Budget FY2017: A mix of positive elements and substantial uncertainty

Thomas Rookmaaker:

From a rating perspective, the budget for FY17 contains a number of positive elements, even though it is subject to substantial uncertainty.

Firstly, the government continues to gradually broaden its ambitious reform program and like last year this budget contains some further announcements of reforms, including measures related to the FDI regime, the financial sector and agriculture.  Even though it may not always be easy to pass all the proposed laws in parliament, the government has a vision of how to structurally improve the economy and it seems to do what it can to achieve this vision.

Secondly, fiscal credibility is supported by the central government meeting its budget deficit target of 3.9% for FY16, as well as by the choice to maintain the previously communicated target of 3.5% of GDP for FY17. For some months it was clear that the government would face difficult choices in this Budget given the desire to simultaneously: i) stimulate GDP growth through public capital spending, ii) hike public sector wages after the Seventh Pay Commission recommendations, and iii) ensure some fiscal consolidation.The acceleration of the targeted revenue growth to 14% in FY17 from 9% in FY16 is subject to substantial uncertainty related to GDP growth.  At the same time, revenue growth is supported to some extent by a number of tax measures, including increased excise duties on various tobacco products and a 1% tax on luxury cars.The announcement to constitute a committee to review the working of the FRBM Act has the potential to cause future watering down of fiscal discipline, but it could also be an opportunity to improve the fiscal balances in the longer run. India’s fiscal balances are weak compared with peers, as the general government debt of some 69% of GDP is the highest of all sovereigns rated in the ‘BBB’ category (‘BBB-, ‘BBB’ or ‘BBB+’). (Fitch Ratings)


Author is Director in Fitch’s Asia-Pacific Sovereigns Group

Budget 2016-17: India has held ground despite slowdown in global growth says Jaitley

Newsroom24x7 Desk

Finance Minister Arun Jaitley
Finance Minister Arun Jaitley

New Delhi: Union Finance Minister Arun Jaitley began presenting the Budget for the financial year 2016-17 in Parliament today by pointing out that amidst slowdown in global growth and trade the Indian economy has held its ground firmly and the growth of GDP has accelerated to 7.6%.

The Finance Minister told the House that we are committed to eliminating black money and announced a voluntary disclosure scheme for this purpose. He said that Fiscal deficit for 2016-17 is  targeted at 3.5% and revenue deficit estimate for FY 2015-16 is down to 2.5%. He went on to annoiunce  that no changes have been made in the existing income tax slabs.

Since the Budget proposals were more project specific and not based on macro economics,  there was a direct and immediate impact on the stock market as the Sensex dropped 500 points when the Budget was being presented.

Sensex falls 500 points amid Jaitley’s Union budget tax proposalsSensex falls 500 points amid Jaitley’s Union budget tax proposalsThe Finance Minister  presented Tax proposals to provide relief to small taxpayers through rebates. He also announced relief to those in rented houses by staying that deduction is proposed to be raised from Rs 24,000 to 60,000 under Section 88G.

Jaitley further said that revenue deficit target for FY16 is 2.5% against budgeted estimates of 2.8%.

Focusing on Corporate income tax, the Finance Minister said incentives for new manufacturing companies, small enterprise companies are proposed..

The Finance Minister said that foreign exchange reserves are at highest ever level and CPI inflation has declined to 5.4%

Jaitley said that recapitalization of banks will be done during next FY. He further said we have to create a prudent fiscal policy, raise domestic demand and carry out reforms.

The Budget is also committed to increase investment in asset reconstruction companies

Foreign exchange reserves are now 350 billion US dollars, Jaitkey told the House.

Important announcements:

Rs 55,000 crore to be allocated for roads and highways and 10,000 km of national highways to be approved.

Govt to provide health insurance of upto Rs 1 lakh per family.

National Skill Development Mission gave training to 76 lakh youth,1500 institutes to be set up.

Rs 9,000 crores allocated to Swaccha Bharat Abhiyaan.

Rashtriya Gram Swaraj Abhiyan: New restructured scheme to increase the governance capabilities of PRIs to be launched.

Appreciation for 75 lakh Middle class and lower middle class for willingly giving up LPG Subsidy.

Stand Up India scheme allocated Rs 500 Crores for SC, ST and women entrepreneurs.

100 % village electrification to be achieved by 1st May, 2018

Rs. 87,765 crores for rural development as a whole have been allocated in the budget.

300 rurban clusters to be set up under Shyama Prasad Mukherji Mission

Rs 9,000 crores allocated to Swaccha Bharat Abhiyaan

New restructured scheme to increase the governance capabilities of PRIs to be launched: Rashtriya Gram Swaraj Abhiyan

Appreciation for 75 lakh Middle class and lower middle class for willingly giving up LPG Subsidy

National SC/ST Hub in partnership with  industry associations to support SC/ST entrepreneurs

85% of stalled road projects back on track

Total allocation to road sector including PMGSY: Rs. 97,000 crores

There will be a new policy for management of assets of public enterprises

100% FDI through FAPB route in marketing of food products produced in India

Department of Disinvestment to be renamed as Dept of Investment and Public Asset Management

RBI Act being amended to provide statutory basis for monetary policy framework

100% FDI to be allowed through FIPB route in Food Products Produced and Marketed in India

RBI Act being amended to provide statutory basis for monetary policy framework

100% FDI to be allowed through FIPB route in Food Products Produced and Marketed in India

Comprehensive Code to provide mechanism for bankruptcy of banks/insurance companies

Banking Board Bureau will be operationalised, we stand behind public sector banks

Rs 900 crore for Market Stabilization Fund for pulses

A bill on targeted delivery of financial services using Aadhar to be introduced

DBT on pilot basis in fertilisers to be introduced in some districts

Rs 100 crore to celebrate birthday of Deen Dayal Upadhyay

Service tax exempted for general insurance schemes under Niramayi Swasthya Bima Yojna

Suitable changes to be made in customs and excise duty rates to boost Make In India

Relief of Rs 3000 per year to taxpayers with income below Rs 5 Lakh per year

Rs 100 crore to celebrate birthday of Deen Dayal Upadhyay

Service tax exempted for general insurance schemes under Niramayi Swasthya Bima Yojna

Suitable changes to be made in customs and excise duty rates to boost Make In India

Relief of Rs 3000 per year to taxpayers with income below Rs 5 Lakh per year

100% deduction for profits of undertakings from housing projects in cities during June 2016-March 2019

Services provided by EPFO exempted from service tax

Service Tax exemption for services under the Deen Dayal Gram Jyoti Yojana

Krishi Kalyan Cess of 0.5% on all taxable services

Letter to Modi exposes double standard of US Legislators

Lalit Shastri

We have a situation in the US where a presidential nominee wants to banish the Muslims, where black men, without any provocation and children playing with toy guns are shot by the police, where gun rights take precedence over human rights.

Several Legislators, who are Members of Tom Lantos Human Rights Commission, a US Congressional Human Rights Caucus (CHRC), have chosen to turn a blind eye to the prevailing situation in the US.They neither bothered to oppose the Klu Klux Klan (KKK) nor speak against the ban on the communists= movement in their country. Instead they have turned their attention to India and selectively criticised it for “violation of human rights of the minorities.”
Tom Lantos Human rights CommissionEight senators and twenty-six members of the U.S. House of Representatives, including the Co-Chairs and thirteen other members of the Human Rights Commission, last Wednesday placed themselves on the high pedestal and shot a letter to Indian Prime Minister Narendra Modi conveying their “grave concerns” about the increasing intolerance and violence experienced by members of religious minority communities in India. Of course they began their letter on a diplomatic note by recognising India’s long-standing commitment to inclusion and tolerance. They have also acknowledged and reiterated strong support to the partnership that exists between India and the US and in the same stroke they have also expressed concern about the increasing intolerance and violence that the members of the religious minorities “experience” in India.

A press statement by Tom Lantos Human rights Commission said: “The (US) legislators have urged Prime Minister Modi to turn words into deeds by taking steps to enforce the rule of law and protect communities from religiously-motivated harassment and violence.” The tone and substance of this surely smacks of Ultracrepidarianism and it seems they are in a habit of advising on a matter outside of their knowledge or  competence.

Inquiry by Newsroom24x7 reveald that Tom Lantos Human Rights Commission, has remained absolutely silent on gross violation of palestinians’ human rights. The entire world knows how some fanatic zealots in Israel have been imposing discriminatory restrictions on palestinians and building unlawful settlements in the occupied West. The Israeli security forces appear to use excessive force against Palestinian demonstrators and suspected attackers. As result there is no dearth of casualties in the West bank.

The US Congressional Caucus also has not written any letter to the Indian Prime Minister till date to ensure the protection of human rights of the religious minority Kashmiri pandits, who over a long period went through endless torture in Kashmir. Their homes and properties were set on fire and almost the entire population of Kashmiri Pandits, barring a few thousand, were driven out of Kashmir by the Pak supported terrorists, infitrators and those from the religious majority in Kashmir valley who want to secede from India. These Kashmiri Pandits have become refugees in their own contry.
The US legislators have conveyed particular concen about the “treatment of Christians Muslims and Sikhs in India. Obviously on their target are those belonging to the majority religious group in India.

On June 17, 2014, the letter by the US Congressmen to Modi says: “more than 50 village councils in the Bastar district of Chhattisgarh adopted a resolution banning all “non-Hindu religious propaganda, prayers, and speeches” in their communities. The Christian minority community has been dramatically affected: the ban effectively has criminalised the practice of Christianity for an estimated 300 Christian families in the region one day after a mob, which included members of the Vishva Hindu Parishad and Bajrang Dal, seriously injured six Christians in the village of Sirciguda. Since the ban was implemented, Christians in the Bastar District reportedly have been subjected to physical assaults, denial of government services, extortion, threats of forced expulsion, denial of access to food and water, and pressure to convert to Hinduism”.

The pointer about Bastar by the US Congressmen does not present a full picture nor the latest position on this count. The Sirisguda gram sabha (village council) in Bastar district of Chhattisgarh State in Central India , had passed a resolution in June 2014 “to stop forced conversion by outside religious campaigners and to prevent them from using derogatory language against Hindu deities and customs, holding of prayers, meetings and propaganda of all non-Hindu religions.”

Supporting the ban, Vishva Hindu Parishad (VHP) Bastar district president Suresh Yadav had said at that point of time that the ban was imposed under Section 129(G) of the Chhattisgarh Panchayat Raj Act by local Gram Panchayats in Bastar to protect their heritage and culture, Religious conversions are creating tension in Bastar’s villages and if the villagers want to stop it using an Act, then we support such efforts, he had emphasised.

Perhaps the US Legislators and their informants are unaware that in August 2015, the Chhattisgarh High Court responded to a writ petition filed by Chhattisgarh Christian Forum which challenged the resolution adopted by panchayat bodies last year and dismissed Bastar Panchayat Ban, while Upholding Religious Freedom.

Raising another pointer, the US Congressmen have urged the Indian Prime Minister to take steps to control the activities of groups, such as the Rashtriya Swayamsevak Sangh (RSS), and instruct Indian security forces to enforce the rule of law and protect religious minority communities from religiously-motivated harassment and violence. This is a totally one-sided advice. What about advice with regard to fanatic groups operating within the religious minorities.

The singling out of the RSS raises serious doubts about the motive behind the letter written to Prime Minister Modi by the US legislators.Question arisis, what about the fanatic and hardline minority religious organisations.

On January 3 this year a huge rally by Muslim protesters against an Akhil Bharat Hindu Mahasabha leader over a derogatory remark allegedly made by him against Prophet Mohammed had turned violent in Malda district in West Bengal and this had led to arson and gunfire resulting in the death of two persons. One can draw an analogy between this violent incident as a result of reaction from those belonging to the religious minority and another episode linked with a blasphemous propaganda material brought in circulation by a leftist group associated with New Delhi’s Jawaharlal Nehru University Students’ Union. This contained extremely derogatory remarks about the much worshipped Hindu deity Goddess Durga. The fact that those from the religious majority maintained their calm even after this disclosure by India’s Minister for Human resource Development Smriti Irani in Parliament is the best example of tolerance and the maturity of the Indian people who cannot allow fringe elements to disrupt peace.

The US leguslator have raised “additional concerns about the lack of recognition of Sikhism as a distinct religion,” adding this prevents members of the community from accessing social services and employment and educational preferences available to other religious communities. Sikh community members reportedly are harassed and pressured to reject religious practices and beliefs distinct to Sikhism. On October 14, security forces killed two Sikhs and injured scores of others in Punjab who were protesting peacefully against the desecration of Sri Guru Granth Sahib, Sikhism’s holy book”

The US Representatives and Senators, when they talk of the rights of the Sikhs in India, it appears that they have lost their moorings. It is least likely that they are naive and do not know what they are talking. The curtain on the Khalistan movement which was backed by Pakistan came down a couple of decades ago. It appears certain splinter groups of this movement still left in the US and Canada have prompted the Human Rights caucus to raise this point. The Sikhs are in the forefront in every sector and sphere and they do not need the Americans to advise the Indian Prime Minister about their welfare.

“We also are concerned that the nearly country-wide beef ban is increasing tensions and encouraging vigilante violence against the Indian Muslim community. On Monday, November 2nd, a Hindu mob killed Mohammed Hasmat Ali, a married father of three, in Manipur, India, after he was accused of stealing a cow. Mr. Ali reportedly is the fourth Muslim murdered in just six weeks by Hindu mobs angered over allegations of cows being slaughtered or stolen. We understand that the September 28th murder of 52-year-old Mohammed Saif in Uttar Pradesh week of sparked a national outcry over rising intolerance toward religious minorities which culminated in hundreds of prominent academics, business leaders, and authors protesting,” the letter said.

The murders brought in focus by the US legislators are criminal acts that deserve to be condemned. People even get murdered in India like in other couuntries over trivial fights, for example over filling of water from public taps often turn into gang wars. Cow slaugther is a sensitive issue when it comes to the Hindus but every citizen in india cutting across religious lines is bound to agree that incidents of cow sluaghter should not lead to murder.

The US Leislators should know that Christianity is India’s third-largest religion. According to the latest census figures, there are approximately 27.8 million followers of Christianity, constituting 2.3 percent of India’s population. Christianity was introduced to India by St. Thomas, who landed at Muziris in Kerala in AD 52 to spread the gospel. By the 7th Cetury the Christian religion was firmly rooted in India. For more than two thousand years, the Christians have lived , prospered and risen in every sphere of activity or profession in India.

After the first Arab invasion around the middle of the 7th Century, the period between 12th and the 16th centuries witnessed a series of Muslim conquests. The Moghuls not only expanded and consolidated their empire but also took India as their homeland. Thereafter began a process of assimilation in the indian subcontinent which became a crucible and melting pot of different religions and cultures. This can be unimaginable for the occidental mindset, barring those who are well versed with the Advait (a Vedantic doctrine that identifies the individual self with the almighty, i.e. non dual) philosphy, word view of Hindu religion and Gautam Buddha’s philosophy and teachings revolving around non-violence and shunning of desire.

Hence, the US law makers would be better advised to look at issues closer home. India is a huge country and has its own set of problems. If the pressent letter is any indication, they might tomorrow write a letter to the Indian Prime Minister to control Jats in Haryana or Hardik Patel and his agitation for reservation of jobs for the Patel community in Gujarat. The US legislators, it seems are failing to recognise the fact that India is a soverign, secular democracy governed under a constitution. It has a giant workforce and a defence force that can protect its borders. The country also has a rubust judiciary to bring order and deal with the criminals, the wayward and those who break the law and defy the Constitution.

In this backdrop, one is constrained to say that it amounts to interfering in the internal affairs of India when the US Senators and Representatives go to the extent of advising the Indian Prime Minister to take steps to address the activities of groups like the RSS and also to “instruct the Indian security forces to enforce the rule of law and protect religious minority communities from religiously-motivated harassment and violence.”
The letter to Modi on religious violence has been signed by Senators Roy Blunt (R-MO), Amy Klobuchar ( D-MN), Al Franken (D-MN), James Lankford (R-OK), Ben Sasse (R-NE), Tim Scott (R-SC) and Representatives Keith Ellison (D-MI), Joe Pitts (R-PA), Brad Wenstrup (R-OH), Jim McGovern (D-MA), Doug Lamborn (R-CO), Trey Gowdy (R-SC), Juan Vargas (D-CA), Jim Costa (D-CA), Trent Franks (R-AZ), Betty McCollum (D-MN), Mark Walker (R-NC), Doug Collins (R-GA), Tim Walberg (R-MI), Ted Poe (R-TX), Adam Schiff (D-CA), and John Conyers, (D-MI).

Air India will shrug away its cloak of years of rot: Ashwani Lohani

Newsroom24x7 Staff

Some stability can be brought about in the functioning of the public sector undertakings only if the dragnet of vigilance, audit and complex processes in the garb of transparency are loosened.

Ashwani Lohani, CMD Air India

Ashwani Lohani, CMD Air India
Ashwani Lohani, CMD Air India

Air India – the national carrier – appears keen to shrug away its cloak of years of rot and neglect. It is now also certain that this entity would soon surge ahead of all its competitors in the not so distant future.

This is how Ashwani Lohani, chairman and Managing Director (CMD) of Air India, has expressed confidence and shared the opitimism through a write-up titled “The travails of a public sector chief” on his blog today that now there is no stopping and the national carrier, which he is heading will turn around, face the competition and beat the private players in their own game.

Lohani talks of the expectation (during his earlier postings) and the demand that systems should be in place to enable the organisation to keep its head abve water at all times. In this context he is emphatic in pointing out that leadership is a role that can never be substituted by systems or inanimate objects.

Notwithstanding the “expectation of utopia” The Air India CMD goes on to say that some stability can be brought about in the functioning of the public sector undertakings only if the dragnet of vigilance, audit and complex processes in the garb of transparency are loosened.”

Hitting the nail on the head, Lohani points out: “The fear of committing a mistake and then getting mauled by the machinery is what keeps most of the public sector mandarins away from the path of decision making and even bringing clarity in their desires. And if decisions are not made in a commercial organization, or if safe play is always resorted to, the outcome can be easily fathomed by even a grocery shop owner.”

Lohani is duly concerned when he underscroes a huge malaise by stating: “Why even petty decisions or acts are microscopically examined without a speck of a concern for the overall performance is beyond comprehension especially for those whose primary concern remains overall growth and results. And finally why should one’s actions be subject to examination by someone who may be less competent, less honest and less committed really foxes me.”

Rreminiscing on his trailblazing earlier stint when he had taken over the reins of the mammoth tourism conglomerate, the Indian Tourism Development Corporation, Lohani goes on to point out: “Faced with a loss making entity on one hand and a system hell bent on getting rid of commercial entities from its fold, the job on hand was definitely not an easy one. Yet gaping mouths is what we encountered when the entire team rose as a goliath to rid the entity of its loss making traits.”

Further, Lohani goes on to recount his three highly successful stints as Managing Director of Madhya Pradesh State Tourism Development Corporation. “While the state rose over all others in its successful quest for being the numero uno, the rapid turnaround of the commercial properties, and there were many, surprised almost everyone including myself. The ferocity with which the men (and women) of the state tourism development corporation shrugged off the cloak of ignominy and inefficiency made even the private sector speechless, Lohani writes on his blog