Indian Economy : News,Discussions & Updates

RISING SUN

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Dec 3, 2017
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Finance Minister hints at review of tax limit on EPF​

Finance Minister Nirmala Sitharaman has said there is no intent to discourage higher income earners from saving with the Employees Provident Fund (EPF) and that she was open to reviewing the contribution limit of ₹2.5 lakh a year for tax-free interest, imposed in the recent Union Budget.

Reiterating that the EPF will continue to remain in its present form, the Minister said there was no plan to merge the EPF with the National Pension Scheme.

“We want to continue with the EPF. We understand that there is a certain comfort with people, particularly middle income earners when they are assured of a return,” she said in an exclusive interview with Business Line.

“We have taken a call not to discourage those earning more than ₹15,000 from being part of EPF,” she added.

There can always be a discussion on the ₹2.5 lakh limit. I can go back and review it. But it is a matter of principle. We are only touching those who are putting far more than what an average Indian’s earnings is per month,” she added.

The Finance Minister has proposed in the budget to tax interest earned on EPF contribution of more than ₹2,50,000 annually.

Realistic numbers​

Ms. Sitharaman said the numbers in the Budget are realistic, both in terms of perception and in what can be achieved. “Every number has been repeatedly vetted for being achievable. This is a Budget that has been put through the wringer repeatedly to get it closer to what is achievable,” she said.

Asked if the disinvestment target of ₹1,75,000 crore is too modest, she replied that it could appear to be so. “But I would rather be cautious than stand up and say later that I went wrong,” she said.

The Finance Minister confirmed that no decision had been made yet on which banks to privatise — the profit-making banks, smaller banks or big ones. In the context of the proposal to launch development financial institutions (Other Forum), she said the idea was that long-term infrastructure funding will be done by these institutions. “Banks must focus on the primary business of lending for commercial purposes, rather than getting choked by sourcing short-term deposits and lending to long-term projects. There should be a marked difference between the portfolios of DFIs and commercial banks,” she said, adding that the Other Forum idea will be implemented “as soon as possible”.

Levies on fuel​

Asked why the Centre was not reducing excise duty on petrol and diesel despite the sharp climb in their retail prices, Ms. Sitharaman said the Centre and States should sit together and see how best to handle the issue. “Taking into GST can be an option. That will certainly bring it to one rate all over the country. The GST Council can deliberate and take a position on it, but then, the fact is, it is both the Centre and States even then,” she said.


“Jugaad” ideology​

Answering a question on whether the Prime Minister’s speech in Parliament defending wealth creators represents a shift in the government’s philosophy, Ms. Sitharaman said the government was never far removed from the BJP’s economic ideology.

“This country had gone too far in reiterating a socialist and what I would call an imported jugaad ideology made from tweaking imported ideas and constantly adding to them in the hope that they would somehow fit the country,” she said.

“There also needs to be recognition that socialism is not the only ideology that has a copyright on welfare. When the economy does not do well and wealth isn’t generated, then social good suffers and so does the welfare state. We are trying to reinforce that lawfully earning money is not wrong. A tax regime that is not oppressive or adversarial can generate sufficient revenues to fund welfare,” she added.
 
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RISING SUN

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Dec 3, 2017
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Aequs To Invest $500 Million To Set Up India’s First Toy Manufacturing Cluster In Karnataka's Koppal

Aequs Private Limited is investing $500 million to build India’s first toy manufacturing cluster across a 400-acre plot at Koppal in Karnataka, reports Economic Times.

India’s toy imports are worth $1.2 billion annually and most of them are sourced from China. The domestic toy cluster is being developed to counter that and stimulate the country’s growth in this sector.

“Toy industry globally is a USD 90 billion-market and Indian market size is about USD 1.7 billion. China exports USD 20 billion worth of toys and recreation goods annually," Aequs Chairman Aravind Melligeri was quoted as saying.

The company is a contract manufacturer and it already has two functioning production units at the special economic zone (SEZ) in Belagavi. It caters to some of the largest North American and European toy brands.

Out of the 400 acres land for the cluster, 300 acres will be an SEZ focusing solely on exports. The rest of the 100 acres will cater to demands within the country.

“Six marquee toy manufacturers and suppliers have already signed up for setting up factories in the toy cluster,” Melligiri was quoted in the report as saying.

The work behind this cluster had kicked off in January itself. This integrated manufacturing setup is slated to assist plastic and electronic toy manufacturers in design, moulding, assembly, painting, and packaging.

The toy manufacturing ecosystem will consist of more than 100 units and will generate direct employment for 25,000 people in addition to creating 1,00,000 indirect jobs.
 

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