அரசியல் பிரச்சாரத்தின் ஆதாரக் கோட்பாடு

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அரசியல் பிரச்சாரத்தின் ஆதாரக் கோட்பாடு.

'' நீதி, மதம், அரசியல், சமுதாயம் சம்பந்தமான எல்லாவித சொல்லடுக்குகளுக்கும் பிரகடனங்களுக்கும் வாக்குறுதிகளுக்கும் பின்னே ஏதாவதொரு வர்க்கத்தின் நலன்கள் ஒழிந்து நிற்பதைக் கண்டுகொள்ள மக்கள் தெரிந்துகொள்ளாத வரையில் அரசியலில் அவர்கள் முட்டாள்தனமான ஏமாளிகளாகவும் தம்மைத் தாமே ஏமாற்றிக்கொள்வோராகவும் இருந்தனர், எப்போதும் இருப்பார்கள். பழைய ஏற்பாடு ஒவ்வொன்றும் எவ்வளவுதான் காட்டு மிராண்டித் தனமாகவும் அழுகிப் போனதாகவும் தோன்றிய போதிலும் ஏதாவது ஒரு ஆளும்வர்க்கத்தின் சக்தியைக் கொண்டு அது நிலைநிறுத்தப்பட்டு வருகிறது. சீர்திருத்தங்கள், அபிவிருத்திகள் ஆகியவற்றின் ஆதரவாளர்கள் இதை உணராத வரையில் பழைய அமைப்பு முறையின் பாதுகாவலர்கள் அவர்களை என்றென்றும் முட்டாளாக்கிக் கொண்டே இருப்பார்கள். இந்த வர்க்கங்களின் எதிர்ப்பைத் தகர்த்து ஒழிப்பதற்கு ஒரே ஒரு வழிதான் உண்டு. அது என்ன?

பழைமையைத் துடைத்தெறியவும் புதுமையைச் சிருக்ஷ்டிக்கவும் திறன் பெற்றவையும், சமுதாயத்தில் தாங்கள் வகிக்கும் ஸ்தானத்தின் காரணமாக அப்படிச் சிருக்ஷ்டித்துக் தீரவேண்டிய நிர்ப்பந்தத்திலிருக்கிறவையுமான சக்திகளை, நம்மைச் சூழ்ந்துள்ள இதே சமுதாயத்துக்குள்ளேயே நாம் கண்டுபிடித்து, அந்தச் சக்திகளுக்கு ஞானமூட்டிப் போராட்டத்துக்கு ஸ்தாபன ரீதியாகத் திரட்ட வேண்டும். இது ஒன்றேதான் வழி. ''

மாமேதை தோழர் லெனின்
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Friday, 18 July 2014

Israel’s Gaza Conflict is no concern of Indian Parliament

A SPECIAL NEWS DOCUMENT
Israel war against Palestine Gaza and Modi Regime 
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''Every Sovereign State has a Right to defend its citizens, be it Israel or India'' Modi Regime

Israel’s Gaza Conflict is no concern of Indian Parliament
Amol Parth17 Jul 2014

The Indian Parliament was witness to a bold Foreign Affairs decision rooted in realism when on July 15, the Modi Government refused to pass a resolution to condemn Israel’s attacks on Gaza. While, it is sad that there may have been some civilian casualties during the ongoing Gaza Conflict, the NDA Government’s decision to not allow the Indian Parliament to become a theatre for empty moral grandstanding was in the best interests of India.

Amid uproar in the Parliament from parties like Congress, Left, SP and PDP which were demanding that the Government bring a resolution condemning Israeli action, the Government didn’t give in to the demands of these pro-minority appeasement political forces.

The previous UPA Government during its reign had condemned the Israeli counterattacks on Palestine with its own domestic political calculations in mind. The new BJP-led Government has on the other hand chosen to put India’s interests above cynical domestic politics by refusing to meddle in a dispute in which India has hardly any interests at stake or any leverage to influence.

In Israeli-Palestinian conflict, weapons are frequently fired from both sides in which both Israel and Palestine face casualties but the number of death in Israel is very few because of Israel’s strong Defence. Israel has increased the size and number of walls separating Israeli from Palestinian territory. Israel has also withdrawn its military and all settlers from Gaza, Palestine.

India’s national interest

“We have diplomatic ties with both nations. Any discourteous reference to any friendly country can impact our relations with them,” NDTV quoted Minister of External Affairs Sushma Swaraj as saying, in the Rajya Shabha.

The Arab countries hold significance for India because of our dependence on their oil. At the same time, Israel is also important to us because of our military and strategic ties with it. India is the largest customer of Israeli military equipment and Israel is the second-largest military partner of India after Russia. Israel has poured billions of dollars of investment into Gujarat and has promised to invest in Bihar. Israel was one of the few selected nations to not condemn India’s 1998 Pokhran-II nuclear tests.

On security front, India and Israel face similar problem of terrorist attacks sponsored by neighbouring countries. According to a 2003 Rediff report, since its formation India’s intelligence agency RAW has had secret links with that of Israel, Mossad.

According to a report in Al Jazeera, Israel helped India militarily in 1962 India-China war, India-Pakistan war in 1971 and 1999 (Kargil). Israeli sensors and satellites are used extensively to monitor the Kashmir border to detect infiltration by insurgents from Pakistan. India recently put an Israeli satellite into orbit. India is also increasingly using Israel’s sophisticated drip irrigation technology to boost agricultural production.

Israel’s domestic conflicts are its internal issue. Narendra Modi Government did the right thing rejecting attempts by Left, Congress and other so-called ‘secular’ parties to discuss Israel’s internal issues in Indian Parliament. It has become a bad habit for the Leftist ecosystem in India to ignore India’s national interests while taking sides in a domestic matter of a foreign nation.

However, according to reports on July 17, official sources said that the debate on Gaza situation will take place in Rajya Sabha on July 21.

Every Sovereign State has a Right to defend its citizens, be it Israel or India. The NDA Government’s decision on July 15 respects that Sovereign Right. The Government should remain firm on its stand and not entertain any debate in the Parliament.

Wednesday, 16 July 2014

ENB WEST: A plan to divide California into six states is one...

ENB WEST: A plan to divide California into six states is one...: A plan to divide California into six states is one step closer to a vote. Silicon Valley venture capitalist Tim Draper got the go-ahea...

Friday, 11 July 2014

சதார் பட்டேல் இந்திய விரிவாதிக்கத்தின் பிதா மகன்


சதார் பட்டேல் இந்திய விரிவாதிக்கத்தின் பிதாமகன்!



Building of a United India
Soon after the Indian Independence, 565 princely states, some of which were ruled by Maharajas and others by Nawabs started believing they would become independent rulers of their kingdoms like in the pre-British era.  

They argued that the government of free India should treat them as equals

It was Sardar Patel’s insight, wisdom and diplomacy that drove sense into the minds of the monarchs who agreed accession to the Indian Republic. 

However there were two rules - the Nizam of Hyderabad and the Nawab of Junagarh- continued to resist. 

Although, the repeated fruitless negotiations pointed to a show might by use of military force the Sardar persisted with his tactful dealings, finally winning over both the rulers without bloodshed.

Industry captains hail Modi govt's first Budget: PTI


Union Budget 2014-15: Industry captains hail Modi govt's first Budget
Last Updated: Thursday, July 10, 2014, 21:54

New Delhi/Mumbai/Kolkata:

Welcoming the Narendra-Modi-led NDA government's maiden Budget 2014-15, industry players said it sets the tone for attaining higher growth trajectory, job creation and attracting investments for an economy grappling with multiple challenges.

"I think the approach of creating a stable business environment to attract investment and boost economic growth, that direction comes across clearly. I am very happy personally by his (Finance Minister Arun Jaitley's) focus on job creation," CII President Ajay Shriram said.

HDFC Chairman Deepak Parekh said: "Infrastructure funding had become a bad word for banks. Banks were not willing to fund. With this move, an out of the box thinking will enable long term lending for infrastructure sector".

State Bank of India chairperson Arundhati Bhattacharya welcomed the pronouncements on the consolidation of banks, saying it should be done in a time-bound manner.

"The budget emphasises a bottoms-up approach to reignite growth," she said.

"The Finance Minister's maiden budget signals, both in sentiment and policy, the new government's intention to drive the next generation of reforms and swiftly put India on a higher GDP growth path," Tata Consultancy Services Chief Executive and Managing Director N Chandrasekaran said.

Y C Deveshwar, chairman, ITC, said, "Within the constraints of time and a challenging economic environment, the Finance Minister has presented a comprehensive budget which addresses some key reforms with a welcome focus on physical and social infrastructure".

Kris Gopalakrishnan, co-founder, Infosys said Digital India project is an important initiative taken by the government to leverage technology to serve citizens better. It will also help grow the domestic IT industry, he added.

"Initiatives to promote entrepreneurship and startup's are also welcome. This will benefit the IT industry since many startup's happen in the IT sector," he said.

Joint chairman of Emami group R S Agarwal said the maiden budget presented by the BJP-led NDA Government is in overall a very good budget, adding that the budget is aimed towards expansion of the country's economy and develop a future roadmap for growth.

Presenting his maiden Budget, Jaitley said the prevailing economic situation presents a great challenge and there was a need to introduce fiscal prudence that will lead to fiscal consolidation and discipline.

Mahindra and Mahindra Director Arun Nanda, however, termed the budget as a "populist budget".
"Looks like it is more of a populist budget. Much of the hype was created but there was disappointment. I personally feel a status-quo type of situation," he said.

K V Kamath, Non Executive Director at ICICI Bank said: "The budget shows that the government is willing to listen and then state that they will act in due course".

Tata Chemicals Managing Director R Mukundan welcomed the budget and said it is a good start by the new government.

"We are not looking at T-20 match. It is a like a series where you have to play step by step and I think they have done right by laying a road map on GST, DTC and also on what the fiscal deficit will be," Mukundan said.

"One of our key priorities was to see a clear course of action to end tax adventurism. The government has tried to address this by promising to not to change any of the tax provisions retrospectively which creates a fresh liability and committing to provide a stable and predictable taxation regime that will be investor friendly and spur growth," said Ficci President Sidharth Birla.

ICICI Bank CEO and MD Chanda Kocchar said the budget has sought to lay out a prudent fiscal path for the country; and address existing issues that have halted infrastructure investment.

"The policy direction is clear, and as the decisions and plans announced today are executed, I am sure the country will move back towards a robust growth path," she added.

Sanjiv Goenka, chairman of the RP-Sanjiv Goenka Group said reduction of fiscal deficit, attracting investments in the manufacturing sector, attracting investments in infrastructure to kick start the economy and restoring investor confidence with a stable and predictable tax regime are the four positive areas in the Budget.

Srei Group Chairman Hemant Kanoria said the budget "has given boost to the infrastructure and manufacturing sectors. The Budget has addressed many issues which will trigger growth. Prima facie, the budget looks progressive in nature".

"The FY15 Union Budget makes a fervent pitch for attaining a balance by creating growth, preserving an ideal level of deficit, and destroying (supply side) inflation," Assocham President Rana Kapoor said.

Terming the budget as "pragmatic and extensive", CII Director General Chandrajit Banerjee said that it "lays out a medium-term vision for the economy and meets industry expectations on growth and employment creation".

Executive Director of Mahindra & Mahindra Pawan Goenka said: "Though there were no big bang announcements, the intent of the budget is clear. I see this budget as a blueprint to the direction the Government will take over the next nine months".

Sandipan Chakravortty, managing director, Tata Steel Processing and Distribution Ltd, in his reaction said it was a long-term budget aimed at increasing employment through a national skill programme and promoting
entrepreneurship.

Terming the union budget positive but largely directional and aspirational, Kiran Mazumdar-Shaw, Chairperson and Managing Director of Biotech major Biocon said: "This Budget is positive but largely directional and aspirational. I was expecting bolder reforms for boosting investor sentiments".

"The pronouncements on the retrospective tax issue, easier FDI rules, jobs creation in manufacturing sector and improving predictability in India's tax regime will improve the investment sentiment in the country. As will measures for addressing the funding needs of small entrepreneurs," she added.

GVK Reddy, Founder Chairman & Managing Director, GVK Power and Infrastructure Limited, views on the budget.

"The assurance to ensure adequate supply of coal for thermal projects, allocation of over Rs 37,000 crore for roads etc indicate the government?s recognition of the fact that a strong foundation of infrastructure can only help realise a country?s economic growth," GVK Reddy, Founder Chairman & Managing Director, GVK Power and Infrastructure Ltd, said.

"Extending of 10 year tax holiday for power companies by March 31, 2017, provides much required predictability for investors investing in power projects. The target of the new government is to provide 24/7 uninterrupted power supply to all homes augurs well for the growth of energy sector in India, Tulsi Tant, CMD Suzlon said in a statement.

PHD Chamber President Sharad Jaipuria said: "The Budget is encouraging on building consumers', investors' and general confidence and aims at enhancing growth, creating additional employment opportunities and containing inflation with the desired focus on garnering much needed investments, both public and private".
Meanwhile, electrical equipments manufacturer IEEMA President Raj Eswaran said the hike in FDI limits in some sectors, infrastructure investment trusts, investment allowance of 15 per cent to manufacturers investing above Rs 25 crore on plant and machinery will boost economic and industry sentiments.

"The budget has ushered in prudent policies in areas like manufacturing, housing, tax concessions for individuals, education that will boost the economy as a whole and create job opportunities," said Anil Rai Gupta, Joint Managing Director at Havells India.

"The budget is forward-looking and has provided fillip to the capital goods, consumer durables and automobile sectors. Kanwal Jeet Jawa, MD, Daikin Air-conditioning India said.

Though the earlier decision to continue the excise duty concession till December 2014 along with the reduction in steel prices and elimination of customs duty on auto components certainly bodes well for the sector," President of Nissan India Operations Kenichiro Yomura said.

Chairman & MD of Bharat Forge Ltd Baba N Kalyani said: "From a Policy perspective, the decision to raise FDI in the Defence sector from 26 per cent to 49 per cent through the FIPB (Foreign Investment Promotion Board) route with management control in Indian hands will provide a boost to domestic manufacturing industry".

"Announcement of investment allowance is a boost for manufacturing sector. The budget should also bring a smile to the consumers with the increased tax exemptions that will leave them with extra disposable income and prospects to invest in white goods," Managing Director of LG India Soon Kwon said.

Wholetime Director at JK Lakshmi Cement Shailendra Chouksey said the Government has very appropriately chosen to focus on housing and infrastructure as a means to kick-start the economy. He said the Cement sector can certainly look forward to revival of growth in its consumption which has been languishing for last 3-4 years at very low levels.

Speaking on behalf of the footwear sector, Managing Director of Woodland Harkirat Singh said the announcement to cut excise duty to 6 per cent from 12 per cent on footwear up to MRP of Rs 1,000 per pair is a welcome move for SMEs and will help provide them with a level-playing field.

The government today announced the launch of a national multi-skill programme -- 'Skill India', that will skill the youth with an emphasis on employability and entrepreneurship.

Commenting on the Skill India initiative, fashion designer Ritu Kumar said: "I welcome the Skill India scheme and look forward to working in a newly motivated environment which is set to encourage the designers, which has been long overdue".

However, Managing Director of Swiss Military Worldwide Anuj Sawhney said: "From the retail sector point of view, the implementation of Goods and Services Tax (GST) is crucial in order to get rid of the bottlenecks the industry is facing and increase efficiency...".

MD & CEO of Hero MotoCorp Pawan Munjal said: "The budget is also an earnest attempt to revive the manufacturing sector by increasing FDI in defence, and by making it possible for a large number of SMEs to gain tax benefits from their investments".

"Finally, for the first time there is an attempt to strongly back start-up entrepreneurship - by setting up a Rs 10,000 crore risk fund," he added.

Reacting to union budget, Suresh Senapaty, Executive Director & Chief Financial Officer of IT major Wipro, congratulated the Finance Minister for delivering the Budget on the dual mandate of kick-starting economic growth and seeding reforms.

"I would like to congratulate the Finance Minister for delivering the Budget on the dual mandate of kick-starting economic growth and seeding reforms while re-affirming election promises within a short span of 45 days of forming the government," Senapaty in a statement said.

PTI

India Budget promises reform: FT

India budget fails to excite investors, but promises reform
Jul 10, 2014 2:54pm by Avantika Chilkoti

Arun Jaitley, India’s finance minister, unveiled a maiden budget on Thursday which failed to excite stock market investors but made several pledges for reform which – if they are implemented – may coax future efficiencies out of an economy burdened by red-tape, corruption and opacity.

The budget outlined plans to raise foreign investment limits in defence and insurance, overhaul India’s US$43bn subsidy regime, and simplify its archaic tax system to make it more transparent and bolster revenue growth. That, the government expects, will help raise growth from last year’s level of about 4.6 per cent.

However, investors did not get the “big bang” reforms that many were expecting, sending the benchmark Nifty equities index down 0.2 per cent in the day to 7,567.75. Nevertheless, there was much in Jaitley’s budget to suggest optimism.

First, investors had been hoping for the retrospective amendment of laws on indirect transfers, which have left multinational groups such as Vodafone fighting retrospective taxes with Indian authorities.

On this topic, Jaitley simply said that, if a new case comes up related to the amendment it will be referred to a high level committee. In reaction, Ketan Dalal, senior tax partner, PwC India said in an emailed statement:

There was a widespread expectation regarding neutralisation of the retrospective amendment re indirect transfer. However, that has not happened, but at least there has been a clear acknowledgment now that retrospective taxation in future will not be resorted to.

The decision has left analysts unclear about what will happen to existing cases and almost as soon as Jaitley wrapped up in New Delhi, Vodafone said it would push for international arbitration in its seven-year battle with the Indian tax authorities over capital gains involved in the telecom group’s 2007 acquisition of Hutchinson Whampoa.

On the question of the Goods and Services Tax (GST), the introduction of which many had hoped would be announced, Jaitley offered a half-way house. He said the government is ready to approve a legislative scheme to enable the introduction of a GST to “streamline the tax administration, avoid harassment of the business and result in higher revenue collection”.

This suggests the government intends to push through this tax reform but that no roadmap has been laid out as yet.

In some areas, Jaitley did meet expectations. He opened up foreign direct investment in ecommerce, and upped the cap on foreign direct investment (FDI) in defence to 49 per cent, from 26 per cent previously.

But then there was a whiff of questionable policy too: the decision to devote Rs2bn ($33.34m) to a statue of Sardar Vallabh Bhai Patel in the home state of Narendra Modi, the prime minister, prompted some jibes on social media.

Modi’s administration will retain the previous Congress government’s ambitious 4.1 per cent fiscal deficit target for this year, despite pressure on state coffers from sluggish tax revenue, rising oil prices linked to turmoil in Iraq and concerns about a poor monsoon.

Jaitley also set a fiscal deficit target of 3.6 per cent of GDP for the next financial year, which starts in April, and 3 per cent the subsequent year. For a pre-budget discussion of budget deficit expectations, see here.

With equity markets rallying in the past six months on hopes of a strong new government at the centre, the government may expect to make money by selling off stakes in public sector companies, and to earn revenues as these groups post good profits and dividends. However, if tax receipts disappoint, New Delhi could struggle to meet its budget deficit target.

“While tax revenue growth seems a tad high that is on an assumption that the manufacturing sector growth will pick up in the second half,” says Shubhada Rao, chief economist at Yes Bank. “At this juncture it looks slightly optimistic.”

And, all in all?

“The reactions maybe on the Sensex were because people really get thrilled if you see some big bang changes,” says Vipul Jhaveri, partner at Deloitte Haskins & Sells. “What is refreshing here is that rather than any big bang changes what he has done is made very small changes across geographies, across various sectors.”

PM Modi wants to be seen as 'pro poor'

Why budget 2014 was 'socialist': PM Modi wants to be seen as 'pro poor'

Well known economic writer Swaminathan Aiyar wrote today,"It's not a radical Modi budget but a Chidambaram budget with saffron lipstick added." But this may be a superficial understanding of the Modi-Jaitley thought process. There seems to be a method in the madness, especially when you see the way the NDA is simply repackaging the many social sector schemes of the UPA.

True, the similarity between the UPA and NDA was reinforced by the fact that Jaitley had retained the fiscal deficit figures presented in the interim budget a few months ago. The interim budget presented by P.Chidambaram projected a fiscal deficit target of 4.1 percent of GDP for 2014-15 and also showed that the government had achieved a fiscal deficit of 4.6 percent of GDP in 2013-14.

Arun Jaitley surprised everyone by retaining these figures in his budget. He even kept the same the revenue growth target as in the interim budget. There was a lot of continuity in the way Jaitley made the budget projections.

This was surprising because the BJP had been very critical of the interim budget, saying that the targets were not realistic and that the UPA government had burdened the NDA by doing 'creative accounting'. But Arun jaitley has now accepted all the key UPA projections for 2013-14 and 2014-15.

The NDA has also retained most of the UPA social sector schemes with some repackaging. This prompted Congress President Sonia Gandhi to say “this is like our UPA budget”.

This writer spoke to finance minister Arun Jaitley after the budget and asked him why he had been so generous to the UPA finance minister. Jaitley gave a smart answer by saying controlling expenditure and aiming at fiscal correction is a good thing. So he had decided to go with the tough targets set by the previous government. The finance minister also admitted that his government had indeed continued many of the social sector programmes of the previous government and would aim to remove their weaknesses because such policies are needed for the poor.

Jaitley said in a country with so many poor people, any economic philosophy which is totally market based will not work. When asked whether the BJP was practicing its own version of socialism, he admitted that a strong dose of inclusive policies were indeed needed. Again the language sounded a lot like the UPA’s.Only BJP is inventing new social sector projects named after Deendayal Upadhyay, Shyama Prasad Mukherjee etc. Jaitley said more such schemes named after relatively unsung heroes from the past will come.

A lot of this thinking also comes from Prime Minister Narendra Modi.

If you carefully trace Modi’s statements in the past few weeks, he has explicitly said that the government coffers are meant for the poor. This statement is very socialist in its tenor and intent. The reason why NDA has carried forward many of UPA’s social sector programme is because eventually Modi wants to take away the historically evolved branding of the Congress party as welfarist and pro poor. From Nehru to Indira Gandhi to Sonia Gandhi, the Congress has acquired a certain image of welfarism. Narendra Modi will gradually want to appropriate some of this. So there seems to be a strategy behind the way the NDA budget carries forward a lot Congress’s social sector programs.

There is another subtle message in the budget. Modi is conscious that he is seen by many as pro big business because of his perceived proximity to some big industrialists. So the budget has been careful in not giving any obvious benefits to big business. On the contrary, it sets up a Rs.10,000 crore fund to help small and medium enterprises to access much needed equity capital. This will also please the Sangh Parivar which has always wanted the BJP to focus more on smaller businesses who really form the backbone of India’s economy.

There was much humour generated by many "token" Rs.100 crore social sector schemes announced by NDA. A careful scrutiny will tell you these are promises Modi had made to various states during his whirlwind election tour. This is partly Modi's way of signalling he was putting in the seed amount and the rest will follow as the economy recovers. So the thinking behind the budget is not as random as some commentators would have us believe.

Surprisingly there was no bitter medicine for the common man in the budget. This is partly because some of it was already delivered before the budget in the form of price hikes in rail fares, sugar and petroleum products. So finance minister Arun Jaitley decided to provide some relief to the middle class in the form of raising the tax exempt salary limit to Rs.2,50,000 pre annum and providing additional tax relief on some savings instruments. All taken together means a monthly salary of upto Rs.30,000 will be free of any income tax.
Another significant development that Jaitley did not specify in the budget but is close to finalizing, is the new Goods and Services Tax(GST) regime which will truly help widen the tax base and bring areas like real estate and construction into the indirect tax net and also attack the menace of black money.

Jaitley told this writer he had almost worked out all the details with the Chief Ministers in the implementation of GST. Only a few issues remain to be resolved, such as bringing the contentious petroleum taxes within the GST ambit. The CMs have agreed to bring real estate under the GST net. This is a big achievement. The finance minister could have announced this in the budget but he chose to play safe.

Overall, the budget is a consolidation exercise though many expected some big vision statement in it. Here also Jaitley chose to play safe by not giving any big bang vision statement because he knows there are many economic risks on the horizon coming largely from an impending drought situation and potential inflationary flare up in the months ahead.

He is betting on growth by promising a big boost to infrastructure sectors and manufacturing. He will hope that growth picks up and increases employment and prosperity. Jaitley admits many factors, like global economy and monsoons, are outside his control. Running an economy of India’s size and complexity is always a gamble. You have to work with very few certainties.

The author is Executive Editor at Amar Ujala publications group.

Budget 2014: Will Arun Jaitley's gamble on growth work for India?

Budget 2014: Will Arun Jaitley's gamble on growth work for India?

Jaitley's first budget is done. And how does it rate? Is it what the doctor ordered? Will it bring down inflation, boost investment, and set the economy on a new virtuous cycle of self-sustaining growth?
Let’s be clear. This is not a budget that breaks the mould and is very much on the lines of what one could have expected from any government. Moreover, by announcing initiatives for everything from cleaning the Ganga, to clean energy, to girl child schemes, to expansion of gas grids, to providing urban amenities in rural areas and starting work on Narendra Modi’s pet idea of smart cities, one cannot escape the impression that small outlays have been spread thinly over many, many ideas. Smart cities, though, get a fairly substantial Rs 7,060 crore.

The budget should thus be seen as a statement of intent and directional change – and not as something that will have high short-term impact.

But then, Arun Jaitley warned us upfront that reviving the economy will take three to four years, and the initiatives taken in this budget have to be carried forward to the next one due in February 2015. So, if we judge it from the perspective of the short time available to a new government to start making its priorities clear, it is a good, but conventional, effort. One can give Jaitley an A-.Image from PIB Image...

However, one cannot be sure the final budget numbers will all add up, for Jaitley has taken a gamble: he has gambled that he will boost growth to reduce his fiscal deficit, and not immediately cut expenditures it to bring finances in order. In this way he has done the opposite of what Chidambaram did: the latter cut spending to reduce the deficit, Jaitley is gambling that higher growth will improve tax revenues and obviate the need for cutting subsidies sharply. In a sense, Jaitley's is a budget of hope over experience.
Here are some of the key takeouts from Jaitley’s budget speech.

Fiscal consolidation: Jaitley has promised to try and meet the 4.1 percent target proposed by P Chidambaram, but this will be daunting. A lot depends on how the economy shapes up in the remaining half of the year, and whether tax revenues start rising. The budget says tax receipts will rise 19.7 percent – which will not be easy given the slowdown. A lot depends on whether subsidies can be reined in, but all that we have is a statement that Jaitley will overhaul the subsidy regime, and that there will be an expenditure reforms commission which will give its report by the end of this financial year. This means, the reforms will happen only in the next budget. However some tentative “tough” steps cannot be ruled out after the assembly elections are done.

Reforms: The finance minister has formally committed the NDA government to the goods and services tax (GST). The direct taxes code will come later, but no specifics were given. Even for GST, while giving states an assurance that he will lend a sympathetic ear, there is no timeline given for its implementation. No reforms have been announced in energy pricing – fuels, food or fertiliser beyond general assurances.

Growth: The big impetus for growth will come from three announcements - the 27 percent hike in plan outlays over what was actually spent in 2013-14, the 15 percent investment allowance for corporate investments above Rs 25 crore for three years, and the freedom for banks to avoid CRR/SLR on long-term deposits raised to fund infrastructure. Banks are currently allowed to lend up to seven years, but their deposits attract CRR of 4 percent and SLR of 22 percent – which raises costs.

But one should take the hike in plan outlay with a pinch of salt. When the deficit widens, the tendency is to cut plan expenditure – which is what Chidambaram had been doing over the last two years.

However, Jaitley said public sector undertakings will invest Rs 2.5 lakh crore this year. Whether this is an addition to what they did last year or not, if this materialises in full, it will boost the investment cycle.

Employment: Will jobs boom as a result of this budget? The positive vibes in the market suggest that India Inc will now begin investing in new projects and upgrade existing ones – especially if government plan spending improves this year.

The Rs 10,000 crore fund for start-ups suggests that the government is keen on boosting enterprise. It is small and medium enterprises that create jobs, and if this sector starts looking up, job growth will improve. But this will happen from next year, not this one. These things take time to implement. The 15 percent investment allowance for investments upto Rs 25 crore – last year Chidambaram had put the threshold at Rs 100 crore – will benefit medium and smaller enterprises, which are engines of employment.

Taxation: There will be more money in the hands of marginal taxpayers – with the basic exemption limit going up by Rs 50,000 for all categories – including senior citizens. The 80 C tax deduction limit is up by Rs 50,000 to Rs 1.5 lakh, and the public provident fund (PPF) limit is up to Rs 1.5 lakh. The deductions available on EMI interest on housing loans are up to Rs 2 lakh for self-occupied property. All these will allow consumers to spend more and save more – whatever they choose. Depending on what they choose, it could boost growth or inflation, or both.

Tax terrorism: Jaitley promised to avoid retrospective taxation, but did not roll back the one legislated by Pranab Mukherjee in 2012 to deal with the Vodafone judgment. This may be tactical, since without the law there would be no pressure on Vodafone to even offer a compromise.

In any case, the matter is going into arbitration and the government has asserted its sovereign right to impose retrospective taxes if it chooses to. But Jaitley had emollient words that ordinarily the government would avoid retro taxes, and announced some changes in the approach to transfer pricing and advance rulings so as to reduce tax disputes.

Privatisation: Jaitley declined to make any mention of privatising banks, and said government holdings will not fall below 51 percent even when banks raise more capital. The disinvestment target is only Rs 63,000 crore this year. This shows a cautious approach to privatisation and raising more resources for growth.

Markets: The announcement that foreign portfolio investments will be taxed as capital gains will prompt fund managers sitting abroad to move back here and invest more. However, corporate investors in debt funds have been disincentivised as the long-term capital gains tax has been raised to 20 percent and the definition of long-term has been extended to three years. This will indirectly benefit banks – who will now be able to attract more direct deposits. Banks shares form a huge chunk of stock market capitalisation and when bank shares rise, the markets cannot remain behind. This is one reason why the Sensex has shot up after the budget speech.

Sin taxes: The bulk of the tax-raising effort is focused on sin taxes – on cigarettes (up 11-72 percent), pan masala, gutka, unmanufactured tobacco, and aerated soft drinks. The clean energy cess on the use of coal, peat and lignite, all dirty fuels, has been doubled from Rs 50 to Rs 100 a tonne. This will push up thermal power costs but raise revenues.

Political messaging: In keeping with the fact that Modi promised a Congress-mukt Bharat and would like to herald a directional shift away from the Nehru-Gandhi brand of politics, many of the budget schemes are named after BJP or non-Congress icons. Thus the Sardar Patel statue planned in Gujarat gets a Rs 200 crore allocation, there is a Deendayal Upadhyaya power scheme for rural areas, there is a Shyama Prasad Mookerji Rurban Mission, and there is a scheme named after Loknayak Jayaprakash Narayan.

The conclusion is this: this is a decent effort given time constraints. But it is not something to shout about from the rooftops. It is not radical or revolutionary. Will we see more radicalism in February 2015, or will it be incrementalism all the way? That question is still unanswered.

Source: F.India

Indian Budget - Taimur Baig

July 11 (Bloomberg) -- Taimur Baig, director of Asia economics in Singapore at Deutsche Bank AG, talks about the Indian government's budget and economic policies. He speaks with Angie Lau on Bloomberg Television's "First Up." (Source: Bloomberg)