Daily Archives: July 13, 2019

India, Other States

Dogras of Jammu want Modi government to abolish public holiday on July 13

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Newsroom24x7 Network

Brig Rajinder Singh's brave soldiers

Jammu: The dogras of Jammu, including retired Army top brass and leading citizens  are seething with anger and want July 13 to be observed only as a “black day”. They want the Modi Government to abolish the public holiday on July 13, which is observed as the ‘martyrs’ day’ in memory of the people killed on 13 July 1931.

Members of a Whatsapp group,  devoted to the Dogra heritage and military heritage of Jammu and Kashmir are in agreement in pointing out: “India perhaps is the only country where holidays are observed in the memory of traitors and the integrationists are treated with contempt.”

This day in 1931, it is being underscored, the Jihadis in Kashmir revolted against the Maharaja of Jammu and Kashmir, Hari Singh, and killed many innocent Hindus in Kashmir, looted their business establishments and burned down their houses demanding “azadi” from Jammu and today July 13 is officially a holiday.

The Dogras and other natives of Jammu are proud of the legacy of Maharaja Hari Singh, who acceded J&K to India on October 26 1947 as per the constitutional law on the subject. Unfortunately there is no holiday in his memory. In fact, he was forced to die in exile in Bombay and Jawaharlal Nehru was responsible for this, they are pointing out adding on the contrary, Sheikh Abdullah, who hobnobbed with Pakistan and wanted to establish a Switzerland type independent Kashmir and who hated Hindus of Jammu and Buddhists of Ladakh from the core of his heart, is treated like a hero. It is being emphasised that “time has come to expose and defeat the present day Jihadis in Kashmir and their supporters in Delhi and Lutyens media.

Such days should never be allowed to be celebrated by one section against the other in the same State. What about Kshmiriat or pluralism of the KASHMIRIS, a large section of people are asking.

One of the members of the whastapp group has drawn attention to the Pakistani Razakaars and recounted how the sleeping Dogras were butchered on the border so that the Pakistanis could enter the state without any problem. This is a historical fact and can never be forgotten.

Early last year, late Bobby Jamwal had introduced the documentary – “The Saviour of Kashmir” which highlights the “untold story of the British planned invasion of Jammu and Kashmir by Pakistan Army personnel disguised as civilians assisting the Tribals called Kabailis/Raiders in 1947”. Bobby wrote on facebook: “Its a one of its kind of battles fought on uneven grounds and how the combine of British and Pakistani attack of over 6000 trained and well armed troops was foiled by a Die-Hard 100 Dogras of the Jammu and Kashmir State Forces under the Brave Brig Rajinder Singh Jamwal, which enabled Maharaja Hari Singh to accede the State of Jammu and Kashmir to India.” It is a gripping story of the gallant Officer who fought to the “Last man-Last Bullet” thus saving Kashmir from the unscruplus British and dishonest Pakistanis.

Check: Saviour of Kashmir: The gripping story of valour and accession of Jammu and Kashmir to India

economy

FM, GDP, Economic Survey: Where FM has bungled on the Budget?

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Bhagyashree Pande

Presentation of Budget and economic survey

 

The Chief Economic Advisor (CEA), in the Economic Survey put out a day before the budget, has taken the latest GDP of Rs 1.9 lakh cr with 11% growth as put out by the Controller General of Accounts (CGA)¹ because they were released as late as 31 May 2019. These last set of figures are important because they give a complete picture of the economy and are used for any projections or any future estimates. Using the numbers put out by CGA this time was important because the budget came only in July as against February when the FM does not have a complete picture of the entire year.

FM Nirmala Sitharaman

Never in the history of Indian budget in the last 70 years has there been a discrepancy in Budget numbers put out by the FM and those put out by her own department. However in the budget of 2020 Finance Minister Nirmala Sitharaman has obviously bungled on all the numbers that she projected to tell the India growth story. What is the mistake? There has been a discrepancy in the GDP numbers taken in the Budget and the figures used in the Economic Survey by the Chief Economic Advisor.

The discrepancy of using the GDP figures taken by FM and those used by CEA project the economy in a different light altogether. The FM has stated that the nominal GDP is at Rs 1.88 lakh cr growing at 12%, while the Economic Survey states the nominal GDP at Rs 1.9 lakh cr growing at 11%. Here is what went wrong and why? The CEA in the Economic Survey put out a day before the budget has taken the latest GDP of Rs 1.9 lakh cr with 11% growth as put out by the CGA because they were released as late as 31 May 2019. These last set of figures are important because they give a complete picture of the economy and are used for any projections or any future estimates. Using the numbers put out by CGA this time was important because the budget came only in July as against February when the FM does not have a complete picture of the entire year.

Why did the FM not use the latest figures? The FM despite having the latest data used outdated interim budget figures of January .When the interim budget was announced by FM in February the growth was looking buoyant at 6.6%. But in the last quarter this shrunk to 5.8% in 2019. The true story of falling growth can be seen in the actual quarterly growth in four quarters of 2019 – Q1 7.7%, Q2 8.2%, Q3 6.6%, Q4 5.8%. This falling picture in the last two quarters pulls down the claims of Acche Din of the Modi govt.

What difference do the two different estimates make to the Budget process? The FM by using a stale data does not want to admit that the economy has grown slowest since 2014 when Modi govt came to power. This despite the Modi government in 2016 changing the methodology of GDP to more current prices. But now a dismal economic picture shows its own govt in a poor light. The FM on the floor of the house claimed that the data used by her in Budget and data used in Economic Survey are not going to make any difference in the future projections. How? In the first place there is a gaping hole in the revenue collections. The Economic survey estimates the tax revenue collection at Rs 15.6 Lakh cr as against the government claim of Rs 17.3 lakh cr. Similarly govt spent Rs 24.6 lakh cr according to the budget, but the economic survey shows govt spending at Rs 23.1 lakh cr. Thus the tax collection and spending have nearly a Rs 2 lakh cr difference between what the FM shows and what the Economic Survey states. The data used by FM as a base will be used for growth in the future as also for various revenue and expenditure. A higher base will mean higher projections but reality in this case is otherwise now. When the FM has lower collections it will have less money for various programs and will have to borrow more thereby adding to the fiscal deficit. Managing the fiscal deficit within the 3% target is a constant bother for the government more so in a falling economy with shrinking incomes.

What is the implication of these differing figures at large? One there has been a continuous tirade by the opposition against the Modi govt that they have been fudging figures to give a false impression of “Acche Din” (good days). In the Budget this doubt has been proved by the FM putting out stale figure to make the growth story look good when the reality is otherwise as projected by Chief Economic Advisor using latest figures. Using differing sets of data gives the impression that the FM is hiding something. Second, this discrepancy of data happens at a time when the FM is trying to roll out a red carpet to the industry as well as foreign investors selling the India growth story. Any investor who is keen to invest will look at details of country’s financial health first. This kind of data distrust will raise the doubts in the minds of investor domestic or foreign. Third, given these projections of an economy that is healthier than actually is a dangerous sign for the govt as it will show projections of greater buoyancy when they are unlikely to be. The targets set by it for the coming year are on an incorrect base whether of revenues, expenses, allotment to various programs etc.In future which is the set of data to be believed if the budget is on stale data? When the lid has blown on discrepancy of data the FM instead of course correction is looking to prove her point. Wonder who is FM trying the hoodwink? It will be for the FM to rise above this mess and present a fresh budget giving out real projection, real targets and real collections? This will be the test of trust of the Modi government. Otherwise the Modi government will prove the skeptics correct. Does it want to?

¹Controller General of Accounts (CGA) is:

  • The Principal Advisor on Accounting matters to the Union Government
  • Responsible for establishing and managing a technically sound Management Accounting System
  • Responsible for preparation and submission of the accounts of the Union Government
  • Responsible for exchequer control and internal audits

Courtesy: Poppolitics.com

Business, economy, India

PM Modi, FM & Investment: Can investor confidence be won over a Budget?

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Bhagyashree Pande

 

These are some prominent reasons why private investors continue to be wary of the government. This government would do well to look at the 80’s and 90’s of the 20th Century, when most investments took place in India. What the government in those days did well to inspire investor confidence. For beginners the ambivalent attitude that ‘every businessman is a swindler ‘ has got to go. Can this socialist mindset be broken by the government? PM Modi has to take the lead to bring the fresh approach to usher in the much needed confidence. Can he is the point?

 

If there is one issue that stands out in the Budget of 2019-20 it is the FM urging the private sector to invest in the India growth story. It has been signaled by the FM that the $5 trillion economy that the PM has targeted needs the active participation of the private sector- to create jobs, manufacture goods, increase exports, generate revenue for government through taxes etc. If one has to look at Modi 1.0 the five years budgets were concentrated on various Yojnas for the hinterland. During this period the government set about what it felt were the mistakes of the UPA government it brought bills like Insolvency and Bankruptcy Code, Indradhanush scheme (remonetising the banks), amendment to the SARFESI and Debt Recovery Tribunal Act . Today after five years of setting the house in order the FM is actively seeking private participation by seeking their opinion at various round tables, hinting at Global Investor Summit etc. However will it be easy to win the confidence of the investor that the Modi 2.0 government now seeks? Has the government done enough for investors to start investing?

Firstly,to begin with are the banks lending? Today most banks are unwilling to lend money for any project no matter how good. Why? There is an interesting history to this unwillingness . The Modi 1.0 government called UPA a scamster and this allegation brought it to power. But when the matter went to the apex court the government surprisingly furnished no proof of any scams. If the BJP then was so confident of scams by UPA why did it not furnish proof when it is in the government? Besides not furnishing proof it did not follow on the loss to the exchequer as was claimed by CAG. In this saga the biggest fallout was breaking of trust between banks ,businesses and above all the trust in the government. Most bankers had lent money to steel, coal, telecom, infrastructure companies in honest faith to do business. If the business goes bad because of lack of demand what is a bank or a businessman to do? The globally accepted norm is to revive the company by infusing capital. If it still does not happen look for changing the management. Only if there are no takers is there a move to file bankruptcy and liquidate the assets. But what happened in India? The first step was television and social media trial calling the failing businessman a thief and bankers a crook besides sparking insinuations of connivance. Only after sufficient damage was done that the government come up with a strategy of 4Rs – Recognition, Resolution, Recapitalization and Reforms . But did this formula succeed? Today the NPAs have risen to Rs 8.06 lakh cr on March 2019 as compared to Rs 2.35 lakh cr on March 2015 when the government took reign. Besides, the list of willful defaulters has risen by 60% in the five years. Add to this is a long list of those who fled the country or applied for foreign citizenship. There is a theory in economics called the flight of Capital, but in India its the flight of the Capitalists too!

Second, has the Insolvency and Bankruptcy Act really worked? The Act was brought in 2016 to solve the issue to resolve corporate dispute mechanism especially for companies that are in steel, power sector. However there has been far from satisfactory results for the same. Nearly 1858 companies have gone in for dispute resolution of this more than 1000 are still under litigation. Only 94 achieved resolution and 243 were resolved by mutual consent. Given the slow process of judiciary it is highly likely that more cases will pile up rather than speed at which resolution is required.

Third, what is the cost of doing business in India? Typically a businessman today is offered an interest rate of 12-16% . So if in the cost of Rs 100 of a product Rs 16 goes to the bank only as interest compare this to any other country their rate is 2-6 %. But why is the money so expensive in India? One big reason is that the government is the biggest borrower. It has an insatiable appetite to meet its social and revenue expenditures (yojnas, welfare schemes). The government borrowing is the highest ever and stands at Rs 7.1 lakh cr for 2020. This has gone up by nearly 49% in the last 4.5 years. Add to this is the borrowing by PSU’s who are borrowing to meet government social needs (like NHAI for highway construction, NHB for Awas yojna, FCI for food subsidy etc). This borrowing stands at Rs 5.37 lakh cr a 100% increase from Rs2.73 lakh cr in 2016. Nearly all the money issued by the RBI is borrowed by the government (and PSUs) leading to high interest rates besides leaving hardly any money for the private sector to borrow.

Four ,the fear of the taxman. Every businessman is worried that if he makes any investment the tax sleuths will come knocking at his door asking for explanation of the money spent. Tax sleuths asking for arbitrary sums to meet their stiff tax targets is the continuing practice from the previous regime. The growing tax terrorism and arbitrations thereof which takes not less than 15 years or more to settle is keeping investors at bay. Add to this is the dishonoring by the government of international tax awards (like in Vodafone case) gives a signal that Modi 1.0 government is the law unto itself. After all the harassment the tax collection till March 2019 is full 1% less than the target set .

As if this is not enough the government continues to be in businesses that it should not be in. Despite claiming that it will disinvest it has not exited many business areas instead it chooses to run public enterprises inefficiently. The government continues to be owner of inefficient banks, bloated airlines, unviable fertiliser units, overmanned steel and mining companies etc. Not only does it run them inefficiently it distorts the prices of the end product thereby discouraging private investors to enter the fray. Why will any private player want to invest in these areas to compete with government inefficiencies?

These are some prominent reasons why private investors continue to be wary of the government. This government would do well to look at the 80’s and 90’s of the 20th Century, when most investments took place in India. What the government in those days did well to inspire investor confidence. For beginners the ambivalent attitude that ‘every businessman is a swindler ‘ has got to go. Can this socialist mindset be broken by the government? PM Modi has to take the lead to bring the fresh approach to usher in the much needed confidence. Can he is the point?

Courtesy: Poppolitics.com