Budget 2017: Status Quo Maintained; Yet Another Opportunity Missed

The Modi government presented what had been widely pegged as the most important budget of its five year term on 1st February’17. Budget 2017 was considered to be extremely crucial for a number of reasons. One, because after nearly three years in office, the government has not been able to truly fulfil its poll promise of massive job creation and this budget was, perhaps, the last opportunity for the government before the next general election to make significant policy changes towards that direction; two, since the overall sentiment of the economy has been low because of the government’s surprise decision to ban high denomination currency notes, with both investment and consumption falling since the decision was taken and India’s economic forecast being downgraded by IMF, this budget was expected to be the government’s chance to lift up spirits and re-energise the economy with some path-breaking initiatives; and three, with the next round of state elections round the corner, the budget was expected to be politically appealing for the ruling party to pitch to the masses before going to polls.

After a perusal of the budget documents, one can safely say that the finance minister focused on achieving the third objective mentioned above and largely maintained the status quo on the other two while preparing the same.

The budget contains enough provisions for BJP’s political workers to boast about during the campaign trail in various state elections, especially in Uttar Pradesh. The party has been keen on propping up the anti-corruption image of the Prime Minister and the budget goes one step forward in doing just that. The policy of limiting cash donation to a political party to Rs. 2000, ostensibly aimed at cleaning up political funding, is one such illustration of the government trying to win over voters with a provision that can easily be evaded by political parties by simply limiting individual contribution to less than the mentioned amount. On the same lines, the policy of banning cash transactions above Rs. 3 Lakh would do little to halt the underground economy since businesses can easily evade scrutiny by simply issuing multiple bills of under Rs. 3 Lakh when undertaking a high value transaction. Even the proposed law on confiscating assets of loan absconders like Vijay Mallya and Lalit Modi is nothing but a sanctimonious attempt to remain on the good side of the public with respect to its promise of clean governance. Other provisions in the budget like cutting the rate of tax to half on income up to Rs. 5 Lakh and expanding the presumptive taxation scheme would provide much needed relief to the middle classes and maintain their political appeal for the next round of assembly elections later this year.

With respect to the post-demonetisation effects on the economy, I disagree with the notion that the government should have used the windfall gain to dole out freebies for Jan-Dhan account holders on the line of the Maternity Benefit Scheme wherein Rs. 6000 would be transferred directly to the bank accounts of eligible pregnant women. In my opinion, this would not achieve any discernible objective and would go against every principle held by this government under the leadership of PM Modi. One might say that the windfall received by post demonetisation allowed the government to double its lending target under the Mudra Yojna or perhaps, significantly increase allocation under various other existing schemes. That, was clearly a far more prudent and far-sighted step to have been taken by the government.

Notwithstanding the above, I would have liked to have seen a roadmap being presented directed at moving towards the Universal Basic Income (UBI) scheme as suggested by Dr. Arvind Subramanium, Chief Economic Advisor, in the Annual Economic Survey presented right before the budget. An action plan to rationalise redundant subsidies while moving towards a UBI scheme targeted at the most vulnerable sections of society is an idea worthy of merit that needs to be debated frequently going forward and possibly even explored in the coming future.

The real disappointment came from the macroeconomic provisions in the budget with the government choosing to stick to its variably successful mantra of incremental reforms and yet again, shying away from introducing any bold initiatives that would provide a fillip to the economy.

With regards to infusion of capital in public sector banks to solve the NPA problem, the government earmarked merely Rs. 10,000 crore for the current fiscal year. Although, the government has pledged more capital if need be, it might have been prudent to consider the idea recommended in the annual Economic Survey of a Public Sector Asset Rehabilitation Agency (PARA) or a ‘bad bank’ which would buy bad loans from state-run banks so that banks can be relieved of that problem and shift their focus on lending. PARA would then be responsible for maximising recoveries, now made simpler with the introduction of the bankruptcy code. Only such path breaking ideas can solve the twin balance sheet problem that India Inc. in currently facing and kick-start the investment cycle in the country, but, the status quoist instincts of the government haven’t allowed such proposals to pass through the planning stage.

The story is the same when it comes to other important economic issues like privatisation of public sector units (PSUs) and further liberalisation of the Foreign Direct Investment (FDI) regime.

In his budget speech, the Finance Minister declared that the government will move ahead with the listing of some railway PSUs like IRCTC, IRCON and IRFC. Although, this is a giant leap forward and might encourage greater investment in railways in the future, the comprehensive road-map with regards to privatisation of PSUs prepared by the Niti Aayog has quietly been put under the shelve so to not attract the ire of public sector workers. Even with regards to FDI liberalisation, the Finance Minister simply reiterated his commitment to the cause without making any concrete policy pledges. The decision to abolish the Foreign Investment Promotion Board (FIPB), hitherto the approving authority of the FDI proposals made by multinationals, can largely said to be redundant since 95% of the FDI coming into India is made through the automatic route.

Although there were some good proposals that were introduced in the budget, but they were few and far between. According infrastructure status to the low cost housing sector is one such proposal. This would lower borrowing costs for developers and would allow them undertake more projects, thereby achieving the ‘housing for all’ target set by the government. The reduction of the income rate from 30% to 25% for firms with turnover up to Rs. 50 crore would provide a major boost to start-ups and SMEs around the country, although an across the board tax cut would have been far more appreciated.

In conclusion, Budget 2017 was simply an extension of the government’s policies undertaken in the last two and a half years but fell desperately short of introducing any original gambit to reverse the fortunes of the country and bring about the much awaited ‘ache din’ to India. It remains to be seen whether the government would make course correction in the near future or face the wrath of the electorate in the next round of elections.

 

New System of Government in India?

An important discussion on the need for change in the prevailing parliamentary system of government is slowly gaining prominence in India. This is particularly important in the current political discourse, which is witnessing the opposition  continuously blocking important legislation in the upper house, where the ruling BJP lacks majority. Now, it is the responsibility of the media to keep the debate well and alive in the mainstream, because, only a set of reforms in the system of government would usher in the transformative change which they wish to see in the Indian democracy.

The issue was first raised by Jay Panda, an elected MP from Orissa, who got slapped with a breach of privilege notice from prominent members of the upper house, a move which clearly iterated just how insecure they all are about the powers that they possess. Mr. Panda, in his article in a daily newspaper, had called for reforms in the upper house of parliament, which has turned into nothing but a way for nominated, unelected members to assert their political will. He suggested that the Rajya Sabha, must either be a democratically elected body or the powers vested in it must be systematically reduced. In my opinion, the former is a bad idea because a country which is perpetually in election mode, does not need another round of polls to deal with. Moreover, the current members are as it is nominated by state legislatures and given the sheer diversity of the Indian electorate, it is unlikely that a Rajya Sabha election would change the prevailing status quo. Thus, reducing its powers seems like a viable option.

At a book launch on the very topic, Dr. Shashi Tharoor, Lok Sabha MP from Kerala, suggested that India should adopt the presidential system of government, wherein the executive is separate from the legislative branch of government. The most prominent argument given for adopting the presidential system is that of United States, which became a dominant world power with such a system. However, one must realize that United States is a two-party state with both of these two parties, Democrat & Republican, having a sufficient degree of internal democracy, something we can’t say Indian political parties, leaving aside the BJP and the Left Front. Also, it is unlikely that one party would continue to hold majority in the lower house – the BJP does now – given the increasingly different electoral choices of the Indian people and having a weak coalition with a distant executive is nothing but a recipe for disaster. In any case, the ongoing political gridlock in Washington is testament to the fact the presidential form of government faces difficulties similar to the ones faced by India. Thus, in my opinion, the parliamentary system must continue, albeit with a much less powerful upper house. 

Whatever the ultimate decision may be, the underlying issue is that the current system needs fixing and we must rejoice that the discussion has at least begun on the same. However, as often happens in India, important debates usually lose momentum to make way for benign issues which keep dominating the news for no apparent reason. One can only hope that this particular issue finds it way in the prime-time discussions on news channels and someday we might see a consensus being built around the same.

I write this article, knowing that such debates are unlikely to become mainstream in the foreseeable future but, with a sincere hope that someday, the Indian parliament would truly become the ‘Temple of Democracy’ it claims to be.

Odd-Even Formula shall be Discontinued!

The latest experiment by Delhi CM Arvind Kejriwal of allowing a car to ply only on alternate days has garnered mixed reactions from the general public and pollution monitoring agencies alike. Some say that the Odd-Even formula has been a massive success and would go a long way in curbing pollution in the city, while others have dismissed it as yet another naive move by the Aam Aadmi Party government which would lead to counterproductive results. In my opinion, Odd-Even formula can be deemed as a successful stint for the most part, but for it to be considered a precedent for the future, we need to sort out the innumerous other considerations that come with it.

From the perspective of an ordinary Dilliwallah, I think the Odd-Even formula has managed to achieve three things; one, it has patently reduced the traffic in the city with the time taken to travel between two spots being almost reduced by half; two, it has managed to invoke a sense of responsibility amongst Delhi citizens, with many of them using cabs and some even car pooling to move around the city; and three, although there isn’t complete consensus on it but it is suffice to say that the pollution levels in the city during the prescribed period have come down, albeit marginally.

That being said, the Odd-Even formula has not been implemented without its share of problems. Although, the time taken to commute may have reduced, that is largely because half the people have been forced to remain confined to their homes for half the week. Although, cabs and car pooling may have surged, the most important transport systems in Delhi i.e. Metro and DTC buses remain overcrowded as ever, perhaps even more so due to the present scheme. The people have been largely inconvenienced and while some might say that it is worth the sacrifice, I would argue it’s not, because the discomfort one would have to face on a daily basis if this scheme is continued may ultimately end up altering the very way of life in the city and not necessarily in a good way.

It is unlikely that the Odd-Even scheme would be extended beyond January 15th’16, but once it ends, the Delhi Government should forget about the underlying issue entirely. It should strenuously mull, in consultation with the centre, schemes to overhaul the transport system in the city by way of various capacity building programmes through increased public expenditure, look out for alternative sources of energy that may be suitable and in essence, design policy which serves the purpose of curbing pollution without massively discomforting the public. We can only hope the future is better.

The Sorry State of our Union!

One can easily infer that a country is in a bad shape when the opposition in it’s premier legislative body spends more than half of its session blocking government bills by protesting over trivial issues and then passes the same bills without any discussion at all. Well, this is what’s happening in the world’s largest democracy, India. Our beloved politicians have made it clear that they serve their respective political parties and not their country. The future remains uncertain.

The winter session of the Indian parliament commenced with the Modi led NDA government declaring November 26 as constitution day in honour of B.R. Ambedkar, the principal architect of the constitution. The next few days saw the Sonia Gandhi led Congress party brag about their party’s legacy, reminding the BJP that it was the Congress Party who oversaw the drafting of the Constitution and not the RSS, the ideological parent of the BJP. It was an incredibly saddening sight to see the Congress party stoop so low that it can’t even appreciate the Constitution without indulging in partisan politics.

The next third of the parliament’s session was wasted over discussions on unimportant issues like the perceived intolerance levels in the country and the Congress protesting over the Supreme Court’s summons to the Gandhis over the National Herald Case. Amidst all of this, it was the roll out of the ambitious GST regime which suffered along with other legislative business which remained in limbo.

Once the dust settled and efforts undertaken by the chairman of Rajya Sabha, the Congress decided to end the road block and pass six extremely important bills without any discussion at all, making it clear that the MP’s work on the directions of the party high command and not for the benefit of the constituent. Among the bills passed were the Juvenile Justice Bill, Atomic Energy Bill, Commercial Courts Bill, all of which had meaningful national interests underlying them but our parliamentarians did not find it prudent to have a debate on the same.

All the above issues reiterate the redundancy of the upper house of parliament, as contented by Jay Panda, a Lok Sabha member and I think a serious debate needs to commence on whether the Rajya Sabha should continue in its present form or not.
Conclusively, I think it can be ascertained that the political dynamics of this country is changing and some people aren’t rather happy about that who would constantly try to throw tantrums as and when they can. However, the Modi government should not pay attention to these morons and fearlessly continue with the development agenda. Lastly, I think it’s high time the Indian youth immerse themselves into politics and start speaking up about the injustices in society. Only then will the politicians listen.

Delhi is a F*ckin’ Chaos

With the parliament not functioning, a bitter fight between the CMO & PMO and the pollutions level so high that it is difficult to breathe, our beloved city of Delhi has turned into a high stake war zone for mighty reputations and the concerns of citizens are becoming increasingly secondary.

As we enter the final fortnight of 2015, the politics in this city keeps getting uglier each passing day. As Modi’s wide ranging policies start to take shape, Sonia Gandhi has clearly lost her mind and made it clear that she will not let the parliament function unless the BJP comes begging at her feet. In my opinion, the saffron party needs to keep up the good work both on the administrative and policy side but sacrifice legislation for some time because there is no point arguing with a woman who can’t accept the fact that her “mother-in-law’s” party is a declining power.

At the same time, our bumbling CM Arvind Kejriwal has found yet another reason to attack Prime Minister Modi, and is now implying that the CBI raid on his principal secretary is in in fact a plot by the BJP to threaten him in some way. The demolition drive carried out by the railways, which allegedly led to the death of a 6 month old infant became another reason for the ugly turf war between the state and central governments. Although, in both cases, there isn’t enough evidence to come to a conclusion as to which part is making the right assertions, it can be said that Kejriwal doesn’t miss an opportunity to bait the centre and the latter walks into it rather easily. Ultimately, it is the ordinary Dilliwallah which suffers every time Kejriwal makes any move by the centre a pride issue.

Furthermore, 2016 is going to take an interesting start with the Odd-Even formula notified by the Delhi Government wherein odd number cars would be allowed to ply only on odd numbered days and vice versa. Also, the NGT has banned the sale of diesel vehicles entirely which has led to an enormous pile up with car dealerships. While both the moves have certain merits attached to them, they also lack vision and shall only be implemented after analysing all its implications and possible alternatives. That being said, the problem of increasing pollution is indeed real and Delhiites need to be prepared to make certain sacrifices for the sake of their city.

Conclusively, it is needless to say that Delhi is going through scary but at the same time, exciting times, so take a deep breath and hope for the best.

Modi Government is far from what one may call a “Dictatorship”

As Prime Minister Narendra Modi heads to Turkey for the G20 summit after a productive visit to Britain, we can extrapolate two things with some certainty: one, his foreign credibility is still very much intact, amongst leaders and citizens alike and two, in spite of his record in governance, the media, both domestic and foreign, still looks at him as a staunch conservative figure who is responsible for the rising levels of intolerance in India. I shall attempt to rebuke the latter claim in the following article.

Over the past months we have seen hundreds of intellectuals return their literary awards as a sign of protest over the murders of rationalists and muslims around the country. The media has backed their protest strongly and the consequence of that has been that somewhere down the line it has become an established fact that India is becoming an intolerant country under Modi’s rule and the freedom of expression is under serious threat with the incumbent government.

Now, I do not doubt the sincerity of the concerns raised by the intellectuals and I am also willing to concede that the attacks in question were carried out by fringe elements of the BJP, although there is no proof of that, but to attribute them directly to the PM or even the government is too much of an exaggeration. I say this because the rule of law has not been any different for the attackers who are being tried in court and the government has strongly condemned any voices within the party trying to shield the attackers. Besides that, if freedom of expression was threatened in the country, would the media be able to criticise the central government for the vigilante violence in states where BJP wasn’t even in power? If Modi wanted to curb expression, couldn’t he have ordered a government crackdown on journalists and bloggers on the same lines as we have seen in Turkey and Bangladesh or has been done for years in China and Saudi Arabia? I bet these so called flag bearers of free speech would think twice before making any such accusation on the respective Head of State of these countries.

I think this is attempt by the media to divert the attention from policy and defame the government in the foreign media. In order to counteract this, the rational voices in the country need to speak up and highlight the policy initiatives undertaken by the government that will result in a never seen before impact on the socio-economic fabric of the country. They must highlight the coherent foreign policy initiatives, the massive social welfare programs and an attempt to create a liberalised economy, all of which will prove to be incredibly fruitful in the not so distant future.

Conclusively, I think the people of this country need to focus on the bigger picture without looking out for instances that somehow vindicate the opposition.