Question: Despite the high rate of economic growth in India, there are still power shortages in many states of India. Is anything being done to remedy the situation?
Answer: India’s electricity consumption grew by 7 per cent in 2023 outpacing the global average of 2.2 per cent. The Indian Energy & Climate Centre has cautioned that power shortages will continue even after all the thermal and hydroelectric capacity is installed as per the current plans. IECC has therefore recommended policy intervention to mitigate the shortages. It has suggested deploying storage solutions and increasing the production of renewable energy capacity, like solar power and wind energy. The government has initiated a policy for promoting pumped shortage projects which would be integrated with renewable energy. Further, nuclear energy is expected to play a significant role for ensuring energy security. This is proposed to be done by setting up Bharat Small Reactors. A substantial amount is allocated for research and development of new technologies for nuclear energy. The budget speech of the finance minister last month has mentioned about the development of indigenous technology for Advanced Ultra Super Critical Thermal Power Plants.
Question: There has been a lull in the monsoon this month which will have a direct impact on agricultural output. Will this affect the Indian economy as rural demand for goods and services may fall?
Answer: According to the American weather agency, National Oceanic & Atmospheric Administration (NOAA), rainfall in the deficit zones of India will increase with the formation of La Nina in the later part of August or in early September. This should wipe out the deficit. The strengthening of the monsoon will prove to be a blessing for farmers in India which will increase the purchasing power in their hands, resulting in a higher demand for consumer goods. Even at present, the deficit in rainfall has not affected the kharif crop sowing operations as water storage in 150 reservoirs located in different states has provided adequate supply. Hence, the overall acreage of areas sown for growing paddy, pulses and oilseeds has increased in the current season. This is also on account of availability of ground water and irrigation facilities. The increase in production of pulses and oilseeds is likely to give a boost to the rural economy with a higher procurement price for these crops.
Question: When I return to India for good next year, I will be remitting my savings in the Gulf to my bank account in India. However, if thereafter I wish to use the rupee funds for travelling abroad or for my foreign medical expenses or for my children’s overseas education, would I be able to do so?
Answer: When you return to India for good, you have three options – (1) retain your existing funds in a foreign bank account, (2) transfer money to a Resident Foreign Currency account in India, and (3) transfer funds to a resident rupee account in India. You are free to avail of all the three options in such proportion as you deem fit. Under the first two options, the interest earned on the money deposited in the foreign bank account or the RFC account will be fully exempt from tax for the two financial years when you are treated as resident but not ordinarily resident in India. Under the third option, interest earned on amounts invested in a bank or in other assets would be fully liable to tax from the very first financial year when you return to India. However, you will be entitled as a resident Indian to avail of the Liberalized Remittance Scheme whereby you can spend up to $250,000 in a financial year in foreign exchange for personal travelling, medical expenses, education of children, purchasing immovable property, investments in overseas equity and debt instruments, etc. You are permitted to open a foreign currency account for this purpose through any Indian bank of your choice or you can open the account with a bank in GIFT City which is treated as an International Financial Services Centre (IFSC). An IFSC is a jurisdiction where business is done in foreign currency. Therefore, funds deposited in the foreign currency account can be utilised to invest in portfolio management schemes that invest in foreign securities as well as in their depository receipts.
H. P. Ranina is a practising lawyer, specialising in corporate and tax laws of India.