Sur­vey Hints at DeMo ‘Wind­fall’ Doles in Bud­get

Sur­vey al­ludes to pos­si­ble hand­outs, talks of Uni­ver­sal Ba­sic In­come and pre­dicts re­cov­ery in de­mon­eti­sa­tion-hit growth next fis­cal, but also warns of chal­lenges ahead

The Economic Times - - Front Page -

ma­jor struc­tural bar­rier.

The Sur­vey es­ti­mates that even go­ing by new real ef­fec­tive ex­change rate giv­ing high weights to In­dia’s Asian com­peti­tors, the ru­pee has strength­ened by 8.3-10.4% in the last two years. Ur­jit Pa­tel, please take note. The Sur­vey also sug­gests free trade pacts with the UK and Euro­pean Union, es­ti­mat­ing the gains at 1.5 mil­lion new jobs and $3 bil­lion of ex­tra ex­ports per year.

It de­votes much space to the pos­si­bil­ity of a Uni­ver­sal Ba­sic In­come (UBI) for all. Yet, its en­thu­si­as­tic tone is tem­pered by the ad­mis­sion that this is com­pletely un­af­ford­able. Even if lim­ited to 45% of the pop­u­la­tion — and hence nowhere near uni­ver­sal — it will cost 4.9% of GDP, far more than ex­plicit cen­tral sub­si­dies of 2% of GDP to­day.

Costs apart, the dig­i­tal fi­nan­cial ar­chi­tec­ture is in­suf­fi­cient, as shown in the partial failure of pilot schemes to sub­sti­tute cash trans­fers for sub­sidised food in Chandigarh and Puducherry. How­ever, ex­ist­ing schemes are also leaky and de­fi­cient, with the Cen­tre alone hav­ing 950 pro-poor plans and states hav­ing many more that don’t reach the masses. So, the Sur­vey seeks a de­bate on ways to phase in UBI grad­u­ally. FY17 Growth Es­ti­mate (%) Tax re­forms, in­clud­ing lower per­sonal in­come tax rates

Faster move to­wards 25% cor­po­rate tax rate FY18 GROWTH ES­TI­MATE

Econ­omy to re­vert to nor­mal by March; de­mon­eti­sa­tion im­pact tran­si­tional Tax on high in­come earn­ers in ex­empt cat­e­gories like agri­cul­ture

A start of some sort of Uni­ver­sal Ba­sic In­come scheme A gov­ern­men­towned bad bank to deal with NPAs

Some fis­cal stim­u­lus with­out shun­ning fis­cal pru­dence Lower in­ter­est rate to boost con­sumer goods and hous­ing

Lin­ger­ing im­pact of de­mon­eti­sa­tion

Slug­gish­ness in pri­vate in­vest­ment Big push to strate­gic dis­in­vest­ment

Labour re­forms for job-gen­er­at­ing sec­tors such as tex­tiles & leather Pick-up in ex­ports due to faster global growth

Gath­er­ing gloom about glob­al­i­sa­tion

Surge in oil prices due to geopo­lit­i­cal risks

Trade war among big coun­tries caus­ing flight of cap­i­tal

In­dia faces 3 big chal­lenges: am­biva­lent at­ti­tudes to pri­vate sec­tor, weak state ca­pac­ity, and in­ef­fi­cient re­dis­tri­bu­tion to the needy

The CBI claims that it is in pos­ses­sion of doc­u­ments in which Ba­tra wrote: “No pledge. Con­se­quen­tial changes to be made,” and then signed the doc­u­ments so that changes could be in­cor­po­rated be­fore the pro­posal was pre­sented to the ex­ec­u­tive com­mit­tee.

IDBI Bank’s se­nior man­age­ment de­cided to go with­out col­lat­eral since Mallya did not want other banks to in­sist on such a se­cu­rity for loans, CBI says. The agency has ar­rested nine peo­ple in con­nec­tion with the case, in­clud­ing five IDBI Bank staff. In a mail to A Raghu­nathan, for­mer CFO, King­fisher Air­lines, Mallya wrote, “Raghu, I have told IDBI that we can­not give any shares as they will be part of the con­sor­tium and will be en­ti­tled for the same se­cu­ri­ties as the other banks. No ex­cep­tion can be for IDBI as other banks will de­mand the same.”

The CBI chargesheet also ques­tions the wis­dom of IDBI Bank ex­ec­u­tives’ ac­cep­tance of King­fisher brand as col­lat­eral even when con­sul­tant Grant Thorn­ton re­port had said: “The brand val­u­a­tion was done by them for in­ter­nal pur­pose and was not an in­vest­ment ad­vice.” The bank did not even think of the le­gal va­lid­ity for ac­cept­ing it.“No le­gal opin­ion on the en­force­abil­ity of the se­cu­rity was done while ac­cept­ing the brand value as one of the se­cu­ri­ties,” the CBI chargesheet says. The King­fisher brand was val­ued at .₹ 3,406 crore by Grant Thorn­ton in 2008. De­spite the brand value be­ing of­fered as col­lat­eral in the ap­pli­ca­tion sub­mit­ted by A Raghu­nathan on 01.10.2009, dur­ing the en­tire loan ap­praisal process, the ac­cused of­fi­cials of IDBI Bank did not con­sider the ad­mis­si­bil­ity or en­force­abil­ity of the brand value as col­lat­eral.

In­for­mal sec­tor to be hit hard ONE-TIME HAND­OUT TO JAN DHAN AC­COUNTS

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