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Planned upliftment of Rural India by Rural Infrastructure Development Programmes remains unfinished. Even though 39,144 kms of rural roads have been constructed over the last ten years, the plan allocation (2014-15) towards the Rural Road Scheme (Union Ministry of Rural Development) of Rs 4529 crores is 47.8% lower than the revised estimates for 2013-14. The Indira Awas Yojana—the Rural Housing Programme has a plan allocation (2014-15) of Rs 11,865 crores, a drop of 13.1%. The subsidy for rural electrification under Rajiv Gandhi Vidyutikaran Yojana has fallen to Rs 4542 crores (2014-15) from Rs 4,04,130 crores (2013-14). In 2014-15 the allocation towards the National Rural Drinking Water Programme has gone down to Rs 108 crores, due to restructuring of the scheme.
The interim Railway Budget for 2014-15 has kept passenger fares and freight rates unchanged and launched 72 new trains. The share of gross working expenses in total earnings or the operating ratio, has increased from 90.2% (2012-13) to 90.8% (2013-14). The railways plan outlay for 2014-15 has been kept at a relatively modest level of Rs 64305 crores, compared to Rs 59359 crores (2013-14). Projections for 2014-15 are dependent on an increase in traffic revenues, higher internal revenues and extra budgetary resources. Itanagar (capital of Arunachal Pradesh) will soon be on the railway map as the Harmuti-Naharlagun line is expected to be commissioned shortly. Meghalaya will benefit by new lines Dudhnoi-Mehendipathar. The 510 km Rangiya-Murkongselek section will be converted to broad gauge. The Udhampur-Katra (Vaishno Devi Shrine) line will be opened shortly. The Rail Tariff Authority to be functional during 2014-15 will supervise fare hikes and passenger charges. Any attempt to aggressively raise freight rates may lead to a loss on an already declining market share vis-a-vis road haulage. Rising cost is accelerated by rise in fuel price, pension and salary-dearness allowance. There are no significant funds for renewing ageing assets, which would be detrimental to rail safety.
Union Budget Interim
India’s economy is growing at about 5%, encouraged by a 4.6% growth in agriculture. The revenue deficit is 3.3%, down from 3.6%, achieved sharply compressing expenditure. Interest payments are at 43.3% of net tax revenue. The budget estimates for 2014-15 reckon a 12.3% increase in total interest payments. The fiscal deficit is 4.1% of GDP. Gross tax revenue is expected to grow at 19% over 2013-14, although the receipts in 2013-14, were 6.2% below expectations. The interim budget has kept income-tax rates unchanged. In an attempt to provide stimulus to the manufacturing sector, excise rates on many capital goods and consumer goods, have been reduced by 2% to 10%. Excise duty has been reduced for small cars, scooters, commercial vehicles, larger cars and sports utility vehicles. Excise duty on mobile handsets will be 6% on cenvat credit to encourage domestic production. More than 2.4 million ex-Defence personnel will benefit from the ‘one rank, one pension’ scheme, costing Rs 500 crores. There will be moratorium on interest on student loans, taken before March 2009, to benefit 9 lac borrowers. Substantial subsidy payments (almost 1% of GDP) are not accounted for, because payments have been deliberately delayed. The union government has transferred over Rs 2 lac crores for the Central Plan to State Plans. Large programmes for school education, health care, women and child development and rural development have been transferred from the centre to the states. A pre-poll receipe to woo voters in some states where the centre is viewed as a villain.
West Bengal’s tax revenue for 2013-14 grew 19% at Rs 39,100 crores. Higher tax collection has reduced the revenue deficit from Rs 13,815 crores (2012-13) to Rs 12,069 crores (2013-14). Property owners will pay stamp duty 6% instead of 7%, on all property of market value upto Rs 30 lacs, instead of Rs 25 lacs. Simplification in VAT registration and reforms in professional tax administration have actually raised tax revenues. The state’s indebtedness is expected to grow around 35%. The revenue deficit is 300%. The gross state domestic product is 5%. The health of state economy presents a gloomy scenario all the way.
US Federal Reserve Reductions
The US Federal Reserve has been instituting further cuts to its massive economic stimulus programme. At end January 2014, the Fed announced a $10 billion (6 billion Pound) cut to its bond-buying programme, known as Quantitative Easing (QE). In December 2013, the programme had already been cut from $85 billion a month to 75 billion Pound. If cuts continue at a rate of $10 billion a month, the programme which started in September 2012, could be over by end 2014. The Fed is keen to keep interest rates close to zero, where they have been since 2008. Economic activity in USA has picked up in the recent quarters. The unemployment rate declined, but remains elevated. Household spending and business fixed investment advanced more quickly in recent months, while the recovery in the housing sector slowed somewhat. USA just added 74,000 new jobs in December 2013, when only 62.8% of the adult workforce participated in the job market. With USA withdrawing its colossal stimulus programme, financial tremors are shaking emerging markets. Important emerging economics, including India, Turkey and South Africa, have all raised interest rates, to defend their currencies. The gradual phasing out of quantitative easing has led to investors becoming less confident about high yielding, risky markets. US is experiencing the strongest growth in annualised consumer spending (3.3%) and a surge in exports (11.4%).
Terror from desert group
Ansar Beyt al-Maqdis (ABM) or champions of Jerusalem is based in the isolated northern Sinai desert, next to the Israeli border. It first emerged in 2011, amid a security vacuum caused by the fall of Egypt’s Hosni Mubarak. Its operations expanded drastically, after Egypt’s Islamist President Mohamed Morsi was ousted in July 2013. The Sinai based insurgency has, of late, spread to the Egyptian heartland. ABM is now capable of increasingly sophisticated attacks, in and outside the peninsula. As premier terrorist threat to Egypt, the ABM fighters have advanced their capabilities from fighting primarily a battle of survival in Sinai, to targets west of the Suez canal, that include car bombs and assassinations. ABM’s targets have been police and soldiers, as revenge for the security forces’ suppression of Islamist dissidents following Morsi’s removal, and for the Egyptian army’s ongoing counter-insurgency in Sinai. In the last week of January 2014, the al-Qaida inspired group claimed responsibility for shooting down a military helicopter in Sinai, using Manpads, a sophisticated portable missile launch system; assassinating a senior policeman, and exploding a huge bomb outside Cairo’s police headquarters. Since July 2013, at least 340 attacks have been reported in Sinai, and ABM has claimed for more of those than other militant groups. ABM has about 1000 members, and the numbers are growing, with decades-old tribal disenfranchisment in Sinai, and the continuing suppression of political Islamism across Egypt, increasing its appeal.
Wine in Red China
Colour red is a positive colour in Chinese culture, and is synonymous with wealth, power and luck. It is affiliated with the Communist Government, while white is associated with death. Chinese drinkers sipped 1865 bn bottles of Vin Rouge in 2013, an increase of 136% over five years, making it the leading market for red wine. Between 2005 to 2013, red wine sales in China rose by 175%, and dropped by 18% in France, and by 5.8% in Italy. Chinese drinkers’ growing taste for wine is evidence of increasing westernisation.
Vol. 46, No. 37, Mar 23 - 29, 2014