Skip to main content

Black money law helps OROP soldier on

By
Those who have retired after a lifetime of defending the nation will get their dues without hurting the exchequer perhaps because those who hid their unaccounted wealth from the taxman have paid theirs.
Business Standard has learnt from senior government sources that the three month- compliance window under the black money law could garner around Rs.20,000 crore, an amount without which implementation of one rank, one pension ( OROP) would have led to stretching of the Centre’s fiscal resources. With such proceeds expected through an imposition of 30 per cent tax, and a similar penalty on the value of unaccounted wealth or assets declared by anyone between July and September, the government may be able to stick to the fiscal deficit target of 3.9 per cent of the gross domestic product ( GDP), without cutting capital expenditure required to kickstart investments.
“The black money compliance window could fetch the exchequer around Rs.20,000 crore. Without that additional amount, there could be serious problems in finding the spending room to implement OROP,” said a senior official, who did not wish to be named. The official added the fiscal deficit target would be maintained, and that the Centre would not compromise with the glide path of achieving a fiscal deficit of three per cent of GDP by 2017- 18.
“Once OROP is taken care of without any major spending cuts in other areas, or without revising the fiscal deficit target, the subsequent years will be easier to deal with, even with the implementation of the Seventh Pay Commission, which will come into force from April 1,” the official said.
OROP, the contours of which were announced by Defence Minister Manohar Parrikar, will stretch government coffers by Rs.18,000- 22,000 crore this financial year. Defence pensions are budgeted at Rs.54,500 crore in 2015- 16, which will now climb to Rs.72,500- 76,500 crore, approaching the Rs.75,103 crore salary and allowances of defence personnel during the year.
Finance Minister Arun Jaitley had said in Parliament the Centre’s salary bill would rise 9.6 per cent to Rs.1,00,619 crore from Rs. 91,839 crore in 2015- 16 on the recommendations of the Seventh Pay Commission, likely to be made to the government in December. The combined effect would be up to a Rs.31,000 crore rise in the Centre’s pay and pensions outgo this financial year.
A second official said without extra- budgetary resources like the compliance window, the finance ministry might have had to force spending cuts in other areas to make room for the pension increase. He said capital expenditure could have been cut and explained, “ Other administrative expenses cannot be cut, and neither can spending be reduced further on health, education and the like as the Centre has already reduced its share of expenditure on social sector schemes following the 14th Finance Commission recommendations”.
Business Standard, New Delhi, 18th Sept. 2015

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more