New Delhi:

The Communist Party of India (CPI) received a notice from the Income Tax Department sometime back regarding some discrepancies due to the use of old PAN cards by some state units of the Communist Party of India, said General Secretary of CPI, D Raja.

“We have received the income tax notice for the use of the old PAN card,” CPI leader D Raja said to ANI.

On being asked if the party received any notice from IT in regard to a particular amount, Mr Raja, clarified, saying, “They did not receive any notice from IT in regard to money.”

The development comes as the Income Tax Department issued a demand notice of about Rs 1700 crore to Congress, sources said. They said the fresh demand notice is for assessment years 2017-18 to 2020-21 and includes penalties and interest.

The Delhi High Court had earlier this week dismissed the party’s plea, challenging the Income Tax Department’s order opening reassessment proceedings against it for 2017-18, 2018-19, 2019-20, and 2020-21.

Congress will stage a nationwide protest on Saturday against notices from the income-tax department, asking it to pay Rs 1,823 crore.

Congress general secretary KC Venugopal has instructed all state units to stage demonstrations at PCC and district Congress Committee headquarters tomorrow.

“Eight years of Income Tax returns of the INC have been reopened on baseless, manufactured grounds to levy patently illegal Income Tax demand orders totalling thousands of crores of rupees. This is nothing but a blatant and naked attack on the very principals of democracy,” Mr Venugopal said in a letter addressed to party workers on Friday.

“Now in a patently illegal and undemocratic action, the Income Tax Department – has launched its next premeditated, diabolical campaign against the INC. Eight years of Income Tax returns of the INC have been reopened on baseless, manufactured grounds to levy patently illegal Income Tax Demand orders totalling thousands of crores of rupees. This is nothing but a blatant and naked attack on the very principals of democracy,” he stated in a letter.

“In light of this egregious attack on democracy and the imposition of tax terrorism on our party amidst the crucial Lok Sabha elections, All Pradesh Congress Committees (PCCs) are requested to hold massive public demonstrations at the State and District headquarters in their respective states tomorrow and the following day, involving senior leaders and party functionaries. Massive protest demonstrations shall be held in all constituencies, led by our party candidates. Protest demonstrations, including Mashal Juloos, shall be conducted in all districts by the District Congress Committees,” he added.

Earlier, accusing the Income Tax Department of double-standards, Congress alleged that while it has been penalised for “a violation of Rs 14 lakh,” the income tax authorities were completely silent on “Rs 42 crore violation” by the BJP and that the violations by the ruling party at the Centre entailed a penalty of Rs 4,600 crore.

Addressing a press conference, Congress leaders Jairam Ramesh and Ajay Maken said there was an attempt to stifle the party financially during the Lok Sabha polls.

Mr Maken said the Election Commission should ensure a level-playing field.

“We have received notices from the time of Sitaram Kesari, from 1993-94… We have been demanded to pay Rs 53 crores from the time of Sitaram Kesari. A total of Rs 1823 crores has been made by the IT department from Congress,” he said.

“We have analysed all violations of the BJP using the same parameters they used to analyse our violations… BJP has a penalty of Rs 4600 crore. The income Tax department should raise a demand from the BJP for the payment of this amount,” he added.

Mr Maken said that efforts are being made to weaken the Congress financially, by freezing the party’s bank account before the Lok Sabha elections.

Recently, the Delhi High Court upheld the Income Tax Appellate Tribunal (ITAT) order refusing to stay on the Income Tax notice for recovery of more than Rs 105 crore as outstanding tax against the Congress. The Court, while upholding the ITAT order, granted liberty to the petitioner’s Congress party to move the appellate tribunal afresh with the grievance.

The Congress has recently approached the Income Tax Appellate Tribunal (ITAT) against the recovery and has filed a complaint and sought a stay against Income Tax Department proceedings of recovery and “freezing” of their bank accounts.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Coming after a 11-year hiatus, the latest Household Consumption Expenditure Survey findings based on surveys conducted between August 2022 and July 2023, shall feed into a possible review of the Consumer Price Index. 
| Photo Credit: The Hindu

India’s headline inflation is expected to trend down creating more room for monetary and fiscal policy to focus on spurring growth rather than fret over inflation, if the latest Household Consumption Expenditure Survey (HCES) that shows a lower proportion of food spends for both rural and urban consumers, is used to rejig the Consumer Price Index (CPI).

The CPI, which is currently based on the 2011-12 consumption spending survey, assigns a weightage of almost 54.2% for rural consumers’ food and beverages’ expenditure and 36.3% for urban consumers, with the combined weightage for such expenses by all households at nearly 46%.

As per the HCES findings for 2022-23, rural spending on food and beverages has dropped to 46.4% from 52.9% in 2011-12, while urban peers spent 39.2% of their overall monthly outgoes on food compared to 42.6% incurred 11 years earlier.

“I think this will have serious implications. There will have to be a complete recast of the CPI that the National Statistical Office [NSO] produces. What is driving inflation today is food, while core inflation is down,” remarked NITI Aayog CEO B.V.R. Subrahmanyam.

“That’s what the Reserve Bank of India [RBI] also keeps saying… that food inflation is spiking, sometimes in onions, sometimes in vegetables, sometimes in pulses. Suddenly, if their share shrinks, your inflation will also probably go down and my suspicion is our inflation is over-reported,” he noted.

In January, core inflation, which excludes volatile energy and food prices, is estimated to have hit a record low of 3.7% in the current CPI data series which uses 2012 as a base year. However, food inflation stood at 8.3%, while food and beverages together clocked a 7.6% inflation.

Mr. Subrahmanyam stressed that rebalancing the CPI, with a lower share of food and cereals, will possibly lead to a reduction in retail inflation which will affect the RBI, which sets interest rates based on retail inflation trends. Economists broadly agreed with Mr. Subrahmanyam’s prognosis.

“Lower weights for food will tend to have a bias on core inflation and reveal lower headline inflation for sure. These weights need to be carefully assessed and ratified over a period of time. Hence choice of the base year is important,” Bank of Baroda chief economist Madan Sabnavis told The Hindu, adding that lower retail inflation would give the central bank room to focus on growth.

GDP math effects 

Coming after a 11-year hiatus, the latest HCES findings based on surveys conducted between August 2022 and July 2023, shall feed into a possible review of the CPI. However, the government is likely to wait for the results of a fresh HCES that began last August and will be completed this July, before pursuing the CPI reset. An official said that the ongoing survey would confirm whether the 2022-23 Survey’s findings are robust and realistic.

The NITI Aayog CEO said this would happen in due course and could also affect the calculation of the economy’s output in GDP (Gross Domestic Product) terms, because the deflators would change. “Suppose GDP was 330, and you deflated it by 10%, it would be 300. But if you deflate it by 8%, the GDP would be higher. I think all these things will happen,” he said.

An economist who didn’t want to be identified said one will have to wait for the complete findings of the latest HCES to ascertain the extent of changes in consumption patterns and the impact on inflation rates will depend on when the government opts to change the CPI base and weightages.

Unfortunately, ‘wise’ , ‘efficient’ and ‘government expenditure’ don’t usually feature in the same sentence. | Getty Images
| Photo Credit: Getty Images

“The Indian economy is expected to grow at an average rate of 6.7% per annum until the end of the decade,” CRISIL said in its latest report.

The economy will grow at this rate between the financial years 2024 to 2031, a notch above the pre-pandemic average of 6.6%. According to CRISIL, the key contributor to this trend will be capital.

“This is a result of the investment-driven strategy of the government when the private sector was shy of making investments.”

“The government increased capital expenditure significantly to support building expenditure and providing interest-free loans to states to bolster their own investment efforts,” the report said.

CRISIL said that after a robust 7.3% growth this fiscal, there will be moderation to 6.4% in the next financial year.

“There is also a need to monitor the impact of the escalation of the Middle East conflict on energy and logistics costs,” it said. “In India, the inflation level of 5.7% in December 2023 was driven solely by volatile vegetable prices and food-grain inflation,” according to the report.

“This will keep Reserve Bank of India cautious on the rate front as it eyes the four per cent inflation target,” CRISIL said.

“The continued softening of core inflation and deflation in fuel prices gives us hope, but the persistent high price levels of the food items, which has substantial weight in consumer price index (CPI), keep the risks of its transmission to non-food components,” the report said.

CRISIL said the Federal Reserve of the U.S. is expected to cut rates this year. The strong labour market data and higher-than-expected inflation have once more cast doubts on the timing and the extent of rate cuts expected to begin this year.