With a strong demographic dividend, a growing entrepreneurial ecosystem and a large domestic market, the time is right for India’s economy to soar.The world is expecting India to translate its potential into action.
If the economic liberalization of 1991 was a watershed moment for India, 25 years later India again stands on the threshold of another historic moment.
The World Bank and the International Monetary Fund both project a robust 7.5% growth for the country in 2016 and 2017.
Yet, India also faces challenges, including shrinking exports, an infrastructure deficit, barriers to business and stalled reforms.
If the pace of reform fails to pick up and improvement in the ease of doing business proves too slow, companies may look elsewhere.
As the government ensures that the benefits of the previous industrial revolutions reach all Indians, it should also prepare itself for the Fourth Industrial Revolution – a technological revolution that is changing the scale, scope and complexity of the opportunities and challenges that we face.
India’s leadership in innovating with technology continues to improve the country’s economic prosperity, civic participation and digital governance – engaging with its citizens, updating them on policies, resolving issues and connecting with them through live conversations.
This is an important inflection point for India, where it can ensure that its economic growth is more broad-based and socially inclusive, and also lead from the front on the Fourth Industrial Revolution to benefit its people and communities. With India taking on the G20 presidency in 2018, progress made now will define the country’s G20 leadership.
India- on the brink to take off or on the brink to fall ? –
The actions will decide the outcome- not only of the government but also of the citizenry.After all, government can launch sanitary campaigns and Swachh Bharat Mission – but it hardly can stop people from peeing – here , there and everywhere.It has to come from within , it has to come from the society.Government can only push you to run if the society is ready to run.For that , there need to change on our collective approach and the best possible solution is – change and change invariably begins at home.Thus the more appropriate question is – Not Indian but Indians – on the brink to take off or on the brink to fall ?
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.