Let’s begin. India’s economic growth in the next fiscal will likely exceed the International Monetary Fund’s projection of 6.1%, supported by enhanced capital formation, chief economic advisor V Anantha Nageswaran said this week. The CEA also stressed the need for fiscal consolidation in the Asia-Pacific region to reduce already-elevated inflationary pressure, as the preparations for Budget FY24 is underway in the finance ministry. Retail inflation in India hit a five-month high of 7.41% in September. It exceeded the upper band of the Reserve Bank of India’s medium-term target of 2-6% for a ninth straight month through September. The country’s public digital infrastructure, said the CEA, has probably crossed an inflection point and that it will contribute to the formalisation of the economy, in addition to growth. So, maybe, there could be a 0.5-0.8% addition to the baseline growth number of 6%.
In some more economy news, the government may set the disinvestment target for the next financial year at a “realistic level” close to the Budget Estimate of Rs 65,000 crore for the current year, sources told FE. They said disinvestment receipts in 2022-23 could be Rs 45,000-50,000 crore, provided the proposed stake sale in Hindustan Zinc goes through. Disinvestment receipts are at Rs 24,544 crore or 38% of the annual target so far this year. This includes Rs 20,516 crore garnered from a 3.5% stake dilution in LIC through an initial public offer. The government plans to sell some of its stake in Vedanta-controlled Hindustan Zinc in the current fiscal. Its residual 29.54% stake in the integrated miner and non-ferrous metal producer is worth about Rs 36,000 crore at current market prices. The government will sell part of this stake in the current fiscal and the balance in FY24, a senior official said. The government may also look at offloading a part of the indirectly held stakes through the Specified Undertaking of the Unit Trust of India in ITC and Axis Bank in Financial Year 23.
Meanwhile, official sources have told FE that the government is giving final touches to seven to eight production-linked incentive schemes that will likely be announced in the Budget for FY24. The PLI schemes, aimed at encouraging the private sector to step up capital expenditure, will complement the Centre’s bid to further bolster its own budgetary capex and serve as important levers for growth and job creation, one of them said. This will be important for the NDA government as well, in the build-up to the 2024 general election. The Centre will also continue to nudge states and central public sector enterprises to raise their capex. Sources had earlier told FE that the new PLI schemes could cover segments, including textiles, electronic components, furniture, toys and leather. Tens of thousands of crores would be extended as incentives. The government intends to make fresh budgetary allocation for the schemes, apart from using savings from the earlier PLI schemes. The budgetary capex, too, will see another spike in FY24, as the government aims to push for economic growth without exacerbating inflationary pressure.
Moving on. The Department of Pension and Pensioners’ Welfare has clarified that there is no provision in the Central Civil Services (Commutation of Pension) Rules, 1981 for the commutation of a percentage of basic pension on a second or subsequent occasion. As per Rule 5 of CCS (Commutation of Pension) Rules, 1981, a Government servant can commute for a lump-sum payment of an amount not exceeding 40 per cent of his basic pension. The Department of Pension and Pensioners’ Welfare has issued the clarification after receiving references/representations seeking clarification on whether it is permissible for a person, who has commuted a percentage of his basic pension, which is less than 40% of his basic pension, to commute a percentage of basic pension on a second or subsequent occasion within the overall maximum limit of 40%.
In other news, for the first time, there is data to prove that cash is losing the king status it has enjoyed for decades in India. According to an SBI Research report, currency circulation in the country declined during the recently concluded Diwali. This has happened for the first time in 20 years. “In a remarkable development, for the first time in 20 years, currency in circulation declined during the Diwali week. Innovations in technology have changed the Indian payment system. Over the years, the Indian cash lead economy now has changed to a smart-phone led payment economy,” the report said. The Currency in Circulation has been declining from 88% in FY16 to 20% in FY22. The CIC is estimated to go down further to 11.15% in Financial Year 27. In contrast, the digital transactions share is continuously increasing from 11.26% in Financial Year16 to 80.4% in Financial Year 22. According to the report, it is expected to touch 88% in Financial Year 27.
