Sarbananda Sonowal vs UOI (2005), by stating that IMDT “has created the biggest hurdle and is the main impediment or barrier in the identification and deportation of illegal migrants”.

The Conduct of Congress in the whole affair requires a closer scrutiny. The IMDT Act had virtually made it impossible for the government to identify and deport illegal immigrants. The constitutionality of this Act was challenged in the Supreme Court of India, in the affidavit filed by the Assam Gana Parishad (AGP) led Assam Government on 28^th August 2000, stated that the State Government has been persistently writing to the Central Government that the IMDT Act was operating against national interest and therefore the Central Government should repeal the IMDT Act. In May 2001, AGP was defeated in the Assam elections and the Congress led government came to power. On 8th August, 2001, the Congress government of Assam moved an application in the Supreme Court praying that the State of Assam be permitted to withdraw the earlier affidavit and be allowed to file a new affidavit, stating that ….the IMDT Act is constitutional and there is no question of either repeal or striking down of the Act.”

At the Centre, The Atal Bihari led NDA government filed its affidavit in the matter on 18^th July, 2000, in which has it stated that a proposal to repeal the IMDT Act was under consideration of Government of India. However, after the Congress led UPA government came to power at the Centre in 2004, another affidavit was filed in the matter on 24^th November, 2004 wherein it was said that though in the earlier affidavit a prayer was made to examine the constitutional validity of the IMDT Act, but on reconsideration the Central Government had taken a decision to retain the IMDT Act in present form in its application to the State of Assam. Ultimately Hon’ble Supreme Court stuck down IMDT act in 2005. The Court further observed: “The dangerous consequences of large scale illegal migration from Bangladesh, both for the people of Assam and more for the Nation as a whole, need to be emphatically stressed. No misconceived and mistaken notions of secularism should be allowed to come in the way of doing so”

It would not be an exaggeration to say that at the root of every socio-politico problem in the country lies the myopic politics of the Congress. The flip-flop resulting from this myopic vision is evident on its stand on Triple Talaq, Supreme Court judgment on maintenance to Shah Bano, illegal immigrants from Bangladesh, Ram Temple at Ayodhya, plight of Kashmiri Pundits, Minorities having the first right on the national resources, etc. Communalizing Indian politics to the core.

Similarly, Ms. Mamta Banerjee’s ambitions have also pole-vaulted in recent times; she sees it as an opportunity to consolidate her Muslim vote-bank in West Bengal. She has dishonestly compared this as a restriction on interstate movement of citizens of India and is trying to make it a Hindu-Muslim issue. We hope she explains her stand on the issue of illegal immigration from Bangladesh. Earlier on 4^th August 2005, she had stated in the Lok Sabha: “The infiltration in Bengal has become a disaster now. You can see the Bangladeshi as well as the Indian names in the list. I have both the Bangladeshi and the Indian voters list. This is a very serious matter. I would like to know when would it be discussed in the House?”. The silence and ambivalence of other political parties like the CPI, CPI (M), BSP, SP, RJD also reeks of hypocrisy.

Under governance parlays, how much does it matter if 70 percent of the people left out from NRC are from the Muslim community? After all, the illegal immigrants, who came in hordes into Assam, are not refugees. The movement under the banners of AASU AAGSP had emerged because the unabated influx of illegal foreigners in to Assam had raised substantive fears in the minds of the local people about its adverse effects on their social, political, cultural and economic life. The 2011 Census of India shows Assamese-speakers have become a minority in their home state. Between 1991 and 2001, their population had declined from 58 percent to 48 percent. In terms of religious communities, the Muslim population of Assam had increased from 25 percent in 1951 to 34 percent in 2011.

All political parties should express their stand on the issue of illegal immigrants into India in no uncertain terms so that we all know where they stand on this matter. Fear mongering and hyperventilation would not serve the interests of the nation, as would keeping quiet on the issue.

Gopal Krishna Agrawal

National Spokesperson of BJP

gopal.agarwal@bjp.org

The Economy Deplomacy Is a Key To Enhancing Nepal – India Relation

September 16, 2018

Gopal Krishna Agrawal,

Gopal Krishna Agrawal is the National Spokesperson on Economic Affairs for ruling Bhartiya Janata Party of India. How does he see Nepal-India economic relations? How can this relation be enhanced? Mahavir Paudyal and Kosh Raj Koirala spoke to him on Nepal-India economic ties and other aspects of bilateral relations while he was in Kathmandu last week.

How do you see the current status of Nepal-India relations?

We are working on making Nepal-India relations much better than what it is today. Nepal is very important country for India’s international relations. This is why Prime Minister Narendra Modi visited Nepal right after assuming office in 2014. We find so many common issues with regard to economy between Nepal and India. Thus we can have a very good business and economic relations. Economic relations are much important for these countries because economic relations are becoming more important between and among the countries across the whole world. Economic issues can be more easily identified and they are as easier to resolve because they are based on give and take and mutual benefits. There will be few contentions in business relations than would be with political relations. You say so but Nepal has had huge trade deficit with India.

I was recently speaking on foreign direct investment issue here in Nepal. Across the world, every country is looking to attract more FDI. FDI is one of the criteria which decide what will be the future of country’s economy. It is important for capital formation and building of infrastructures. India has been successful in attracting huge FDI over the last few years. We have been able to get 62 billion dollars of FDI, which is the highest FDI across the world. But a country cannot raise FDI rate simply by asking others to come and invest. Most of such investments come from the private sector. And private investment comes to those places where you have strong regulatory bodies. They look into which regulatory set ups are there that can come to their aid when something goes wrong with business. Foreigners are ready to invest in India because we have strong and autonomous set ups in many of the fields such as banking, capital market, insurance, telecommunications etc. For each of these sectors, we have a separate regulatory body to boost the confidence of the investors.

Thus the more you build autonomous and independent regulatory institutions the more it will raise confidence of foreign investors. And the more you will be able to attract FDI. I think this applies to Nepal as much it does to India.

The importance of FDI is obvious but how can Nepal reduce trade deficit with India?

One of the ways would be if the two countries maintain relations with industrialists with both sides, instead of focusing on only government-to-government relations. It’s better for Nepal and India to organize bilateral economic conclaves at a reasonable frequency so that they can discuss issues and find solutions. Private sector bodies of Nepal can have direct contact with Indian investors through Indian business organizations. If they talk with each other directly, many things can be settled. The government of Nepal can also communicate their policies directly with the Indian industrialists. If Nepal establishes direct contact with Indian industrialists, it would know their concerns and also find out the factors that have hindered investment in Nepal. The government will also come to know directly what their concerns are and how those concerns can be addressed. Equally important is to incentivize the investment. Creating Special Economic Zones, cluster development models, integrated supply chain models with global suppliers etc are some incentivizing factors. They have done a lot for India. Such ideas might be as useful for Nepal.

Many Indian investors are willing to invest in Nepal. Nepal has a lot of hydro potentials. After the success of Arun III more companies are interested to come to Nepal and invest. Indian companies are also interested to invest in tourism, education and many other sectors. Private education industrialists can set up their institutions in Nepal. If two countries have good business relations it will directly contribute to minimizing tensions, if any, on diplomatic and political fronts. Economic diplomacy can become a key tool in further enhancing Nepal-India relations. This is what is happening globally. Leaders across the globe are now more focused on economic issues. Through economic cooperation and considerations it is easier to build better diplomatic relations.

The demonetization drive was criticized by some sections at one time. How has it helped Indian economy?

You cannot look into any initiative in isolation. When our party took over, there was a problem with regard to tax compliance and large part of business transaction was not being channeled through financial institution mechanism. There was a need to push transaction through digital banking. We had to establish the audit trail of business transactions. And there was a need for identifying the concerns of liquidity and the issue of shifting the informal sector into formal sector. Several other steps together with demonetization helped into creating an ecosystem whereby we are moving informal sector into formal sector. The GST could not have been as successful if we had not made concerted efforts to moving towards digital economy and digital banking.

Cumulatively, demonetization has created an ecosystem that has greatly helped minimize corruption. We have been able to establish audit trail of all transactions. The government has deregistered around four hundred thousand companies found in money laundering. Because of these steps, we now have more transparent and corruption-free eco system and it’s easier to do business in India. Most of all, tax compliance has increased, thanks to audit trail.

Demonetization has affected a lot of Nepalis. The government of India has refused to exchange Indian currency possessed by many Nepalis.
I think this is for Reserve Bank of India to decide. Central banks of Nepal and India should work to resolve issues related to Indian currency in Nepal.

One of economic issues in India at the moment is depreciation of Indian rupees against US dollars. This might have direct bearing on Nepali economy for our currency is pegged with Indian currency.
Rise of petroleum price and depreciation of Indian rupees against dollars are two issues facing us at the moment. There are global factors behind it. This could have been addressed by direct intervention by the central bank but the government has decided it is not yet time for intervention for domestically we are in better situation. Our GDP grew by more than 8.2 percent. Inflation is well under control. It is 3.6 percent at the moment. Our foreign exchange reserve is more than 24 billion dollars, which is very healthy. Our current account deficit is well within the limit. And we are getting a lot of FDI. Depreciation is largely driven by external factors. Our domestic factors do not require us to act for immediate strong measures.

Exporting ginger to India from Nepal has rarely been a hassle-free undertaking. Now and then Nepal-bound containers are held up in Kolkata port.

You should not take one or two sporadic incidents and make a judgment. The intention of the Indian government is very clear. Our focus is on smooth trade between the two countries and establishing even better connectivity for this. We are developing connectivity infrastructures including with Nepal to enhance trade relations. India has put BBIN in priority for the same purpose. The government is open to resolving all kinds of issues. Media reports sometimes create completely different perceptions. We need to read them critically. We have good trade relations even with countries with which India does not have so special relations. We have special relations with Nepal. There is no reason why we cannot have smooth trade with the neighbor with which we have a special relations.

One of the persistent concerns of your party has been regarding Hinduism in Nepal. One of the former Nepali prime ministers recently said India imposed blockade on Nepal in 2015 because Nepali leaders failed to address India’s concern related to Hindu state.

I think it is unwise to link what you call blockade with Hindu concern. Indian government has consistently denied blockade. Yes, India showed some concern for people of Tarai but at the same time India has always maintained that it’s up to Nepal to do whatever is best for Nepal. The opinions of general people should not be equated with opinions of the government. As for Hindu state, we had always appreciated Nepal as a Hindu state because over 85 percent of Nepalis are Hindus. India is also a Hindu dominated country. So there have always been positive sentiments among Indians regarding Hindu state status of Nepal. But that too, like I said, is the public opinion. India is a secular country. We cannot say what should be the status of Hindu religion in Nepal. It’s for Nepal to decide. The government does not have any position on this. What individual leaders say are individual opinions. They should be understood as such.

Petroleum Prices, Why They Are So Important For Our Economy

July 26, 2018

By Gopal Krishna Agarwal,

For understanding petroleum pricing in India: We have to break it into following aspects:

1. Petroleum prices component

2. Issues of under recovery and oil bonds during UPA

3. Revenue to Central and State governments from the petroleum section.

4. Alternative Sources of energy and future planning for reduced dependence on oil

Petroleum products pricing is always a contentious issue. It has a large impact on inflation and also a major source of revenue for the Central and State governments, we import about 80% of our consumption needs. An increase of one dollar in the international price of crude oil increases the cost of our petrol and diesel by Rs. 0.50/ litre and one rupee fall in exchange rate against US dollar increase the cost by Rs 0.65/litre of petrol and diesel. We can conclude that the prices of petroleum products are determined in India by external factors. India imported 256.32 million metric tones of crude oil and petroleum products in 2017-18 and paid Rs. 6,52,896 lakh crore.

Earlier under Administered Price Mechanism (APM) followed by UPA, petrol and diesel prices were not market determined. Steep increase in international prices of oil used to put severe pressure on the oil marketing companies (OMC). Still their retail prices were kept below the cost, resulting in under-recoveries for OMCs. Between the year 2004 to 2014, the total under-recoveries was to the tune of Rs. 8,53,628 crores.

When the international crude prices were increasing, during the period of 2004-08 the subsidy by the government on petroleum products became insufficient. Since the fiscal position of the Government was very bad, there was no scope for increasing the subsidy. The government started issuing ‘oil bonds’ to the OMCs instead of giving cash subsidy. These interests bearing Oil bonds were not even reflected in the Budget provision by the UPA Government, resulting in distortion of fiscal deficit figures. During 2005 to 2010, oil bonds for Rs. 1,42,202 crore were issued,

with rate of interest on them ranging from 7.33 to 8.4 % per annum repayable up to 2024-25 by successive governments in the future. This was a case of postponing current liabilities on the future generation.

Bad fiscal prudence under UPA government resulted in increasing of the interest rates affecting borrowing and investment in the economy and higher inflation for the common men. While the petrol and diesel prices were artificially kept low, people were paying higher prices for almost every other thing. The burden sharing mechanism devised by the UPA government had also led to a depletion of cash reserves of oil companies like ONGC, GAIL and OIL and destruction of their intrinsic market value.

The argument that high taxed on petroleum product in India needs to be brought down to control the spiraling prices has to be closely looked into.

Firstly, this revenue is required for catalyzing India’s economic growth, for building infrastructure for better quality of life and providing social security to the poor classes and in the backward areas. Secondly, large component of Central government duties on petroleum products i.e. 42% of the Basic Excise Duty is given to State governments and 60% of the balance 58% of the Basic Duty is spent on Centrally Sponsored welfare schemes in the States i.e. total amount transferred to the States by the Centre is (42+34.8)= 76.8 % of the Basic Excise Duty. It is also estimated that a one rupee reduction in the excise duty at the Centre would reduce revenue collection by Rs 14,000 crores.

Increase in the petroleum prices has different effect on the tax collected by the Centre and the States, which also has to be analyzed properly.

In a decontrolled regime now being followed in India, any change in international crude price is passed on to the consumer. Higher prices are likely to reduce consumption. The taxes imposed by the Centre are specific tax, i.e., fixed in terms of Rs per unit. So, if the consumption falls, the tax collected by the Centre goes down. The States, however, levy ad valorem taxes i.e. percentage based on prices and therefore with the increase in petroleum prices, its tax collection does not fall even with fall in consumption. Therefore, if the taxes on petroleum products have to be reduced in wake of the rising international prices, it should be done by the States first than by the Centre.

The solution to this teething problem on the long-term basis, is to change the share of petroleum products in energy consumption mix (34.48%, year 2015-16) We need to generate more energy from coal and lignite (46.28%), which and also focus on electricity generation from hydro, nuclear and other renewable sources like wind and solar (12.75%).

Shri Narendra Modi government is working on this line. In the coming years we will definitely see a fall in the contribution of petroleum products in the overall energy share in our consumption.