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08 July Current Affairs

Ineligible persons pocket welfare pensions

In News:

Ineligible beneficiaries are reported to be gnawing a plum share of the State government’s welfare pension pie with the tacit support of a section of local body members who are using it as a means for bolstering their electoral prospects.

Details:

A thorough evaluation of the pension schemes that covers 40% of the State’s household, conducted under the tutelage of D. Narayana, Director, Gulati Institute of Finance and Taxation, has found that about 10-30% ineligible beneficiaries are thriving on the benefits by severely understating their income, falsification of age, widow status and disability criteria. Many below the age of 60 years are receiving old-age pension. Cases of beneficiaries fudging details for securing widow and disability pension too are aplenty, the report says.

Procedures for placing applications for the pensions are being deftly exploited by a section of local body members to further their political clout among the voters. The government had coughed up Rs. 5,030.21 crore to disburse pensions to 42.41 lakh beneficiaries in 2017-18.

Number doubles:

The number of pensioners more than doubled in the four years between 2011-12 and 2015-16 and recorded a 25% increase in the next two years. There was a steep increase in the number of old-age pensioners, from less than 30% of the total pensioners in 2011-12, it went up close to 50% by 2017-18.

The unprecedented increase in the number of beneficiaries is being attributed to the relaxation of income criterion in 2014, when the annual income of a household, whether APL or BPL, to gain eligibility for pension was fixed at Rs. 3 lakh. The order was repealed after two years, but the notion that people irrespective of their income are eligible for pension prevailed and that is being cited as the prime reason for the increasing number of pensioners.

Assuming that each pensioner household has 1.3 pensioners on an average, the 32.60-lakh households are being benefited by the pensions. Which also means that 40% of the total families are covered by the scheme.

Palatial homes:

Enumerators deployed for the survey that covered the entire State through a scientific sampling process found beneficiaries living in palatial houses and some others tutored to respond to their queries.

The proportion of ineligible was found to be high when agriculture, trade and business were reported as the sources of income.

The report holds errant elected members culpable for such irregularities for pocketing the spartan resources being spent for welfare of the indigent.

Talaq Bill in a cliffhanger in Rajya Sabha

In News:

With the arithmetic in Rajya Sabha slowly shifting in favour of the ruling NDA alliance, voting on the Muslim Women (Protection of Rights on Marriage) Bill 2019, popularly known as the Triple Talaq Bill, is expected to go down to the wire.

Details:

The legislation was introduced in Lok Sabha on June 21 and the government is keen on passing it in both Houses in this very session. It was the first legislation introduced by the Modi government in its second term.

The legislation makes it illegal for a Muslim man to divorce his wife by uttering the word “talaq” three times and provides for a jail term of three years for violators.

In its last outing, the Bill could not pass the muster in the Upper House as the opposition had a stronger presence and lapsed along with 16th Lok Sabha. In February the government brought in the Bill via an ordinance to keep it alive.

In Rajya Sabha, the BJP alone now has 78 members, and together with its allies, it has 115. Broadly, the opposition bloc led by the Congress’s 48 members has a total of 107 votes.

Abstention option:

At first glance the NDA is well ahead of the opposition in terms of numbers. However two of its allies — JD (U) which has six members and AIADMK with 13 members, have questioned the “criminality clause”. “We can’t vote in favour of the Bill but at the same time we can’t be seen opposing the BJP either. So in all likelihood we shall abstain if it comes down to voting,” a senior AIADMK leader said.

It’s the neutral bloc of parties that include the Telangana Rashtra Samithi, Biju Janata Dal and YSR Congress Party that will decide the fate of the vote. Together these parties have 13 members. All three parties maintain that they are against the criminality clause in the legislation. However, they remain uncertain on the course of action in case of a vote.

“We are opposed to the criminality clause that the government has retained. We haven’t decided what to do in case of voting,” BJD’s Rajya Sabha floor leader Prasanna Acharya said. The party has seven members.

TRS yet to decide:

The TRS is also equally circumspect. “We oppose the criminality clause but as far as voting is concerned, we will make up our mind when the legislation reaches Rajya Sabha,” TRS’s Keshav Rao said.

The YSR Congress Party with its two members does not want to be seen openly opposing the BJP. A senior leader hinted that it might also take the AIADMK route of abstaining in the event of a vote.

Defence allocation disappoints military

In News:

There is disappointment in the military and industry over the defence allocation in the Union Budget. There are questions on the overall military modernisation and the big-ticket deals lined up for conclusion this year as no resources are left for new procurements.

Details:

“The capital expenditure allocated for the Navy and the Indian Air Force (IAF) does not meet their committed liabilities this year. Services had taken up the matter with the Defence Ministry after the interim Budget,” a defence source said on condition of anonymity.

Finance Minister Nirmala Sitharaman, as Defence Minister previously, had promised to take up the matter with the Finance Ministry and get it addressed in the full Budget. “But nothing has been done,” the source said.

Committed liabilities are payments for deals signed and typically spread over several years. The remaining part of the capital head goes for new procurements.

Industry downcast:

The industry too has given the thumbs down to the defence budget. There was no major expectation on defence, but this is actually disappointing, a senior industry official said. “One expected easing of Foreign Direct Investment (FDI), but the decision was excluded,” said another official of a major Indian company.

The IAF has committed liabilities of Rs. 47,400 crore, as in the past few years, it had signed major deals such as those for 36 Rafale jets and the S-400 air defence systems and is beginning to induct platforms such as the CH-47F Chinook heavy lift and AH-64 Apache attack helicopters. In contrast, its capital allocation is Rs. 39,300 crore. Similarly, the Navy’s committed liabilities stand at Rs. 25,461 crore while the capital allocation is Rs. 22,227 crore.

The Navy has major deals lined up and they are in advanced stages. A deal for 24 MH-60R multi-role helicopters from the U.S. valued at $2.6 billion is expected to be concluded by year-end. A proposal for 10 more P-8I long-range maritime patrol aircraft estimated to cost over $3 billion is waiting for clearance from the Defence Acquisition Council (DAC).

This means the Navy and Air Force have no money left for new deals, and may default on earlier payments as well. The Army with its large size has a huge revenue burden and a significant part of it goes towards salaries. For the coming year, the Army has a total shortfall of Rs. 12,000 crore of which Rs. 6,300 crore is in the capital head and around Rs. 5500 crore in non-salary expenditure.

The only relief the services were given was waiver of basic customs duty for import of equipment not manufactured in the country.

320 elephants ‘leased’ by Assam have not returned

In News:

Assam has, over the years, transferred 320 elephants to other States through an ambiguous leasing system. None of these animals has returned, and many are not even traceable.

Details:

A December 2007 report on captive elephants by the State’s Wildlife Crime Prevention Unit (WCPU) said 259 elephants were transferred outside the State between 2003 and 2007. Records with the Assam Forest Department said 61 elephants had been transferred since 2008.

Immediately needed:

The WCPU report said corrective steps ought to have been taken for stopping such transfer or transportation and to bring back the captive elephants after the expiry of the permission. It also said that Assam immediately requires the Captive Elephants (Management and Maintenance) Rules, the draft of which was awaiting the approval of the State Cabinet.

The scenario, wildlife activists said, has not changed in more than a decade after the WCPU report.

“Elephants are sold in the guise of a lease, whose term is usually not mentioned. The Wildlife (Protection) Act, 1972 is violated through this system that borders between legality and illegality. An elephant is sold for Rs. 10-15 lakh, depending on whether female, male and tusker. The juveniles are invariably sold, although technically only those above 8-10 years old — the period when they reach maturity — should be transferred,” said a wildlife activist declining to be quoted.

Forest officials dealing with the transfer of the elephants allegedly get a cut from the sale disguised as lease. Investigation also revealed most transfers are made on a common plea — that the elephant owner is poor and does not have the resources to maintain his elephants.

The report also cites veterinarian and elephant expert Kushal Kumar Sharma as saying in 2006 that 78 elephants were sold in Bihar’s Sonepur animal fair and, from there, 35 elephants were taken to Kerala.

The report also said the elephants are “treated inhumanly by their owners”.

Nepal is turning Everest trash into treasure

In News:

In a bid to save Mount Everest from trash, Nepal conducted a month-long cleaning campaign and collected around 10,000 kg of rubbish from the region.

Details:

For the mega clean-up drive, government and non-government agencies, along with a dedicated Sherpa team, not only brought the litter down but also removed four dead bodies from the roof of the world, Xinhua news agency reported on Sunday.

Instead of sending the solid waste straight to the landfill near Kathmandy, the items were segregated, processed and recycled as raw materials for various products. “We segregated the collected materials in different categories such as plastic, glass, iron, aluminium and textile. Of the 10 tonnes of waste collected, two tonnes have been recycled. The remaining eight were soil mixed with wrappers and semi-burned items, which could not be recycled,” Nabin Bikash Maharjan, the head of Kathmandu-based Blue Waste to Value, a social enterprise, said.

Besides recycling the waste, Mr. Maharjan’s team is also working with municipalities, hospitals, hotels and different offices to maximise value from waste by recycling, reducing the amount of waste sent to landfills and by creating green jobs.

To make the campaign more effective, the company suggested authorities to set up an initial processing unit in the mountain area itself, so that waste can be segregated immediately and easily managed.

Selling products online:

Though the company does not recycle the materials itself, it collaborates with another firm called Moware Designs to create up-cycled glass bottle products and to sell them online.

Ujen Wangmo Lepcha from Moware Designs said that glass products are trendy and useful for homes home, offices, restaurants and hotels. They are used as decorative items as a flower vase, candle cover, plates, travel cups, regular drinking glasses or as an accessory.

These products, which range from 350 Nepalese rupees to 2,000 Nepalese rupees ($3 to $18), are bacteria free as they are sterilized. These glass items have also been a means of livelihood for local women who shape them into trendy designs.

‘No clarity on fiscal benefits on EVs’

In News:

This Budget is a blueprint for five years for all sectors of the economy. The auto industry needs a stimulus to get the demand cycle going.

Details:

It needed a temporary Goods and Services Tax relief to get the demand back. I hope the Centre will consider it. This government has come up with a clear belief that the mandate that they have got brings responsibility on them to deliver on promises they had made. I find a sense of urgency to get things done.

Everything that has been said about rural India is in line with what has been said before. A few new things were announced that will add to the thrust. So I won’t say that anything has changed drastically pre-Budget and post-Budget. It is the same direction that we have seen. It is easy for us to say what happened and what did not. But the Finance Minister had to ensure that fiscal deficit did not go beyond 3.3/3.4%. Therefore I don’t think everything that one would wish would be possible. The biggest thing that has happened in this Budget is the likelihood of better availability of finance and the likelihood of rates coming down. And that is a big thing.

Financing is an issue:

Today, for example, it is not that the demand is not there but a good number of people are not getting the financing. Hence, if financing is made easily available it will make a huge difference in the market.

As far as fiscal benefit on electric vehicles (EVs) is concerned, what is not clear to me is whether this will only benefit personal buyers or also benefit fleet buyers.

Many benefits have been announced by the government such as FAME II benefit, registration being free and this announcement as well as incentives for local manufacturing to EVs and benefits for setting up charging infrastructure. As an industry, we could not have asked for more. Though, there is never enough. Now, it is up to us and other players to make this EV dream a reality. Our EV strategy has always been very aggressive and we do not need to change anything because of the Budget.

In FAME-II, there’s a lot of money set aside for charging infrastructure. The government gives a fair amount of subsidy if you want to set up a charging infrastructure and this will help.

Income tax benefits to those companies that are setting up manufacturing for lithium ion batteries in India or solar will also benefit. EV is a one-term opportunity and India should become a hub for EVs for the emerging markets.

However, the main challenge is translating the intent to on-ground implementation. EVs is the biggest opportunity or the biggest threat to Make in India, depending on how we handle it. India’s economy has to grow at 7% and for that is there enough in the Budget to spur demand? That is the only question mark in my mind.

Road to agricultural and rural prosperity

In News:

A truly agriculture and rural development-focussed Budget, it has adequately met the twin objectives of growth and inclusiveness.

Details:

When doubling of farmers’ income is being rigorously pursued by the government, a fresh slew of measures through this Budget will only firm up the prospects of the agriculture and rural development sectors. The crux of the Budget is ‘sustainability’ in every aspect, be it agriculture practices or economic viability.

An announcement of formation of 10,000 new FPOs over the next five years is a step towards the same. With this, the economies of scale can be harnessed to achieve the goal of doubling farmer’s income by reduction in input costs and assuring better price realisations by the farmers for their output.

The incentives proposed for women SHGs will not only lead to livelihood generation and women empowerment, but also nurture first-generation entrepreneurs though the MUDRA loans of Rs. 1 lakh. With the proposed interventions, not only farmers, but also rural entrepreneurship will get the necessary boost.

A new scheme — Pradhan Mantri Matsya Sampada Yojana — will give enough confidence to those who are in fisheries sector, to enhance their income with better fisheries management, infrastructure creation, increasing production and productivity, improved post-harvest management bringing economic viability of the sector. As the government wants to extend the parameters of ease-of-doing business and ease-of-living to the rural areas too, the emphasis of ‘Gaon, Garib and Kisan’ will see the uplift of rural lives of farmers and the poor, equally. The government has shown that every person having potential to bring economic revolution will be given an equal opportunity. Another new scheme — SFURTI — is an attempt in this direction.

Rural artisans have received a holding hand from the government in a cluster-based development approach that will upgrade regional and traditional industries, benefiting about 50,000 artisans. Now, under Pradhan Mantri Gram Sadak Yojana, a road network of 1.25 lakh km will bring more villages to rural markets. Enhancing the prospects of agripreneurs, the ASPIRE scheme will create 50,000 skilled rural entrepreneurs, especially in the rural agriculture sector.

Power generation:

To expand the income sources of our farmers, there is a proposal to enable them to take up power generation activities on their field to transform the ‘Annadata’ to an ‘Urjadata’.

For relieving farmers from uncertain prospects, the States will be forced to implement e-NAM mechanism for better operations under the APMC Act.

The concept of zero-budget farming, which some farmers have exemplarily proved to be viable, will boost the confidence of farmers. With conventional means, the farmers will be able to enhance their income levels by keeping the input costs under control.

Integration of funds from various Ministries to fund the Jal Shakti Abhiyan may see critical water blocks being regained. In a nutshell, ‘sustainability’ has largely remained at the centre of this Budget.

A Budget for the masses

In News:

As Ms. Nirmala Sitharaman presented her maiden Budget, public expectation towards Union Budget 2019-20 was extraordinary, given the massive victory of the Modi government and the state of the economy. GDP growth has slowed down, and global outlook turning gloomy, amid heightened trade tensions and fear of prolonged slowdown in the euro zone.

Growth-focussed:

The Finance Minister presented a Budget that focussed on growth, touching every aspect of the economy, especially job creation.

The most reassuring aspect was the fiscal deficit target of 3.3% for FY20, although a large segment of intellectuals would have been comfortable even with 3.5% in lieu of a growth Budget. The government’s focus on international borrowings will prevent crowding out the private sector borrowing in the domestic market as well as help establish sovereign yield curve.

Lower borrowing in the domestic market should be positive for the currency and interest rate, and therefore interest costs will come down. Housing has been and continues to be a priority for the government.

The FM said that the government had already built 1.5 crore houses and would build 1.95 crore houses under the Pradhan Mantari Awas Yojna (PMAY) — Gramin over the next two years.

Also, the time taken to complete construction of houses under PMAY has collapsed from 314 days in 2015-16 to 114 days in 2017-18, thus reassuring that the target of Housing for All by 2022 will be met.

The FM has incentivised people buying affordable houses, by increasing fiscal incentives on a home loan. The Budget has provided for an increase of up to Rs. 1,50,000 deduction p.a. on the interest component of a home loan borrowed before March 31, 2020, provided the property value is under Rs. 45 lakh. With this, the total fiscal incentives on a home loan by way of interest deductions are Rs. 3.5 lakh p.a.

This additional fiscal benefit will also lead to increase in the loan eligibility of the borrower. Apart from this, there is already a tax benefit on repayment of principal of up to Rs. 1.5 lakh.

Having said all this, if the borrower buying such a property also fulfills all the requirements of the PMAY scheme, then the effective overall interest rate on his home loan can be below 4% p.a. even though the nominal home loan interest rate is 8.7% p.a. This should provide a huge boost to affordable housing.

There has been a massive clean-up of NPAs of the banking sector in the past few years and the Rs. 70,000 crore recapitalisation plan will adequately bolster PSU banks’ capital base and improve credit uptake.

The FM said that the government will provide a one-time, six-month partial credit guarantee to PSU banks for first loss up to 10% for the purchase of high-rated pooled assets of financially sound NBFCs.

This will incentivise banks to lend to NBFCs. The FM has cut the tax rate to 25% for all the corporates with an annual turnover of up to Rs. 400 crore from the earlier Rs. 250 crore thus covering 99.30% of all corporates in India. This is a step in the right direction.

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