India can gain over $500 bn yearly joining TPP: Economic Survey

By joining an expanded Trans-Pacific Partnership (TPP) or participating in a comprehensive Free Trade Area of the Asia Pacific (FTAAP) and the country's national income would expand by 4%, or $200 billion

India could experience export gains of more than $500 billion per year, or 60% increase, from joining an expanded Trans-Pacific Partnership (TPP) or participating in a comprehensive Free Trade Area of the Asia Pacific (FTAAP) and the country's national income would expand by 4%, or $200 billion, said the Economic Survey 2015-16.
The Survey, presented by Finance Minister Arun Jaitley in parliament on Friday, cited experts to say that India is most competitive in services trade and reduction of trade barriers in services among TPP members will result in growth in India's services exports.
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"The possible risks of not joining the TPP are difficult to quantify, but some of the research has highlighted the possibility of trade diversion and raised concerns about erosion of India's share in exports to the US and Europe," it said.
The TPP is a US-led trade agreement involving twelve Pacific Rim countries and concerning a variety of matters of trade and economic policy, on which consensus was reached in October last year after seven years of negotiations.
"The TPP is expected to make around 11,000 tariff lines duty free for its members, which may result in loss of competitiveness of Indian exports in these markets," it added.
Noting TPP economies on average are more open than the Indian economy, the survey said the service trade restriction index of the World Bank indicates that the TPP economies are less stringent about entry of services than India.
Last month, Commerce Minister Nirmala Sitharaman sought to reassure Indian industry that there would be no adverse impact of entering into the TPP agreement.
"There is nothing to worry about the adverse impact of TPP on India. We have taken necessary steps to boost India's trade and investment in the wake of emerging new trade architecture," she said in her address at the Confederation of Indian Industry's annual partnership summit here.
Sitharaman also said the real implementation of TPP has a long way to go as till date, not a single TPP member has got it passed through their parliament.

Rs 1 lakh crore worth of subsidies go to the 'well-off'

The Economic Survey 2015-16, presented in the Lok Sabha on Thursday by Finance Minister Arun Jaitley, said that there was uneven distribution of subsidies worth Rs 1 lakh crore subsidies going to the better-off and those who did not deserve them.

The survey, which was prepared by Chief Economic Advisor (CEA) Arvind Subramanian and his team of economists in the Finance Ministry, also said that the government could further expand the use of direct transfer of benefits through Jan-Dhan Yojana, Aadhaar and mobiles (JAM), with fertilizer subsidies and within-government transfers as two most promising areas for introduction of the JAM.

The survey said that the relatively well-off sections of society were getting the undeserved subsidies on account of commodities and services like gold, cooking gas, kerosene, electricity, railway fares, aviation and turbine fuel (ATF) plus the small savings scheme.

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“The total amount given as subsidy is no less than Rs 91,350 crore not to forget that this is an underestimate of the actual subsidy to the better-off because of the underestimation of the consumption by the rich in the NSS,” it said.

“If we add the subsidies inherent in just the PPF schemes, the total subsidy to the well-off amounts to above Rs 1 lakh crore. This represents substantial leakage from the Government’s kitty, and an opportunity foregone to help the truly deserving,” the survey added

The survey said that addressing the interventions and rectifying these anomalies will be beneficial from financial year and political economy welfare perspective, and will credibility to other market-oriented reforms.

The last economic survey had laid down the genesis of the JAM trinity to reduce subsidies and the latest survey gave pointers on how to expand its scope further. The concept was widely used in reducing subsidy leakages in LPG and foodgrain.

“While deciding where next to spread JAM, policymakers should consider the challenges of beneficiary identification, distributor opposition and beneficiary financial inclusion. Spreading JAM to other areas will reduce leakages and provide more fiscal space to the government,” it said.

It said that all sections of the administrated economy, from poor households to state and local governments and their employees receive funds from the same Sarkari financial pipe that delivers subsidies – and which JAM can improve by reducing delays, leakages, and administrative burden.

“The policy areas that appear most conducive to JAM are those where the central government has significant control and where leakages — and hence fiscal savings due to JAM — are high. This combination is met for fertiliser and within-government fund transfers,” it said.

Food Security, in the current Agriculture Scenario

In order to provide Food Security, in the current Agriculture Scenario, India has to Focus on Supplies which are timely and Uninterrupted and Affordable for the Poor

57 % of Households had Calorie intake below 2160 KCal/Consumer unit/day

Average Protein intake Per Capita per day Rises Steadily

India Has the Second Highest Number of Undernourished People which Warrants Immediate Attention

                        The Economic Survey 2015-16 presented here today in the Parliament by the Union Finance Minister Shri Arun Jaitley emphasizes that the main aim of food management policy is to provide food security to the population.  Providing food security entails making food available at affordable prices at all times, without interruptions. In order to provide food security, in the current agriculture scenario, India has to focus on supplies which are timely and uninterrupted and affordable for the poor.  Though India’s GDP growth has been impressive and the agricultural production has also increased over the past few decades, hunger and starvation still persist among the poorer section of the population. There has been moderation of inflation including food inflation during the last two years, but more needs to be achieved by freeing up markets, augmenting supply of food and leveraging the use of IT.

According to the data of the 66^th round of the National Sample Survey (2009-10), the average dietary energy intake per person per day was 2147 Kcal for rural India and 2123 Kcal for urban India.  As per the Report of Nutritional Intake in India, 2011-12 (NSSO, 68^th round), among the bottom 5 per cent of rural population ranked by Monthly Per Capita Expenditure (MPCE), 57 per cent of households had calorie intake below 2160 Kcal/consumer unit/day. The average protein intake per capita per day rises steadily with MPCE level  in  rural India from 43 gm for the bottom  5 per cent of population ranked by MPCE to 91 gm for the top 5 per cent, and in urban India from 44 gm for the bottom 5 per cent to about 87 gm for the top 5 per cent.

                        Economic Survey 2015-16 states that India has the second highest number of undernourished people at 194.6 million person (FAO, State of Food Insecurity in the World, 2015) which warrants immediate attention. Moreover, with 27 per cent of the population below the poverty line, the rise in prices of food impacts the poor adversely, with a greater proportion of their household incomes being spent on food. Therefore, along with provision of food subsidy, stability in agricultural commodity prices is essential for making poorer sections food secure.

There is a strong correlation between stability in agricultural production and food security. Volatility in agricultural production impacts food supplies and can result in spikes in food prices, which adversely affect the lowest income of the population.

With a large number of people who remain undernourished and the issues of volatility in agricultural prices, Economic Survey 2015-16 states that India has one of the largest scheme of food schemes in the World to ensure food security. There is entitlement feeding programs like the Integrated Child Development Scheme (ICDS) (All Children under six, pregnant and lactating mothers) and MDMS (Mid  Day Meal Schemes), food subsidy programmes like the Targeted  Public Distribution  System, Annapurna ( 10 Kgs of free food grain for destitute poor) and the   Employment  Programmes like  Mahatama Gandhi National Rural Employment  Guarantee Scheme (100 days of employment at minimum wages) to ensure food security.

Reforms in Tax Rates

Reforms in Tax Rates

            The details of the tax rates of the major countries of Asia have been taken from the KPMG Report on Global Rates, 2015 and are mentioned below:

Country	Corporate	Individual Income
Afghanistan	20	-----
Bangladesh	27.5	30
China	25	45
India	34.61	33.91
Japan	33.06	50.84
Kazakhstan	20	10
Malaysia	25	25
Pakistan	33	---
Singapore	17	20
Srilanka	28	24

            In view of above, the Indian tax rates for direct taxes are higher than the average tax rate among Asian countries.

            As far as Indirect Taxes are concerned, tax to GDP ratio during Financial Year 2014-15 was 4.4%.

            Tax rates are higher because of exemptions and deductions provided for in the Income Tax Act, 1961. Taking into account the revenue foregone on account of these exemptions and deductions, the effective rate of corporate tax works out to be around 23%.

            Proposal to bring reforms in tax rates to reduce the burden of tax payers is under consideration of the Government. In the Budget Speech 2015, it was stated that the Corporate Tax rate would be reduced from 30% to 25% over the next four years along with phasing out of exemptions and deductions.

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.

Indian Penal Code requires a thorough revision

The IPC is one of the legislative fiats of the British Indian regime which, on account of its fair accuracy, has withstood the test of time. As Sir James Stephen had mentioned about the qualities of a strong law and I quote: “It is not enough to attain a degree of precision which a person reading in good faith can understand. It is necessary to attain a degree of precision which a person reading in bad faith cannot misunderstand” (unquote). The definitions of crimes in the IPC hold good even today though relevance of some and emergence of new forms of offense like cyber crime call for refinements.

3. Security of citizens and of property is an essential function of a State. It is achieved through the instrumentality of criminal law. The mandate of criminal law is to punish criminals and prevent recurrence of crime. Criminal Law has to be necessarily sensitive to changes in social structure and social philosophy. It has to be a reflection of contemporary social consciousness and a faithful mirror of a civilization underlining the fundamental values on which it rests. It is in this broad perspective that the drafting, formulation and working of the Indian Penal Code has to be seen.

4. The Indian Penal Code was drafted by the First Law Commission of pre-independent India. This body was presided over by Lord Macaulay and consisted of J.M. Macleod, G.W. Anderson and F. Millet as members. They drew upon not only English and Indian laws and regulations but also Edward Livingston’s Louisiana Civil Code of 1825 and the Napoleonic Code. The draft Code, which was submitted to the Governor General of India in 1837, underwent revisions at the hands of eminent jurists, judges and professors. The revisions were completed in 1850. It was presented to the Legislative Council in 1856 and was passed in 1860. The Penal Code came into operation on the first day of January 1862.

5. The objective of the IPC is to provide a general penal code for India. It codifies the laws relating to the offences which it deals with. The Code is divided into twenty-six chapters though originally it had twenty-three. The offences described in the Code fall into two categories, namely (i) offences against the State and the public; and (ii) offences against person and property. In this respect, the IPC adopts the same classification as that of the civil law.

6. This division of crime into public and private offences has received the acceptance of eminent jurists who justifies it by a reference to the division of civic duty into absolute and relative duties. Absolute duties are those which the subject owes to the State, and the violation of which constitute an offence against the State. Relative duties are such duties which the subjects owe inter se and the violation of which constitutes offences that necessarily involve the rights of specific individuals.

7. Transgressions in absolute duties directly affect the community at large, and therefore, offences falling in this category are as a rule non-compoundable. On the other hand, offences affecting a particular individual are as a rule compoundable, unless they by their heinousness so affect the community as to be declared non-compoundable.

8. The Constitution of India came into effect on twenty-sixth January 1950. Under this noble document, citizens of the country were entitled to certain guaranteed rights. There were also Constitutional safeguards protecting the life and property of individuals as well as of public. These provisions in the Constitution reflect a broad framework underlined in detail in the IPC. For instance, assault on person and public are defined in the IPC along with graded punishments for them. Different courts and procedures have been decreed for different offences.

9. There is no doubt that the IPC as a premier code for criminal law is a model piece of legislation. Nevertheless, it requires a thorough revision to meet the changing needs of the twenty-first century. The IPC has undergone very few changes in the last one hundred fifty-five years. Very few crimes have been added to the initial list of crimes and declared punishable. Even now, there are offences in the Code which were enacted by the British to meet their colonial needs. Yet, there are many new offences which have to be properly defined and incorporated in the Code.

 

10. In a developing country like ours, where economic success is crucial for inclusive growth and national progress, economic offenses cannot be allowed to impede on our national objectives. Crime of a fiduciary nature is also a crime against the State and its people. Some economic offenses can be as serious as the other crimes which have been so meticulously defined and carefully catalogued in the IPC. It is a challenge to bring all new-age offenses with its intricacies within the ambit of the criminal law.

11. This century has witnessed the proliferation of technology in wider spaces of human interaction and transaction. It has resulted in greater conveniences but at the same time has led to occurrence of newer types of offenses. Crimes in the cyber space like email spoofing, financial fraud, online gambling, match-fixing, cyber defamation and cyber stalking call for an ingenuous and proactive response from the law providers.

FTAs have led to more imports than exports: Economic Survey

The 42 free trade agreements signed by India so far have led to more imports than exports as the country has had to go for larger tariff reductions than its FTA partners 

 The 42 free trade agreements (FTAs) signed by India so far have led to more imports than exports as the country has had to go for larger tariff reductions than its FTA partners because of relatively high tariffs, the Economic Survey 2015-16 said.

Mint reported on 16 February that the survey will assess the impact of FTAs on India.
The survey said that in the current context of slowing demand and excess capacity, with threats of circumvention of trade rules, progress on FTAs, if pursued, must be combined with strengthening of India’s ability to respond with measures consistent with the World Trade Organization, such as anti-dumping and conventional duties and safeguard measures.
“Analytical and other preparatory work must begin in earnest to prepare India for a mega-regional world,” it said.
The survey said in the case of the Asean (Association of South East Asian Nations) FTA, India has benefitted on both sides of trade flows, with a statistically significant 33% increase in exports and 79% increase in imports.
“The trade increases have been much greater with Asean than other FTAs and they have been greater in certain industries such as metals on the import side. On the export side, FTAs have led to increased dynamism in apparel, especially in Asean markets,” it said.
The survey said the overall effect of an FTA on trade is positive and statistically significant. “The cumulative effect between the year of the FTA and 2013 on trade with ASEAN, Japan, and Korea is approximately equal to 50%. India’s increased trade with FTA countries is not due to diversion of imports from more efficient non-FTA countries,” it said.
On the import side, a 10% reduction in FTA tariffs for metals and machinery increased imports by 1.4% and 2.1%, respectively, compared to other products from FTAs or all products from non-FTA countries, the survey said.

Economic Survey calls for pumping investment to better India’s human capital

The Economic survey points to the need to focus on the quality of education in both ‘public and private sectors’ and to leverage private investment in social sectors 

 Admitting that India’s education quality is worsening, the Economic Survey on Friday called for “more investment in human capital” in order to arrest the trend and improve healthcare delivery.

It also drew a link between human capital investment and improving productivity.
“On the education front, the declining educational outcomes reflected in lower reading levels in both public and private sector schools are areas of concern,” the Economic survey said.
The survey points to the need to focus on the quality of education in both “public and private sectors” and to leverage private investment in social sectors.
Presented in Parliament by finance minister Arun Jaitley, the survey said that the “social infrastructure scenario in the country reflects gaps in access to education, health and housing amenities”.
It said “inclusive growth in India requires bridging gaps in educational outcomes and improved health attainments across the population”.
India spends around 4% of its gross domestic product on education—against a long standing target of 6%. India’s education sector with over 45,000 colleges and universities is one of the biggest sectors in the world but faces many challenges on quality. It caters to over 300 million students who are key to helping the country reap its human capital advantage.
In order to reap the so-called “demographic dividend”, the survey called for “increasing investment in human capital” as it is a “key requirement to improve productivity of the population”.
The Economic Survey also said that the total expenditure on social services, including education, health, social security, nutrition, and the welfare of underprivileged during 2014-15 (revised estimate), was 7% of the gross domestic product (GDP), while it was 6.5% the year ago.
The survey said the immunization coverage of children, health of pregnant women, declining role of public health delivery systems and the lack of adequate skilled personnel are the biggest challenges in the health sector.
Health and access to sanitation are closely related issues which can improve productivity and the living environment of the population to a great extent, the survey said, indicating a huge disparity in social indicators across states.