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
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