Citizens' Issues
Countdown begins for what Jaitley, Prabhu have budgeted for
New Delhi : From average tax-payers and rail commuters to global investors and analysts, all eyes for the next seven days are on two crucial Indian budgets to be tabled by the ministers overseeing the finance and railways portfolios.
 
While Railway Minister Suresh Prabhu presents his budget on February 25 amid a growing gap between the money India's railroad network makes and spends, Finance Minister Arun Jaitley has this task four days later in sending the right cues on reforms and in the national budget.
 
In the interim, Jaitley will also table in the Lok Sabha, the lower house of parliament, the Economic Survey for 2014-15, authored by Chief Economic Advisor Arvind Subramanian, which will seek to give an overview of the current state of the Indian economy and the required policy actions.
 
In a recent post on YouTube, Minister of State for Finance Jayant Sinha said the uplift of the poor, progress of farmers and employment for the youth will be the focus of the upcoming budget.
 
"This budget will be a forward-looking budget that will ensure that India will continue to be a haven of stability and growth in a very turbulent and choppy global environment," he said.
 
Earlier, Finance Minister Arun Jaitley had spoken about facilitating tax payers.
 
In presenting its expectations of the budget, the Indian industry has highlighted the importance of clarity in tax laws and other significant implementations needed to boost trade and economy.
 
"The proposal to reduce corporate tax rates announced as part of last year's budget is undoubtedly a step in the right direction. However, there are several other factors that warrant a closer look," Federation of Indian Chambers of Commerce and Industry (Ficci) said in its pre-budget memorandum.
 
"There is a need to ensure stability in tax policy in the medium term. For instance, in an income-tax context, this involves eliminating frequent policy reversals, both directly (for example through the removal of MAT exemption to SEZ units) as well as indirectly," it said.
 
In this regard, the government has said tax exemptions are costing India's exchequer about Rs.200,000 crore annually and it is necessary to phase them out to provide a level playing field for domestic companies to make for a successful Make in India.
 
"In direct tax, we are losing about Rs.1 lakh crore in these exemptions. The cause may be noble, but it distorts the taxation system. In case of indirect tax also, we are almost losing Rs.1 lakh crore because of various exemptions given for SEZs, EOUs," Revenue Secretary Hasmukh Adhia said last week on the ministry's YouTube channel.
 
The Indian economy grew 7.3 percent in the third quarter ended December 31, 2015 -- down from the 7.7 percent expansion in the previous quarter, but marginally up over the 7.1 percent over the like period of last fiscal, official data showed last week.
 
The government's mid-year economic review, released last December, lowered the economic growth forecast for the current fiscal to the 7-7.5 percent range, from the previously projected 8.1-8.5 percent, mainly because of lower agricultural output due to deficit rainfall.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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MG Warrier

1 year ago

This year, compared to previous years, the Budget exercise has created a higher level of expectation. Even the exercise to elicit views from public did attract public attention and over 7000 suggestions were posted. Finally, FM may not be able to come out of the contours traditionally set for the Budget. But, FM and his colleagues being aware of the thinking of those affected by Budget, by itself, can work as a change agent for future evolution of Government policy.

In disaster, bank accounts do not provide financial security
Only 35 percent of Indians above the age of 15 had bank accounts in 2011 (26.5 percent of females and 43 percent of males), according to a World Bank estimate. By 2014, this number, which coincided with cyclones Phailin and Hud-Hud ravaging the coastal states of Andhra Pradesh and Odisha, increased to 53 percent (43 percent of females and 62 percent of males), according to World Bank data.
 
Although 10 million bank accounts were opened on a single day - a global record, as part of Prime Minister Narendra Modi’s nationwide plan to ensure the poor have bank accounts - more than 30 percent remain without money, as IndiaSpend reported earlier, quoting government data.
 
In an attempt to find out how financially secure people were at the time of these disasters, we travelled across the most-ravaged areas of these two states, talking to families in three villages and 11 urban areas. These are the initial findings, albeit from a small random sample of about 200 households:
 
94 percent of households have bank accounts
 
Contrary to popular opinion, 94 percent of the families interviewed said that they had at least one bank account. Many had multiple accounts that they had to open to benefit from various government schemes, which do not allow them to use existing accounts.
 
While 28 percent had a Pradhan Mantri Jan Dhan Yojna (PMJDY) - or Prime Minister’s People’s Wealth-account, 16 percent said they opened bank accounts to receive post-cyclone damage compensation; 13percent opened them earlier to access other government schemes and benefits.
 
Most people only used these accounts to gain state benefits: Only seven percent used bank accounts for work-related transactions and 19 percent for savings schemes.
 
People were uncomfortable putting money into these accounts either because of a lack of trust, or simply because they didn’t save enough after daily needs were met.
 
But there were other forms of investments people claimed to be making.
 
Due to a lack of alternatives, or tempted by good returns, many still participated in private chit funds despite knowing a history of fraud. Many women were part of more informal self-help groups or social-kitty systems, where 20 to 25 women got together and pooled in Rs. 10,000 to Rs 20,000 per person into one account. They accessed these funds based on their needs and returned it with interest over a fixed period of time.
 
This system works primarily on the social trust that people have with each other, but many people who had asset-based livelihoods, such as grocery stores, invested in more assets for their shops rather than keeping the money liquid.
 
So do bank accounts mean better financial security, and do they help people when calamities strike?
 
Friends, not government, are first responders in crisis
 
As many as 73 percent of those interviewed were helped by friends and relatives to recover after cyclones. These cases were rarer in urban than rural areas, possibly because of distances or limited resources to share. This indicates people rely not only on social-safety nets but also on what is most accessible.
 
Nearly 76 percent of responders borrowed money either from their friends or from money-lenders to recover from cyclone damage. These loans ranged from Rs.3,000 to Rs.2 lakh at two-five percent monthly interest.
 
Since the majority of these people had bank accounts, low interest-rate government loans may prove more effective than fixed but insufficient compensation. This would help combat usurious interest rates, while involving the banking system.
 
Many people working in houses as maids, or shops as casual workers, also borrowed money, clothes, medicines and other food supplies from their employers, although at low or no interest rates. In Khaja Sahi, a slum in Berhampur flattened by the cyclone, a Muslim Trust helped people rebuild lives, another example of an informal safety net.
 
Most have life insurance but don’t know about other protection - or don’t use it
 
Many people had some form of life insurance, but none of those we spoke to had any access or knowledge about other types of insurance, especially for work-related assets or housing, except those benefitting from World Bank-funded housing projects. This could be because there are not too many insurance products available in the market, particularly for those living or working in the informal sector.
 
As many as 26 percent of respondents said they had some form of life insurance; 25 percent of them said they had a policy with the Life Insurance Corporation and one percent had a policy with the Pradhan Mantri Bima Yojana (Prime Minister’s Life Insurance Policy), although most did not know how to operate it.
 
About 43 percent of households said they were covered by the National Health Insurance Scheme, the Rashtriya Swasthya Bima Yojana, but only 21 percent of these said they had used it, since it applies only for major medical treatments and emergencies.
 
What makes people’s lives insecure?
 
A third of families mentioned health as the primary reason for savings, followed by education (27 percent), future eventualities (17 percent) which could include cyclones, rains and any other everyday challenges, children’s marriages (nine percent) and livelihood-related risks (eight percent). About seven percentof families also mentioned house repairs as a motivation to save.
 
These are indications that while most people consider health, education and livelihoods as future risks, not as many considered cyclones and disasters.
 
This could also give an insight to policy makers working on reducing climate-related risks and provides an indication of mistrust of public services, such as health and education. People have taken it upon themselves to save for those, above private affairs, such as marriages and home repairs.
 
In disasters, where people have limited liquid assets or financial security, having bank accounts is an important step, but it is not enough for financial security.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Ramesh Poapt

1 year ago

very well said!!

Budget to be growth-oriented with eye on fiscal deficit: Official
New Delhi : Ahead of the February 29 presentation of India's budget for the next fiscal, the government on Monday promised a growth-oriented budget that would also keep in mind the country's fiscal constraints.
 
"Given the fiscal parameters and other constraints, the effort of the government will be to have a budget which is growth-oriented and that will maintain the momentum of growth," Economic Affairs Secretary Shaktikanta Das said in an interview on the finance ministry's YouTube channel.
 
On the government's expenditure plans and the fiscal deficit target for the next fiscal, he said the effort will be to maintain a balance between both of these.
 
"A balance has to be found between the expenditure requirements and how much the government can borrow and the repayment capacity. The truth lies in the middle, and the government has to do a balancing act," he said.
 
The government said last week that the reason behind India's high growth rate is the quality of public expenditure.
 
"In the current fiscal, our capital expenditure, which goes into asset creation, has seen a significant growth as against revenue expenditure, which goes into salary payment and rent ... and is resulting in high growth," Finance Secretary Ratan P. Watal said on Saturday on the ministry's YouTube channel.
 
Noting that revenues being received are in tandem with expenditure the government is incurring, he said this meant that things were moving as planned.
 
According to official data, plan expenditure during April to December was 74.4 percent of the budget estimates, as compared to 61.3 percent during the same period a year ago.
 
The government has targeted reducing the fiscal deficit to 3.9 percent of the gross domestic product (GDP) in the current financial year, from four percent last year, and reduce it further to 3.5 percent in 2016-17.
 
The Indian economy grew 7.3 percent in the third quarter ended December 31, 2015, down from the 7.7 percent expansion in the previous quarter, but marginally up over 7.1 percent recorded in the like period of last fiscal, official data showed earlier this month.
 
The government's mid-year economic review, released December, lowered economic growth forecast for the current fiscal to the 7-7.5 percent range, from previously projected 8.1-8.5 percent, mainly because of lower agricultural output due to deficient rainfall.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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