31 January 2018

Allahabad High court Judge Shukla to be impeached

CJI Justice Deepak Mishra recommended the removal of Justice shri Narayan Shukla, the eighth senior most judge of Allahabad High court. The CJI has set the process in motion with a letter to the Prime Minister or the impeachment of Judge.

Government backs down on Orange Passports

Ministry of external affairs has backed down from its decision to issue separate orange passports to migrant labourers.

Skill development to get leg up

Skill development eco system need to be created in the country. Upgrading ITS’s, interest subsidies to boost skilling in difficult areas, financial incentives for the corporates to engage more apprentices can be the few steps.

There are expectations that budget would have some measures under SANKALP(skill acquisition, knowledge awareness of livelihood promotion), STRIVE ( skill strengthening for Industrial value enrichment) etc.

Editorial

A road map for renewal

Analysis of economic survey

Economic survey has become an analytical and scholarly document for readers. It has brought in new catch phrases to define various phenomena affecting Indian economy. Twin balance sheet problem, JAM trinity,

Previously, CEA Arvind Subramanian has stated that Indian political economy was not capable of big bang reforms. Instead reforms would be persistent, creative and incremental. It was belied with demonetisation, GST etc.

There are many revealing facts in this year economic survey on the status of Indian economy.

1. Demonetisation, GST led to more formalisation of economy and it has led to significant jump in number of tax payers.
2. India’s export sector is more diversified. Top 1% of exporters occupy a small share compared to east asian countries. Is it due to failure of our companies to grow big need to be analysed.

Other issues

A Populist hint :

Farm incomes have remained stagnant for the past four years.  There is an announcement from the Prime Minister to double the farm income by 2022. It can drive the budget towards populism.

Disinvestment :

Govt has overachieved on disinvestment target this year. It is due to surge in prices. Economic survey has expressed a caution for small investors that it can be a bubble.

Fiscal deficit : populism can widen the fiscal deficit. But, disinvestment targets being optimistic, tax collections going up can help to reduce it.

Global factors

Rise in oil prices:

It can make Indian economy triple benefit factor to be lost. Lower oil prices are the reason for low deficit on fiscal and current account and low inflation.

Monetary policy of US fed :

Growth and inflation returning to USA , fed is expected to tighten its monetary policy. Rise in interest rates can cause reversal of capital flow.

Rising inequality

Oxfam report has stated that 1% of Indian possess 73% of its wealth. So, to arrest inequalities reducing indirect taxes is essential.

Tax disputes

Survey states that close to 8 lakh crore rupees is stuck in tax disputes. It is due to lack of incentive for tax officer to make a quick decision. There is fear of corruption charges or collusion if any decision is made in favour of tax payer. Benches on special subjects can be constituted for speedy redressal.

Patents

Pendency in settling or granting patents is crippling innovation.

The balancing act

ASEAN is looking for India to keep the regional architecture open, inclusive and balanced. Assertive china is seen as a threat to their sovereignty and USA inaction is a cause of concern among ASEAN countries . For India, ASEAN is vital for its economic and strategic reasons. Traditional distinctions like immediate neighbourhood and extended neighbourhood appears to be no more valid.

Key Areas

Political - Security cooperation : freedom of navigation, Maritime cooperation and obtaining a legally binding code of conduct from china on South china sea appears to be the objective. Another aspect is integrating willing nations in to the Quad framework.

Trade and economic cooperation : India need to have the help of ASEAN nations to have a bargaining power in RCEP. A swift conclusion of modern, comprehensive and mutually beneficial RCEP is necessary.

Socio cultural coopération : Islam, Ramayana and Buddhism are the connecting links of culture between india and ASEAN.

Connectivity : India and ASEAN pledged for greater physical and Digital connectivity.

A wider net

Increased tax payers for both direct and indirect tax nets shall make the Government to reduce indirect tax rates that can affect the poor adversely.

Points to note -

India appears to be breaking Tax GDP ratio inertia.

Siege of terror

Corruption, internal disputes of Afghan Government, lack of cooperation from Pakistan, alienation of people due to repeated aerial raids made ground ripe for the rejuvenation of Taliban and growth of IS in Afghanistan. An Urgent measure to strengthen state is necessary.

Interview : fiscal populism is really counter productive : Arvind Subramanian

1. Oil prices and asset bubble need to be worry for Indian economy. Oil prices rise can reverse fiscal consolidation path and Asset bubble can affect the sentiments of small time investors.
2. Twin balance sheet syndrome had affected the nation beyond expectations. It is one major reason for India’s failure to achieve double digit growth.

India is moving from crony capitalism to stigmatised capitalism. It is due to transfer of public money from public sector banks to private lenders. India have to move towards private sector majority participation.