News Wrap


India’s Economic Survey (2015-16) suggests that the Indian economy would grow between 7% and 7.25% in 2016-17, well short of the earlier projection of over 8%. The fiscal deficit for 2015-16 would be 3.5% of GDP. The consumer price index inflation is expected to be around 4.5% to 5% in 2016-17. Nearly 42% of Indian households derive bulk of their income from farming. Major concerns relate to domestic factors and a challenging external environment. Fears arise over the still elusive Goods and Services Tax (GST) legislation, a lacklustre disinvestment programme unable to meet targets, a cost subsidy regime, especially for fertilisers, the poor profitability of banks on accounting mounting bad debts, neglect of agriculture, delays in deciding issues by civil servants, and under-performance on maternal and child health indicators. The Survey has called for the Reserve Bank of India (RBI) to ease liquidity conditions, and further cut interest rates. The proposal for a free market agriculture, entails direct transfer of cash to farmers, to ensure transparency.

Union Budget
Total expenditure in the union government of India’s budget for 2016-17 is projected at Rs 19.78 lac crore, consisting of Rs 5.5 lac crore under plan and Rs 14.28 lac crore under non-plan. Increase in the plan expenditure is 15.3% over 2015-16 budget estimates. Fiscal deficit for budget 2016-17 has been fixed at 3.5% of the Gross Domestic Product (GDP) as against 3.9% of the GDP in 2015-16 with assurances that the deficit target will not affect development expenditure in the new financial year. The working of the Fiscal Responsibility and Budget Management (FRBM) Act (2003) will be reviewed. There is no mention of allocation for defence in the budget. The allocation for the agricultural sector has been almost doubled to Rs 44,485 crore. There is no change in personal income tax slab. The ‘Krishi Kalyan’ surcharge will be levied on all taxable services to improve agriculture and rural economy. Rs 17,408 crore has been provided for the Women and Child Development Ministry. 40% of the interest accrued on provident fund withdrawals at the time of retirement, including the Employees’ Provident Fund (EPF) and any super annuation fund will become taxable at the taxpayer’s relevant rate. But faced with severe criticism even from his own party the finance minister finally withdraw this tax at the time of writing [March 8, 2016]. An increase in income tax revenue is budgeted, with voluntary disclosure of unaccounted income, to be taxed at 45%. Dividend income of over Rs 10 lac will face tax of 10% in addition to the dividend distribution tax. Individuals with over Rs 1 crore income, face a surcharge of 15% from 12%.

Rail Budget
The Indian Railways budget (2016-17) consists of a plan size at Rs 1.21 lac crore. There is a shortfall of Rs 15,744 crore in revenue earnings for fiscal 2015-16. Operation ratio has been targeted at 92% for 2016-17, against 90% in 2015-16. Growth of ordinary expenses has been restricted by 11.16%, after building impacts of the 7th Pay Commission recommendations, and planned reduction in diesel and electricity sources would be increased to the world average of 10% over the next five years, from less than 5% of 2015-16. Rs 18.4 lac crore is the revenue target. Passenger fares and freight rates have been left untouched. Passenger earning growth pegged at 12.4%, the earnings target is budgeted at Rs 51,102 crore. Freight traffic is aimed at incremental tariff of 50 million tons, with goods earnings proposed at Rs 1.17 lac crore. Three new superfast trains will include ‘Humsafar’, which will be a fully air-conditioned 3 AC service, with option for meals. The new freight corridors will connect north-south Delhi to Chennai, east-west Kharagpur to Mumbai, and east coast Kharagpur to Vijaywada. A 33% sub-quota for women will apply to all reserved categories. Like the previous year, there are no new trains and no new tracks for West Bengal. In 2015-16 the railways gross traffic receipts fell Rs 15,774 crore short of Budget Estimates. Staff and Pension expenses account for almost half of total expenditure. Depreciation reserve fund has been lowered to Rs 3200 crore from the revised estimate of Rs 5500 crore for 2015-16.

Africa’s National Parks
Virunga National Park, in the eastern Democratic Republic of Congo, spans 3000 square miles of savannas, glaciers and active volcanoes. It was founded in 1925, when Africa’s population was roughly a tenth of its current size. The park is home to roughly the world’s 900 mountain gorillas. The UN declared it a world heritage site in 1979. Virunga is two million acres of some of the most fertile land in Africa, set in incredible wealth in terms of biological and natural riches. A Congolese family can earn about $500 (£ 325) a year, in profit, from an acre of arable land with basic subsistence farming. That is $1 billion has to be paid for in terms of opportunity costs for preserving Virunga National Park. There are 69 armed groups active in Congo’s Kivu region. Led by officers from the FDLR, a rebel remnant of the Rwandan genocide, the Mai Mai or militiamen frequently overrun the Rangers’ stations, on the southern shores of Lake Edward, firing Kalashnikovs. Patrol posts are burnt, wildlife rangers and Congolese soldiers stationed are killed. The Mai Mai attackers in Virunga’s Chiondo peninsula are not armed poachers killing elephants and rhinos. They are part of a battle for basic resources that pits human needs, such as food, against the ideals of conservation. The Mai Mai rebels want control of the peninsula, so that they could charge local people to fish. There are 4 million people living around the park. The illegal charcoal industry, from trees felled inside the park is worth an estimated $35 million a year. Illegal fishing on Lake Edward is worth about $38 million annually. Only 720 of almost 5000 boats are licensed.

Iran’s Nuclear Deal
Triggering the end of international sanctions, Iran implemented the nuclear deal on 17 January 2016. Iran accepted the conditions of the historic nuclear deal, signed in July 2015. The announcement that Tehran was committed to scale back its nuclear programme, in line with the nuclear accord came exactly 37 years after the western-backed Shah of Iran, fled into exile. Iran’s acceptance of the nuclear deal has led to the removal of all nuclear-related sanctions, and the release of more than £20 billion in frozen assets. It also means the opening up of one of the biggest economies in the Middle East, and frees Iran to sell its oil internationally. The terms of the nuclear deal of July 2015, have been adhered to by Iran. In less than six months Iran has removed 13000 of its installed centrifuges used to enrich uranium, needed for a nuclear bomb, two-thirds of its total. It has also disposed off 98% of its stockpile of enriched uranium, shipping 25,000 lbs to Russia and Kazakhstan, over the 2015 Christmas holidays. Beginning January 2016, the core of the Arak heavy-water reactor which could be used to produce plutonium for a bomb, was taken out and filled with cement. The US Department of Energy agreed to buy six tons of excess heavy water, and to facilitate the sale of another 34 tons to the private sector. Ending decades of enforced isolation, beginning January 2015, Iran freed four Americans in a prisoner swap, and released ten US sailors, who were captured by Iran, when their boats strayed into Iranian waters.

Blocking Balkans
Along its border with Greece, Macedonia has built a 10-feet-high razor-wire fence, with European Union help to try stop hundreds of thousands of migrants, travelling through the Balkans into Europe. The majority of people suspected of carrying out mass sex attacks on New Year’s Eve in Cologne, the German city, were illegal immigrants and asylum seekers. From six of the European Union’s eastern members, armed body guards are helping Macedonia, a non-EU member to shore up its frontier, against Greece. Not just a member of the EU, Greece is also a member of its borderless Schengen zone. The razor-wire fence is modelled on one erected by Hungary, on its own southern border in August 2015. The construction of the Macedonia fence has been prompted by the failure of Turkey and Greece to clamp down on the ‘‘Balkan route’’, so far used by 850,000 (as in 2015) people, from Syria and elsewhere to enter Europe. The Hungarians, who are playing a leading role in the anti-migrants patrolling operation, are equipped with sophisticated thermal imaging equipment and movement detectors. They also have ferocious dogs. The deal with EU leaders and Turkey, to stop migrants using its shores as a launching pad to Europe, in exchange for billions of pounds in aid and political concessions, was not working.

Vol. 48, No. 37, Mar 20 - 26, 2016