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The Indian Budget 2018: The Good, the Bad and the Ugly

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It won’t be a hyperbole to call the preparation of the Indian Budget the world’s toughest tightrope balancing act. In a country of 1.3 billion Indians, a gazillion sects and a country where the dialect changes every 20 kilometers, the Indian Budget is a unique unifying factor. Sitting in a small office, a select group of individuals charts the course of the Indian economy, soon to be the world’s fifth largest. A multitude of Intelligence and Security agencies are tasked to ensure that the Budget remains a secret before it is presented and the markets wait with a bated breath to gauge the winds that will blow with the onset of the Indian Budget. These winds can help the markets move at roaring speeds or topple the very applecart of their existence.

The Narendra Modi led National Democratic Alliance presented it final full Budget on Feb. 1, 2018. With elections due in eight states and the coming of the all-India General Elections, this budget was a final attempt by Modi to deliver on his promise of “Ache Din” (Good Days). But did he? Large sections of India is now restless. Farmers are suffering from a lack of good prices and mounting agricultural loans. Youth is suffering for the want of jobs. Businesses are under stress due to a new tax regime that they are yet to understand and comprehend. The Indian Middle class, BJP’s strongest supporters and among the minuscule few who actually pay a direct tax is reeling under high taxes. This was the last grab attempt to placate these sections and retain power for another five years. But what did it deliver? Sure enough, the budget contains a slew of measures for the agriculture and rural sectors, a new health insurance scheme has been announced for the poor and a small relief in income tax for the salaried class and senior citizens.

Let’s take a closer look at the Indian budget and break out the good, the bad and the ugly.

The Good

To placate the Farmers who have been protesting across the length and the breadth of the country, this budget promises to raise the minimum price offered to farmers for their crops. Stating that the focus of the government in the coming fiscal would be agriculture and rural India, the finance minister has announced that all Kharif crops will be paid a minimum support price (MSP) that is 50 percent more than the cost of production. It has also identified a need to invest heavily in the agricultural markets across India. It has also earmarked more money for rural areas, including that for irrigation projects and for aquaculture projects. The Kisan credit card will be extended to fisheries and animal husbandry farmers while Rs 2,000 crore provided for the development of agriculture market. The central budget directs state governments to purchase extra solar power generated by farmers using solar-powered pumps who have become cheaper after this budget.  The credit to agriculture would be raised to Rs 11 lakh crore in the coming fiscal from Rs 10 lakh crore. The budget provides for a 100 percent tax deduction for farm producer firms with Rs 100 crore turnover. There is a special impetus to promote “Operation Green”. In total, there has been a record allocation of Rs. 14.34 lakh crores for the agriculture sector.

In a bid to provide universal healthcare, the Budget announces a ‘National Health Protection scheme’ to provide health cover of up to Rs 5 lakh to each of the 10 crore poor families per year. Under the Aayushman Bharat programme, a total of 1.5 lakh centers will be set up to provide health facilities closer to the homes for which an outlay of Rs 1,200 crore to be allocated. A total of Rs 600 crore have been allocated for tuberculosis patients who will be provided with a grant at the rate Rs 500 per month during the course of their treatment. There are plans to set up 24 new medical colleges and hospitals by upgrading district level ones.  The budget lists that the PM JivanBimaYojana has benefited 5.22 crore families with more in the pipeline. And here we were really thinking that Obama-care was game changing?  Apart from all these announcements, the Budget contains a slew of announcements for the senior citizens of the nation like Incentives for Senior citizens like exemptions in income of Rs 10,000 from Banks FD and post offices and Rs 50,000 per annum exemption for medical insurance under Sec 80D.

With the finance minister promising a record infrastructure spending on roads and railways, construction and engineering firms, as well as train wagon-producers, could benefit. There is a plan to expand airport handling capacity by five times to handle 1 billion trips a year. It is estimated that Rs 50 lakh crore is needed for infrastructure building and the government will allocate Rs 7,140 crore for the textiles sector in next year.  National highways exceeding 9,000-km will be completed in 2018-19 and allocation of over Rs 1.48 lakh crore has been planned for railways. Regional air connectivity scheme shall connect 56 unserved airports and 31 unserved helipads for better connected and a closer India.

For the rural economy, the budget contains a slew of announcements. 8 crore poor women will get new LPG connections. Under the Prime Minister’s SaubhagyaYojana, it is estimated that 4 crore poor people will get power connection. A total spending estimate for this scheme is Rs 16,000 crore. Under the Swach Bharat Mission, the Government plans to construct 2 crore toilets in the next fiscal year. The government has set an ambitious target to provide a house for all by 2022. A total of 1 crore houses are to be built under Pradhan MantriAwasYojana in the rural areas. The Government will expand the PM Jan DhanYojana. All 16 crore accounts will be included under micro insurance and pension schemes for better returns and social outreach.

To formalize the economy, the Employees Provident Fund Act will be amended to reduce the contribution of women to 8 percent from 12 percent for first three years, with no change in employer’s contribution. The government will contribute 12 per cent of wages of new employees in EPF for all sectors for the next 3 years. The target for loan disbursement under Mudra scheme has been set at Rs 3 lakh crore for next fiscal.

The Bad

The government has extended Corporate Tax of 25% to companies with turnover up to Rs 250 cr in the financial year 2016-17. For a party always under a perception of being a corporate front, this will not go down well in the eyes of the media and the party will have a wild time dousing the flames. Also, 100% tax deduction is allowed to co-operative societies, the majority of whom have cooked books and shady members.

The long-term capital gains will now be taxed at a rate of 10% if exceeding Rs 1 lakh. The Education cess increased to 4% from 3% to collect additional Rs 11,000 crore but in turn, has put an additional burden on the tax paying middle class. The government’s decision to impose long-term capital gains tax on equity investments may dent investor sentiment for financial services companies, life insurers and providers of mutual fund products.

The Indian Defense Budget, while increased contains no clear roadmap to make India a manufacturing powerhouse and increase our armament production. Barely spending money is not good and while the outlays are increasing continuously, it is no secret that our outlay is minuscule in comparison to our GDP. Furthermore, most of the current budget is spent on personnel and maintenance costs, leaving very little for capital acquisition.  There is a serious need to quantify the defense budget and earmark separate funds for the capital acquisition.

The Ugly

Apart from a few scraps here and there like Rs 40,000 standard deduction, Mr. Modi has completely ignored the honest Indian Direct Taxpayer. A resentment is now brewing in this segment which has honestly been paying to tax and has time and again got pinched by every budget. In a nation where barely, 1.9% of the populations pays any tax, the honest Indian Taxpayer has become a minority of sorts, exploited and with no one to raise a voice for it. Hopefully, Modi can mollify this before the General Elections or all hell will break loose.

Conclusion

To conclude, the Indian Budget is prudent, not populist. The Indian Government deserves full credit for bringing out such a balanced budget so close to the General Elections. The fiscal prudence of this government has been lauded by international agencies and the recent budget is in line with the attempt of the government’s fiscal consolidation path. The Finance minister has set the fiscal deficit for 2019/19 (April-March) at 3.3 percent of the gross domestic product, slightly higher than expectations for 3.2 percent. Altogether, the budget has focused more “investments” than one-time hangouts. However, the devil lies in the details. There is a pertinent need for faster and smoother implementation.  The infrastructure projects will generate more jobs and ultimately, more usable projects on completion. R&D will generate more output for this nation. The government is ably trying to focus on both the “Ease of Doing Business” and the “Ease of Living”. Elections are upon the present dispensation and the Government must now focus on the implementation. If the 2014 election was about Ache Din, 2019 (or 2018) will be about the poor. The buildup initiated with the Jan Dhan and theUjwala Yojana, continued with the PAHAL andSaubhagyaYojana and now the AyushmanYojana and this Budget. The ingredients are all there. It now up to the chef Modi to cook his broth. But will his broth taste like sweet victory or a bitter-sweet defeat. This only time, and the Indian Rural Voter will tell.

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South Asia

The problem of pellet guns in Kashmir

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Jammu and Kashmir is the only northern state of the Indian union dogged with an overridden unhealthy political atmosphere. The valley of Kashmir is beset with a major governance deficit which has given renewed impetus to the dissenting voices of the masses day in and day out. Dissent is the hallmark of a democracy which acts as a medium for the expression of the masses against the system. There are certain rights and duties guaranteed by the Indian constitution for the citizens, including the right to freedom of expression and right to life. Caught in the quagmire of a political crisis that has deeply permeated the society, the people in Kashmir from time to time vent up their dissent. Hartals are the tools for the masses through which they ventilate their pent up emotions. Kashmir is not a different case. It is also amuck with crisis and caught in a looming distress day in and day out. Kashmir is the most sensitive zone of the whole Asian sub-continent, where situations turn awry with the passage of time, like the seasons of the year and is the only state of the Indian Union where there has been a reckless use of the pellet guns without any regard for the precious life of the common man. This is a sort of dichotomy.

The use of pellet guns is a major problem which has not only maimed, blinded and killed the masses, but also shaken the collective conscience of the people, who have fallen prey to a different approach of dichotomy of the government. The killing of militant commander Burhan Wani in 2016 brought about a volcanic eruption in valley which not only deteriorated the situation in Kashmir, but also increased the massive alienation of the masses. The waves of grief and anger against the day-to-day killings and maims that the people felt increased with each passing day. In order to control the crisis, the security agencies used the deadly pellets which caused heavy damage to the sufferers. More than 1200 people lost their vision in 2016. According to a report of State Human Rights Commission (SHRC), more than 75% people suffered injuries due to pellet guns, ranging from minor to major in 2016.There was a heavy loss of life.

Although small in size, these black metallic balls have deteriorated our young generation. The use of pellet guns has wreaked crisis in Kashmir. For the security agencies, it is meant to disperse the crowds, but, for the common masses, it is a problematic affair. Pellet guns are pump-action shotguns which fire a cluster of small, round, metal pellets with high velocity over a broad range.

Recently, after the killing of a militant from Pahalgam area during the anti-establishment protests, a number of people were injured due to pellet A nurse working in the same area personally told me that we healed at least 100 plus pellet injured victims. The bloody Sunday of this year’s April and the subsequent clashes of the protestors with the security agencies left many injured, with multiple cases of pellet injuries to the eyes of the protestors.

Naseer Ahmad Bhat of Seer Hamdan, Anantnag was killed by the security forces during the post-Burhan phase of 2016 protests in Kashmir. He was an able worker and a good cricketer who fell silent to the pellets. Not only the collective conscience of the people was shaken, but also a state of disparity ensued. These deadly pellets have not even spared the school going children and snatched the power of seeing of the victims. Insha, a pellet victim who passed her matriculation examination last year despite odds is an inspiring hope for the likewise victims.

Pellets cause a number of biological ramifications in the victim, like the loss of vision, the state of paralysis, in case, the damage is caused to the spinal cord, defacements, and death in case of damage to the vital organs of the body, like, heart, kidneys, lungs, brain, etc. Moreover, the pangs of guilt that a victim suffers in silence dishearten one and all. The use of pellet guns as a crowd-control method during protests, whether in case of cordon and search operations (CASO) or common protests has added a volley of questions to the psyche of the common man? Being a part of the Indian union, that two acing the crown, Kashmir has been treated otherwise all through the passing times. People have got million queries, but, there are no solid answers to their problems and subsequent tactful solutions.

The substitution of pellet guns with PAVA shells can in no way control the crisis. The way people of other parts of the country are treated should form a close semblance in case of protests in Kashmir. Why the security forces are using pellets and bullets against the people whom the system claims with a sense of belonging. There can be other alternatives, like the use of water cannons without any damage and subsequent ensuing crisis that engulfs the society and creeps the psyche of the common men. If this is the notion of the system to punish dissent, then dissent itself takes a u-turn of additions and alterations with the passage of time. The bleeding valley is giving a close call for one and all to unite and ensue a state of peace and order. There is an urgent requirement of the administrative and political will to stop the use of pellet guns in Kashmir.

Whatever is happening to the people of Kashmir has not been experienced by the other people of the country. After all, it is a question of humanity. People suffer out of the ways as circumstances decide or may be destined otherwise. But to expect a peaceful valley without the intervention of a political will would be an underestimation of statements. There is a dual intolerance in Kashmir, one from the people and next from the system. The systematic targeting of the protestors from a point blank range irrespective of regard for the human life has shattered several families in Kashmir

Kashmir is passing through the phases of testing times with each passing day. The ugly turn of the situations and recurring events and the amateur dealing of the same has created an unhealthy atmosphere everywhere, where people have lost faith in the governance systems. The safety and security of every Tom, Dick and Harry is the looming question of the hour. Exits from dwellings and adieus from home don’t guarantee the safe return of the leavers. The interlocutor of the centre in vale, Mr. Dineshwar Sharma once reiterated that, ‘the priority is to prevent Kashmir turning into Syria’. The imbroglio has crippled the educational scenario, down slowed the economy, increased the unemployment, but, above all, the ultimate question is the redressal of the problem at stake, which for God sake can erupt into a lava-laden volcano one day and engulf the whole peace, stability and order of the South Asia, if not tactfully handled in the current times by the government.

The victory of BJP at the centre with the thumping majority after the 2014 Lok Sabha elections with the slogan of ‘minimum government, maximum governance’ falls short of words and has partially failed in the state of J&K.The killings of the common masses are in no way remedies to the political ailments. There should be the ultimate regard for the human lives. Why has the blood of the people become so cheap .When will peace return to the valley of Kashmir? The government of India had constituted an expert committee in July 2016 to explore other possible alternatives to pellet guns as non-lethal weapons. Although, the committee submitted its report and the recommendations were taken into account by the government for implementation. But, what happened afterwards lies in the public domain for discussion. The use of pellet guns is tantamount to the violation of rights of the people.

In order to direct the valley towards the state of peace and development, the role of multiple players of India, Pakistan and Valley is necessary. This way the government can make a significant contribution in the restoration of normalcy. The need of the hour is the unity of all the stakeholders of the society, like government, non-governmental parties, NGO’s, etc. to help these pellet victims via financial or other means.

Although, there has been a strong criticism of the use of pellet guns not only at the local level ,but also at the international level, but the main part of the problem resolution lies with the government of India and the state. Although, much has been said and written about the people of Kashmir with the flow of waters of the river Jhelum, but the stability of the region is a farfetched dream. Here, comes the role of the government into play. The use of pellet guns against the dissenting masses has wreaked havoc and wounded the collective psyche of the people, particularly those who have lost their near and dear ones due to the deadly metallic balls. Those who have fully or partially lost the vision and are living in dark suffer in silence. The government should review the situation and put a full stop for the future use of pellet guns. Those who have lost their dear ones should be financially compensated or by provision of bread and butter. However, the clarion call of the people is the complete ban and stoppage of these pellet guns in order to prevent the further damage and restore the faith of the people in the system. The government of India should pass a resolution to put a terminal pause to the use of pellet guns in the state of Jammu and Kashmir.

The vital task for the current times is to build a consensus for the total pellet ban. The use of non-lethal methods by the security agencies like water cannons could be the best alternatives. This will not only restore the faith of the people in governance, but also generate a feeling of belongingness among the masses. The bruised scars of the pellets have defaulted the trust of the people in the political system. Although, the situation is worrisome for one and all, but, in which direction the boat sails lies with the future course of action. After all action speaks louder than the words.

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South Asia

Pakistan not a Threat for Israel: Clearing Misconceptions

Uzge A. Saleem

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Ever since 1998; the beginning of Pakistan’s nuclear age, the state’s self-defense mechanism has been a source of worry and unrest for India and the US. Both these states never really accepted that a small state like Pakistan could develop the prestigious asset and was now well capable of defending itself against external threats. US opposed the program on the grounds that it had been tested after the signing of NPT and that it is an “illegitimate” program. Their basic concern was Pakistan not being a party to NPT and US non-proliferation efforts failing. India, though very much against the program, could not openly oppose it on the same grounds because its own Nuclear Program had the same issue i.e. it was tested after the signing of NPT and they had also not signed the treaty.

There  are  a  lot  of  ambiguities  surrounding   Pakistan’s  nuclear  program  which  are  there intentionally for the benefit and security of the program and state. However, there is one thing which has been kept very clear since day one and that is the Indo centric nature of Pakistan’s nuclear program. The program was developed because the conventionally strong next door neighbor had developed their program. Pakistan, in an attempt to ensure territorial security, had to develop its own program as well. US, China, Russia, France or the UK were never a threat to Pakistan nor was Pakistan on their attack agenda. India on the other hand was in close territorial proximity, a historic enemy, conventionally stronger and now also a nuclear power. After evaluating all these factors any national strategist would suggest a nuclear program for Pakistan and that is exactly what the state did.

There have been news in an Israeli newspaper,  Haaretz, that Pakistan is more of a threat to Israel than Iran. This was published on 20 May, 2018. The grounds for this allegation have been identified  as  Pakistan’s  growing  arsenal  and  other  similar  reasons  which  have  always  been popular in the western policy circles. Iran, a conventional enemy, one with which there have been numerous conflicts, has been ruled out as a threat to Israel since they do not have a nuclear arsenal.

However, there are many concrete facts that have been ignored in this propagating debate. For instance Pakistan has had no wars with Israel. Both the states have never even been on the verge of an all-out war. The states have never even had a conflict that could’ve led to war. Although Iran does not have  a nuclear arsenal at present but that did not stop the states from indulging into conflicts before and although initiating a nuclear war might not be a possibility for Iran but a conventional war is very much within their skill set.

Pakistan is already indulged in a two front defense strategy on its eastern and western borders. The Taliban threat from the west and the ever present Indian threat from the east, particularly along the  line of control is already consuming most of the state’s energy, attention and resources. Under such circumstances, jumping into any sort of venture as far as Israel without any apparent or direct conflict seems like an amateur move which is not expected from Pakistan whatsoever. If any linkages are being made based on the fact that Iran and Israel have cordial ties then they are weak to begin with. On the other hand India and Iran have more than friendly ties and India’s nuclear arsenal is growing rapidly with the US help. However, this does not mean that just because India is a nuclear state and a friend of Iran, it will be inclined to attack Israel.

Pakistan’s nuclear program is solely for the safety and security of the nation against any external threat.  The program  is not for the state  to pick  and choose  enemies  and start  non-existing conflicts. That is definitely not how Pakistan intends to use its resources and deviate from the real agenda which is to protect the state of Pakistan. The only condition under which Pakistan would use its nuclear weapons against any state would be if they choose to attack the territory of Pakistan in a nuclear or non-nuclear manner. The state has been absolutely clear about this from the very beginning of its  nuclear era.

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Behind Indo-Pacific Vision

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Mike Pompeo’s recent speech titled, ‘America’s Indo-Pacific Economic Vision – at the Indo-Pacific Business Forum’ at the US Chamber of Commerce, Washington DC has been carefully observed across Asia.  Beijing has understandably, paid close special attention to it. Pompeo emphasized on the need for greater connectivity within the Indo-Pacific, while also highlighting the role which the US was likely to play (including financial investments to the tune of 113 Million USD in areas like infrastructure, energy and digital economy). The US Secretary of State while stating that this vision was not targeted at anyone, he did make references to China’s hegemonic tendencies, as well as the lacunae of Chinese connectivity projects (especially the economic dimension).

The Chinese reaction to Pompeo’s speech was interesting. Senior Chinese government officials were initially dismissive of the speech, saying that such ideas have been spoken in the past, but produced no tangible results.

An article in the Global Times ‘Indo-Pacific strategy more a geo-political military alliance’ response is significant. What emerges clearly from this article is that Beijing is not taking the ‘Indo-Pacific vision’ lightly, and neither does it rule out the possibility of collaboration. The article is unequivocal, in expressing its skepticism, with regard to the geo-political vision of the Indo-Pacific vision. Argues the article:

While the geopolitical connotation of the strategy may lead to regional tensions and conflicts and thus put countries in the region on alert

It is optimistic with regard to the geo-economic dimension, saying that this would be beneficial, and would promote economic growth and prosperity. What must be noted is that, while the US vision for ‘Indo-Pacific’ has been put forward as a counter to the Belt and Road Initiative (BRI), the article also spoke about the possible complementarities between the US vision for ‘Indo-Pacific’ and China’s version of BRI. While Mike Pompeo had spoken about a crucial role for US private companies in his speech, the article clearly bats in favor of not just between Indian, Japanese, Chinese, US governments as well as companies. This is interesting, given the fact that China had gone to the extent of dubbing the Indo-Pacific vision as the foam on the sea” “that gets attention but will soon dissipate”

While there is absolutely no doubt, that there is immense scope for synergies between the Indo-Pacific vision, and BRI especially in the economic sphere. China’s recent openness towards the Indo-Pacific vision is welcome, but one of the propelling factors is the growing resentment against the economic implications of some BRI projects. While in South Asia, Sri Lanka is a classical example of China’s debt trap diplomacy, where Beijing provides loans at high interest rates (China has taken over the strategic Hambantota Project, since Sri Lanka has been unable to pay Beijing the whopping 13 Billion USD). Even in ASEAN grouping, countries are beginning to question the feasibility of BRI projects, Malaysia which shares close economic ties with Beijing is reviewing certain Chinese projects (this was one of the first steps undertaken by  Mahathir Mohammad after taking over the reigns as Prime Minister of Malaysia).

Second, that while for long the Indo-Pacific Vision has been dubbed as a mere ‘expression’ and one of the criticisms has been a lack of gravitas in the economic context (and even now 113 Million USD is not sufficient). Developments over recent months, including the recent speech, indicate that The Department of State seems to be keen to dispel this notion that the Indo-Pacific narrative is bereft of substance. Here it would be pertinent to point out, that Pompeo’s speech was followed by an Asia visit (Indonesia, Malaysia, Singapore).

Countries which are key stakeholders in the Indo-Pacific narrative need to keep in mind the following:

US needs to walk the course and apart from investing, more it needs to think of involving more countries, including Taiwan and more South Asian countries like Sri Lanka and Bangladesh in the Indo-Pacific partnership.

Second, the Indo-Pacific speaks in favor of democracy as well as greater integration, but not only are countries becoming more inward looking, even their stand on democracy, and Human Rights is ambiguous.  Japan is trying to change its attitude towards immigration, and is at the forefront of promoting integration and connectivity within the Indo-Pacific. Neither US, nor India, Japan or Australia have criticized China for its excesses against the Uighur minority in Xinjiang province.

Finally, there is scope for China to be part of the Indo-Pacific, but it needs to look at certain projects beyond the rubric of the BRI. A perfect instance is the Bangladesh China, India Myanmar BCIM Corridor which India was willing to join, but China now considers this project as a part of BRI.

Conclusion

In conclusion, Beijing can not be excluded from the ‘Indo-Pacific’ narrative, but it can not expect to be part of the same, on its own terms. It is also important, for countries like US and India to speak up more forcefully on issues (within their domestic contexts, as well as external) pertaining to Freedom of Speech, Human Rights and  immigration issues, given that all these are essential for a ‘Free and Open Indo-Pacific’

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