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Demonetization and Indian budget 2017 – An introduction

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[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] T [/yt_dropcap]he BJP government in India has unveiled annual budget on February 01, trying for recovery after deadly cash crunch, unleashed by PM Modi by his shock therapy, making people feel badly stranded at a crossroads without cash and not really knowing where exactly to go for getting their own money deposited in banks.

While demonetization forces the people to deposit all their money to banks, especially in rural areas where economy is hidden, Jaitley claimed his budget is focused on increasing rural incomes and boosting infrastructure, besides ushering in long-pending reforms in the financial sector.

Prime Minister Narendra Modi’s surprise decision last November on a night as the results of US presidency poll were pouring in, to scrap high-value banknotes worth 86 percent of India’s cash in circulation has hit consumer demand, disrupted supply chains and hurt capital investments. PM Modi did find some space in international news but he could not equal or outsmart Trump’s grand victory defeating the “official candidate” Hillary. Clinton

As Gujarat CM, Modi had promised a vibrant economy during his 2014 maiden elections to parliament from Varanasi in UP, but India economy has only survived now- let alone becoming a strong one. That is below the target rate of 8 percent or more that Modi needs to create enough jobs for the 1 million young Indians who enter the workforce in India – a nation of 1.3 billion where half the population is below the age of 25.

Indian Finance Minister Arun Jaitley presented his budget as five states are going to assembly polls later this month the outcomes of which could decide the future politics of India as well as political alliances and equation. Arun Jaitley said that the impact on growth from the government’s cash crackdown would wear off soon. “We are seen as an engine of global growth,” Jaitley said as he delivered the opening remarks of his fourth budget.

Budgets are essentially statements on the status of national economy and they are meant to allocate resources for every sector of the nation and specify the sources of resources including taxes needed for developmental projects, etc. Generally the budgets remain as unfulfilled promises and project proposals as a lot of resources are being diverted and siphoned off by many “important” persons for their personal and private purposes, thereby making corruption inevitable at the source.

The budget talked about concessional tax rates being provided to those moving toward non-cash payment mechanisms, and making it mandatory for many Government transactions to move to digital, which again are important steps in this direction. The reduction of personal income tax at the lowest slab to 5 percent is more a gesture of goodwill for those who bore the pain of demonetization, rather than a big reward.

The budget makes clear the intention of the Government to fight black money and digitize the economy. Limiting the amount of cash per transaction to Rs. 3 lakh, reducing the limit of cash donations to trusts/political parties to Rs. 2,000 per person, and coming up with an innovative way of funding political parties (electoral bonds) are all excellent initiatives. The implementation, though, needs to be watched.

Jaitley’s chief economic adviser advocated slashing personal income tax and accelerating cuts in corporate tax rates. He cautioned, however, against pursuing debt-fuelled fiscal expansion. Still, economists are penciling in a federal fiscal deficit of 3.3 percent of GDP for 2017/18. That would be higher than the 3 percent pledged earlier but lower than 3.5 percent that the government has budgeted for the year soon to end.

The BJP budget has been in consistent with the government’s focus over the last two years on “fundamental” growth, rather than subsidies and loan waivers. It focused on increasing rural incomes and boosting infrastructure, besides ushering in long-pending reforms in the financial sector.

The rollout of a nationwide Goods and Services tax (GST), expected in July after years of delays, and could also weigh on economic growth. Countries that have introduced GST in the past have often faced a relative economic slowdown before the benefits of a unified tax regime feed through.

The budge, as well as the government, has not taken into account the suicides of farmers in rural areas, although the budget also provided for an additional Rs.20, 000 crores for the long-term irrigation fund under NABARD. The total allocations to rural, farm, and allied sectors saw a whopping 24 percent hike in outlay at over Rs 1, 87,000 crore.

The impetus given to affordable housing by according it the status of an ‘Infrastructure Industry’ and increasing the area eligible for affordable housing are steps in the right direction, which would ensure that more people in the country can afford to buy their own homes.

Reportedly, assets worth $7.6 trillion are stashed in tax havens across the globe. Jurisdictions known as ‘tax havens’ across the world offer powerful MNCs and rich individuals banking secrecy and the ability to sidestep financial regulations that apply to ordinary people. However, this secrecy sure hurts the public, as profits and wealth go untaxed, countries lose revenue and allocations in budgets shrink. Reportedly, assets worth $7.6 trillion are stashed in tax havens across the globe.

Not only the rich lords hoard black cash in the country, but the cross-border movement of money that is illegally earned, transferred or utilized (through trade manipulation, organized crime and corruption) or tax avoidance by multinational companies also cause over $1 trillion every year to illicit financial flows in developing countries, including India.

Double Taxation Avoidance Agreements (DTAAs) have been misused and exploited in the past, to avoid paying any taxes – resulting in double non-taxation – and re-routing black money through tax havens for investment in India. The General Anti-Avoidance Rules (GAAR) have also been adopted by the government, extends to deny double taxation avoidance benefits if deals in tax havens are found to be avoiding taxes.

The Union Budget has announced a few new laws to address financial crime – one for confiscation of property of economic offenders and another to deal with illicit deposit schemes. India will start exchanging information with other countries, and receive information regarding Indian citizens’ assets abroad starting September 2017, on an automatic and periodic basis.

Still, economists are penciling in a federal fiscal deficit of 3.3 percent of GDP for 2017/18. That would be higher than the 3 percent pledged earlier but lower than 3.5 percent that the government has budgeted for the year soon to end.

While opinions vary on how long the disruptions caused by Modi’s crackdown on untaxed and illicit wealth will last, there is near unanimity among economists that Asia’s third-largest economy needs a helping hand.

The issue of combating blackmoney was not given proper thoughts. The budget speech did not draw attention to a number of initiatives taken by the government in the past few months to curb the menace of tax avoidance.

Government of India should seek to address these loopholes in the norms of international taxation at the national level, while simultaneously support the establishment of a representative and well-resourced global tax body under the auspices of the UN.

Observations

Demonetization has only further complicated the life of common people and has not succeeded in India because basically every politician and official dealing with economic affairs are corrupt and make wealth illegally that the state defends. Black money also has not many headway in real terms because there is no visible evidence that black money is disappearing from Indian scene. Without sincere intention by officals and politicians nothing can be set right in the country- the rulers since 1947 has only added rot to Indian system which is now defunct. Importantly, no politician party seems to be sincere about abolishing corruption and black money as that could negatively affect the funding of politics and polls by the rich and corporate lords that shamelessly thrive thanks to state protection and policies in their favor.

Budget statements are just the usual gimmick to fool the poor voters.

India acclaimed to be a “bright spot” in the world economy, and Finance Minister Arun Jaitley repeated the same as he unveiled his annual budget, adding that the impact on growth from the government’s cash crackdown would wear off soon.

The BJP government’s budget has kept in pace with the economic policy of India for the last many years since the large scale privatization cum divestment program during the Congress reign with Manmohan Singh as finance minister to promote WB and IMF polices, to release the money of the state sectors for use by the private compote lords and global multinational magnets to increase their own wealth instead of taking care of welfare programs of common men.

The BJP budget this year was a usual one and as former finance minister Chidambaram said there are no real high lights. Those who had expected relief for those who suffered as Modi imposed demonetization without adequate preparation too launch his pet financial dream of ending black and other dirty money in the country. Now it is clear that the black money is here to stay no matter what measures the government adopt mainly because they only corporate lords who control the government want all these dirty cash circulation so that they could make more profits- after the objective of all governments – both elected and electionless – serve the cause of the rich and corporate lords and for which, unfortunately, common people vote a party to power.

The worst of the cash crunch is now almost over, leaving behind a shaky nation, and the government expects it to be fully cleared by the end of April. A private manufacturing survey showed business is slowly returning to normal. Still, the finance ministry forecasts that growth could dip to as low as 6.5 percent in the current fiscal year to March, before picking up slightly in the coming fiscal year to between 6.75 and 7.5 percent. That is below the target rate of 8 percent or more that PM Modi needs to create enough jobs for the 1 million young Indians who enter the workforce in India – a nation of 1.3 billion where half the population is below the age of 25.

The BJP which, like the Congress party, promotes the rich and corporate lords to sponsor cricket and IPL type joint sport exercise to keep the people under illusions, pursues the congress policies by keeping in view the goals of World Bank and IMF, denying subsides and freebies to poor and under privileged- thereby they want to remove the poor classes altogether and increase the illegal wealth of the rich. That is basic of capitalism that fuels wars of imperialism for acquiring more resources- now energy resources of West Asia.

The merging of the Railway Budget with the general budget was done seamlessly and was touted as a historic move, ridding us of the colonial era practice of separate budgets. However, the rationale for merging the railway budget with general budget this year as a new experiment has caused confusion as a separate budget for rail steadily raised the facilities and working of the sector, increasing rails and spending more resources year by year. Unlike other transport sectors, railways have achieved great strides over years and rail system today is not what it was say 10 years back. As the largest employment sector railways is also the cheapest mode of transport in India.

The nation expected the finance minister and PM Modi to give details of demonetization efforts of the fo government giving a brief about the amount of blackmoney it should get and what are the new techniques being employed to tackle this grave anti-national mischief by liquor-cricket bosses like Mallya- a BJP MP with links everywhere especially with cricket bosses and other corporate lords. The Modi government refuses to take the people into confidence on demonetization.

Perhaps, the intentions of the government to guide the country onto the path of inclusive growth are clear. While there will always be some misses and hits in the budget, the Modi Government, unlike the Congress and even Vajpayee governments that religiously promoted corruption and blackmoney as their key policy, has shown the political will to fight corruption and black money, which have become strong appendages of our economy.

Taxes the major revenues for the governments but the Modi government is eager to be sympathetic to big business houses with tax rebates. The minister’s roadmap in the FY-2015 budget promised to reduce the corporate tax rate to 25% within four years, even after three years.

In a difficult year, represented by growing global uncertainties, lower economic growth at home and increasing oil and commodity prices, the finance minister has done to sticking to the fundamentals and doing what is good for the economy, rather than for the vote bank.

While avoiding populist measures and focusing on investment activities that have a multiplier effect, Arun has also tried to garner additional resources through higher tax compliance, rather than higher tax rates. In fact, contrary to popular expectation, the definition of long term capital gains for property transactions was brought down to two years from three years.

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South Asia

PTI Government in Pakistan: To full-fill its promise on curbing Corruption

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Big achievements of PTI (Pakistan Tehreek-E-Insaf) Government in Pakistan. Corruption is an international phenomenon, especially among developing and underdeveloped countries. Corruption is a major hurdle in the fight against poverty and development. However, the beneficiary of corruption is still the developed world. The rulers from developing and underdeveloped world, transfer all their black money to developed countries and in the end, developed world enjoy out of their black money.

Pakistan, being a developing country, no exception to this curse. During the last few governments, it was very much visible. Either it was financial corruption of moral corruption, all are equally harmful to the country. Previous few governments, appointed corrupt and unqualified persons on key posts and used them as their front men in corruption.

Some of their front men were an evil genius and committed heinous crimes in such a technical manner that it is very difficult to find out evidence. Either it is fake accounts or various forms of money laundering or in the form of subsidies or government grants, commissions or kickbacks in projects or procurement, bribes or gift, all are the same but with different forms to harm the socio-economic of this country.

It was in the manifesto of PTI, and part of its slogan during the election campaign, to fight against corruption. Prime Minister Imran Khan in his speech on several occasions has promised with the nation that, he will fix all corrupt, irrespective of their status in the society. It is logical to start from the big fish and later on to common corrupt officials at junior levels.

Pakistan’s judiciary and the military are also on the same page and extending full support to the PTI government’s mission to eliminate corruption from this society once for all. The recent arrests are just the beginning of accountability and have to go on a long journey. May it take one term or even next term, but the accountability process must keep on going till the eradication of corruption completely.

Pakistan is under the heavy foreign-debt, worth US Dollars 100 billion approximately. Who took this huge loan? Have they worked out, how to pay back? Have they spent all the loans on the development of Pakistan? Why this loan has not been trickled down impact? Why this heavy loan could not improve Pakistan’s economy? How useful was this loan to common man of Pakistan? Why IMF could not improve the governance of Pakistan? Why IMF failed to improve performance of Pakistan? Why IMF could not give positive advice to Government of Pakistan? The lenders also need to be blamed for lending without any feasibility and failure of IMF packages offered to Pakistan during last one decade or so long. Why few families (rulers) become more rich and country become poorer?

If the sitting governments of that times have been borrowing without any planning or homework or without considering how to pay back, all of them must be held responsible for this heinous crime against the nation. Whether they are inside Pakistan or left the country, they must be arrested and brought back to face justice.

If only a few corrupt families are arrested and asked for the return of looted money, Pakistan can get rid of its major part of foreign-debt. We may not need any bailout package from the IMF or any help from any friendly country. All the looted money must be returned, all the illegal assets must be confiscated and suctioned out. All the recovered money must be used to pay back our foreign-debt.

There is no need to impose additional taxes and duties on the common man. Electricity, Fuel, Gas and consumer products may be kept on the original position. It is illogical that the common man, who is not responsible for the debt and still suffers due to the corruption of rulers.  It is desired, the previous rulers, who have pushed the country into economic chaos, should be held responsible and all damages need to be compensated by them only. There is no need to punish the whole nation for few criminals. Recovery from previous corrupt rulers is very much do-able and very much possible, above all very much desired. There are examples available in the world, how they recovered looted money from their big shots.  Saudi Arabia has done it well. China is a role model to be followed in this regard.  The Chinese government is willing to share its experience and expertise in fighting against corruption.

Our internal resources may be utilized fully to control corruption and recover all black money. Even if there is a need to introduce new legislation, the Government should not hesitate. Masses in Pakistan stands with Government on this issue. The government should move smartly in this direction with full strength and confidence. Public support is already there.  However, if the Government fails to accomplish this task, it may lose popularity.

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Gentlemen’s game or Propaganda? Cricket and the India-Pakistan Voices

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Can a sport be utilized as an effective propaganda tool? And if so, does it ideally mean that government intrusion is a necessity for its success? The answer to this question lies in the reflection of the cricket scenario in Asia. Although recognized as a gentlemen’s game, much can be said about its dichotomy as a weapon in the ever-growing war between India and Pakistan. Cricket propaganda has become a major trend over the past decade between the two countries as competition remains scarce with the political tensions and matches are seen as a great opportunity to reflect those political tensions. 

Recently, the tension between the two countries escalated with a suicide bombing attack sponsored by the terror group, Jaish-e-Mohammed in the Pulwama district of Jammu & Kashmir. This grave attack resulted in the death of 40 Central Reserve Police Force personnel, which in the opinion of the Indian government was an act of war leading them to raise the issue on the global platform. Surprising, one of the biggest acts of public response, with the usual backlash of the country’s rights over the Kashmir valley, was a call to abandon the upcoming match between the two countries following the start of the ICC cricket world cup. Although, the Modi government did conduct airstrikes against Pakistan, leading to a major confrontation between the two countries along the ‘line of control’ (the de facto border between the two countries), a large scale debate about whether India should abandon the game was a hotly debated topic in the country.

It is worth noticing that later the Board of Control for Cricket in India (BCCI), did hand over the matter to the Modi government, after which the decision was inclined towards the sportsmanship of the country, however, both the Indian cricket team and the BCCI were not ready to desert the will of the public that easily. Involved in an ODI series with Australia, the Indian team walked out wearing military caps as a sign of apparent solidarity with the troopers killed in the terrorist attack. Never before had Team India taken it upon themselves to spread such jingoistic propaganda on a global scale and make such overt statement. The rise of the protestors in Pakistan were met with official statements from the International body of Cricket (ICC), stating their approval as a means of “support” to the Indian team for a fund-raising effort for their fallen soldiers.  

Similarly, in an act of nationalistic fervor, the BCCI decided to get Pakistan banned from the upcoming world-cup prior to its commencement but was severely backlashed by the International Cricket Council (ICC), to keep politics away from the sanctity of the game. Although BCCI was unsuccessful in passing an unrealistic degree of order, given their large scale influence on the International body, it was clear that cricket had become an additional weapon of mass destruction and means of propaganda between the two countries.

So has the situation become better now? Recently, an Ad-war following the start of the world cup has emerged between the two countries, given their highly anticipated upcoming clash on the 16th of June. Ahead of the Sunday clash-guaranteed to put both the nations at a standstill- Star Sport’s Mauka ad ( loosely translated to a chance of winning) has captured the attention of the Indian fans, as the video has garnered over 2.5 million views after it was published on 10th June 2019. This video currently stands as a reprise an extension of the “Patakhe kab podhenge” campaign (clumsily translated to “When will be get to burn crackers”), wherein a Pakistani fan never gets a chance to burn his crackers as Pakistan is always defeated by India on a world cup stage, as indicated by the records as well. However, the new Mauka ad seems to recognize the importance of June 16th as Father’s day and does not fail to interject the role of India as a father in comparison Pakistan, as a means of cheeky humor which received large scale reaction from the Pakistani fans.

As a means of response, a Pakistani news channel Jazz Tv published a video with a character impersonating Wing Commander Abhinandan Varthaman, the Indian air force pilot who was captured, briefly held and then released under the pretense of the Geneva Convention. The character is seen sporting the pilot’s handlebar mustache with a fake South Indian accent and is dressed in the Indian team jersey, following which an interrogator asks him to give back the teacup he has been holding, as a means to denote how the cup belongs to Pakistan. This video was met with the usual support from the Pakistani fans and deemed ‘racist’ by the Indian fans, accounting to the portrayal of the esteemed pilot with a fake southern accent. Although, tension has been running high between the countries for some time now, both the nations have resorted to extending their tensions to the cricket pitch as well, ensuring large scale traction for their upcoming matches.

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Modi’s Operandi

Syed Nasir Hassan

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Same old Modi puts himself in throne again but with different mandate this time. This time he came with much force and appeared more vigilant. Sweeping an electoral win with more than 300 seats out of 543 and restricting Indian National Congress to mere 52 seats. This clearly shows that India gave priority to nationalism over any other set of idea. Prior to previous electoral year i.e. 2014,Modi lured with promises of social and economic reforms and upheaval. Which sunk badly as some of the predicaments are still in the society. From being miserable in improving the job sector that gave rise to unemployment rate to the inducing grieves to the farmers, Modi bagged some failures as well in his previous tenure.

Whereas this time bait was the Hindu nationalistic sentiments, which Mr. Modi and his members of the den enjoyed the feast by winning the election. By using hate mandate, Modi successfully maneuvered himself and his party in to the realms of Delhi. Before elections, his unfortunate adventurous voyage with its neighbor and rival Pakistan made a lucid chance to portray himself as heroic figure. Modi flaunted anger and hate towards its immediate neighbor. It profited him in shape of getting a majority in the lower house of the Indian political saga. Hate sentiments were provoked and inducted in common minds. Question herby rises that how Hindu nationalism can or will transform India?

During previous reign of Mr. Modi, clear social and religious divisions were drawn onto the Indian society. This was mechanized in recent elections as well by promoting nationalism or more likely Hinduism. One of the tactics that was opted by BJP and Modi is persuasion of fears of Indian society and Hindu ideology and presenting himself as the only savior. Modi portrayed himself as the only option for Hindu caste to save Hindu ideology from external threats.

Modi has always been fond of shifting Indian secular discourse towards a Hindu nationalist sermon. His previous tenure and the plight minorities faced during that time testifies his aims. Now he has been elected for another five years. This time he has secured almost 56% of the lower house that clearly means that Mr. Modi will have to face no hurdle in his way towards passing a legislation.

Media and Modi has always been close aides to each other. This nexus was also prominent in the recent elections as Social and Electronic media, both were eminent in glaring Modi-ism. It ultimately cultivated his ideology in the minds of a common viewer hence reflecting it in the election results. His election campaign was given more coverage than any other thing on TV. The election soap series continued feeding the people of the India. Without any doubt, there have been immense flow of monetary funds in the veins on Indian media during the election time.

Modi’s Bharatya Jantya Party or BJP’s Modi have already drawn a plan to be executed in the society. Selection of candidates that were given tickets and won were some of the most extremist in nature. Shakshi Mahraj, a newly elected member of parliament on BJP’s seat already has more than 30 criminal cases against him. Another newly elected BJP’s Member of Parliament, Pragya Singh Thakur remarked Mahatma Gandhi’s assassin as “a patriot”. Not only this, selections for new cabinet members clearly indicated where Mr. Modi would be leading Indian society. Amit Shah who is also a president of BJP has ironically been selected as India’s Home Minister. There is a clear chance thatnew reforms might be religion centric rather than being focused on governance. BJP will clearly exhibit the Hindu ideology in governance that would further raise concerns for the minorities in India.

The Indian future and the question of Indian minorities seems bleak. Modi created a narrative on abhorrence and nationalism, he won elections on this mandate but now he has to defend it and every word of hatred that came out of his mouth may be realized through his actions. It puts Indian society in a dismal situation.

It is arduous to analyze that how large populous has voted in favor of hate mandate prompted by Modi. But there is a chance that Indian society might be falling prey to reverse psychology. It indulged itself so deep and intense in criticizing and accusing its neighbor, Pakistan, for being extremist and conservative society that it itself is becoming one.

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