India is now a $2-trillion economy

India is now a $2-trillion economy

According to a recently released World Bank report, India’s GDP has crossed the $2-trillion mark in 2014 and at present stands at $2.067 trillion. After taking 60 years to reach the $1-trillion mark, India has added the next trillion in just seven years.

What else the report says?

• Going by income, India is still in the lower middle income category.
• India’s gross national income per person has risen to $1,610, which converts to Rs 1,01,430 by present exchange rate.
• India is among the world the fastest growing economies this year.
• Despite its increase in per capita gross national income (GNI), India has remained in the ‘lower middle income’ category ($1,046-$4,125).
• The report also shows that India would become an ‘upper middle income’ country ($4,126-$12,735) in 2026. This will put it in the category China occupies now. But, it will take India till 2039 to reach the ‘upper middle income’ level, at the assumed growth rate.

The World Bank’s data on gross national income per capita show Bangladesh, Kenya, Myanmar, Tajikistan, Mongolia, Paraguay, Argentina, Hungary, the Seychelles and Venezuela have shifted their income categories for the better. For example, Bangladesh, Kenya, Myanmar, and Tajikistan are now ‘middle income’ countries from being ‘low income’ nations.

GNI (Gross national income) is the sum of value added by all resident producers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad.

BLACK MONEY RULES NOTIFIED

BLACK MONEY RULES NOTIFIED

The Union government has notified the rules under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act.

Details of the Notified Rules:

All deposits made in an undisclosed overseas bank account since opening will be clubbed while assets like immovable property, shares and jewellery will be valued at fair market price for levy of tax and penalty under the new black money law.
All overseas income and assets, including the ones voluntarily declared within the 90-day compliance window ending September 30, will be valued in rupee terms.
The fair market value of assets like bullion, jewellery or precious stone, immovable property, drawings, paintings, archaeological collections, and sculptures or work of art, will be “its cost of acquisition” or the price that the asset “shall ordinarily fetch if sold in the open market on the valuation date”, whichever is higher.
As per the rules, for shares and securities, the fair market value will be the higher of the cost of acquisition or average of the lowest and highest price on the date of valuation.
The rules also provide a formula for calculating the fair market value of an unquoted equity shares and provided a methodology for calculating the interest of a person in a partnership firm, association of persons or Limited Liability Partnership (LLP).
The rules also say that in case the person disclosing foreign income does not have a PAN, he or she would be required to apply for it.

Govt releases socio-economic and caste census for better policy-making

Govt releases socio-economic and caste census for better policy-making

The union government recently released socio-economic and caste census (SECC) 2011.

• This is the first paperless census conducted on hand-held electronic devices by the government.

Details of the Census:

• According to the census, there are a total number of 24.39 crore households in the country, of which 17.91 crore live in villages. Of these, 10.69 crore households are considered as deprived.
• The census says that 23.52% rural families have no literate adult above 25 years, suggesting a poor state of education among rural masses.
• The census indicates that one out of three families living in villages is landless and depends on manual labour for livelihood. The deprivation data reveal that 5.37 crore (29.97%) households in rural areas are landless deriving a major part of their income from manual labour.
• As many as 2.37 crore (13.25%) families in villages live in houses of one room with ‘kaccha’ walls and roof.
• 53%, or 3.86 crore, families living in villages belong to SC/ST categories.
• 6% of all rural households in the country pay income tax.
• As for sources of income, 9.16 crore households (51.14%) depend on manual casual labour followed by cultivation (30.10%).
• 5 crore (14.01%) rural families are dependent on income from other sources which include government service, private sector and PSUs.
• 08 lakh households fall back on ragpicking while 6.68 lakh depend on begging and charity alms.
• Transgenders comprise 0.1% of India’s rural population. Andaman & Nicobar islands, West Bengal, Gujarat, Odisha and Mizoram have the highest proportions of transgenders.
• 6% of rural Indians were unmarried, 40% are currently married and 3.5% are divorced.
• Daman and Diu lead the country in the proportion of their rural population that has remained unmarried — at 55.9%, this is far higher than the national average. Chandigarh, on the other hand, has only 23.2% of its population that has never married.

The rural development ministry has taken a decision to use the SECC data in all its programmes.

Data on Literacy:

• The Socio Economic and Caste Census 2011 (SECC) has found that 36% of the 884 million people in rural India are illiterate. This is higher than the 32% recorded by the Census of India 2011.
• Of the 64% literate rural Indians, a more than a fifth have not even completed primary school. The SECC also found that only 5.4% of rural India has completed high school with a mere 3.4% having graduated from college.
• This poor state of rural education is reflected in the fact that 23.5% of rural households had no adults above the age of 25 who are literate – one of the categories of deprivation measured by the SECC.
• The performance within States is hugely varied, with an alarming 47.6% of rural Rajasthanis remaining illiterate, compared to 9.3% in Lakshadweep and 11.4% in Kerala.
• Delhi performs the best when it comes to percentage of its rural population that has completed graduate studies – at 9.6%, its performance is almost thrice as good as the national average.

Cabinet nod to central irrigation plan, national common agri market

The Union Cabinet has cleared the ambitious Pradhan Mantri Krishi Sinchaee Yojana (PMKSY), which, with an outlay of Rs 50,000 crore spread over a period of five years starting from 2015-16, aims to provide irrigation to every village by converging the various ongoing irrigation schemes.

A sum of Rs 5,300 crore has been allocated in the current financial year for the programme. That apart, officials said another proposal from the department of agriculture to create a national common agriculture market, by digitally integrating more than 580 regulated mandis or wholesale markets across the country by 2017-18 with an allocation of Rs 200 crore has also been okayed.

"Both the proposals have been cleared by the union cabinet, but a formal announcement would be made on Thursday," a senior official told Business Standard.

News agency PTI said that the Cabinet Committee on Economic Affairs (CCEA) had also extended by a year the ban on holding of onion stock beyond the prescribed limit. The order empowering states to impose stock limits on traders for holding onion and ban hoarding beyond the set limit, expires on July 2.

Under the national agriculture market scheme, the central government will identify 50 mandis across five states in the first phase, who will granted an allocation of Rs 30 lakh for setting up of hardware and infrastructure for digital integration. The funding will not be available for private mandis, but they will have access to the e-platform. After the rollout in 50 mandis, the implementation would be handed over by Small Farmers' Agribusiness Consortium, an arm of the department of agriculture, to another agency.

GREENER PASTURES

Pradhan Mantri Krishi Sinchayee Yojana with an outlay of Rs 50,000 crore for five years cleared   Scheme to rely on decentralised planning and encourage states to draw up district and state irrigation plans   The plans will focus on three main components which is water sources, distribution network and water use application   In total, 75%of the grant will be given from central government, while states have to bear the remaining 25%   The scheme aims to club investments under several other irrigation programmes under one roof at the field level   The national agriculture market scheme plans to integrate 580 regulated mandis via a common platform in three yrs, with an allocation of Rs 200 crore

ISRO Chairman: New Space roadmap soon, but tackling the backlog comes first

A.S.Kiran Kumar took charge as the eighth Chairman of the Indian Space Research Organisation; Secretary, Department of Space and Chairman, Space Commission in January this year. In his first media interview, the veteran space scientist recently shared with Madhumathi D.S. the urgencies of the 46-year-old organisation and what lies ahead. Edited excerpts:

What is the track you would like to put ISRO on, immediately and in the future?

ISRO has a large number of projects assigned by the government. First, I want to make sure that backlogs, whatever there are, are addressed immediately. My first set of activities has been to take stock of our total deliverables and how well we are prepared to completing them - in communication, remote sensing satellites, launch vehicles or for realising hardware.

A firm action plan is taking shape in the next two to three months ... for completing the tasks already assigned to ISRO in two or three years. Then we will come out with a long-term vision.

Look at what we need to complete, look at what we need to work on in the near future and look a little farther into future - I'm in this process right now.

Could you specify a few priorities?

One of the major [issues] has been the development of the GSLV launch vehicle, [delayed] because of the various issues we faced.

You also have to first solve some of the existing problems - facilities, people, the GSLV Mark II [launcher which uses the indigenous cryogenic engine.] We are streamlining the entire Mk II activity. We have a good visibility for its cryo engine. For the heavy-lift GSLV Mk III, the indigenous development of its cryogenic engine is progressing satisfactorily.

This is the first set of activities I am trying to complete.

Where do you see the challenges?

User demands have been changing a lot, the requirements are far more than before. We have to see how these are [accommodated.] Nobody is going to accept programmes that get delayed for a decade. For example, the IRNSS navigation satellite series should have been completed during the previous Five-Year Plan period [by 2012]. But we will be completing it only by March next year. Likewise we must complete a large number of launches in reasonable time.

In the next one year we have seven launches and want to increase the number beyond that. We have facility bottlenecks. The way people work will also have to change. Everything will have to happen in a much more vigorous way [than until now].

Earlier we were engaging 12-15 departments to use our capability. Now the government is keen on using Space technology-based tools for a much larger number of departments.

It also demands greater industry interactions for getting many more things done.

What is the big picture that you see for ISRO, say by 2025 and beyond?

We should firm up our newer geostationary launch vehicle technology activities. R&D is going on for the semi-cryogenic engine to lift much heavier payloads.

It would obviously be about improving communication capability, transponder availability. We plan to bring in a high-throughput Ka-band satellite. A suggestion is to work with international [partners]. The [four-tonne] GSAT-11 would be our parallel approach.

We would also use two GSLV MkIII flights, of December 2016 and 2017, to demonstrate next-generation satellite technologies.

For the long term the planetary science body ADCOS [Advisory Committee for Space Sciences] is looking at missions such as Mars-2, Venus and a few asteroids. Chandrayaan-2 and Aditya are in progress.

The Reusable Launch Vehicle's technology demonstrator called Hypersonic Experiment is coming up, although the RLV itself will be a long way off.

There is this old grievance about shortage of transponders, mainly for the broadcast industry.

Obviously there are delays of the past. The GSLV development did take time and so also many communication programmes. We are moving on that and increasing capacity. Our ability to provide basic requirements of security cannot be compromised.

When we talk about space-based communication or transponders we should have a vision that is different from completely commercial. We should make sure we have the capability to influence the way things are happening in the country, influence and regulate the huge market, such as in terms of the service cost to the public.

You mentioned having greater interactions with industry. How do you propose to do it?

We are setting up teams to address this and plan to firm it up over the coming months. The objective is to transfer activities wherever we can. Recently the government approved 15 future PSLVs. A substantial portion of these launchers gets done in industry. In the future, may be a full launch, too, without compromising the security aspect.

How do you view the future societal role of Space?

Though there are other significant [land-based] efforts, linking remote places will be possible only through the Space segment. There is a big [Digital India] plan for enabling people down to the gram panchayat level in 250,000 villages with digital data of 20 mbps. About 20,000 villages are difficult to reach.

As the provider of the Space infrastructure, we would have a significant role in this plan, starting with a connectivity of 2 mbps. We are doing trials now in the North East. It could be for tele-medicine, tele-education, banking, village resource information or local phone connections.

ISRO is now working on a Space law.

Enacting a full-fledged Space Law has become a requirement as more and more private enterprises enter this business. It will clarify many existing issues and resolve certain ambiguities.

A draft has been circulated [to experts] and we hope to submit it to the government by the end of the year.

What is the status of the arbitrations in the Antrix-Devas contract case? Was it a trigger for the law?

The arbitration cases are going on. It is a long drawn out process with a binding on time. They have to give a verdict.

Not quite a trigger. Space is being used more and more for non-civil activities. The law should ensure Space is not misused. Who will be liable if private launches happen and all kinds of objects are put in space? These activities will have to be spelt out while enabling commercial opportunities.

The Greek crisis and an imperfect EU

The IMF and Germany’s response to Greece’s social crisis has set in motion political responses that could have long lasting impact on big power equations within Europe and beyond. In Greece, it is the IMF and Europe’s regional financial institutions that have been found wanting

The European Union (EU) was never a union. Greece has called the bluff. At the heart of the economic crisis in the EU is a political failure. The inability, indeed the unwillingness, of the member nations of the “Union” to move beyond a single market and a monetary union to create a political entity. The economic crisis in Greece is a manifestation of that political failure across the EU. National politics have worsted regional economics.

Imagine an India in which a less developed State was on the verge of default and neither New Delhi nor any of the more developed States were willing to step in and help. The success of the Indian Union rests on the fact that the developed regions of the country, and the Union government, have taken upon themselves the responsibility of offering a safety net to the less developed regions. All federal systems and continental nations are built on this foundation of regional interdependence and mutual support facilitated by federal political systems.

A commentary on EU

The failure of the EU’s more developed nations, especially Germany, to provide such a safety net to a less developed one like Greece has brought the EU to the brink of unravelling. This situation has been long in making.

The distance between Brussels, Berlin and Athens was brought home to me 20 summers ago when I opted for Athens as a destination for my travels as a guest of the European Union Visitors Programme (EUVP). The head of the Delegation of the EU in Delhi at the time, a French diplomat, suggested politely that I drop Athens and opt for Paris instead. The EUVP invitee was allowed to visit two European capitals of choice apart from the visit to Brussels. Berlin and Paris are the heart of Europe, she told me. Why waste time visiting Athens?

Since I had been to Paris many times and never to Greece, I insisted on Athens. When the ambassador of Greece to India found out that I was under pressure to visit Paris rather than Athens, he threw a mighty fit causing a diplomatic brouhaha in Brussels. Two decades later, the relationship between Europe’s major powers and its peripheral nations has not changed much.

Germany has behaved much in the same way that developed States in India like to when it comes to the question of transferring funds to less developed States. The former usually sermonise the latter on the virtues of industriousness and hard work and blame them for their backwardness. The latter demand all manner of special assistance. The Indian union has the political instruments to deal with such issues. The EU doesn’t.

Through the 1990s and well into the 2000s, EU enthusiasts from various European, especially German, think tanks would often lecture Indians about the virtues of regional cooperation and hold up the EU as an example for South Asia to emulate. The fact is that long before the EU tried its experiment with unification, India did. The reason why India stuck together and the EU is now facing the prospect of “Grexit” and “Brexit” (the exit of Greece and Britain) is because the Indian Union became not just an economic and political union but adopted the principle of federal financing administered by a democratically elected Union government.

The absence of such a principle of internal safety net for an imploding economy, and the weakness of the EU’s political institutions, has brought the EU to this brink. How the citizens of Greece would view their future and how much importance they attach to their membership of the EU to safeguard their future will be determined this weekend when Greece conducts a referendum.

Future of Europe

Two exogenous factors have come to shape the Western response to an unfolding Greek tragedy. First, the rise of Germany as a geoeconomic power and, second, the return of Russia as a geopolitical player. Over the years, a more economically successful and prosperous Germany has asserted itself, projecting its post-war “geoeconomic’” power to acquire political influence. The eastward expansion of the EU has further facilitated this.

Germany’s ascendance within Europe was shaped by two additional factors. First, the relative decline of other European economies, especially the economies of southern Europe.

Second, the induction into the EU of several east and north European economies worried about the resurgence of Russia as a geopolitical player. Russian President Vladimir Putin’s aggressive leadership has sent a shiver down Europe’s spine and many of East Europe’s smaller nations.

Germany and multipolar world

While southern Europe, including Italy, worries more about growing German assertiveness within Europe, northern and eastern Europe worry about a re-assertive Russia. It is against this background that Greece’s nationalist and Leftwing leadership reached out to Russia for help and Mr. Putin was quite happy to step into Europe’s troubled waters. Indeed, the fact that Greek voters opted for a Leftwing leadership has added a new dimension to the resolution of the crisis, given concerns in Germany and the United States about rising left-wing and right-wing forces in Europe and the decline in the influence of centrist political parties. Therefore, the stakes are high. The crisis in Greece is not just about sovereign default. It is about the future of Europe.

There is an interesting parallel between the Asian financial crisis of the late 1990s and the European crisis today. In 1997-98, when Indonesia, South Korea and Thailand faced a payments and debt crisis, it was the political fallout of that crisis, and the failure of the International Monetary Fund (IMF) to help the economies in trouble, that altered Asian geopolitics. While the IMF sermonised Korea and dictated to Indonesia, China stepped in and bailed out Thailand. The IMF has not been able to return to Asia since, while China has set up its own regional financial institutions.

Russia does not have the deep pockets to be a China to beleaguered Greece, but the IMF and Germany’s myopic policy response to Greece’s social crisis has set in motion political responses that could have similar long lasting impact on big power equations within Europe and beyond. In Greece it is not just the IMF but also Europe’s own regional financial institutions that have been found wanting.

Germany, it would appear, would not mind the exit of Greece, and maybe even Italy, because it has acquired a more loyal hinterland to its east. This could well mark the beginning of a new “Pax Germanica”. The crisis in Europe is also a test for the U.S. Having fathered the post-war trans-Atlantic order, the U.S. is unable or unwilling to step in and preserve the EU in its present form.

When the dust settles in Europe the emerging multipolar world will come to stay. If the Asian financial crisis consolidated Chinese power in Asia, the European financial crisis will consolidate German, and perhaps Russian, power in Europe. Economic crises do have geopolitical consequences.

Developed economy risk

The crisis in Greece does not in itself pose an economic risk for Indian investors and traders, but a Europe-wide crisis would. Even as the Indian economy begins to recover from the consequences of India’s own bad policies it may face the risk of dealing with those of Europe. There may be some business opportunities for Indian investors arising out of the decline in asset valuations in Europe, but caution would be the better part of valour.

Over the past five years, there has been a flight of capital from India to Europe. Many Indian companies have found investing in Europe a better proposition than investing at home. What the Greek crisis shows is that even in developed market economies there can be government failure, if not market failure. Indian businesses that seek foreign markets and external investment opportunities must invest more in understanding the nature of political risk around the world. Far too many analysts have worried about “emerging market risk” to have bothered about “developed economies’ risk”. This now deserves attention.

What the Greek crisis also brings home to Indian policymakers is the importance of responsible economic management at home and the need for creating multiple interdependencies externally. Greece’s weakness is that few in the world worry about its economy capsizing. India was in that spot in 1990-91 and, mercifully, is no longer in that worrisome place. But the debate on the extent of global interdependency that India should create and maintain continues. The lesson from Greece is not that a country should isolate itself from the global economy but that it should carefully manage its relations with the regional and world economy.

read about greek crisis
http://www.nytimes.com/interactive/2015/business/international/greece-debt-crisis-euro.html?_r=0

A new multilateral institution

The launch of the $100-billion Asian Infrastructure Investment Bank, within two years of its conception, signals the arrival of a new multilateral institution on the world stage. It also represents a challenge to the older such institutions. Mooted by Chinese President Xi Jinping in October 2013, the AIIB took shape with 50 members, including Australia, India, Russia and the United Kingdom. The articles of agreement were initialled at a gathering in Beijing of representatives of the 57 founding-members. The remaining seven are likely to sign in by the end of the year. China will be the largest shareholder (at 30.34 per cent), followed by India (8.52 per cent) and Russia (6.66 per cent). Though one among the Asian giants, Japan has chosen to stay out of the Beijing-initiated AIIB. The Philippines, which has territorial issues with Beijing in the South China Sea, has held itself back from signing, for now. And Indonesia has sought to have the bank housed in Jakarta. These spell geopolitical roadblocks to the success of the China-led initiative, which in a way is meant to counter the purported bias among existing multilateral institutions, that are perceived to be driven largely by the diktats of the U.S. and Europe. Indeed, the AIIB is a culmination of China’s incessant articulation of the concerns of the emerging economies, which felt they were not being given an adequate say in institutions such as the International Monetary Fund and the World Bank. Again, the AIIB is the consequence of the inability of these institutions to undergo change to suit changing times.

It is also essential to see the AIIB and China’s ambitious plans for the ‘Belt and Road’ project as being complementary. The AIIB as envisaged by China is clearly meant to use its financial resources and surplus to invest in projects in the Asian neighbourhood, which is suffering from a massive infrastructure funding gap. The infrastructure projects in the neighbourhood, nevertheless, are a way of allowing Chinese companies (among others) to participate and invest in them at a time when there is a situation of industrial overcapacity. The participation of many countries from Europe and elsewhere in the AIIB attests to their understanding of the potential of the projects for which the investments could be used, especially the Belt and Road schemes. India’s participation in the AIIB, too, indicates that New Delhi is keen on a balancing act to suit its interests – to engage with the West and the dominant international finance order, at the same time exploring options with new financial institutions. This is a prudent strategy. Will the AIIB be different from the likes of the IMF and the World Bank? That will depend largely on how Beijing manages the cooperation game.