Thursday 12 March 2015

MR. RAJINDAR SACHAR HAS ISSUED THE FOLLOWING STATEMENT.



Dated : 11/03/2015
                                                                                            

MR. RAJINDAR SACHAR HAS ISSUED THE FOLLOWING STATEMENT.


The outrageous, senile statement on blog by Justice Katju Calling Gandhi Ji “an British Agent who did great harm to India” being the raving of out of office frustrated individual deserves to be rejected with the contempt it deserves. By this statement Katju has qualified himself to be the fittest successor to Mohan Bhagwat, RSS Chief. Had Churchill been alive he would have embraced Katju and included him the senior most position in his cabinet of 1940.     


Rajindar Sachar

Tuesday 3 March 2015

Points on the Budget 2015-16


New Delhi. ‘Lokayat’ an affiliate of the Socialist Party (India), has released the following note on the budget presented by the Finance Minister Arun Jaitely for the year 2015-16. The Socialist Party shares the concerns and critique of the budget made by Neeraj Jain of ‘Lokayat’. Hence Pannalal Surana, Chairman Parliamentary Board and Spokesperson of the Socialist Party (India) released the same to the press and people.


Points on the Budget 2015-16

Part I:

The fraudulent fiscal deficit theory continues. As we have discussed in our booklet, IS THE GOVERNMENT REALLY POOR, the theory that “the government should reduce its fiscal deficit to promote growth”, is really a fraudulent theory, designed to allow the government to transfer public money to the corporate houses.  Firstly, as Keynes had demonstrated long ago, for a demand-constrained economy like India, fiscal deficit is good for the economy. Even the developed countries like Japan facing recessionary conditions have high fiscal deficits. But in India, the government is seeking to bring down its fiscal deficit to near zero. Even assuming the fiscal deficit needs to be reduced, the government can reduce it by increasing taxes on the rich, but that it is not willing to do; the transfers to the rich, to the tune of lakhs of crores of rupees, are justified in the name of promoting growth and so are not called subsidies, but 'incentives'. The tax-to-gdp ratio of India is lower than even the sub-Saharan African countries. And yet, the government has further reduced the taxes on corporate houses in this budget.

On the other hand,  the government spending on the poor, aimed at providing them the bare means of subsistence and education and health at affordable rates so that they can live like human beings and develop their inherent potential, are being reduced to such low levels that they are amongst the lowest in the world. They have been further reduced in this budget, in the name of keeping the fiscal deficit under check.

So, here are some of the figures from this budget:

The Finance Minister seeks to contain fiscal deficit:

For 2014-15 – 4.1%
2015-16 – 3.9%
2016-17 – 3.5%
2017-18 – 3% (so target delayed by a year)

However,
While govt achieves fiscal deficit target for 2014-15 of 4.1%,
tax revenues target not achieved
l  Jaitley's first budget, 2014-15: gross tax revenue 10.6 per cent of the GDP; 
l  actual (revised estimates) -- gross tax revenue 9.9 % of GDP.

Reasons for fall in Revenue in 2014-15: because revenue foregone in tax exemptions – up from
Ø  Rs. 5.5 lakh crores in 2013-14
Ø  to Rs. 5.89 lakh crores in 2014-15!

New Budget, 2015-16:
i) In 2015-16 budget, FM announces further reduction in taxes:
l  New budget – corporate tax rates further reduced from 30% to 25% - saying 30% uncompetitive! (even though Jaitley admits – effective rate of taxation only 23%)
l  Reduction of corporate taxes – to provide tax-relief to corporate houses of Rs. 20,000 crores every year over next 4 years; Rs 80,000 crore in fourth year
l  Budget abolishes wealth tax (while increasing taxes on super rich - incomes in excess of Rs. 1 crore – by 2% more)
l  GAAR implementation deferred by more than 2 years – to 2017
l  MAT also abolished.
ii) And on other hand, budget raises excise duties and service taxes:

iii) Net result:
Ø  Direct taxes fall => by Rs 8,315 crore, benefiting the rich
Ø  Indirect taxes rise => by Rs 23,383 crore, increasing burden on the people
Ø  Net impact of all indirect and direct tax proposals – revenue gain of Rs 15,068 crore

iv) And so, on the whole Gross tax revenue no significant increase, actually fall over 2014-15 (budgeted):
l   2015-16: 10.3% of GDP
l   2014-15 (budgeted): 10.6% of GDP
With tax revenues not rising (as proportion of GDP), and fiscal deficit target set to fall, obviously – government expenditures set to fall!

Note:
What is GAAR – General Anti-Avoidance Rules:
Avoidance is legal provision which allows investors to legally reduce their tax liability
GAAR – empowers tax officials to deny avoidance, that is, tax benefits on transactions or arrangements which do not have any commercial substance or consideration other than achieving tax benefit

Whole debate came about due to Vodafone case:
·  Hutch-Essar – an Indian company that had obtained telecom licenses in India to provide cellular telephony in different circles in India
·  67% of Hutch-Essar – controlled by CGP Investments – a company resident for tax purposes in Cayman Islands; CGP in turn controlled by Hutchinson Hong Kong.
·  Vodafone, through a subsidiary, purchased CGP in 2007 for $11 billion (or Rs. 55000) crores from  Hutchinson – deal made overseas, so no taxes paid.

Indian tax authorities: Since aim of transaction to acquire an Indian company, and CGP had made a profit in selling shares of Hutch-Essar to Vodafone, so Vodafone as buyer of shares liable to pay capital gains tax, of $2.5 billion, or Rs. 11,000 crore.
Vodafone challenged this, saying deal outside India, and both companies – buyer and seller – located outside India.
l Vodafone – world's biggest revenue earning mobile telephony company, and second-largest in terms of subscribers.

High Court upholds Indian tax authorities, Supreme Court overrules, saying it cannot be said the registration of CGP in Cayman Islands was for tax avoidance.
l This strange – Cayman Islands world renowned tax haven, fifth-largest banking centre in the world, with $1.5 trillion in banking liabilities.

Since 2012, Indian Finance Ministers seeking to implement GAAR – to check such transactions – but furious opposition by FIIs – so keep deferring it.

Part II:

And so: Total plan expenditure, non-plan expenditure, and total expenditure declines:
l  Total plan expenditure declines by Rs 107,066 crore, to Rs 467,934 crore
l  Non-plan expenditure also fell,
l  2014-15, Revised estimates: Total exp declined over the budget estimates by Rs 113,734 crore;
l  2015-16: Jaitley cuts plan exp by Rs 2,657 crore (over revised estimates for 2014-15)

BUT MEANWHILE:

FM Announces an increase in public investment on infrastructure by Rs 70,000 crore

So, Axe has to fall on social sector spending:

Sharp falls in social sector spending: both in 2014-15 and new budget

Budget 2015: allocations on agriculture, rural development, drinking water and sanitation, health, school education and women and child welfare have been cut: by Rs 439,192.25 crore or Rs 4.3 lakh crore

1) Dept of agriculture: allocations reduced from Rs 19,800 cr in 2014-15 to Rs 17,000 cr

2) Ministry of panchayati raj:  Heavy cuts – from Rs 3,400 crore in 2014-15 to Rs 95 crore

3) Ministry of drinking water and sanitation, which includes clean Indian campaign: Allocations halved, frorm Rs 12,000 crore to Rs 6,200 crore

4) Ministry of resources, river development and Ganga rejuvenation, under Uma Bharti: allocation reduced by a third – will now get Rs 4,200 crore against Rs 6,000 earmarked last year; National Ganga Plan outlay within this increased to Rs 2100 crore from Rs 1500 crore, implying other rivers can continue decaying.

5) Scheduled Castes Sub-Plan (SCP) and Tribal Sub-Plan
                                                                    Actual 2013-14      Budget 2014-15   Revised 2014-15    Budget 2015-16
Scheduled Castes Sub-Plan (SCP)                Rs 34,700 cr        Rs 50,500 crore    Rs 33,600 crore     Rs 30,800 crore
Tribal Sub-Plan                                              Rs 22,000 cr       Rs 32,400 cr          Rs 20,500 crore     Rs 20,000 crore

6) The women and child development ministry funds halved:
l  2014-15, budgeted: Rs 21,100 crore 
l  2014-15, actual spent: Rs. 18,500 crore
l  2015-16: Rs 10,300 crore
Within this, ICDS – budget halved, from Rs 16000 crore to Rs 8000 crore!
National Nutrition Mission, scheme to increase allocation to anganwadi workers – all in limbo

7) Expenditure on schemes for the welfare of children:
Ø  2014-15, budgeted: Rs 81,100 crore;
Ø  2014-15, actual spent: Rs 70,000 crore
Ø  2015-16: Rs 58,000 crore =>Rs 12,000 crore less.

8) Education budget – several new IITs announced in July last year – yet to take off, and yet another new IIT announced, new IIMs and AIIMS also announced

                                     Actual 2013-14      Budget 2014-15                        Revised 2014-15         Budget 2015-16
Dept of School Edn
and Literacy                           46856           55115                                     46805                              42219
Dept of Higher Edn                 24465                                       27656                                         23700                              26855
Total                                       71321             82771                                       70505                              69074


·         school education budget cut– from Rs 55,100 crore to Rs 42,200 crore;
·         higher education budget cut – from Rs 27,600 crore to Rs 26,800 crore.
·         In all, education budget cut by nearly 17%

Education spending as percentage of GDP now down to just 3.3% of GDP.

9) Ministry of Health and family welfare outlay reduced by Rs 5,900 crore.

                                                        Actual 2013-14              Budget 2014-15           Revised 2014-15           Budget 2015-16

Department of Health
and Family Welfare                          27145                              35163                              29042                            29653
Department of Health Research      874                                  1017                                    932                               1018
Department of AIDS Control            1473                                  1785                               1300                                    1397
Total                                                 29492                                     37965                              31274                           32068

10) Although Jaitley tried to present a human face by announcing a slew of low-cost pension and insurance schemes, including the Atal Pension Yojana and the Universal Social Security scheme, the impact of these schemes cannot be assessed for want of details.



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