Union Cabinet gives nod to black money bill

Union Cabinet has cleared the black money bill to curb the menace of black money in the country. Decision in this regard was taken at the cabinet meeting in New Delhi.

Union Government is seeking to introduce this bill the current budget session of Parliament.

Some provisions of bill

The proposed bill gives powers to tax authorities to track and deal with illegal wealth stashed abroad.

Under the provisions of the new Bill, the offences related to black money will be non-compoundable and the offenders will not be permitted to approach the Settlement Commission.

The bill also has provision of punishment to deal with the black money cases. It proposes penalty at the rate of 300 per cent of taxes to be levied on the concealed income and assets, in addition to 10 years rigorous imprisonment.

Union Cabinet also gave its nod for signing of an agreement with the US on the Foreign Account Tax Compliance Act (FATCA). The agreement will enable India to acquire information on big foreign transactions and indirectly curb black money stashing.

Apart from these decisions, Union Cabinet also approved to release of 33,000 crore rupees in tranches to states and Union Territories (UTs). These tranches will provide compensation to states and UTs for revenue loss on account of phasing out of Centre Sales Tax, CST for the three financial years up to 2012-2013

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#MUDRA Bank: A catalyst for India's 10% GDP growth

The mandate that the Narendra Modi government was emphatically given in May 2014 by the people of India, was a mandate for change and a break from the status quo; change in our governance and politics, as well as a change in the economic architecture, growth and inclusion.

While the Modi government's first Budget was a status-quoist, placeholder Budget, the Budget in 2015, the government's first full year Budget, is surely redrawing the economic architecture of the country.

The Indian economy is structured as a pyramid, with the rich and middle class as the top two layers of the pyramid and the bottom being the poor, which has been the political focus and the 'intended' recipient for several thousand crores of spending by successive governments. The spending on 'programmes' has continued with little or no change, despite evidence of rampant corruption, leakage and an increasing culture of entitlement rather than enterprise that has taken root in our country. It is this Budget that has started the process of restructuring and developing a more effective way of targeting these spends through its JAM (Jan Dhan-Aadhaar-Mobile) platform.

For all these years, a big part of this economic pyramid has been ignored by the spend-and-forget strategy. This slice of our country's population, amounting to several hundred million jobs rooted in enterprise and hard work, is referred to as the non-corporate or informal sector. For the purposes of this article, I will refer to it as the informal sector.

The Economic Census Survey of 2012 revealed the scale and magnitude of what we have been ignoring for several decades. There are 57.7 million enterprises in India, and it generates employment for 460 million people, of which 262 million people are self-employed. That this long ignored informal sector is a significant part of our economy is obvious from the following statistics. It accounts for 90 per cent of our non-agricultural workforce, 50 per cent of the gross domestic product (GDP) and 40 per cent of the non-farm GDP. This informal GDP is almost completely out of the direct tax net and lacks any formal form of access to credit or risk capital to allow it to grow and join the mainstream economy. A recent Credit Suisse report stated: "Unlike in developed economies, where informality is a deliberate choice to avoid taxation or regulations, in India it is more structural, a reflection of the lack of development and limited government reach."

Reports have concluded that Indian GDP can be raised by almost 15 per cent if the informal sector data is incorporated in the GDP series. Yet, only 4 per cent have access to institutional credit, with loans between Rs 50,000 and Rs 10 lakh almost impossible, forcing them to go to moneylenders. The non-corporate sector faces stiff competition from larger firms, and are further impeded by the lack of infrastructure and access to easy credit. They are often unable to procure adequate financial resources for the purchase of machinery, equipment or raw materials.

Bringing in the informal sector into the formal has many advantages for both business and economy. It is precisely to address this large population of Indians that have been kept out of the economic radar for the last six decades that the Budget has proposed the Micro Units Development Refinance Agency (MUDRA) Bank, which will be set up with a corpus of Rs 20,000 crore and a credit guarantee corpus of Rs 3,000 crore to help microfinance firms to lend more.

The MUDRA Bank will boost loans and cut borrowing costs for the cash-starved domestic small businesses. It will create a framework that regulates and provides refinancing capital flows to micro-finance institutions that are in turn in the business of lending to micro/small business entities engaged in manufacturing, trading and services activities. This will create and expand the financial ecosystem that is a source of capital and finance to the unbanked and also reduce the cost of capital from the last-mile financers to the micro/small enterprises, most of which are in the informal sector.

The 'change' to our economic architecture could be deep and transformational. It involves funding the unfunded, and unlocking the potential of a new pool of entrepreneurs and future taxpayers in this country. It is encouraging for entrepreneurship across the economic strata. It is using micro finance, an economic development tool whose objective is to assist the lower income groups to develop and grow their small businesses, many of whose owners are traditionally excluded communities such as Scheduled Castes, Scheduled Tribes or other Backward Classes, who own almost 60 per cent of all enterprises in this sector. It represents a real way to make the dreams of millions in the informal sector, long neglected and ignored, a reality. This formalisation of the informal sector would expand the tax-GDP ratio and expand the number of taxpayers and, in turn, government revenues.

This government is right to see the potential of this sector to drive up jobs and taxes. It has realised the force multiplier impact on the economy and tax revenues by a successful formalisation of the informal sector. It has realised the failure of both the Reserve Bank of India and the banking system in credit-supporting this sector. This also is core to this new economic philosophy of supporting enterprise wherever there is a desire for that in our economy, while continuing with better targeted and well-conceived social security framework for the poor and needy. This also marks an end to the Manmohanomics corporate sector-driven growth era and marks a beginning of a deeper and broader enterprise and entrepreneurship-driven economic model. This clearly fits the expectations of 'change' from this government.

India's gold obsession needs a correction

The Union Budget paid special attention to gold. The finance minister outlined a multi-pronged approach to persuade households to stop hoarding the precious metal. Thus, existing gold-loan schemes will be reviewed and tweaked. The government will make arrangements to issue its own goldcoins and biscuits to ease pressure on imports. A sovereign gold bond will also be launched. The compulsions are clear: too large a proportion of savings is parked in an unproductive asset that is, moreover, imported. India imports about 1,000 tonnes or more of gold annually, making this the second largest contributor to imports. In fact, the current account would probably be surplus in 2014-15 if gold imports were to moderate just a little.

HDFC Mutual Fund's Chief Investment Officer Prashant Jain recently drew attention to data that highlight how deleterious the obsession with gold has proved. While receiving theBusiness Standard award for the best equity fund manager, Mr Jain said that in the past 15 years, foreign institutional investors parked $150 billion in Indian equities and India imported over $250 billion worth of gold. During that period,stock market indices gave a return of around 15 per cent a year, while gold gave an annual return of only eight per cent. Hence, India has lost out in terms of investible resources and suffered pressure on the current account, while gold investors have lost out on returns. Each of the proposed Budget initiatives has pros and cons. The devil lies in the details. The sovereign gold bond will be a derivative instrument. Units will be benchmarked to gold prices and fluctuate accordingly in price, while a small interest rate (about two per cent a year) will also be paid. The instrument is to be settled in rupees, obviating the need to import metal. The interest costs will be easily financed by investing the corpus in higher-yield instruments. But this bond also commits to absorbing capital losses in the event of mass redemptions at high gold prices.

Gold-lending schemes already in operation have not proved popular. In these, the investor lends metal, receives interest in rupees and redeems by receiving gold back in the form of biscuits. In theory, lending enables stocks of idle gold to be monetised and used by jewellers, etc. However, much of the idle gold stock has been accumulated with the help of converted black money. Also, no household wishes to hand over jewellery and receive biscuits in return. The new loan proposal would have to be tweaked to take account of these preferences. The success of the third new concept, that of launching indigenous gold coins and biscuits, will depend largely on relative efficiencies. Will it really be cheaper for the Indian government to set up a precious metal mint, or to import customised biscuits in bulk?

The obsession with gold has its roots in Indian customs. But the traditional preference has been compounded by the lack of safe investment options for households. The stock market is perceived as scam-driven; there is no secondary debt market; mutual funds and unit-linked insurance policies have been mis-sold. Finding less damaging ways to satisfy the appetite for gold is no more than treating the symptoms. To change household preferences and persuade retail investors to move their savings back into financial assets, systemic problems across the financial sector must be tackled.

#current affairs-16th march

‪#‎Indianwomen‬ win ‪#‎WorldHockeyLeague‬
Befitting its stature, the final of the Hero women’s Hockey World League Round 2 here on Sunday was the best match of the tournament, and India won 3-1 against Poland at the Major Dhyan Chand National Stadium.

The teams were evenly matched in every department, making it a well-fought and fast-paced contest. While India began aggressively, a confident Poland gradually kept increasing its attacks with well co-ordinated short passes to storm past the Indian defence.

Vandana Katariya finally broke the deadlock in the 15th minute after several close chances were missed. Poland struck back immediately on resumption in the second quarter, Oriana Walasek deflecting home off the team’s first penalty corner. India earned four, but could not convert any.

Rani was the Indian team’s lynchpin, creating most of the chances, earning penalty corners and scoring a brilliant goal from an acute angle on the backline in the 44th minute.

Making a comeback a dislocated shoulder put her out of action for six months, Rani proved her worth with some sharp, accurate passes. Her goal was the impetus India needed at a time when Poland was increasingly threatening to go ahead.

There were some tense moments for India when Poland earned its fifth penalty corner two minutes from time, but it was saved. A minute later, Ritu Rani scored India’s third goal after being put through by Poonam Rani from just outside the circle.

The results: Final: India 3 (Vandana Katariya, Rani, Ritu Rani) bt Poland 1 (Oriana Walasek).

Play-offs: 3-4: Malaysia 3 (Fazilla Sylvester Silin 2, Norazlin Sumantri) bt Thailand 0; 5-6: Russia 9 (Ksenia Shamina 4, Kristina Shumilina 2, Daria Vasileva 2, Marina Fedorova) bt Kazakhstan 0; 7-8: Ghana 2 (Linda Sasu, Elizabeth Opoku) bt Singapore 1 (Ivy Chan).

Kidambi Srikanth wins ‪#‎SwissOpen‬ title
Continuing his rapid rise in the world of badminton, Kidambi ‪#‎Srikanth‬dethroned Viktor Axelsen of Denmark to become the first Indian man to win the $120,000 Swiss Open Grand Prix Gold on Sunday.

The top seed defeated defending champion and second seed Axelsen 21-15, 12-21, 21-14 to clinch his third international title in 21 months. Down with a hamstring injury, suffered in January, the world No.4 missed dozens of practice sessions coming into the European circuit. Despite being knocked out of the All England in the very first round last Wednesday the 22-year-old braved all odds, staged brilliant comebacks and survived several scares to triumph at St Jakobshalle.

Interestingly, this venue was the favourite hunting ground for Saina Nehwal, who won here in 2011 & 12. But Srikanth made up for her absence much to the delight of Indian fans, who used to make Saina cut her birthday cake every year at St Jakobshalle.

"I am extremely delighted to win the title here," Srikanth said after the victory. Asked how important is the title when compared to his earlier victories, he said, "Every title is important for me. I don't want to compare. I only want to win more and more titles."

Green India Mission coverged with #MGNREGA

The government has merged National Mission for a #GreenIndia, which aims afforestation at 10 million hectares of land over the next decade, with MGNREGA to increase and improve the country's forest cover.

Modern technology like remote sensing will be used to monitor the progress of this initiative regularly.

Currently, green works such as water harvesting, afforestation and farm foresty are undertaken under the Mahatma Gandhi National Rural Employment Guarantee Scheme implemented by Rural Development Ministry.

The government is also eyeing at increasing 10 million hectares of forest cover under the 'National Mission for a Green India' being implemented by the Environment Ministry.

"To further synergise these efforts and to collectively address the climate change concerns, the government has come out with convergence guidelines after consulting both Environment and Rural Development Ministries," a senior government official said.

The convergence guidelines sets out the approach to be adopted to strengthen co-ordination at field-level for developing forest cover and improving forest-based livelihoods for about three million households.

According to the guidelines issued by the Environment Ministry, all lands including village common lands, community lands, revenue wastelands, shifting cultivation areas, wetlands and private agricultural lands will be eligible for afforestation under this convergence.

Under MGNREGA, forest works such as pre-plantation, pit digging, planting and watering, fencing, plant support and protection activities, weeding, mulching and manuring the plants among others can be undertaken for afforestation.

State Forest Development Agencies (SFDA) will provide technical advice on plant species suitable for area, raise nurseries and deliver required plant material to each gram panchayat before July each year meeting the cost from MGNREGA funds.

"However, where there is a shortage of funds under MGNREGA, it may be topped up from Green India Mission funds," the guidelines said.

A nation's fortunes are linked to its neighbourhood'

Thank you for coming here in such large numbers. It is a real honour to visit Sri Lanka. Over the course of these two days, I will meet people from all walks of life. For me, this is one of the most important meetings in Sri Lanka.This is because no matter how old and strong the relationship is, economic cooperation is often the locomotive that gives it momentum. It is also important because for all of us in our region, the most important priority is transforming the lives of our people. Our path will be determined by our economic choices and the quality of governance. But business enterprises will remain critical for our success.

I often say that a nation's fortunes are linked to its neighbourhood. There are many in India who would argue that India is too large to need her neighbours. There are many in our region who worry that India's economic size will hurt them. I disagree with both views. For one, we all need a stable and peaceful neighbourhood to concentrate on national development.

I also believe that countries do better when the entire region moves together. I said at the SAARC Summit that barriers of boundaries inhibit progress; international partnerships give it speed. That is why we see a rising tide of regional integration and cooperation across the world. Our region is rich in resources. We constitute a large market. We complement each other. Therefore, our cooperation can be of huge benefit to all of us.

There are already powerful examples in south Asia that show us that differences in size is no constraint to beneficial partnerships, if we use our strengths and seize our opportunities. Bhutan benefits from hydropower exports to India. Nepal has significant manufacturing exports to India - in part driven by Indian investors.

Infrastructure, energy, supply chains, modern manufacturing, tourism and services - there are no limits to our possibilities. I hardly need to tell this informed audience about the transformation that has taken place in India over the past 10 months.

There is new purpose and clarity in our policies, a new vision for inclusive development, new standards in our governance and a new level of energy in our economy.

Last quarter, India was the fastest growing global economy. We are confident that we can grow even faster. The progress of one-sixth of humanity is a major economic opportunity for the world. The global confidence in India has been restored. The world's engagement with India is at a new level. But the first claim on us should be that of India's neighbours.

And, I will be happy if India is a catalyst for economic growth in our own region. That is why I speak of a neighbourhood where trade, investment, ideas and people move easily across the borders.

We will work to integrate our markets more. We will make trade smoother and possible through the most direct routes. We will invest in regional connectivity. And, we will share our capabilities in science and technology with south Asia, from advanced medicines to disaster management or space science. As a friend and neighbour, we attach the highest importance to Sri Lanka's economic progress. Sri Lanka is a nation of many achievements and great strengths. It has education, skills and enterprise. It has an excellent location. And, it has won peace now. Sri Lankan businesses have shown that they can compete with the best in the world. Our garments and tea industry know that!

We are pleased to be Sri Lanka's largest trading partner and one its largest sources of investment. Our Free Trade Agreement in 2000 was a pioneering initiative in the region. It has given a big boost to our trade. Sri Lanka's exports to India have grown sixteen times - yes, 16 times - since then. This is impressive by any standards. I know there are concerns here about the huge trade imbalance.

I am prepared to work with you to address them. I want balanced growth in trade. We will try to make it easier and smoother for you to access the Indian market. Our agreement on customs cooperation is a step in that direction.

Indian investments can also upgrade and expand your infrastructure. It is also natural that Indian investors are more likely to invest here because of familiarity and proximity. They are already here. And, I know that there are many large commitments in the pipeline. They are looking for your support.

During this visit, I have been pleased with progress on Sampur thermal power project and the Trincomalee oil farm. That is good for Sri Lanka's energy security and for our partnership.

We have extended visa on arrival facility to Sri Lanka from April 14, 2015. We should do more to connect our countries by air and sea. India and Sri Lanka were, in some ways, better connected in the past than we are now. In the past, a person could buy a rail ticket in Colombo and travel to Chennai by rail and ferry. Air India's decision to launch a direct flight between our capitals will help reverse that trend. Tourism unites people and creates economic opportunities.

In conclusion, let me return to the point I had made in the beginning. India's progress gives us the ability to create opportunities for our neighbours. Our development partnership has injected commitments of $1.6 billion in assistance from India. That has helped rebuild and upgrade infrastructure in Sri Lanka.

Today, we have offered another line of credit of $318 million for the railways sector. Reserve Bank of India has agreed to provide Central Bank of Sri Lanka a currency swap arrangement for $1.5 billion. This will increase the stability of the Sri Lankan rupee. We will also be supportive in advancing your commercial interests. I believe in Sri Lanka's capabilities. We should engage more. We should open up to each other more and move forward with greater belief in our own strengths.