FE Editorial : F1 economics

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SummaryGiven its Rs.2,45,000 crore debt and the ruling regime’s desire to give out freebies—apart from the computers promised in the election, R1,650 crore of farm loans were waived off a few weeks ago—despite having a budget constraint, it’s not surprising the state has set up a Resource Committee to find ways to drum up some revenues.

case, when the Jaypee Group spent R2,000 crore on the project, it had an assurance of exemption from entertainment taxes. Getting rid of these changes the economics of the project and is easily challenged in court. The new regime in UP can argue that there was favouritism by the Mayawati regime. That may or may not be true, but when a proposal has the stamp of a duly elected government, it has to take responsibility for it. That is why, when the Supreme Court ruled in favour of cancelling the 2G licences, the central government decided to refund the money paid by the firms whose licences were cancelled. This is what Tata Group chairman Ratan Tata had in mind the other day when he said that if government approvals were taken lightly, people would take India lightly.

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