India’s transformative Budget

Wednesday 10th July 2019 07:58 EDT

No national budget in a democracy commands all-party support. India is no exception to the rule. There are pros and cons, and discussions in the public space will intensify going forward. A significant point needs to be emphasised. Prime Minister Narendra Modi’s landslide victory in the general election was based on the broad perception that his first term had registered sufficient economic and social change that merited a second period in office to complete what he had begun. In 2014, when Mr Modi first swept to power at the Centre, India ranked eleventh among the world’s large economies; five years later, in 2019, it had risen to sixth position.

However, much remains to be done to drive India forward to the next cycle of growth to meet the government stated target of a $5 trillion economy. Among its priorities is the reenergizing of a slowing economy to an annual growth of 8 per cent, allied to low inflation. This could be achieved by restoring investor confidence, and hence persuade the captains of Indian industry to place their trust in the potential of the domestic market, among the largest in the world and expanding in every direction.

The required jump start lay in addressing the the rot in the banking sector. Government will now inject Rs 70,000 crore into public sector to bolster capital and facilitate lending. Experts also expected further consolidation in the banking sector and hoped the capital infusion would be tied to performance.

 In keeping with its vision, the government seeks to access global investors by floating sovereign funds denominated in dollars, pounds sterling or euros. This will ease pressure on domestic savings and interest rates. Next, the government has enunciated a clearer focus on Make in India, which will concentrate on selected sectors such as Micro, Small Medium Enterprises (MSMEs), start-ups, defence manufacturing, automobiles and electronics. Third, the government has set its sights on global investor participation in mega-manufacturing plants as a means to bring in advanced technology in electric vehicles, electronics and related areas. Such an environment, it is hoped, will lift India’s investment rate from the current 31.3 per cent based on around 7 per cent growth to a higher investment rate linked to 8 per cent growth.

MSMEs have hailed the extension of a lower 25 per cent corporate tax to companies with an annual turnover of Rs 400 crore from the present Rs 250 crore.

‘This will cover 99.3 per cent of the present companies. Now only 0.7 per cent of the companies remain outside this rate,’ said Finance Minister Sitharaman. Welcoming the measure, K. John Baby, CEO, Funskool India Ltd, said, ‘The government policy of phased reduction in corporate tax rates is a welcome step. The widening of of annual turnover will boost profit in the long-term.’ The move was also welcomed by N.V. Raman, Partner Indirect Tax, BDO India.

Easier loans for housing development are expected to lead to a realty boom and should therefore be a boon for the country’s middle class.

A One Nation One Grid proposal is calculated to ensure power for every section of society, near and far. Defence allocation stands at Rs 3.19 lakh crore, excluding pensions. The Finance Minister (previously defence minister, and hence aware of its needs) said, defence modernization remains an urgent national priority. ‘For this purpose, import of defence equipment that are not being manufactured in India are exempted from the the basic customs duty, she said. ‘This will have an impact of augmenting the defence budget by Rs 25,000 crore on asccount of savings in expenditure on customs duty over the next five years.’

Education and health proportionate to the Budget remains at 3,5 per cent at Rs 94,854 crore and Rs 64,999 crore respectively.

Concluding on an optimistic note, Mallika Srinivasan, Chairman and CEO, TAFE , writes: ‘The format of the present budget represents an interesting development from the past. It lays out the bold goal for us as a nation, to work towards a progressive and inclusive India that is a global leader by 2025...This gives confidence that there is clarity of vision, combined with commitment to ensure continuity in policy making for the next five years.’

Mantra of Rail budget

The Rail budget has partnered the national budget for decades. India’s Railways has been,is, and will continue to be far into the future the county’s mass transport system. Railways Minister Piyush Goyal said the government was eyeing a massive investment of Rs 50 lakh crore by 2030 to trnsform it into a global leader. The Minister said rail infrastructure in the country had increased by a mere 30 per cent in the past 65 years, while passenger traffic rose by 1,500 per cent. The government envisioned a network ensuring passenger safety, expansion of track and increase in freight share.

Minister Goyal announced that the entire length of the iconic Konkan Railway Corporation route from Mumbai to Mangalore would be electrified in the next year and a half. Electrification work has commenced under the authority of the Railways Ministry at a cost of Rs 1,000 crore. ‘Running the entire route on electricity will save the environment and increase speed. Besides, trains will run on clean fuel,’ explained the Minister. Apropos of the Konkan railway, measures were underfoot to increase its capacity without doubling the track. Mr Goyal said his Ministry has a sanctioned budget of Rs 1.60 lakh crore as opposed to the Rs 45,000 crore invested in 2013-14, the final year of the previous Congress-led government.

Politics goes skyward at Headingly

The ODI cricket World Cup tie at Headingly, Leeds, between India and Sri Lanka was a riveting encounter: India’s star batsman Rohit Sharma hit a record fifth century for the tournament, studded with an array of glittering strokes; his partner at the crease, K.L. Rahul also compiled a century with more measured batsmanship. This was in reply to Sri Lanka’s fighting total of 264, of which Angelo Matthews contributed a gallant century. India cantered to 7 wicket victory, and hence topped the table of four contending sides, Australia, England and New Zealand the other three, for the trophy.

Sport was spiced with contentious politics, when two aircraft flew across the ground trailing a banner which read ‘Justice for Kashmir.’ The plane reappeared and did two sorties circling the ground, with a more strident proclamation: ‘India stop genocide, free Kashmir.’ Later, when Sharma and Rahul were batting, the plane made a third appearance, with a yet another banner reading, ‘Help end mob lynching in India.’

 The International Cricket Council (ICC) organizers of this magnificent tournament, were deeply upset, as keeping politics away from cricket has long been their mantra. They issued the following statememnt: ‘Throughout the tournament we have worked with the local police forces around the country to prevent this type of protest occurring.... we were assured by the West Yorkshire Police there would be no request of this issue, so we are very dissatisfied it has happened again.’ An upset BCCI expressed its displeasure at this blatant breach of security. It expressed concern about the safety of the Indian players currently playing in the World Cup.

The police had assured the ICC that given Headingly was under the flight path of the Leeds-Bradford Airport, it would not be an issue. Obviously the precautionary measures failed, and the public must say why. West Yorkshire is an infestation of jihadi communities much given radical Islami0st causes in most corners of the civilised world.

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