IASstuffDially: February 2017

Sunday, 19 February 2017

Highlights of the Economic Survey 2016-17 (Summary of Economic Survey 2016-17)

Union finance Minister Arun Jaitley tabled the Economic Survey 2016-17 in Parliament budget session.

It is Presented before the Budget.

The first draft of the economic survey is prepared by the department of economic affairs in the finance ministry.

Then, this draft is cleared by the Chief Economic Advisor and secretary of economic affairs.

The final version is scrutinized by the Finance Secretary and Finance Minister.

Most of the data are given by Central Statistical Office (CSO) of Ministry of Statistics & Programme Implementation (MOPSI).

The survey projects the economy to grow in the range of 6.75% to 7.5% in fiscal year 2017-18 in the post-demonetisation year.

It says that the adverse impact of demonetisation on GDP growth will be transitional.

Major highlights from the Economic Survey 2016-17 :

Growth Forecast:

Gross domestic product (GDP) growth in 2016-17 pegged at 7.1%, down from 7.6% in last fiscal 2015-16.
Economic growth to rebound to 6.75 to 7.5% in 2017-18.
Farm sector to grow at 4.1% in 2016-17, up from 1.2% in 2015-16.
Growth rate of industrial sector estimated to moderate to 5.2% in 2016-17 from 7.4% in 2015-16.
Service sector is estimated to grow at 8.9% in 2016-17.
GST, other structural reforms should take the growth rate trend to 8-10%.

Taxation:

Prescribes cut in individual Income Tax rates, real estate stamp duties.
IT net could be widened gradually by encompassing all high income earners.
Time table for cutting corporate tax should be accelerated.
Tax administration could be improved to reduce discretion and improve accountability.
Property Tax can be tapped to generate Additional Revenue at City Level

Goods and Services Tax (GST):

Fiscal gains from GST will take time to realise.

Fiscal Deficit:

Implementation of muted tax receipts, wage hike to put pressure on fiscal deficit in 2017-18.

For fiscal health of the economy fiscal prudence for both centre and states is needed.

Fiscal windfall from low oil prices to disappear in 2017-18.

Inflation:

The average consumer price index (CPI) inflation rate declined to 4.9% in 2015-16 from 5.9% in 2014-15. CPI-based core inflation remained sticky around 5% in the 2016-17.

Oil prices, seen rising by one-sixth in 2017-18 over the previous fiscal 2016-17 prices which could dampen India’s economic growth.

Monetary Policy:

Monetary easing headroom may be capped due to sharp rise in prices in 2017-18.
Market interest rates seen lower in 2017-18 due to demonetisation.

Government Debt to GDP ratio:

It was 68.5% in 2016, down from 69.1% in 2015.

Banking:

Suggests setting up public sector asset rehabilitation agency (PSARA) to take charge of large bad loans in banks. With government backing, PSAR can overcome coordination and political issues on bad loans.

Demonetisation:

The adverse impact of demonetisation on GDP growth will be transitional.

It will affect growth rate by 0.25-0.5%, but to have long-term benefits It may affect supplies of certain agricultural products like sugar, milk, potatoes and onions.

Universal Basic Income (UBI):

Advocates the concept of UBI as an alternative to the various social welfare schemes in an effort to reduce poverty.

It will be alternative to plethora of state subsidies for poverty alleviation. UBI would cost between 4 and 5% of GDP
The Survey concludes that the UBI is a powerful idea whose time even if not ripe for implementation, is ripe for serious discussion.

Highlights of Union Budget (2017-18)

The Budget broadly focussed on 10 themes viz. farming sector, rural population, the youth, the poor to name a few.

The 2017 Union Budget, presented by Finance Minister Arun Jaitley on Wednesday, was broadly focused on 10 themes — the farming sector, the rural population, the youth, the poor and underprivileged health care, infrastructure, the financial sector for stronger institutions, speedy accountability, public services, prudent fiscal management and tax administration for the honest.

Following are the highlights of Mr. Jaitley's Budget speech:

Demonetisation

Demonetisation is expected to have a transient impact on the economy.
It will have a great impact on the economy and lives of people .
Demonetisation is a bold and decisive measure that will lead to higher GDP growth.
The effects of demonetisation will not spillover to the next fiscal.

Agriculture sector

Sowing farmers should feel secure against natural calamities.
A sum of Rs. 10 lakh crore is allocated as credit to farmers, with 60 days interest waiver.
NABARD fund will be increased to Rs. 40,000 crore.
Government will set up mini labs in Krishi Vigyan Kendras for soil testing.
A dedicated micro irrigation fund will be set up for NABARD with Rs 5,000 crore initial corpus.
Irrigation corpus increased from Rs 20,000 crore to Rs 40,000 crore.
Dairy processing infrastructure fund wlll be initially created with a corpus of Rs. 2000 crore.
Issuance of soil cards has gained momentum.
A model law on contract farming will be prepared and shared with the States.

Rural population

The government targets to bring 1 crore households out of poverty by 2019.
During 2017-18, five lakh farm ponds will be be taken up under the MGNREGA.
Over Rs 3 lakh crore will be spent for rural India. MGNREGA to double farmers' income.
Will take steps to ensure participation of women in MGNREGA up to 55%.
Space technology will be used in a big way to ensure MGNREGA works.
The government proposes to complete 1 crore houses for those without homes.
Will allocate Rs. 19,000 crore for Pradhan Mantri Gram Sadak Yojana in 2017-18.
The country well on way to achieve 100% rural electrification by March 2018.
Swachh Bharat mission has made tremendous progress; sanitation coverage has gone up from 42% in Oct 13 to 60% now.

For youth

Will introduce a system of measuring annual learning outcomes and come out with an innovation fund for secondary education.
Focus will be on 3,479 educationally-backward blocks.
Colleges will be identified based on accreditation.
Skill India mission was launched to maximise potential. Will set up 100 India International centres across the country.
Courses on foreign languages will be introduced.
Will take steps to create 5000 PG seats per annum.

For the poor and underprivilege health care

Rs. 500 crore allocated for Mahila Shakthi Kendras.
Under a nationwide scheme for pregnant women, Rs. 6000 will be transferred to each person.
A sum of Rs. 1,84,632 crore allocated for women and children.
Affordable housing will be given infrastructure status.
Owing to surplus liquidity, banks have started reducing lending rates for housing.
Elimination of tuberculosis by 2025 targeted.
Health sub centres, numbering 1.5 lakh, willl be transformed into health wellness centres.
Two AIIMS will be set up in Jharkhand and Gujarat.
Will undertake structural transformation of the regulator framework for medical education.
Allocation for Scheduled Castes is Rs. 52,393 crore
Aadhaar-based smartcards will be issued to senior citizens to monitor health.

Infrastructure and railways

A total allocation of Rs. 39,61,354 crore has been made for infrastructure.
Total allocation for Railways is Rs. 1,31,000 crore.
No service charge on tickets booked through IRCTC.
Raksha coach with a corpus of Rs. 1 lakh crore for five years (for passenger safety).
Unmanned level crossings will be eliminated by 2020.
3,500 km of railway lines to be commissioned this year up from 2,800 km last year.
SMS-based ''clean my coach service'' is put in place.
Coach mitra facility will be introduced to register all coach related complaints.
By 2019 all trains will have bio-toilets.
Five-hundred stations will be made differently-abled friendly.
Railways to partner with logistics players for front-end and back-end solutions for select commodities.
Railways will offer competitive ticket booking facility.
Rs. 64,000 crore allocated for highways.
High speed Internet to be allocated to 1,50,000 gram panchayats.
New Metro rail policy will be announced with new modes of financing.

Energy sector

A strategic policy for crude reserves will be set up.
Rs. 1.26,000 crore received as energy production based investments.
Trade infra export scheme will be launched 2017-18.

Financial sector

FDI policy reforms - more than 90% of FDI inflows are now automated.
Shares of Railway PSE like IRCTC will be listed on stock exchanges.
Bill on resolution of financial firms will be introduced in this session of Parliament.
Foreign Investment Promotion Board will be abolished.
Revised mechanism to ensure time-bound listing of CPSEs.
Computer emergency response team for financial sector will be formed.
Pradhan Mantri Mudra Yojana lending target fixed at Rs 2.44 lakh crore for 2017-18.
Digital India - BHIM app will unleash mobile phone revolution. The government will introduce two schemes to promote BHIM App - referral bonus for the users and cash back for the traders.
Negotiable Instruments Act might be amended.
DBT to LPG consumers , Chandigarh is kerosene-free, 84 government schemes are on the DBT platform.
Head post office as the central office for rendering passport service.
Easy online booking system for Army and other defence personnel.
For big-time offences - including economic offenders fleeing India, the government will introduce legislative change or introduce law to confiscate the assets of these people within the country.

Fiscal situation

Total expenditure is Rs. 21, 47,000 crore.
Plan, non-plan expenditure to be abolished; focus will be on capital expenditure, which will be 25.4 %.
Rs. 3,000 crore under the Department of Economic Affairs for implementing the Budget announcements.
Expenditure for science and technology is Rs. 37,435 crore.
Total resources transferred to States and Union Territories is Rs 4.11 lakh crore.
Recommended 3% fiscal deficit for three years with a deviation of 0.5% of the GDP.
Revenue deficit is 1.9 %
Fiscal deficit of 2017-18 pegged at 3.2% of the GDP. Will remain committed to achieving 3% in the next year.

Funding of political parties

The maximum amount of cash donation for a political party will be Rs. 2,000 from any one source.
Political parties will be entitled to receive donations by cheque or digital mode from donors.
An amendment is being proposed to the RBI Act to enable issuance of electoral bonds .A donor can purchase these bonds from banks or post offices through cheque or digital transactions. They can be redeemed only by registered political parties.

Defence sector

The defence sector gets an allocation of Rs. 2.74,114 crore.

Tax proposals

India’s tax to GDP ratio is not favourable.
Out of 13.14 lakh registered companies, only 5.97 lakh firms have filed returns for 2016-17.
Proportion of direct tax to indirect tax is not optimal.
Individuals numbering 1.95 crore showed an income between Rs. 2.5 lakh to Rs. 5 lakh.
Out of 76 lakh individual assessees declaring income more than Rs. 5 lakh, 56 lakh are salaried.
Only 1.72 lakh people showed income of more than Rs. 50 lakh a year.
Between November 8 to December 30, deposits ranging from Rs. 2 lakh and Rs. 80 lakh were made in 1.09 crore accounts.
Net tax revenue of 2013-14 was Rs. 11.38 lakh crore.
Out of 76 lakh individual assessees declaring income more than Rs 5 lakh, 56 lakh are salaried.
1.95 crore individuals showed income between Rs. 2.5 lakh to Rs. 5 lakh.
Rate of growth of advance tax in Personal I-T is 34.8% in the last three quarters of this financial year.
Holding period for long term capital gain lowered to two years
Proposal to have a carry-forward of MAT for 15 years.
Capital gains tax to be exempted for persons holding land from which land was pooled for creation of the state capital of Andhra Pradesh.
Under the corporate tax, in order to make MSME companies more viable, there is a proposal to reduce tax for small companies with a turnover of up to Rs 50 crore to 25%. About 67 lakh companies fall in this category. Ninety-six % of companies to get this benefit.
The government proposes to reduce basic customs duty for LNG to 2.5% from 5%.
The Income Tax Act to be amended to ensure that no transaction above Rs 3 lakh is permitted in cash.
The limit of cash donation by charitable trusts is reduced to Rs 2,000 from Rs 10,000.
Net revenue loss in direct tax could be Rs. 20,000 crore.

Personal income tax

Existing rate of tax for individuals between Rs. 2.5- Rs 5 lakh is reduced to 5% from 10%.
All other categories of tax payers in subsequent brackets will get a benefit of Rs 12,500.
Simple one page return for people with an annual income of Rs. 5 lakh other than business income.
People filing I-T returns for the first time will not come under any government scrutiny.
Ten % surcharge on individual income above Rs. 50 lakh and up to Rs 1 crore to make up for Rs 15,000 crore loss due to cut in personal I-T rate. 15 surcharge on individual income above Rs. 1 crore to remain.

Newspaper articles of the day- 19th February,2017

The Hindu

Front Page / NATIONAL

Black and unquiet flows the Periyar in Kerala: Chemical pollution of river and vast tracts of paddyland has been a matter of concern for decades.

Challenge of ageing with dignity: India’s rapidly ageing population may soon outweigh the demographic dividend of a young workforce. Unless attitudes towards the elderly improve and the government increases resources for their care, India is staring at the prospect of a generational socioeconomic crisis.

The lowdown on the Aero India show: The majestic Russian Sukhoi-30, the highly advanced French war-plane Rafale, and the American warhorse F-16, all streaking across the sky, with an occasional sonic boom signalling their friendly banter over Bengaluru.

NIO begins fingerprinting tar balls to track oil spills: Environmental forensic analysts are chasing tar balls in sea coasts to trace the source of marine oil spills.

Editorial/OPINION

What the courts miss in the Constitution: A distinctive feature of Indian secularism is that it rejects the ‘wall of separation’ but demands that the state keep a ‘principled distance’ from all religions.

Newspaper articles of the day- 13th February,2017

The Hindu

Front Page / NATIONAL

Married woman can also ask tenant to vacate: Supreme Court: A tenant cannot refuse to vacate a house saying his landlady is married and has her husband’s home to live in, the Supreme Court has held.

Multi-role chopper model to be unveiled at Aero India expo: Hindustan Aeronautics Limited (HAL) will reveal the mock-up of India’s first indigenous multi-role helicopter at the Aero India exhibition beginning in Bengaluru next week.

‘Naxals possess lethal edge in using IEDs’: Maoists are resolute, aggressive and well-adapted to jungle terrain: Report.

Man can’t claim married sister’s property: SC: A property inherited by a woman from her husband cannot be claimed by her brother, the Supreme Court has said.

Editorial/OPINION

Solar power breaks a price barrier: The auctioned price of solar photovoltaic (SPV) power per kilowatt hour has dropped.

ECONOMY

Commerce Dept. special arm may drive foreign trade policy: Trade strategy is now being piloted by the PMO & the External Affairs Ministry.

China is way ahead of India in terms of railway investment: Suresh Prabhu: India is way behind China on investment in railway, including border infrastructure.

Indian Express

Bucking the slump: Budget balances imperatives of economic growth with requirements of equity in a time of global recession.

Live Mint

A disrupter’s guide to India’s defence budget: While India’s defence budget is now the fourth largest in the world, it is not providing adequate bang for the buck.

Newspaper articles of the day- 6th February,2017

The Hindu

Front Page / NATIONAL

Aadhaar linkage to school subsidy schemes worries HRD Ministry: The Human Resource Development (HRD) Ministry has expressed concern over the Centre’s push to link the Aadhaar number with subsidy schemes related to school education.

In ISRO’s launch of 104 satellites next week, 88 will be from U.S.: The Indian Space Research Organisation (ISRO) is on the cusp of making history when it sends 104 satellites into orbit on its PSLV-C37 rocket on February 15. Only three of them are Indian satellites.

Delhi, Dhaka push Ganga basin project: Bangladesh and India have held talks on the Ganga basin development project after dialogue on the Teesta water sharing agreement slowed down.

Editorial/OPINION

Ancient sport, new age protests: Almost everybody appeared to miss the siren song of ‘unsynchronised awakenings’ of an ‘under class’ in the jallikattu protests. It is these segments that are leading the global revolt against the so-called ‘elite’.

Targeting old scourges: The reference in the Union Budget to new elimination targets for some major communicable diseases barely hints at the enormous burden carried by millions in India with tuberculosis, kala-azar (leishmaniasis), filariasis, leprosy and measles.

Return to a dangerous normal: The hurry to declare the clean-up operation complete raises questions that go beyond just the specifics of the oil spill on the Chennai coast.

ECONOMY

An Indian sub-prime crisis in the making?: The share of debt of firms with failing financial health has been going up every year since 2011, leading to mounting NPAs.

Borrowers struggle in deep sea as banks deflate life jackets: While MCLR was reduced by 90 basis points, base rate cut was limited to 10 bps.

Will Budget help double farmers’ income?: Most of the earnings of the average farm household were spent in meeting consumption expenditures.

Indian Express

Health Budget: Reality Check: Its traditional approach to public investment is out of step with changing needs.

Live Mint

Focusing on domestic growth: One of the key trends underlying huge concentration of wealth and incomes is the increasing return to capital versus labour.

Newspaper articles of the day- 12th February,2017

The Hindu

Front Page / NATIONAL

India’s own interceptor missile soars high: An indigenously developed interceptor missile on Saturday successfully destroyed an incoming ballistic missile in a direct hit, demonstrating the capability of India’s Ballistic Missile Shield (BMD), which is under development.

Green drive on blue waters — solar power lights up naval vessel: In a first, a warship of the Navy has turned to the sun to generate a share of its on-board power.

Centre clears five names for SC judges: Chief Justices of the High Courts in Tamil Nadu, Kerala, Rajasthan and Chhattisgarh are among those selected.

Editorial/OPINION

When hospitals infect you: A 2015 study finds that the rates of hospital-acquired infections and antimicrobial resistance were markedly higher in India than those reported by the CDC in the U.S.

ECONOMY

SEBI lays down reforms roadmap for FY18: The Securities and Exchange Board of India (SEBI) plans to bring in a host of reforms in various segments including primary market, commodities and foreign investors among others.

Indian Express

Beyond black money: The fact that demonetisation was handled so inefficiently should tell the Prime Minister that administrative reforms are almost more important now than economic reforms.

Newspaper articles of the day- 5th February,2017

The Hindu

Front Page / NATIONAL

Central Pollution Control Board assessing oil spill: Environment Ministry likely to present a status report soon on the damage done.

Lighter purse for arms deals: But India is likely to seal some of the biggest ‘Make-in-India’ deals in the sector.

Butterfly find enriches Indian faunal diversity: It was earlier recorded only in Tibet, Myanmar and Vietnam.

Editorial/OPINION

A clinical trial that isn’t: A team of homoeopaths and scientists claims its experimental treatment has cured eight persons of HIV at a Hyderabad hospital. Calling it fradulent, the National AIDS Control Organization is mulling legal action.

ECONOMY

Budget 2017: Education, skills and jobs: The increased focus on human capital development in Budget 2017 to empower the youth is indeed a welcome step. The several key announcements in education, skills and youth development shall have structural and long term impact on quality of education, availability of qualified manpower and preparing the next generation for the hyper age of automation and AI.

E-commerce in focus during Azevêdo’s visit: India opposes inclusion of e-commerce in the Doha round.

Indian Express

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Live Mint

India in 10 years: The jobs challenge: The Indian economy should urgently seek ways to generate decent jobs in large numbers. A failure to do so would result in frittering away the energies of the country’s young population.

India in 10 years: Relearning navigation in foreign waters: India will have to craft a new strategy for managing its ties with great powers.

Newspaper articles of the day- 2nd February,2017

The Hindu

Front Page / NATIONAL and ECONOMY

SMALL WONDER: In a workmanlike Budget, Arun Jaitley maintains fiscal discipline while handing out more to those at the bottom of the pyramid.

₹2,000 ceiling for cash donation to parties: But individuals can give funds by cheque or through digital mode.

I-T relief for those earning ₹2.5-5 lakh: Uniform benefit of ₹12,500 per person for all other categories of taxpayers.

A fine balance of growth and equity: The Union budget for 2017-18 has managed a fine balance between growth and equity based on strategic thrust areas.

Infrastructure gets a major boost: As the Budget is a combined one, the Centre can now synergise investments in rail, roads, rivers and civil aviation.

Safety comes first, e-tickets gain traction: Corpus of ₹1 lakh crore for safety and zero service charge on digital bookings major highlights of rail budget.

Payments board may get a MPC lookalike: Centre will review the Payment and Settlement Systems Act, 2007, and bring about amendments.

Editorial/OPINION

Politics trumps ideology: The macroeconomic credentials of the Budget are quite impressive. The highlight is a greater than 25% increase in capital spending and a substantial increase in the transfer to the States.

Readying for the long road: The Budget for this fiscal year is a balanced one which takes forward the work done in 2016-2017.

The message in the median: The fiscal prudence is timely, but the Budget lacks measures to revive the economy.

Indian Express

More Water For The Field: But silence on reforming food and fertiliser subsidies is disappointing.

Live Mint

Union Budget: more hits than misses: The government has taken several reform measures in the budget that will help the economy.

Budget 2017: An opportunity lost for renewable energy: The budget’s real test lay in its approach to mitigating financial risk in the renewable energy, where capital costs are high, payback periods are long and off-taker, construction and foreign exchange risks raise cost of debt.

Newspaper articles of the day- 1st February,2017

The Hindu

Front Page / NATIONAL

Note ban a radical measure: CEA: Demonetisation will have an impact on economic growth.

SC rejects plea to stay jallikattu law: A few hours after the President gave his assent on Tuesday to the Tamil Nadu amendments in the Prevention of Cruelty Act of 1960 to allow jallikattu, the Supreme Court refused to stay the new State law.

Kathmandu meet to finalise SAARC budget, agenda: Diplomats say the meeting is critical as it will require consensus among members.

Editorial/OPINION

Demonetisation’s long shadow: The Economic Survey presented on the eve of the Union Budget has been dominated by a singular action of the government.

Drawing up a diet plan: The welfare challenge lies in providing assistance to needy households to ensure adequate diets without creating conditions in which they opt for inferior diets that are too heavy on cereals.

This land is their land: Despite the new land acquisition law, questions of resettlement and rehabilitation persist.

ECONOMY

Reward States’ good fiscal show: The Economic Survey recommended the Centre to incentivise good fiscal work by States to keep the overall fiscal performance on track.

CSO revises GDP growth for 2015-16 upwards to 7.9%: Government has marginally revised upwards GDP growth for 2015-16 to 7.9 per cent from the earlier estimate of 7.6 per cent after factoring in latest data on agriculture and industrial production.

Economic Survey wants modification of FRBM Act: India has “changed utterly” over the last 13 years since the Fiscal Responsibility and Budget Management (FRBM) was enshrined in law for prudent fiscal management and therefore, the FRBM operational framework designed in 2003 “needs to be modified to reflect the India of today and even more importantly, the India of tomorrow,” according to the Economic Survey.

Science and Technology

Researchers employ laser light to speed up electronics: A researcher from India has taken the first definitive step to produce high-speed electronic devices that can operate one million times faster than modern electronics.

Indian Express

Demonetisation 2.0: It has become manifestly clear that it is a political move without an economic rationale.

Surveying ideas for India: Economic reforms are not, or not just, about overcoming vested interests; they are increasingly about shared narratives on problems and solutions. Economic Survey builds on this idea.

Live Mint

The building blocks of economic policy: The budget should be a part of the longer-term policy objective of increasing economic activity, prosperity and well-being.

The right priorities for healthcare spending: The only sustainable solution is robust infrastructure and sufficient manpower, not controlling the prices of drugs.

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