Extension of RoDTEP Scheme for Export Sectors

Amidst global economic uncertainties, there is a call for the government to extend the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for export-oriented units (EOUs) and special economic zones (SEZs) until the end of September.

Current Status and Expiry

• The RoDTEP scheme for exports from the domestic tariff area (DTA) is operational until September 30 of this year.
• For SEZs, EOUs, and advance authorisation (AA) holders, it expired on December 31 of the previous year.

Purpose and Implementation

• The scheme refunds non-creditable central, state, and local levies to boost India’s exports.
• Initially effective in 2021, it covered additional export sectors from March 11, 2024, to aid exporters facing international challenges.

Concerns and Suggestions

• The Export Promotion Council for EOUs and SEZs (EPCES) argues against denying RoDTEP benefits to specific exporters like EOUs, SEZs, and AA holders.
• In case of budget constraints, they suggest limiting the scheme to certain sectors/products instead of excluding small exporter groups.
• Export contributions from EOUs and SEZs comprise approximately 15% of total merchandise exports, indicating limited budget needs for their inclusion.
• A recommendation is made that all exporters be covered under RoDTEP until March 31 in constrained budget scenarios.

Financial Allocation

• An allocation of Rs 16,575 crore has been made for the RoDTEP scheme in the Union Budget 2014-25.

Additional Sector Insights

• Government capital expenditure and safeguard duties are crucial for the steel sector's performance.
• Saudi oil price adjustments indicate a tightening supply for Asian markets.
• The UP government's new export policy aims to provide additional benefits to exporters.
• The services Purchasing Managers' Index (PMI) rose to 59.3 in December, indicating demand buoyancy.

Income Inequality in India - 2023

In 2023, India's income inequality remains higher than in the 1950s, despite some post-pandemic improvements, as indicated by a working paper from the People Research on India’s Consumer Economy (PRICE).

Key Findings

• The Gini coefficient for India in 2023 is 0.410, an increase from 0.371 in 1955. In 2021, it had peaked at 0.528 due to the pandemic.
• The Gini coefficient measures income distribution inequality; 0 indicates perfect equality, 1 indicates perfect inequality.
• Rural Gini coefficient rose to 0.405 in 2023 from 0.341 in 1955, while urban areas saw a slight decline from 0.392 to 0.382.
• The bottom 10 per cent households saw their income share decrease from 3% in 1955 to 2.38% in 2023.
• The bottom 50 per cent households saw a slight increase in income share, from 22% to 22.82% in the same time frame.

Recommendations

• Investment in education, healthcare, and infrastructure, especially in rural areas, is crucial.
• Implementing social safety nets and progressive taxation is necessary for equitable growth distribution.

Social Welfare Impact

• Programs like the Mahatma Gandhi National Rural Employment Guarantee Act and direct benefit transfers have improved the income share of the bottom 50 per cent.

Challenges and Observations

• Despite improvements, a "seesaw" pattern of inequality persists, influenced by external disruptions and policy shortcomings.
• Adaptive policymaking is essential for sustained progress post-pandemic.
• Model-based synthetic estimates, such as those by the World Inequality Database, often overstate inequality by over-relying on top income earners’ data.
• According to WID, the top 1 per cent controlled 22.6% of national income, while surveys indicate they controlled only 7.3%.

Demands from Central Trade Unions

Central trade unions have put forth several demands to the government to address issues related to employment, social security, and taxation.

Key Demands

• 8th Pay Commission: Immediate constitution to review and adjust salaries of central government employees.
• Job Creation: Fill existing vacancies in central government departments and PSUs to boost employment.
• MGNREGA Enhancement: Increase allocations for MGNREGA to ensure 200 days of work per family.
• Income Tax Rebate: Increase income tax exemption limit to Rs 10 lakh per annum.
• Social Security for Gig Workers: Introduction of a social security scheme.
• Old Pension Scheme: Restoration of the old pension scheme for government employees.
• EPFO Minimum Pension: Raise to Rs 5,000 per month.

Labour Codes

There is division among trade unions regarding the new labour codes:

• Support for Codes: Bharatiya Mazdoor Sangh (BMS), National Front of Indian Trade Unions (NFITU), and Trade Union Coordination Centre (TUCC) support the Code on Wages and Code on Social Security.
• Opposition to Codes: Other central TUs demand scrapping all four labour codes, advocating the restoration of the repealed 29 labour statutes.
• Recommendations: Notify Code on Wages 2019 and Code on Social Security 2020, while removing anti-worker provisions in other codes.

Economic and Taxation Proposals

• Funding for Startups and Gig Economy: Increase budget allocation to support growth and skilling in these sectors.
• Corporate and Wealth Tax: Propose higher taxes on corporations and wealthy individuals, introduce inheritance tax, and reduce GST on essential goods.
• Privatisation: Demand to halt privatisation of PSUs.

Social Security and Worker Status

• Unorganised Workers: Establish a government-sponsored social security fund.
• Domestic Workers: Grant worker status and social security benefits, involving contributions from resident welfare associations.

Summary of Demands

• Boost rural job scheme to provide 200 workdays per family.
• Raise income tax exemption limit to Rs 10 lakh.
• Create a universal fund for unorganised workers.
• Increase EPFO minimum pension to Rs 5,000; set minimum wage at Rs 26,000.
• Remove GST on essential items like food and medicines.