News Wrap

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The Union Government of India has accepted the 14th Finance Commission’s recommendations to devolve an unprecedented 42% of the divisible tax pool to states during 2015-16 to 2019-20, against 32% suggested by the previous commission. In 2015-16, the states will receive Rs 5.79 lac crore of the Centre’s expected gross tax receipts of Rs 15.67 lac crore. The share of states will rise to 51.55% compared to the 2014-15 estimate of Rs 3.82 lac crore. Tax devolution form a larger part of the transfers from the Union Government than earlier. Considering the recommendation of Rs 5.37 lac crore of grants to states, total devolution to states will increase to 47% of the divisible pool in the next five years from 39.5%, suggested by the previous Commission. Greater devolution to states implies fiscal space for the Central Government will reduce in the same proportion, even though during the five-year period, the government would have Rs 49.14 lac crore from the divisible pool. While suggesting grants to states, the Commission has done away with the distinction between Plan and non-Plan expenditure. Earlier under ‘‘conditional transfers’’, funds were given to states for specific purposes, which meant that they had little flexibility in their use. The 14th Commission has recommended that the government largely do away with this distinction between ‘‘unconditional’’ and ‘‘conditional’’ transfers, reinforcing the ongoing movement towards greater decentralization.

On the shares of individual states, the 14th Commission has introduced two new considerations of change in population between 1971 and 2011, and giving credit to success in retaining forest cover, in addition to the traditional population, per capital income and area considerations. The Commission suggested performance based grants to panchayats and local bodies. The ratio of basic-to-performance grant would be kept at 90 : 10 for panchayats, and 80 : 20 for municipalities. The Commission has sought state’s fiscal deficit to be fixed at an annual limit of 3% Gross State Domestic Product (GSDP), with flexibility of 0.25% if its debt-GSDP ratio was upto 25% in the preceding year. On the Goods and Services Tax (GST), the Commission has proposed a more generous compensation formula for states, to be delivered through a guaranteed pool of funds. The West Bengal government’s share of Central Taxes has been raised to 7.324% from 7.264%. Bengal is getting almost Rs 20,000 crore additionally, in 2015-16, as the Finance Commission has raised its share of federal taxes slightly, and approved a special grant in aid of Rs 8,449 crore, because it is a revenue-deficit state.

Railway Budget
The first full fledged Railway budget of the BJP Union Government of India, for 2015-16, noted that new trains will be announced, only after the completion of a review that is underway to evaluate the capacity of various routes. The new Rail budget is devoid of regional considerations, in terms of new railway lines. There is a proposal to introduce a modern train system called ‘‘train sets’’, similar to bullet trains in design, and can run on existing tracks, without an engine to haul them. Proposed investments will involve an unprecedented increase of over 50%, to over Rs 1 lac crore, during 2015-16. The proposed increase in railway freight rates for goods will rise to 10% through re-classification. The move would fetch an additional Rs 4000 crore of revenue in 2015-16. The additional resource mobilization is expected to increase goods earnings by 13.5% to Rs 1.21 lac crore in the fiscal year. Passenger fares have been left unchanged. There shall be steps to give passengers a better travelling experience. Indian railways will find it easier to give out contracts. The five-year investment road map, is part of the promised vision for 2030. Operating efficiency is aimed to improve to 88.5% in 2015-16. The freight rate for cement, coal, and others has been hiked by 10%. Investment of Rs 8.50 lac crore is envisaged in five years. The plan outlay of over Rs 1 lac crore for 2015-16 will be utilized for the acquisition of locomotives, coaches and wagons, doubling of railway lines, gauge conversion of rail lines, and new rail lines. The investment on Railways is expected to be catalyst for overall growth, in terms of a five-year perspective. The operating efficiency has improved to 91.8% (2014-15), from 93.6% (2013-14). The depreciation reserve fund has been raised by Rs 1050 crore to 7900 crore.

Jews Flee France
Chased away by acts of anti-semitism and a growing climate of intolerance towards’s Europe’s biggest Jewish community, Jews are fleeing France in record numbers to escape anti-semitism. About 7000 French Jews left for Israel in 2014, double the number in 2013. French Jews are leading an exodus from Europe to Israel. Since Israel’s foundation in 1948, France is topping the list of countries from which immigrants moved to Israel. The number of immigrants who came to Israel from the democratic world has been greater than the number of immigrants fleeing countries in distress. Record breaking ‘‘Aliyah’’, the Hebrew word immigration to Israel continues. France has 500,000 to 600,000 Jews, and is second only to the United States and Israel, as home to people of Jewish origin. French community leaders are alarmed over a new anti-Semitism emerging among France’s Arab dominated urban housing estates, and entering popular culture. During the Nazi occupation of France in the 1940s, 70,000 Jews were deported to German death camps.

The rise in departure of Jews is in response to a new phase of violence. In March 2012, Mohammed Merah, an Algerian immigrant, shot dead seven people in Toulouse and Montauban, amongst whom were three children at a Jewish school. A Frenchman of Arab-origin shot dead four people at the Jewish museum in Brussels. Being angered by Israel’s military offensive in Gaza, in the summer of 2014, gangs attacked synagogues in and around Paris. At their home in the Paris suburb of retail, a married couple were assaulted and the wife raped in an anti-Semitic attack, in December 2014. Along with the slaughter at the offices of satirical magazine ‘‘Charlie Hebdo’’, in January 2015, four Jews were killed when an Islamist gunman stormed a Kosher supermarket, and policewoman gunned down in cold blood. Many French Jews were also leaving to live in the United States, Britain and other countries. Fear of religious attacks forces French Jews to avoid religious dress and certain districts. The French state is also not fully tolerant of religion, in the form of restrictions on the ritual slaughter of animals, moves to restrict cicumcision, and a long standing right to refuse to take exams on the Sabbath.

On 15 February 2015, a Jewish man was shot in the head and killed near Copenhagen’s main Synagogue in the city centre. Prime Minister Benjamin Netanyahu of Israel, called for massive immigration of European Jews to Israel, warning them to stay prepared for more attacks. The Israel government is considering a US $ 46 million program to support aliya (immigration) of Jews from around the world.

Frontier
Vol. 47, No. 37, Mar 22 - 28, 2015