Economic Survey: The Constitutional Amendment on GST will create a common Indian market,

Economic Survey: The Constitutional Amendment on GST will create a common Indian market, improve tax compliance and governance and boost investment and growth.

The Economic Survey states that the world GDP is expected to grow because of a fiscal stimulus in the United States but points out that there are considerable risks.

Economic Survey: Addressing the Twin Balance Sheet problem of over-indebted corporates and bad-loan-encumbered Public Sector Banks will be vital.

The Economic Survey 2016-17 presented in Parliament today states that against the backdrop of robust macro-economic stability, the year was marked by two major domestic policy developments-the passage of the Constitutional Amendment, paving the way for implementing the transformational Goods and Services Tax (GST), and the action to demonetize the two highest denomination notes. The GST will create a common Indian market, improve tax compliance and governance, and boost investment and growth; it is also a bold new experiment in the governance of India’s cooperative federalism.

The Survey Report says that demonetisation has had short-term costs but holds the potential for long-term benefits. Follow-up actions to minimize the costs and maximize the benefits include: fast, demand-driven, remonetisation; further tax reforms, including bringing land and real estate into the GST, reducing tax rates and stamp duties; and acting to allay anxieties about over-zealous tax administration. These actions would allow growth to return to trend in 2017-18, possibly making it the fastest-growing major economy in the world, following a temporary dip in 2016-17.

The Economic Survey 2016-17 states that the year was also marked by some tumultuous external developments. In the short-run, world GDP growth is expected to increase because of a fiscal stimulus in the United States but there are considerable risks. These include higher oil prices, and eruption of trade tensions from sharp currency movements, especially involving the Chinese yuan, and from geo-political factors. Another serious medium-term risk is an upsurge in protectionism that could affect India’s exports.

The Survey states that the year also saw a number of legislative accomplishments in the country. In addition to the GST, the Government:

·          Overhauled the bankruptcy laws so that the “exit” problem that pervades the Indian economy--with deleterious consequences highlighted in last year’s Survey--can be addressed effectively and expeditiously;

·         Codified the institutional arrangements on monetary policy with the Reserve Bank of India (RBI), to consolidate the gains from macroeconomic stability by ensuring that inflation control will be less susceptible to the whims of individuals and the caprice of governments; and

·         Solidified the legal basis for Aadhaar, to realise the long-term gains from the JAM trifecta (Jan Dhan-Aadhaar-Mobile).

Beyond these headline reforms were other less-heralded but nonetheless important actions. The Government enacted a package of measures to assist the clothing sector that by virtue of being export-oriented, labour-intensive could provide a boost to employment, especially female employment. The National Payments Corporation of India (NPCI) successfully finalized the Unified Payments Interface (UPI) platform. By facilitating inter-operability, UPI has the potential to unleash the power of mobile phones in achieving digitalization of payments and financial inclusion, and making the “M” an integral part of “JAM.” Further FDI reform measures were implemented, allowing India to become one of the world’s largest recipients of foreign direct investment. The government has also adhered to a steady and consistent path of fiscal consolidation.

The major short term macro-economic challenge is to re-establish private investment and exports as the major drivers of growth and reduce reliance on Government and private consumption. Addressing the Twin Balance Sheet problem—over-indebted corporates and bad-loan-encumbered public sector banks—a legacy of the years surrounding the Global Financial Crisis will be vital.

Looking further ahead, societal shifts at the level of ideas and narratives will be needed to overcome three long-standing meta-challenges: inefficient redistribution, ambivalence about the private sector and property rights, and improving but still-challenged state capacity. Doing so would lift an economy that is oozing with potential. In the aftermath of demonetisation, and at a time of gathering gloom about globalization, articulating and embracing those ideational shifts will be critical to ensuring that India’s sweet spot is enduring not evanescent.

The report says that India seems to be a demographic sweet spot with its working age population projected to grow by a third over the next three decades providing it a potential the growth boost from the demographic divided which is likely to peak within next five years.

The Survey report also states that the Swachh Bharat which has the objective of ensuring safe and adequate sanitation, water security and hygiene has been a part of serious policy issue which would promote a broader fundamental right to privacy for women in the country.

Economic Survey 2016-17 in the Parliament

Finance Minister Shri Arun Jaitley Presented Economic Survey 2016-17 in the Parliament today

Economic Survey says economic growth to return to normal as new currency notes in required quantities come back into circulation and follow-up action on demonetisation is taken.

The CPI based core inflation remained stable in the current fiscal year averaging around 5 per cent.

The Economic Survey says that the rupee performed better than most of the other emerging market economies.

The total area coverage under Rabi crops as on 13.01.2017 for 2016-17 is 616.2 lakh hectares which is 5.9 per cent higher than that in the corresponding week of last year.

The area coverage under Gram (Channa Dal) as on 13.01.2017 for 2016-17 is 10.6 percent higher than that in the corresponding week of last year.

The Indian Economy has sustained a macro-economic environment of relatively lower inflation, fiscal discipline and moderate current account deficit coupled with broadly stable rupee-dollar exchange rate. The Economic Survey 2016-17 presented in the Parliament today by the Union Finance Minister Shri Arun Jaitley states that such a sustenance is despite continuing global sluggishness. It says :

·         As per the advance estimates released by the Central Statistics Office, the growth rate of GDP at constant market prices for the year 2016-17 is placed at 7.1 per cent, as against 7.6 per cent in 2015-16.This estimate is based mainly on information for the first seven to eight months of the financial year. Government final consumption expenditure is the major driver of GDP growth in the current year.

·         Fixed investment (gross fixed capital formation) to GDP ratio (at current prices) is estimated to be 26.6 per cent in 2016-17, vis-à-vis 29.3 per cent in 2015-16.

·         For 2017-18, it is expected that the growth would return to normal as the new currency notes in required quantities come back into circulation and as follow-up actions to demonetisation are taken. On balance, there is a likelihood that Indian economy may recover back to 6 ¾ per cent to 7 ½ per cent in 2017-18.

Fiscal

·         Indirect taxes grew by 26.9 per cent during April-November 2016.

·         The strong growth in revenue expenditure during April-November 2016 was boosted mainly by a 23.2 per cent increase in salaries due to the implementation of the Seventh Pay Commission and a 39.5 per cent increase in the grants for creation of capital assets.

Prices

·         The headline inflation as measured by Consumer Price Index (CPI) remained under control for the third successive financial year. The average CPI inflation declined to 4.9 per cent in 2015-16 from 5.9 per cent in 2014-15 and stood at 4.8 per cent during April-December 2015.

·         Inflation based on Wholesale Price Index (WPI) declined to (-) 2.5 per cent in 2015-16 from 2.0 per cent in 2014-15 and averaged 2.9 per cent during April-December 2016.

·         Inflation is repeatedly being driven by narrow group of food items, of these pulses continued to be the major contributor of food inflation.

·         The CPI based core inflation has remained sticky in the current fiscal year averaging around 5 per cent.

Trade

·         The trend of negative export growth was reversed somewhat during 2016-17 (April-December), with exports growing at 0.7 per cent to US$ 198.8 billion. During 2016-17 (April-December) imports declined by 7.4 per cent to US$ 275.4 billion.

·         Trade deficit declined to US$ 76.5 billion in 2016-17 (April-December) as compared to US$ 100.1 billion in the corresponding period of the previous year.

·         The current account deficit (CAD) narrowed in the first half (H1) of 2016-17 to 0.3 per cent of GDP from 1.5 per cent in H1 of 2015-16 and 1.1 per cent in 2015-16 full year.

·         Robust inflows of foreign direct investment and net positive inflow of foreign portfolio investment were sufficient to finance CAD leading to an accretion in foreign exchange reserves in H1 of 2016-17.

·         In H1 of 2016-17, India’s foreign exchange reserves increased by US$ 15.5 billion on BoP basis.

·         During 2016-17 so far, the rupee has performed better than most of the other emerging market economies.

External Debt

·         At end-September 2016, India’s external debt stock stood at US$ 484.3 billion, recording a decline of US$ 0.8 billion over the level at end-March 2016.

·         Most of the key external debt indicators showed an improvement in September 2016 vis-à-vis March 2016. The share of short-term debt in total external debt declined to 16.8 per cent at end-September 2016 and foreign exchange reserves provided a cover of 76.8 per cent to the total external debt stock.

·         India’s key debt indicators compare well with other indebted developing countries and India continues to be among the less vulnerable countries.

Agriculture

·         Agriculture sector is estimated to grow at 4.1 per cent in 2016-17 as opposed to 1.2 per cent in 2015-16; the higher growth in agriculture sector is not surprising as the monsoon rains were much better in the current year than the previous two years.

·         The total area coverage under Rabi crops as on 13.01.2017 for 2016-17 is 616.2 lakh hectares which is 5.9 per cent higher than that in the corresponding week of last year.

·         The area coverage under wheat as on 13.01.2017 for 2016-17 is 7.1 percent higher than that in the corresponding week of last year. The area coverage under gram as on 13.01.2017 for 2016-17 is 10.6 percent higher than that in the corresponding week of last year.

Industry

·         Growth rate of the industrial sector is estimated to moderate to 5.2 per cent in 2016-17 from 7.4 per cent in 2015-16.During April-November 2016-17, a modest growth of 0.4 per cent has been observed in the Index of Industrial Production (IIP).

·         The eight core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity registered a cumulative growth of 4.9 per cent during April-November 2016-17 as compared to 2.5 per cent during April-November 2015-16. The production of refinery products, fertilizers, steel, electricity and cement increased substantially, while the production of crude oil, natural gas fell during April-November 2016-17. Coal production attained lower growth during the same period.

·         The performance of corporate sector (Reserve Bank of India, January 2017) highlighted that the growth of sales grew by 1.9 per cent in Q2 of 2016-17 as compared to near stagnant growth of 0.1 per cent in Q1 of 2016-17. Growth in net profit registered a remarkable growth of 16.0 per cent in Q2 of 2016-17 as compared to 11.2 per cent in Q1 of 2016-17.

Services

·         Service sector is estimated to grow at 8.9 per cent in 2016-17, almost the same as in 2015-16. It is the significant pick-up in public administration, defence and other services, boosted by the payouts of the Seventh Pay Commission that is estimated to push up the growth in services.

Social Infrastructure, Employment and Human Development

·         The Parliament has passed the “Rights of Persons with Disabilities Act, 2016”. The Act aims at securing and enhancing the rights and entitlements of Persons with Disabilities. The Act has proposed to increase the reservation in vacancies in government establishments from 3 per cent to 4 per cent for those persons with benchmark disability and high support needs.

two year of niti ayog

NITI Ayog

The National Institution for Transforming India is a policy body serving as ‘think tank’ tasked with a role of formulating policies and directions for the government. It replaced Planning Commission which had been preparing five year plans for India for last 60 years.

According to the resolution of the cabinet to set up NITI Ayog, the body is responsible to recommend a national agenda including strategic and technical advice on elements of policy and economic matters. It also develops mechanisms for village level plans and aggregates these progressively at higher levels of government.

While the NITI Ayog has been set up with an aim to foster and enhance the centre-state cooperation, the opposition parties criticised saying that the replacement of Planning Commission can be best viewed as a ‘cosmetic change’.

The change

The main role of Planning Commission was to decide inter-ministerial allocation. If a government allocates Rs. 5 lakh crores as planned fund, how to decide how much for industry, for education, for health etc. was being done by finance ministry in other countries. In India, this role has traditionally been done by Planning Commission. Now this role has been deleted and they are no longer deciding the allocation. It is now directly decided by the finance ministry just as done in state governments and other countries.

Planning Commission was not doing well because:

1. Generally members of Planning Commission were defeated politicians and rarely had interest in academic knowledge or finding out why things are not working well.
2. Most of officers posted in Planning Commission were due to its becoming a dumping ground for unwanted officers.

Earlier, the Planning Commission had been restricted with assimilating the demands of various ministries, state governments and allocating the resources. This was needing a change and hence from NITI Ayog, the role of assimilating and allocation of resources to the state has now been taken over by 14^th FC.

Two years of NITI Ayog

NITI Ayog is still in infancy and trying to find out its role and how things should be done. The role of think tank is not an easy one. The members have to be aware of all the constraints, be in touch with professional organisations and give suggestions to state governments and central government. This role has still not been performed by NITI Ayog and thus they need some more time to carve out their responsibilities.

Any ‘Think tank’ has to be slightly distant from government. It has been however observed that members, vice-chairman of NITI Ayog have been defending government on all issues. That is the role of ministry of information, visual publicity or PMO. If this role is being performed by a ‘Think tank’ then there is a conflict between justifying government and giving advice to government on right kind of issues. Thus, it is not apt by NITI Ayog to justify the government on all issues, especially controversial issues.

Though it is true that it may not have accomplished the full work for which the transformation of NITI Ayog was done. But it is moving towards the same as its full term is not yet over.

Areas where NITI Ayog intervened

Land acquisition was a complicated issue where NITI Ayog set up its task force and explored area such as digitisation, land leasing. It has formulated a model land-leasing law, which Madhya Pradesh has adopted and Uttar Pradesh has substantially incorporated into a pre-existing law. Several other states are actively considering adopting the model law.

The Aayog has taken the initiative to identify numerous sick Public Sector units for closure. Action on 17 such units is under way. The Aayog has also identified several functioning units for strategic disinvestment.

It has also proposed replacement of the Indian Medical Council Act, 1956, by a Medical Education Commission Act to overhaul medical education in India.

The Aayog is also leading a campaign to bring about major reforms in agricultural marketing.

However, in the biggest policy decision impacting economic, political and social life had no role of NITI Ayog in terms of providing either the conceptual inputs or in implementation. They belatedly took up the idea of popularising digital payment system and innovating some lottery schemes.

Time needed

Two years is a short period of time for any institution to evolve. Even the Planning Commission evolved for over 60 years and ultimately rendered itself useless. Thus, in institutional life, two years is very less.

Truly independent?

The new ‘think tank’ has been called as National Institute for Transforming India thereby giving it a big name. But the work has not been concretized as yet. From the beginning, the terms of conceptualising this institute has been flawed. There was a body that was required to replace Planning Commission and hence something was set up without much thinking. The job of Planning Commission of allocation of resources for planned schemes among the states had been taken over by finance ministry. After that, NITI Ayog was conceived as a think tank. Now NITI Ayog is called a part of government where except for few external consultants, it functions within the same bureaucratic set up as the government. Hence, to think that it will come out with out of the box ideas will be very difficult or sending false signals.

Also, NITI Ayog has become a toothless organisation which has no power to implement or voice its decisions. The states also don’t turn up for meeting which they did during Planning Commission, which had allocating functions.

Role of Planning Commission vis-a-vis states

Planning Commission had no big role in funding the states, but rather had a very big role in deciding the funds for ministries of GoI. The states got funding from 3 sources: 50% from Finance Commission, 45% central ministries as CSS and only 5% from the Planning Commission. So Planning Commission’s role vis-a-vis states had been diluted in 1991 after liberalisation. The Planning Commission no longer decided what state schemes should run and that function was given to respective ministries. These ministries are still running programmes such as SSA, PMGSY, NREGA.

Analytical role

Job creation is a major concern. Unemployment leads to faltering of economy as well. The government had promised 100 million jobs by 2019. It is very well established that during 2004-14, it was a period of jobless growth. Hardly any jobs were created in that period.

In last two years, the government has given lot of importance to it. But what has happened in last two years should be studied by NITI Ayog.  Until two years, NITI Ayog has not fared expectedly in this process. The industry expects from NITI Ayog to create avenues of jobs through its findings and analysis. For example, the MSME sector can create jobs but how and how much is not categorically known.

Unfortunately, World Bank came out with a study recently showing that progress is dismal. Programmes like Ajeevika have not rendered any new jobs and hence a failed programme.

Government very rightly asked NITI Ayog to monitor sustainable development goals. For one year and half, they have not produced a sigle report as to why MDGs were not achieved by India in respect to gender, health, hunger, education, sanitation. They should analyse it and make a report else all these flaws will remain and sustainable development goals will also not be achieved.

Way forward

Any criticism which leads to improvement or desired transformation is welcome. More studies need to be done by NITI Ayog to establish itself as a critical institution in fora of planning. Also, there should be some accountability, more information given to public and road map of future course of action given by NITI Ayog.

There is a need for an institution to serve the concept of cooperative federalism. The highest decision making on development and planning which used to be NDC, NITI Ayog should serve a similar Team India concept.

It would be useful if NITI ayog could make evaluation of government policies and programmes given that it is not able to come up with out of the box ideas by itself. It can give tips which could help to deliver those programmes on ground- Make in India etc.

NITI Ayog is disintegrating its planning into three areas. 15 years long term vision document. 7 years implementation plan and 3 years short term action plan. It is expected to come out with the action plan shortly which will expectedly take into account the impact of demonetisation on the economy, especially on informal sector.

Nasa probe begins search for elusive Earth-Trojan asteroid

OSIRIS-REx, currently on a two-year outbound journey to the asteroid Bennu, will spend almost two weeks searching for evidence of Earth-Trojan asteroids, Nasa said

A National Aeronautics and Space Administration (Nasa) spacecraft has started searching for an enigmatic class of near-Earth objects known as Earth-Trojan asteroids, which may be lurking in the solar system in places difficult to observe from our planet.

OSIRIS-REx, currently on a two-year outbound journey to the asteroid Bennu, will spend almost two weeks searching for evidence of these small bodies, Nasa said.
Trojan asteroids are trapped in stable gravity wells, called Lagrange points, which precede or follow a planet. OSIRIS-REx is currently travelling through Earth’s fourth Lagrange point, which is located 60 degrees ahead in Earth’s orbit around the Sun, about 150 million kilometres from our planet.
The mission team will use this opportunity to take multiple images of the area with the spacecraft’s MapCam camera in the hope of identifying Earth-Trojan asteroids in the region. Although scientists have discovered thousands of Trojan asteroids accompanying other planets, only one Earth-Trojan has been identified to date, asteroid 2010 TK7.

Scientists predict that there should be more Trojans sharing Earth’s orbit, but they are difficult to detect from Earth as they appear near the Sun on the Earth’s horizon. “Because the Earth’s fourth Lagrange point is relatively stable, it is possible that remnants of the material that built Earth are trapped within it,” said principal investigator Dante Lauretta of the University of Arizona, Tucson.
“So this search gives us a unique opportunity to explore the primordial building blocks of Earth,” Lauretta said. On each observation day, the spacecraft’s MapCam camera will take 135 survey images that will be processed and examined by the mission’s imaging scientists.
The study plan also includes opportunities for MapCam to image Jupiter, several galaxies, and the main belt asteroids 55 Pandora, 47 Aglaja and 12 Victoria, Nasa said. Whether or not the team discovers any new asteroids, the search is a beneficial exercise, researchers said.
The operations involved in searching for Earth-Trojan asteroids closely resemble those required to search for natural satellites and other potential hazards around Bennu when the spacecraft approaches its target in 2018. Being able to practice these mission-critical operations in advance will help the OSIRIS-REx team reduce mission risk once the spacecraft arrives at Bennu.

Isro set to launch record 104 satellites on 15 February

Isro’s PSLV-C37 will launch the 714kg Cartosat-2 series satellite for earth observation along with 103 co-passenger satellites, together weighing about 664kg at lift-of

Indian Space Research Organisation’s (Isro) workhorse Polar Satellite Launch Vehicle (PSLV) will carry a record 104 satellites in a single mission on 15 February from the space centre at Sriharikota in Andhra Pradesh.

“PSLV-C37/Cartosat-2 Series Satellite Mission is scheduled to be launched on February 15, 2017 at 9.28 hours IST from SDSC SHAR Sriharikota,” Isro said.
The PSLV, in its 39th flight (PSLV-C37), will launch the 714kg Cartosat-2 series satellite for earth observation along with 103 co-passenger satellites, together weighing about 664kg at lift-off. It will be launched into a 505km polar Sun Synchronous Orbit (SSO).
Isro said the co-passenger satellites comprise 101 nano- satellites, one each from Israel, Kazakhstan, the Netherlands, Switzerland, United Arab Emirates (UAE) and 96 from United States of America (USA), as well as two from India.
The two Indian nano-satellites are Isro’s INS-1A and INS-1B. INS-1A and INS-1B will carry a total of four different payloads from Space Applications Centre (SAC) and Laboratory for Electro Optics Systems (LEOS) of Isro for conducting various experiments, the space agency said.
Last year, Isro had launched a record 20 satellites at one go. The highest number of satellites launched in a single mission is 37, a record that Russia set in 2014. The US space agency, Nasa has launched 29.
The 101 international customer nano-satellites are being launched as part of the commercial arrangements between Antrix Corporation Ltd (Antrix), the commercial arm of Isro and the international customers.
Speaking on the record launch, Isro chairman Kiran Kumar had earlier said the aim was to maximise the capability with each launch and it was not to set a record. “We are not looking at it as a record or anything like that; we are just trying to maximise our capability with each launch, in trying to utilise that launch for the ability it has got and getting the maximum return,” he had said.

KHELEO

Mascot for FIFA Under 17 World Cup India 2017

Minister of State (I/C) for Youth Affairs and Sports Shri Vijay Goel with President of AIFF Shri Praful Patel here today unveiled the mascot KHELEO for FIFA under 17 World Cup India 2017. The mascot was unveiled during the launch of Mission XI Million programme.

FIFA under 17 world cup to be held in India from 06/10/2017 to 28/10/2017.

India successfully test-fires interceptor missile off Odisha coast

India successfully test-fired its interceptor missile off the Odisha coast, achieving a significant milestone in direction of developing a 2-layered Ballistic Missile Defence system

India on Saturday successfully test-fired its interceptor missile off the Odisha coast, achieving a significant milestone in the direction of developing a two-layered Ballistic Missile Defence system. The interceptor was launched from Abdul Kalam Island or Wheeler Island of ITR at about 7.45am.

This mission, termed as “PDV mission is for engaging the targets in the exo-atmosphere region at an altitude above 50 km of earth’s atmosphere”, said a Defence Research Development Organisation (DRDO) official. “Both, the PDV interceptor and the two stage target missile, were successfully engaged,” he said.
The target was developed for mimicking a hostile Ballistic Missile approaching from more than 2,000 km away was launched from a ship anchored in the Bay of Bengal.
In an automated operation, radar based detection and tracking system detected and tracked the enemy’s ballistic missile. The computer network with the help of data received from radars predicted the trajectory of the incoming Ballistic Missile.
The PDV that was kept fully ready, took-off once the computer system gave the necessary command for lift-off. The Interceptor guided by high accuracy Inertial Navigation System (INS) supported by a Redundant Micro Navigation System moved towards the estimated point of the interception.
Once the missile crossed the atmosphere, the Heat Shield ejected and the IR Seeker dome opened to look at the Target location as designated by the Mission Computer. With the help of Inertial Guidance and IR Seeker the missile moved for interception.