Price hike in oil prices: why and how

The fuel Price in India hit the record high three figures for the first time in the history of India. On Wednesday the retail price of regular petrol hiked by 26 paise in Rajasthan’s Sri Ganganagar and reached Rs. 100.13. While the Diesel rested at Rs. 92.13 after a hike of 27 paise. The fuel prices in India vary from state to state, City to City. It is determined after implementing state and central government taxes. So why are the prices rising like never before?  After effects of the infamous Pandemic:  Due to the then on-going Pandemic, the demand of Crude Oil (pre refined petroleum) showed a significant drop in April 2020. Which then turned to a collapse in prices of crude oil.           After Pandemic, Saudi Arabia a key oil producing country voluntarily cut its supply by about one million barrels to 8.125 million barrels of crude oil to boost the prices hence to cover the loss due to Pandemic. Resulting in Price of Crude Oil hiked by about 50%. Compared to $40/Barrel

Budget 2021 Expectations: Rebound in sight?

 All eyes are on the upcoming budget for the next financial year as India looks to recover from the disaster caused by the coronavirus pandemic 2020-21. The government has already started consulting stakeholders and industry experts ahead of all important annual budget announcements for 2021-22. The budget for the next fiscal year will be announced by the Finance Minister Nirmala Sitharaman on February 1, 2021.

A few days ago, finance minister Nirmala Sitharaman promised a budget like ‘Never before’ indicating that the government is set to take difficult steps required to boost the damaged economy.

Focus on Agriculture Reforms

As the Farmer protest continues, with no sign of end to that impasse between incensed farmer and a determined centre one thing is clear. Unlike in the past, when agriculture got not much, this time round, Finance Minister, Nirmala Sitharaman will take care to ensure the Budget sends the right message: that this is a government that cares for farmers and farmer welfare.

About time, too. Though the government has stuck to its declared goal of doubling farmers’ income by 2022, a promise repeated by Finance Minister, Nirmala Sitharaman in her budget speech last year, it was apparent, well before Covid-19 hit us, that the government would not be able to deliver. The problems of the agriculture sector go much deeper. The pandemic has only made the promise more distant.

According to estimates, doubling farmer income would require growth in the range of 15 % per annum growth in real incomes of farmers during the remaining years to 2022, compared to about three per cent growth achieved during the five years of NDA Government . An impossible task without root and branch reform – read a shift away from the erstwhile subsidy-driven regime; with subsidies on inputs such as fertilisers, water, power, seeds and dependence on a minimum support price at the output stage. However, tentative moves by the government to introduce such reforms seem to have already hit a roadblock.

Health Care expenditure boost

The coronavirus pandemic exposed gaps in India's health care system, which was overcome as cases of covid rose quickly in Country. Over 1.5 lakh people died in the country due to the COVID-19 pandemic and many of them died as they did not receive treatment on time.

Shortage of beds and ventilators made headlines often during pandemic hit 2020. Therefore this year's budget is widely expected to focus on improving the country's health system, especially in the rural areas.

Many experts have sought an increase in public health expenditure towards pharma research and disease surveillance is also expected in the work of the pandemic.

Keep Income tax rates steady and rationalize GST

Budget 2021, needs to continue on the strategy chosen to previous year I.e. reduces consumption and increases investments. For, this government had impressed tax rates for the higher income group and also included dividends as a part of income and remove the Dividend Distribution Tax. This has been an incentive for the industry to invest. Corporate tax rates at 22% makes India a competitive destination with a large man power. Expert believes that is no need to change in income tax slabs any further. GST rates needs to be rationalized so that there is limited ambiguity in them.

The recent buoyancy in GST collections points to increased shift to the organised sector from the unorganized sector. To encourage wide participation wide participation and increase collections, government needs to bring rates down and the number of slabs to be reduces.

MSME Segment and Services

Covid has impacted the MSME segment considerably, perhaps more than their larger peers as they have limited access to capital. This segment was already impacted due to GST and its cascading effect. MSME’s need to access counselling/technology and capital. We hope that the budget tries to foster the MSME segment to realise its full potential.

Most of India’s recent GDP growth has been on the back of the services sector. This sector has been impacted significantly due to Covid, and needs urgent relief. Hotels and restaurants and segments such as these will require low cost of capital along with some loans to be forgiven to help them come back.

 - रचित


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