Economic Highlights

New Delhi, 15 January 2024

Budget &The Voter

HOPES FROM ‘BARE-BONE AFFAIR’

By Shivaji Sarkar 

The Union Budget 2024 may not be a glittering box butcould reveal a lot on the Hindutva economy driving the country on to the fast track. It may not be populist but may have lot for the electorate of ‘New India.’ 

Over the decades a norm has evolved of presenting an interim budget lest the incumbent government could take an advantage in elections. Being the election year, it does not prevent the new budget from coming out with certain surprises as the Constitution does not have any provision for an interim statement of accounts. It will be in that sense a normal budget and the government is within its right to include any proposal. 

It may spring surprises and consolidate the Hindutva importance on swadeshi-led overall growth creating bonanza for investments. All sectors of industry and finances may have a platter and it may go far beyond hackneyed tax reforms.There is elation in official circles about the GDP numbers that is hoped to touch 7.3 percent and a four trillion level. The questions on calculating methodology,however, are disposed as theoretical. 

Some sections of the media announced the income tax limit would be raised to Rs 7.5 lakh to lure the voters, but it wasdenied later. People, however, forget that with the last raise in the limit, the effective exemption is around Rs 7 lakh. So, it does not require an announcement.Finance Ministry officials indicate that the interim budget may have a waiver of tax collected at source (TCS) on individual overseas credit and debit card expenditures up to Rs 7 lakh a year. This is in the realm of speculation and helps only the most affluent.  

There are hopes that in view of the impending elections and unpopularity of the vehicle scrapping policy, government might extend the lives of the vehicles, particularly cars and tractors, as these hit largely the lower strata, or upcoming middle class and farmers the most. This apart it is being said that such vehicles have the lowest emission level of around 1 percent and are no way the polluters. 

The western Uttar Pradesh farmers, strong supporters of BJP, are up in arms to protect their diesel tractors. It is hurting the country’s economy. Most in the government and even in the organisations related to the NDA want that such moves which lead to unpopularity must be rectified. They believe that it gives the Opposition an edge on populist issues such as vehicle scrapping, apparently a move by the automobile makers’ lobby to boost their profits. Besides, farmers are sensitive to many new developments. Their Kisan Samman Nidhi or farmers’ pension of Rs 6000 a year may see an increase to Rs 8000. The allocation of Rs 60000 crore a year might go up in the range of Rs 70000 crore. 

While putting curbs on diesel in the country, exports of diesel by private refineries, including the Russian refinery in India, Nayara, have increased manifold to Europe and the US as their profits swell. Transporters and others want restrictions removed on domestic use of diesel and diesel vehicles. They have also repeatedly said that car scrapping is unique to poor India. Nowhere in the world, even in affluent US or Europe, vehicles are scrapped, and these are allowed to ply for 40 years as scrapping hurts generation of wealth. It may be a good move and help poll more votes, but whether it’s going to happen now is anybody’s guess. 

Concerns have been expressed over the high petrol road cess and tormenting road toll collections. The NHAI needs about Rs 1.25 lakh crore a year, but the total collections are several times more in the range of Rs 7 to 10 lakh crore a year. This is stated to hurt businesses. Transporters want it replaced by an annual contribution on each truck and allowing free movement of non-commercial vehicles. Lower rates and no toll gate are also stated to check inflation and boost domestic tourism industry. These potent issues could have positive impact in the elections. 

Some of the key political concerns are the poor, women, youth, farmers, and tribals, as the BJP-NDA aims a third term in office over Prime Minister Narendra Modi’s stress on ‘inclusive growth’. The Union Budget 2023 too had stressed on these sectors. It is believed to have paid dividends politically in the recent elections to five States--Madhya Pradesh, Rajasthan, Chhattisgarh, Telangana and Mizoram. 

There is speculation that schemes meant for these sections of society might get more emphasis. Education and skill development might get attention to address the aspirations of the youth. The youth at age 18, comprising the first-time voters, are considered an asset for the Sangh Parivar. Similarly, many more welfare schemes for women are likely to be formulated. 

Recall, the Congress too had eyed these issues, particularly aimed at the women in Madhya Pradesh and Rajasthan along with lowering LPG cylinder prices. It would be interesting to watch how Finance Minister Nirmala Sitharaman tailors her budget speech on February 1 on this focal point. Political concern for women is also because it’snow believed that they direct the polling trend significantly. Earlier, this was the male preserve in rural India. Now vocal women are said to challenge the male domination and often youth and rural farm workers are getting swayed by their opinion. 

Additionally, tribals and other backward classes have stood largely with the ruling combine. It might not be a surprise to see special programmes being announced for them. Prime Minister Modi while flagging off the Vikasit Bharat SankalpYatra at Khunti in Jharkhand had specifically mentioned that some sections which were not beneficiary of many schemes would now be on government’s agenda. They may get a substantial share of allocations and it could be the same for the hills and the North-East.Ekalavya Model schools too may get further attention to connect with the people in remote areas. 

Sitharaman herself has downplayed expectations stating that it would be a “bare-bone affair”. This means the major concern is to have the appropriation bill passed to keep the wheels moving till June. Practically it may focus on fiscal discipline, check on expense limits, no major tax reforms though populist policy shift and future path reset is possible. It could do certain course corrections to address the growing debt for an economy touching four-trillion mark. Many hopes even from bare bones!---INFA 

(Copyright, India News & Feature Alliance)

Events & Issues

New Delhi, 13 January 2024

National Rail Plan

WIDER EXPANSION CRUCIAL

By Dr. Oishee Mukherjee 

Amid the decade when there is a cry the world over to lower emissions, it is but necessary that more attention to be given to railways. Its recent plans have evoked much interest. As there is a crisis in getting a confirmed ticket in the place and class of one’s choice, there is an imperative need for wider expansion of the railway network in India. 

It was heartening to hear that there has been a decision to run 3000 additional mail, express and passenger trains in the next four-five years to tackle the huge problem of wait-listed passengers who cannot undertake their journeys. Obviously, it is expected that the expansion would be in the routes where there is lot of congestion, mainly in the metros of Mumbai, Delhi, Bangalore, Kolkata, Hyderabad and various tourist centres. Currently, around 500 crore passenger trips are undertaken annually and this is likely to touch 1000 crore in the next five years.   

The second major development follows from the first, i.e. to increase the number of trains, there are plans to augment track capacity. In fact, recently Prime Minister Modi flagged off 6 Vande Bharat Express trains and 2 Amrit Bharat trains. The railways proposed a Rs 4.2 lakh crore mega plan for multi-tracking of seven high density corridors – Delhi-Howrah, Mumbai-Howrah, Delhi-Mumbai, Delhi-Guwahati, Delhi-Chennai, Howrah-Chennai and Mumbai-Chennai – for introduction of faster passenger trains and quicker movement of freight. This is, necessary as the speed of trains is quite slow compared to global standards and very slow compared to the Western nations.  

The Railways Ministry from 2024-25 to 2033-34, plans to lay third and fourth line on different stretches of these corridors according to the traffic demand. The plan also includes construction of flyovers and underpasses, among plans to introduce more modern trains like Vande Bharat with sleeper facilities that have a maximum design speed of 220 kmph. In all 233 projects have been identified that need to be undertaken on these corridors, which have breached the saturation point and 200 such works will be completed in the first phase—in next three years. 

Union Railway Minister, Ashwini Vaishnaw, outlined the transformative impact of seven multi-tracking projects valued at Rs 32,500 crore, which received Cabinet approval. These would propel the Railways into a new era of efficiency and capacity expansion, with combined length expected to add 2,339 km to the existing rail network. 

The envisioned outcomes are not limited to mere expansion but extend to relieving congestion and enhancing operational efficiency, across 35 districts, spanning States of Andhra Pradesh, Bihar, Gujarat, Jharkhand, Maharashtra, Odisha, Telangana, Uttar Pradesh, and West Bengal. Apart from the infrastructure enhancements, these projects are anticipated to augment freight capacity significantly, accommodating approximately 200 million tonnes of additional freight traffic annually. 

Though in tune with the National Rail Plan (NRP) for India, 2030, overall capacities are being augmented, both in passenger and freight traffic, there is need to think about affordability of all sections of the population. Indian railways has a huge network but the average speed is one of the slowest in the world. The need for faster trains can’t be doubted but fare structure must be such that it’s affordable, at least to the middle-income sections. The fare of Vande Bharat trains is higher than those of the Shatabdi and the dynamic fare system makes it still higher. 

Under the Rajdhani pricing system, the base fare jumps by 10% for every 10% seats booked, with a ceiling of 50% hike above the base fare. Unless the dynamic fare structure is changed, travel by faster train will remain high and beyond the capacity of a large section of people.  Thus, in planning more mail and express trains, there should be faster trains like Amrit Bharat Express trains that are affordable to the lower income sections and EWS facilitating their travel to their native villages. 

It can be admitted that a major milestone in the journey of the railways is the development of automatic electronic block signalling systems at railway stations. The automatic signalling system has been installed in 530 kms during 2022-23, as compared to 218 kms during 2021-22, registering an increase of over 143 per cent. This takes a lot of care in increasing line capacity and safety measures on tracks. 

The government in the past few years also focussed on doubling of tracks with the purpose to reduce or minimise train traffic. In budget 2023-24, Indian railways has allotted Rs 30,749 crore just for doubling of railway tracks. This has not only improved operational efficiency but also allowed for smooth movement of trains.  

In building the much-needed infrastructure, huge financial requirements are necessary for which resource generation needs to be found. In this regard, upgradation of stations and giving space to the private sector has been a major initiative. With over 400 redeveloped railway stations, these spaces are now mostly congestion-free with non-conflicting entry and exit points. As per figures available, Andhra Pradesh has 72 stations for transformation, Bihar 86 and Gujarat 87 railway stations for upgradation among other states. Another source of generating revenue is upgrading the retiring rooms, with deluxe facilities, and increasing their number so that both people on official work as also tourists can use these. 

Though there could be a rise in passenger and freight fares, which have already happened, there is a need to look into amenities, which are much below standards. The unclean toilets of mail/express trains, specially in the sleeper coaches, not to speak of the unreserved ones, has to be improved with proper maintenance to ensure adequate supply of water during the full course of the journey. 

A more disturbing development is the occurrence of frequent accidents, which even after a lot of progress in automatic signalling has not been curbed. Special efforts need to be given in ensuring that accidents do not happen, and the unmanned tracks cannot be allowed to continue. 

Finally, modernisation and expansion of railways in the country is imperative and has the potential to boost up economic growth and bring about social integration. The priority given to railways has been a right decision of the ruling dispensation and it is expected that the network, performance, speed, passenger facilities and safety measures would be taken care of in the coming years.  ---INFA 

                   (Copyright, India News & Feature Alliance)

REWIND

New Delhi, 11 January 2024

Opposition Is Coming Alive

By Inder Jit

(Released on 21 October 1980) 

New aspects of our national life have caused thinking democrats greater concern in recent months than the state of the Opposition. Mrs Gandhi, many have felt over the months, was lucky in getting a massive majority in the Lok Sabha on a minority mandate. But she has been luckier having on Opposition which is not only divided and in disarray, but to quote a veteran observer, is “stupid and impotent”. Happily for these democrats, the situation is beginning to change and look up. It is no longer as hopeless. After months of distressing inactivity and despair, the Opposition is showing signs of coming alive again. Moves are afoot for joint action against the Congress (I) “misrule and abuse of power”--- and Mrs Gandhi’s failure to provide a Government that works. Simultaneously, efforts are on both openly and behind the scenes for forging some understanding among the Opposition parties. Unlike in the past, no one talks these days of Opposition unity or alliances. The emphasis is now on realism and pragmatism --- at least in talk. 

Mrs Gandhi showed between March 1977 and the end of 1979 how an Opposition leader and party could function. The 1977 poll cast her in the dumps. She was written off by almost all the party leaders, political analysts including myself, and the people at large. Even prominent Congress (I) men quietly went along with the assessment. But Mrs Gandhi determinedly rode back to power with a bang. Many were bitterly critical when following her defeat she turned up unannounced at an Arab national day reception in response to an invitation sent as a matter of courtesy. In retrospect, however, the message she put across was clear --- a message which eventually helped her to win back the support of the Muslims at home. (Remember, the banquet hosted in honour of Mrs Gandhi by the Saudi Ambassador in New Delhi on the eve of the Lok Sabha poll.) Not a few ridiculed her visit to Belchi atop an elephant and her efforts to woo the Harijans. Here again she proved right and the others wrong. 

Many scoffed at Mrs Gandhi’s decision to split the Congress early in 1979 and felt that this would hasten her end politically. But here, too, her strategy yielded rich rewards. Few then saw the real purpose behind her surprise move. It, no doubt, cut her strength in the Lok Sabha to less than half and ended her party’s pre-eminence as the official Opposition. But it gave her a well-knit and committed task force. (“What counts in a fight ultimately”, analysed a Congress (I) leader, “is the strength of the stick, not its length”.) Thereafter, she utilized every opportunity in Parliament to hit at the Janata Government. Mr C.M. Stephen’s disenchantment with the Congress (U) was exploited to get for her group one of the Lok Sabha’s most effective Opposition leaders ignoring the fact that he had strongly supported her expulsion from the party. Much else followed and Mrs Gandhi shrewdly got a great deal of mileage out of both the Kanti affair (thanks to the tactless Morarji-Charan Singh correspondence) and her expulsion from the Lok Sabha -- and imprisonment. 

The Opposition has of late started planning popular campaigns to assert its identity --- individually or collectively. A six-party front has been formed at the national level comprising CPM, CPI, Forward Bloc, RSP, Lok Dal and Congress (U) for united action on three specific issues initially --- rising prices, communalism and civil liberties. The state units have been left free to formulate their own programmes and also to choose the participants in the light of local compulsions. The Front has, for instance, persuaded the Janata Party to join hands with it in Maharashtra even though it has chosen to keep aloof at the national level. More than one lakh persons have courted arrest in Maharashtra and Tamil Nadu to protest against rising prices. The Bharatiya Janata Party has, meanwhile, launched on its own a movement against the National Security Ordinance all over the country. 

Simultaneously, efforts are on among erstwhile constituents of the Janata to revive the old party as an alternative to the Congress (I). (Contrary to a popular impression, the six parties constituting the Left Democratic Front have not come together. “We are not a front or an alliance for fighting the elections or forming a government”, EMS told me. “Haste, as the Janata experience shows, can become counter-productive. We, therefore, prefer to move slowly.”) A convention of four middle-of-the-road democratic parties --- Congress (U), Lok Dal, Janata Party and the Janata(S) was held in Patna on October 7 for evolving a national alternative. An eight-man committee was formed to sound the respective party High Commands on the desirability of their merger. Significantly, it warned the four High Commands that if they failed to bring about a merger by December 31, another state level convention would be held in January to take a concrete decision. 

The outcome of the move is anybody’s guess. But it should not be dismissed out of hand simply because the initiative has been taken at the state level. Important persons, who enjoy status in their respective parties, are actively involved in the new exercise. They include Mr S.N. Sinha (Janata), Mr S.N. Mishra (Lok Dal), Mr Abdul Ghafoor (Congress-U) and Mr Bhola Prasad Singh Janata(S). Furthermore, the exercise is not isolated. Exploratory talks in the same direction have taken place in Uttar Pradesh, Maharashtra, West Bengal, Rajasthan and Karnataka. Similar conventions are proposed to be held in the other states. True, a section of the leaders in all the four parties is opposed to the move. Some even tried to sabotage it at the start. (Mr Madhu Limaye, for instance, got Mr Karpoori Thakur to stay away from the Patna convention. Mr S.N. Mishra and a few others, however, went ahead.) But the second-line leadership, by and large, is not averse to the idea. 

Most of the younger leaders in the four parties appear agreed on the broad diagnosis of the disease. The Janata, they argue, collapsed because of the clash of personal ambitions between Mr Morarji Desai, Mr Charan Singh and Mr Jagjivan Ram. Several others played the game of the three leaders in the hope of promoting their respective interests. (Most ministerial plums in free India have gone to people on the basis of who is with whom and not strictly on the basis of merit or who can handle which job.) Things, it is said, may not have come to the tragic pass they did in 1979 if only an interesting suggestion informally made by the President, Mr Sanjiva Reddy, to the three top leaders had been accepted by them. Mr Reddy, I now learn, proposed at one stage that all the three might hold the office of Prime Minister for equal periods in turn as had been done in Japan among the members of the ruling alliance on occasions. 

What of the remedy? Opinions vary. The younger leaders in the Lok Dal, Congress (U) and Janata (S) feel there should be no difficulty in their coming together with the Janata, thanks mainly to the common Congress culture, provided the “oldies” are willing to call it a day. But the latter is easier said than done. There is little likelihood of either Mr. Charan Singh or Mr. Jagjivan Ram and other top Congress (I) leaders retiring. Mr Morarji Desai alone has indicated his decision not to accept any office. This has enabled the Janata to be one up on the others and to think and plan in terms of offering itself as an alternative to the Congress (I). As a Janata leader summed up: “We have the potential, even if we lack the inherent strength today. We offer a young, collective leadership. We have a clean image. And, we are working hard to build up an organisation from the grassroots. We shall be glad to welcome back old friends and seek the cooperation of new ones on a selective basis.” 

Ultimately, however, the battle of the alternative, so to say, will not be won by any fresh unity or the creation of an alliance or front. The outcome will depend upon the ability of the Janata with or without the other parties, the BJP, which has homogeneity and dedicated cadres, and the Left Front representing the Communist culture to win back credibility among the masses and to function effectively as the Opposition. Parliament offers a powerful forum for exposing the Government and influencing the people. Mrs Gandhi used it to great advantage. But the Opposition has not been able to push the Government into the dock even where overwhelming facts, as against allegations, have been laid bare in various scandals. Issue after issue is raised each succeeding day by the Opposition in the two Houses. But nothing is done to pick on one or two and follow them up effectively. Not enough is being done outside either. Coming alive is fine for the Opposition and welcome. But this by itself will not do. The Opposition must plan its strategy and tactics. It has still much to learn and unlearn. ---INFA

(Copyright, India News & Feature Alliance)

Spotlight

New Delhi, 11 January 2024

Of Poverty & Inequality

POLL PROMISES DON’T USHER CHANGE 

By Dr. S.S. Chhina

                                (Senior Fellow, Institute of Social Sciences, New Delhi)                                           

The New Year demands introspection by the ruling dispensation whether the world’s largest democracy has made the progress in the right direction. Since 1952, when the first general election was held in India, the process to make promises got started. All the political parties made a number of these, mainly concerned with removing unemployment and creating social and economic equality in the society. But inequality, poverty and unemployment went on thriving, similar to the surge in poll promises. Actually, inequality of income is itself an impediment for development and prosperity. The impression is given in every election that there would be perfect equality, full employment, and prosperity after these are done. But the situation has sadly remained more or less the same as it was seven decades earlier. 

Income inequality, unemployment and poverty -- all the three factors are closely related with each other, wherever there is unemployment there is poverty and this unemployment is based on income and wealth inequality. When there are very rich, which are few on one side and large number of poor on the other, the level of effective demand is low. The rich people save much, but whatever is not spent it does not become the income of the others. The gap between total income and total expenditure went on thriving. 

When the previous goods and services do not sell, there is no need to prepare for the new ones, no need of more employment, rather there is retrenchment among the existing employed people. It leads to the vicious cycle of poverty. People are poor as they do not have employment. As the income is declining, the demand is declining, surplus production leads to unemployment. This vicious cycle is required to be broken for sustainable development, but it’s possible only if there is equality of income and wealth. 

The countries having equality of income are prosperous, there would be full employment, social security and higher rate of development along with sustainable development. But the countries having inequality are suffering from stagnation, unemployment and poverty along with other economic and social evils. In 1929, when the world was facing big depression, its cause was diagnosed as the lack of effective demand and the remedies suggested were aimed to raise the demand either through credit, instalments and generation of jobs in public works, because private entrepreneurs were not coming forward because of the declining demand. The then Soviet Union was the only socialist country at that time, but the great depression had no impact on its economy and it was developing with a satisfactory rate of growth. 

After Independence, measures were introduced to create equality of income and wealth. The Constitution prescribes establishing the socialistic pattern of society in its directive principles of State policy. Public sector enterprises were started. But inequality went on rising. According to a report in 1939-40, 1% of the population was holding 20.7% of the wealth. But at present because of the surge in inequality, 1% of the rich population is holding 58.4% of the wealth. 10% of rich population is holding 80.7% wealth of the country. In 2017, the 73% of wealth rose for only 1% of population, whereas 67 million that includes 50% more poor population, realised only 1% hike in their wealth. 

At the time of independence 75% population of India was engaged in the profession of agriculture but there was the ‘Zamidari’ system. There were landlords holding thousands of acres of land on the one side and the land-less tenants on the other side. The Zamindari system was abolished and the ceiling on the upper limit of land holding was imposed ostensibly with two objectives, one to create social equality and second to make the best use of land. But was equality in respect of ownership of land created? No, the situation presented by Punjab shows that the objective of equality could not be realised by this act and similar is the situation in other States. 

Punjab is the dominant farm state. In all 33% of the holdings possess less than five acres of land, but this number of holdings are having only 2.36% area of the State. On the other side there are only 5.28% of the holdings which have their farms above 25 acres of land but they possess 21.68% area of the State. The aspect of inequality of wealth is palpable in the ownership of the land holdings. The large holdings do not belong to the peasants  but with the persons who are engaged in other professions than farming. It also vindicated the concept that imposing of ceiling on land could not yield the desired results. 

When the upper ceiling on land holding was imposed, it was suggested by many social reformers that ceiling on urban property should too be imposed, but this suggestion could not be approved on the plea that it would adversely affect the industrial growth, where India was already lagging much behind. 

But this yielded another form of inequality in the country. Some of the residential houses are sprawling in acres, whereas there are four/five families living in 100-yard plots. There are 80 million people in the country that do not have any house, and are spending their lives in huts on the roadside. They have no reach to purchase the land and the prices of these plots are thriving because of the fact of inequality in income and wealth. 

The situation explained above makes it clear that entrepreneurship in Indian population has its constraints because of inequality. Everybody can not venture to start his enterprise even if he/she is capable with his/her abilities. Inequality in income, minus the large number of able entrepreneurs to contribute for the development of the country and welfare of society. The entrepreneur is mainly interested in securing his interest and protect himself from any financial risk, where regular sale of his product is the most crucial factor. But the low effective demand discourages new entrepreneurs. Number of times the concessions for the foreign investment are announced, but it had been observed that the response of the foreign investors is dismal only because of the low demand for number of products which are beyond the purchasing power of the large number of consumers of the country. 

As inequality of income hampers the employment opportunities it generates the number of social problems also like drug addiction, child labour, exploitation of women, cheating and theft and snatching. All such evils are stalemates in the interest of the new entrepreneurs. Child labour is a big menace in the country. There are about 30 million child labourers and the number is further thriving. Unemployment , poverty, debt, illness of the parents are the causes for this menace. Thus, child labour cannot be called employment, rather it is a crime. Nowhere in the developed countries such child labour is visible, as it’s due to equality in income. There is a need of statesmanship, to galvanise a proper economic system that may assure the alleviation of inequality. Only then will the other reforms follow automatically. Promises are only hollow. ---INFA 

(Copyright, India News & Feature Alliance)