News Wrap


The Economic Survey of India for 2014-15 predicted that Gross Domestic Product (GDP), as measured using the recently revised estimates, would grow at a rate between 8.1 and 8.5 percent. It claimed India was on the CUSP of a high growth path. ‘‘A persistent, encompassing and creative incrementalism’’ was predicted, and maintained that big-bang reforms would not happen. The survey indicated that the union budget likely continue the process of fiscal consolidation, but in a ‘limited’ way. Firm control over expenditures and eliminating leakages in subsidies, could ensure a fiscal deficit target of 3% of GDP, for India’s credibility. While the Finance Commission has awarded states an additional Rs 1.16 lac crore in transfers, in 2014-15, the fall in oil prices is likely to give the Union Government of India a windfall of over Rs 1 lac crore. Rs 30,000 crore will be saved on fuel subsidy, and about Rs 77,000 lac will come as additional fuel taxes. The survey estimated incremental GDP growth for 2015-16 over 2014-15 as 0.6 to 1.1 percentage points. A better farm output was expected to raise growth during 2014-15 to touch 8%. Outlining a politically cautious plan, the survey envisaged the conversion of ordinances into legislation, and the ratification of the goods and services tax (GST). It wanted better business setting easier regulation on and less tedious taxes. A pitch has been made for reforming labour laws, building infrastructure and enabling connectivity, to reduce cost of doing business in the country. The survey suggested the creation of single market for agricultural goods, over-ruling individual states’ agricultural produce marketing acts. The Union Government might completely privatise some public sector banks. ‘‘Selective Recapitalization’’ would be applied to the bad loans crisis. The Consumer Price Index (CPI) based inflation is estimated to vary between 5 and 5.5%. The GDP defaultar would be between 2.8% and 3%.

Union Budget
The Union Government of India’s budget for 2015-16 assures continued social sector spending to benefit the poor and disadvantaged. Rs 98,968 crore is allocated to education, Rs 33,152 crore for health, Rs 77,526 crore for rural development including MNREGA, and Rs 22,407 crore for housing and urban development. There will be increased funding of Rs 70,000 crore for infrastructure. Direct Tax proposals could lead to a loss of Rs 8315 crore, but indirect tax proposals will yield Rs 23,383 crore. Personal and Corporate Income Tax rates for 2015-16 will have no changes. The limit of deduction on health insurance premium has been raised to Rs 20,000 from Rs 15,000. For senior citizens the exemption will go up from Rs 20,000 to Rs 30,000. Those above 80 years without Health Insurance, can have deductions of Rs 30,000. Deduction of Rs 1.5 lac is allowed on account of contribution to pension fund, as against Rs 1 lac now. Transport allowance is doubled to Rs 1600, exemption. Other than corporate social responsibility (CSR) funds contributions, 100% deduction has been allowed for donations to Swach Bharat and Clean Ganga Funds. Wealth Tax has been abolished, and there are proposed tax reliefs for yoga instruction and institutions. The rate of corporate taxes would be reduced to 25% from 30%, over the next four years. Service Tax has been hiked from 12.3% to 14%, making eating out, e-shopping and cinemas/theatres more dearer. The budget provides increase in public investments for railways, roads and defence. But allocations for agriculture, rural development, health, school education and women and child welfare have been cut. To curb the generation of black money, competence of immovable property is prohibited.

West Bengal State Budget
West Bengal’s plan outlay 2015-16, has been fixed at Rs 49,507 crore, up by 16% compared to 2014-15. The Rs 1,38,374 crore Budget does not have any increase in existing taxes, nor have any new taxes been imposed. Civic polls in the state are imminent. There is a shortfall of around Rs 5351 crore in the state’s tax revenue collection in 2014-15, as against the targeted Rs 45,413 crore. The state’s fiscal deficit for 2014-15 is estimated at Rs 23,881 crore, an increase of Rs 8592 crore, estimated earlier. A tax collection of Rs 46,496 crore is projected for 2015-16, an increase of only Rs 1083 crores, over projections for 2014-15. Exemption from paying 1% of additional stamp duty on the registration of property, has been raised to value Rs 40 lac, from the existing Rs 30 lac. Value Added Tax for traders having annual turnover of upto Rs 10 lac is exempted, as against present Rs 5 lac. The allocation for minority affairs department has a hike of Rs 296 crore over last year. For 2014-15, there has been lower than expected collection in sales tax (by about Rs 2500 crore), and stamp duty and registration fees (by Rs 1100 crore).

Looted Antiquities
The Islamic State has been filling its war chest by selling looted antiquities. The looted antiquities, worth millions of pounds, are sold directly to western collectors. Some of the artefacts have been sold illegally to buyers in the United Kingdom. Dealers no longer use middlemen to buy looted stone work and paintings from the Middle East. They are now in direct contact with the Islamic State (IS), which is now using its own network to come into contact with the final buyers. Less than 1% of the pieces known to have been stolen by the militants from churches and ancient towns, across Iraq and Syria, have been recovered. Aleppo and Homs are among the 1000 historical sites, raided by IS jihadis and other rebel factions during the war in Syria. There has been heavy looting in the Greek cities of Apamea and Dura-Europe. IS sometimes hires contractors with bulldozers to tear large sites apart. A 12.5% tax is charged on sales of antiquities by private smugglers in IS territory. Frescoes and masonry wrenched from the walls of ancient churches are among the most commonly illicitly traded artefacts. Often following the same channels as oil and arms smuggling, the artefacts are taken across the self-declared caliphate’s borders in several directions, including through Turkey. Proceeds from sales of artefacts are bolstering the IS war chest, alongside oil smuggling, ransoms from hostage taking and racketeering. Ransacking archeological sites is also a kind of cultural cleansing that undermines the morale of the communities the IS invades.

Vol. 47, No. 39, Apr 5 - 11, 2015