Domino economy.

"While wage earnings of casual workers in urban areas increased by 3.3% per annum between 2017-18 and 2020-21, those actually declined for regular workers by 0.8% per annum. In fact, the earnings of a regular worker in the April-June quarter of 2021 were 3% lower than in the same quarter of 2018," wrote Prof Himanshu. "Essentially, a regular worker was earning 14% lower wages than a decade ago. Much of this decline was among highly educated workers." "A large part of the demand for discretionary spending comes from urban India. With inflation further eroding the purchasing power of urban consumers, we are facing the biggest demand crisis we have seen in recent times." One huge reason for inflation is the price of fuel as "net profits of top three oil-marketing companies (OMCs) in the country - IOC, BPCL and HPCL - have grown exponentially. IOC's net profit stood at INR5,273 (Rs 52.73 billion) in FY15." ET. In FY22 its net profit was 5 times higher at Rs 241.84 billion. "The combined net profit of all three OMCs for FY21 was Rs 515.42 billion." In the last 7 years excise duty on petrol has gone up by 258% and on diesel by 820%, while the Center has raked in Rs 24 trillion. The Budget for 2023-24 will be revealed on 1 February. indiabudget. gov.in. "Ahead of next week's Union Budget, speculation over an expansion of the government's Production -Linked Incentive (PLI) scheme is running rife." ET. "The PLI scheme - which offers incentives on incremental sales of products manufactured in India - was initially rolled out for three sectors in early 2020 and then extended to 11 more." Why not cover the whole lot? "In FY2022-23 of every Rs 100 budgeted to be spent, debt servicing, defence, transfers to states, subsidies and pensions take up 2/3rd of the budget. If one adds salary costs of the current establishment, this will go up to 3/4th of the budget," wrote Somnath Mukherjee. "While the Centre has said it will tighten its fiscal deficit to 4.5% of GDP by 2025-26 (it is budgeted at 6.4% this year), anxiety has been aired at this being too big a target." Mint. Because government debt is above 80% of GDP, so that "Already, the Centre's allocation for its interest bill takes up roughly half its revenue." "It is likely that this core fiscal target (6.4%) will be met despite the fact that the subsidy bill will overshoot the budgeted target by over Rs 2 trillion," wrote Niranjan Rajdhyaksha. That is because of higher tax collections. "The main reason why this extra money has flowed into the tax coffers is high growth in nominal GDP; it will be lower in the next financial year as economic growth loses steam while price pressures ease." Nominal GDP is the value of total production at current prices without correcting for inflation. Investopedia. The government collected huge taxes because of soaring prices and the rebound in spending. This will not be repeated in the next fiscal. To add to it, "India's goods exports in December declined by 12.2% to $34.48 billion on an annualised basis and imports fell by 3.46% to $58.24 billion." HT. Increase prices by huge excise duties on fuel, which bring in a windfall Rs 24 trillion in taxes, higher profits and, hence, higher dividends from OMCs, higher tax collection from goods and services tax (GST) and, bingo, the fiscal deficit is controlled. Like a domino effect. Sheer genius.