FM Jaitley hints at reform-packed Budget, cutting of expenditure

Jaitley said the Budget will focus on reforms in power, energy, railways and ports and also hinted at more public investment into these sectors


Ahead of the Union Budget, Finance Minister Arun Jaitley Friday hinted at more reforms for faster economic growth and rationalisation of expenditure, saying the government does not believe in living on borrowed money.
"We're trying to rationalise expenditure as far as the government is concerned because we do not want the government to live on borrowed money indefinitely. The whole concept of spending beyond your means and leaving the next generation in debt to repay what we are overspending today is never prudent fiscal policy," he said.
The statement comes on the heels of the government already touching 99% of market borrowing plan estimated in the Budget, as of end November -- four months ahead of the end of the financial year on 31st March.
Addressing a gathering of top industrialists and planners through video conferencing at an event -- 'Mumbai First: Turning the city into an international finance hub' -- Jaitley hinted that the 4.1% deficit target will be met as also at more cuts in the planned expenditure.
After taking over the charge eight months ago, Jaitley already had reduced planned spending by 10% and since the tax mop up has not been pacing as planned, it has been reported that more cuts are on the way.
The minister also hinted at stable tax regime to be unveiled in the Budget, saying no unfair effort will be made the state and the Centre to mop up revenues.
"Our taxation policy was not exactly investor friendly. In the last few months, we have made a huge effort to smoothen tax disputes and those issues, which were bringing the Indian revenue structure a bad name.
"I've always believed that where taxes are to be paid, taxes will be collected, but no unfair effort will be made by the state so that investors are unnecessarily harassed in that area," he said.
The government recently decided not to appeal against the Bombay High Court verdict in favour of British telecom major Vodafone in a Rs3,000 crore transfer pricing case.
The Finance Minister said the Budget will focus on reforms in power, energy, railways and ports and also hinted at more public investment into these sectors.
Besides, not even 50% of the target from the divestment proceeds has been met so far.


BSE to shift 53 scrips to restricted trade segment
Era Infra Engineering, FCS Software Solutions, Intrasoft Technologies and Shri Lakshmi Cotsyn are among the scrips to be shifted to restrictive trading 'T' segment
Indian bourses BSE and National Stock Exchange (NSE) have decided to shift shares of 53 and eight companies, respectively, to restricted trading segment from 10th February. 
BSE has decided to shift stocks of 53 companies, while NSE will move scrips of eight companies to the restricted trading segment from next week to ensure safety in capital markets and safeguard the interest of investors. 
Stocks that would be transferred on both the bourses include Era Infra Engineering, FCS Software Solutions, Intrasoft Technologies and Shri Lakshmi Cotsyn.
In two separate circulars, BSE and NSE said it would be shifting 53 scrips and stocks of eight companies, respectively to the trade-for-trade or the 'T' group segment.
Under the trade-for-trade segment, no speculative trading is allowed and delivery of shares and payment of consideration amount are mandatory.
The decision is part of a surveillance review to ensure market safety and safeguard the interest of investors, the bourses said.
"Trading Members should note that transfer of scrips for trading and settlement on a trade-to-trade basis is purely on account of market surveillance measure and it should not be construed as an adverse action against the company," the bourses said.
"Further, this is a temporary measure and will be reviewed periodically depending on market conditions," they added.
Besides, BSE and NSE also issued a list of stocks that would continue in the trade-for-trade segment on their respective platforms.
While BSE has identified 206 companies whose securities will remain under restricted category, NSE has listed nearly 80 companies.


HAL’s efforts to revive its Bengaluru airport may lead to legal issues
Hindustan Aeronautics is going all way out to reopen its once-thriving airport in Bengaluru for civil commercial air traffic. However, the agreement between government and private airport operators bars opening second airport within 150kms radius, which may turn to be the bone of contention
Once again, RK Tyagi, chairman of state-run Hindustan Aeronautics Ltd (HAL), has raised the issue of reopening the its airport in Bengaluru for short domestic flights, stating that most major cities in the world have two airports and the city will benefit by doing the same. It may be recalled that the civilian air traffic to HAL airport was closed in 2008 soon after the opening of Bangalore International Airport (BIA), which has now been renamed as Kempegowda International Airport (KIA). However, HAL airport has been serving the private charter flights and the Indian Air Force. It is also a very convenient location for the passengers. Tyagi has stated that because of this diversion of traffic to KIA , HAL airport has lost revenue of about Rs1,500 crore.
However, HAL’s plan to reopen its Bengaluru airport may lead to legal issues. Especially, according to the agreement signed between Indian government and Bangalore International Airport Ltd (BIAL), no commercial airport can operate within a radius of 150kms from KIA. Noteworthy to mention, it is the same clause that is making it difficult to make the Bidar airport operational. Bidar airport is 141kms from Hyderabad’s greenfield airport, or within the radius of 150kms and facing several hurdles. So unless, the Defence and Civil Aviation Ministry comes together and sort issues amicably with private operators, the reopening of HAL’s airport in Bengaluru looks bleak. Tyagi, the chairman of HAL, had been citing examples of how London’s four airports and New York’s six airports have helped in economic progress, but there really need a bigger push at higher level to reopen the second facility at Bengaluru.
Meanwhile, a selected number of public sector units (PSUs) will be divesting this year and chances are that HAL, Bengaluru may go for a 10% divestment initially, which eventually will reach a ratio of 75:25 (government to public). Details of the proposal have not been made public yet.
In order to go ahead with the divestment plan, it was necessary to restructure the Board, which according to the HAL chairman, has just been completed and this will be effective from 1st April this year. The delay was due to the disclosure clauses, and this has been cleared by the competent authorities, who have "allowed the defence aircraft manufacturer to get listed like other PSUs, such as Bharat Electronics".
HAL has other ambitious plans on the anvil. This includes opening of integrated cyrogenic engine facility and the major project work relating to the manufacture of 108 French Rafale fighter jets. It may be remembered that this $22 billion order has been kept in abeyance for several years now due to work share issues. Whether HAL will wholly manufacture these fighters or to what extent various components will be made available by Airbus Industrie has been the bone of contention.
To sort all these out, the Airbus Team is expected in March and work may commence thereafter.
HAL's Koraput division, in Odisha which has just celebrated its golden jubilee, proposes to invest Rs4,530 crore to modernise its plant and machinery. This plant has been specialising in the manufacture of various types of engines, mostly Russian, and in overhauling facilities. Air Marshal Arup Raha, who recently visited the plant, stressed the need for developing the division as engine capital of the country.
In the meantime, it would be worthwhile reconsidering the issue of using the HAL airport for domestic air traffic, considering the establishment and growth of regional airlines that would be serving Tier II and Tier III cities. However, because of the importance attached to the Indo-French project involving Rafale fighter jets, this matter has to be reviewed with great caution and the availability of adequate land needs.

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)



Sanjeev B

2 years ago

HAL seems to be doing this only to strengthen its case as a divestment candidate and to increase its perceived valuation.

HAL has lost many decades as a monopoly for aeronautical engineering in India, with very little to show in terms of completed projects or intellectual property. HAL needs to do this now by completing key engineering and strategic projects, instead of trying to join the commercial airport business.

Vivek Bopiah

2 years ago

Ironically in early late eighties or early nineties it was the then Chairman of HAL who asked the AAI to get out and construct their own airport!
Later when the Pre Qualification process was on for the new airport it was proposed that ATRs - less than 60 seaters, would land at the HAL airport. Since this impinged on the financial viability of the new airport this was dropped.
HAL is now realising their blunder!!!
Col Vivek Bopiah (retd)

Dr Anantha K Ramdas

2 years ago

There is more unbelievable but true fact is that the cab ride to KIA is more expensive than some of the domestic destinations! On your return journey, your "regulated" cabs cost you more than the "free" cabs that are ready to take you back to the city.

The only consolation is the regular service of special Vajra buses to the airport, which are definitely cheaper and affordable; but from their drop off points, one needs to again take the service of an auto who is not "merciful" and quote non negotiable rates, and never come by the meter!

The issue of having coaches has been pointed out to Air Asia because Tony Fernandez and Mittu Chandilya can make this part of their ticket package, collecting the passenger from a given pick up point in the centre of the city and with couple of designated stops. This will be an added attraction.

Once this happens, chances are IndiGo and Jet may follow suit. Even a pooled airport bus service by two or three airlines would make the travellers take the service!

Opening of HAL airport for regional carriers would resolve a lot of problems!

Veeresh Malik

2 years ago

Can anybody imagine if such a stupid rule was implemented for railway stations or bus terminals? There should be a CBI enquiry on how this citizen unfriendly rule was allowed in the first case. Likewise, the Ghewar-NOIDA Airport project should also be put on the fast-track, and the Lonavala AIrport for Mumbai should be commissioned rapidly too.



In Reply to Veeresh Malik 2 years ago

I don't thing Airports can function like our railway stations and Bus stops. I am not a flier but I have the seen the sufferings of the Air travelers with the present Kempe Gowda International Airport. While the Airport inside is good the chaos outside will kill any body. The roads leading to the airport from various points inside the city is unfit for travelling even for cattle. As for other legal issues are concerned they are concerned with bigwigs, it is not going to matter much for common man.

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