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.

 

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.

Juvenile Justice Bill 2015 is a Much Requited Piece of Legislation

With the release of the juvenile convict in the Nirbhaya Case and the Juvenile Justice Bill 2015 being stalled in the Rajya Sabha, the debate on whether juveniles between 16-18 years of age shall be treated as adults in case of heinous offences has never been as fierce as it is now.

The 2015 bill would replace the Juvenile Justice Act 2000 and it seeks to permit juveniles between the ages of 16 – 18 to be tried as adults for heinous offences, resembling the infamous December 16 incident in New Delhi which shocked the entire nation. Although, the new bill is a massively populist move which panders to feminists and women’s rights activists in general, but it also aims to provide a legislative solution to an increasing epidemic in India, that of heinous crimes committed by juveniles. In the last decade alone, rapes and murders committed by juveniles have more than quadrupled and a comprehensive mechanism is urgently needed to deal with such situations which attempts to grant appropriate punishment to the convict but at the same time, upholds the sensitivity that is required while dealing with juveniles.

The current Act, last amended in 2000, does not allow juveniles to be tries as adults in case of heinous offences and is essentially considered the reason why the Nirbhaya convict was released by the criminal authorities. The above provision would be replaced under the new Act, which would also require Juvenile Justice Boards (JJB) and Child Welfare Committees (CWC) to be constituted in each district. The JJB would conduct a preliminary enquiry whether the juvenile offender is to be sent to rehabilitation or be tried as an adult. At the same time, CWC’s would determine institutional care for children in need of protection.

In my opinion, it is high time that we start holding juveniles accountable for their actions. It is a disgrace that someone convicted for a crime as horrendous as the Nirbhaya incident can walk out of jail simply because he was a minor when the crime was committed. The critics of the bill say that lowering the juvenile age would not act as a deterrent for crimes for juveniles committing heinous crimes. While they may be right in contending that, they must be told that no person shall be eligible to get a free pass from jail merely because of their age. Moreover, the JJB and CWC would ensure that the convicted juvenile gets as much counselling as possible which may ultimately help him in mending his ways. At the same time, it is desirable that the Women and Child Development Industry ties up with local NGO’s to conduct regular workshops in ghettos and other backward areas around the country to sensitize young men about women security; the same may help in building a mechanism that brings down the crimes committed by juveniles.

That being said, I think the Juvenile Justice Bill 2015 is an important piece of legislation which would, if nothing else, keep the accused where they are meant to be, that is in jail. After the release of the Nirbhaya Convict and the winter session of the upper house coming to a close, there is an urgency being displayed by legislators and activists alike with respect to the passage of the bill in parliament and one can only hope that sanity would prevail.