the essay of 19 June 2024 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="left"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>JUNE 19, 2024</strong></font></p> <p align="center"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>New FM</strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><u>By Vijay Kumar</u></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Ms. Nirmala Sitharaman</strong>, fondly referred to as the second lady Finance Minister of the Country, is back. When the idea of the GST Council emerged, maybe they had a vision that sometime in the future, there would be a lady Finance Minister and it would be embarrassing to call her the Chairman of the GST Council. Article 279A of the Constitution designates the Union Finance Minister as the chairperson of the GST Council, not Chairman. Launching the GST in 2019, Prime Minister Modi said it would put an end to tax terrorism. But tax terrorism seems to be intact. Let us hope the new (old) Finance Minister ensures that it is reduced, if not eliminated. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In her Interim Budget speech on February 01 2024, Ms Nirmala Sitharaman stated, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">94. In 2014 when our Government assumed the reins, the responsibility to mend the economy step by step and to put the governance systems in order was enormous. The need of the hour was to give hope to the people, to attract investments, and to build support for the much-needed reforms. The Government did that successfully following our strong belief of 'nation-first'. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">95. The crisis of those years has been overcome, and the economy has been put firmly on a high sustainable growth path with all-round development. It is now appropriate to look at where we were then till 2014 and where we are now, only for the purpose of drawing lessons from the mismanagement of those years. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">The Government will lay a White Paper on table of the House. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">96. The exemplary track record of governance, development and performance, effective delivery, and 'Jan Kalyan' has given the Government trust, confidence and blessings of the people to realize, whatever it takes, the goal of 'Viksit Bharat' with good intentions, true dedication and hard work in the coming years and decades. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, under the changed circumstances, that White Paper may not be laid. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There seems to be a lot of fuss about the lady Finance minister. What is special about a lady becoming the Finance Minister? That reminds me of an outstanding lady Finance Minister-<em>Sri Mulyani Indrawati, </em>the Star Finance Minister of Indonesia who became the Finance Minister in 2005. When she left the job to take up an assignment as the Managing Director of the World Bank in 2010, the Indonesian Stock Market collapsed. She came back as Finance Minister in 2016. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Addressing senior officers of her ministry, she once advised them to: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Be the adhesive for things that have been cracked. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Be the unifier of things that are currently scattered. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Be the coolants for things that some time ago felt warm and heated up. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Be the bridge for those who had been distant. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Clarify things that have become turbid lately. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe, our FM would also have some such advice for the senior babus. </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://taxindiaonline.com/RC2/image/stories/JestGST33619062024.PNG" width="537" height="363"></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Running the Finance ministry is not an easy task. This is a huge maze, to understand which, will itself take a long time. Just have a look at the structure of the Ministry and what it is up to. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ministry of Finance was re-organized in the year 1949 in two Departments: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Department of Revenue and Expenditure: and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Department of Economic Affairs. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 1956, two separate Departments, Department of Revenue and Department of Expenditure were created. Ministry of Disinvestment, which was created in December 1999, was brought under Ministry of Finance as 'Department of Disinvestment' in May 2004. In 2007, a new Department of Financial Services was created by carving the Banking and Insurance Division out of the Department of Economic Affairs. At present, Ministry of Finance has the following six Departments. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) Department of Economic Affairs, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) Department of Expenditure, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c) Department of Revenue, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d) Department of Financial Services, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e) Department of Disinvestment, and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">f) Department of Public Enterprises. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There are six departments each headed by a Secretary assisted by a couple of Additional Secretaries and many Joint Secretaries and other varieties and they all have secretaries to do secretarial work. Remember the scene in<em> "Yes Minister"</em>, where the Secretary tries to tell the minister about the personnel in the ministry. He says, <em>"Well briefly, Sir, I am the Permanent Under Secretary of State, known as the Permanent Secretary. Woolley here is your Principal Private Secretary; I too have a Principal Private Secretary and he is the Principal Private Secretary to the Permanent Secretary. Directly responsible to me are 10 Deputy Secretaries, 87 Under Secretaries and 219 Assistant Secretaries. Directly responsible to the Principal Private Secretary are plain Private Secretaries, and the Prime Minister will be appointing 2 Parliamentary Under Secretaries and you will be appointing your own Parliamentary Private Secretary." </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the minister asks, <em>"Do they all type?" </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Well, the six departments that Madam Sitharaman has to handle are: </font></p> <p align="justify"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The Department of Revenue: </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is the Department that is responsible for all the good deeds in the Goods and Services Tax administration. It exercises control in respect of matters relating to all the Direct and Indirect Taxes of the Union through two statutory Boards, the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC). Each Board is headed by a Chairman with six Members who are all ex-officio Special Secretaries to the Government of India. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Department administers <em>inter alia-</em> </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Central Economic Intelligence Bureau. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Directorate of Enforcement. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Central Bureau of Narcotics. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Chief Controller of Factories. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Appellate Tribunals (CESTAT, GSTAT). Please note that the Income Tax Appellate Tribunal is not under the Revenue Department or Finance Ministry. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue Department's website shows the Tribunals as <strong>Attached/Subordinate</strong> Offices of the Revenue Department. And you thought the Tribunals were independent judicial bodies! </font></p> <p align="justify"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The Department of Expenditure</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> is the nodal Department for overseeing the public financial management system in the Central Government. It is responsible for the implementation of the recommendations of the Finance Commission and Central Pay Commission, monitoring of audit comments/observations, preparation of Central Government Accounts. It assists central Ministries/Departments in controlling the costs and prices of public services, reviewing system and procedure to optimize outputs and outcomes of public expenditure. The principal activities of the Department include overseeing the expenditure management in the central Ministries/Departments through the interface with the Financial Advisers and the administration of the Financial Rules/Regulations/Orders, pre-sanction appraisal of major schemes/projects, handling bulk of the central budgetary resources transferred to States. </font></p> <p align="justify"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Department of Investment and Public Asset Management (DIPAM):</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The Department of Disinvestment was set up as a separate Department on 10th December 1999 and was later renamed as Ministry of Disinvestment in September 2001. From May 2004, the Department of Disinvestment is one of the Departments under the Ministry of Finance. The Department of Disinvestment has been renamed as Department of Investment and Public Asset Management (DIPAM) from 14th April 2016. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Department is responsible for- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. All matters relating to management of Central Government investments in equity including disinvestment of equity in Central Public Sector Undertakings. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. All matters relating to sale of Central Government equity through offer for sale or private placement or any other mode in the erstwhile Central Public Sector Undertakings. </font></p> </blockquote> <p align="justify"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Department of Economic Affairs:</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> DEA is responsible for advice on economic issues having a bearing on internal and external aspects of Indian Economy including inflation, price control, foreign exchange management, Official Development Assistance, domestic finance and preparation of Union Budget, bilateral and multilateral engagement with international financial institutions and other countries. The Department maintains the cadre of Indian Economic Service. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DEA is divided into fifteen functional divisions like Budget, Economic Division, Financial Markets, Currency & Coin, Financial Sector Reforms & Legislation and so on. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Department inter alia deals with matters relating to- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Preparation of Union Budget, Supplementary Demand for Grants and Excess Grants, monitoring of the provisions of the Union Budget. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Borrowings, lending and Ways and Means of the Union Government. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Public Debt, including external debt and Debt Management Office. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Non-Tax Revenues. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Finance Commission and financial matters relating to reorganization of States. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Financial emergency. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Currency & Coinage. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. Management of Foreign Exchange Resources. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. Preparation of Economic Survey, Mid-year Economic Analysis, Indian Public Finance Statistics. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. Securities market. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. Small savings, including Public Provident Fund. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12. Bilateral Investment Protection and Promotion Agreements. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13. Foreign travel of Ministers of State Governments/Union Territories, Members of State Legislature/Union Territories and State Government Officials. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">14. Multilateral Financial Institutions such as World Bank, International Monetary Fund, African Development Bank, International Fund for Agriculture Development, Asian Development Bank, BRICS New Development Bank etc </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has control over: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Security Printing and Minting Corporation of India Ltd. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. National Savings Institute. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Securities and Exchange Board of India. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Delhi Mumbai Industrial Corridor Trust. </font></p> </blockquote> <p align="justify"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Department of Financial Services</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> covers the functioning of Banks, Financial Institutions, Insurance Companies and the National Pension System. The Department manages the Pradhan Mantri Jan Dhan Yojana (PMJDY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Mudra Yojana (PMMY), Atal Pension Yojana (APY), Pradhan Mantri Vaya Vandana Yojana (PMVVY) and the Stand Up India Scheme. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This Department deals with legislative and policy issues pertaining to the regulatory bodies like the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI) and the Pension Fund Regulatory and Development Authority (PFRDA). </font></p> <p align="justify"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Department of Public Enterprises:</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The Bureau of Public Enterprises (BPE) was set up in 1965 in the Ministry of Finance. As a result of the reorganization of the Ministries/Departments of the Union Government in September, 1985, BPE was made part of the Ministry of Industry. In May, 1990, BPE was made a full-fledged Department known as the Department of Public Enterprises (DPE). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department of Public Enterprises is the nodal department for all the Central Public Sector Enterprises (CPSEs) and formulates policy pertaining to CPSEs. It lays down, in particular, policy guidelines on performance improvement and evaluation, autonomy and financial delegation and personnel management in CPSEs. </font></p> <p align="justify"><font color="#009900" size="2" face="Verdana, Arial, Helvetica, sans-serif">But where is the Finance Secretary?</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Usually, the seniormost among the Secretaries in the Ministry is designated as the Finance Secretary. At present, the Expenditure Secretary Dr. YV Somanathan is the Finance Secretary. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">WOW, that's a lot of government. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The FM has also to take care of transfer of senior officers of all these departments, which itself is a gigantic task. It's a miracle how the Finance Ministers have survived this ordeal. Maybe the system is unfair to the Finance Ministers, for the sheer load of work they have to carry, compared to, maybe the minister for tourism. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A former Finance Minister of Punjab once told me in the presence of two other State Finance Ministers that it is very difficult for Finance Ministers to win elections; they become so unpopular that they either lose the next election or win with a dangerously thin majority. This Finance Minister had lost the last election. So, the upper house is a safe berth for Finance Ministers. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It's a tough task ahead for Ms Nirmala Sitharaman. Let's wish her all the best. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until next week</font></p> </body> </html>