News Wrap


The Government of India's Economic Survey Report 2018-19, presented on 04 July 2019, projected a GDP growth of 7% for 2019-20, a 0.2% up from last year. The Indian economy growth is at a 5-year low of 6.8% in 2018-19, and the fourth quarter has slumped to 5.8%, which is a 17-quarter low. The survey has stressed on export to improve GDP, because higher savings preclude domestic consumptions, as the driver of final demand. While current account deficit (CAD) increased from 1.9% of GDP in 2017-18 to 2.6% in April-Dec 2018, the foreign exchange reserves have decreased by about $D 11.6 billion, by end Mar 2019. The widening of deficit was largely on account of a higher trade deficit, driven by a rise in international crude oil prices. The Indian currency has also depreciated by 7.8%, vis-à-vis US dollar. Fixed investment growth picked up from 8.3% in 2016-17, to 9.3% in 2017-18, and for then to 10% in 2018-19. The investment rate in agriculture still continues to lag behind, and now is half the investment rate in the industry sector. Low pay and wage inequality remain serious obstacles towards achieving inclusive growth. There is a shortfall of Rs 167,455 crores in revenue collection from the revised estimate, presented in February 2019, in the interim budget. The government spent Rs 145,813 crores less. The subsidy bill was pruned by Rs 69,140 crores, Capital expenditure fell short by Rs 13,664 crores, that was presented in the interim budget lower spending on subsides has hurt farmeRs The lower spending on capital expenditure has hit the economy's prospects. A declining trend in lower capital expenditure on machinery, equipment and dwellings implies lower formal manufacturing sector job opportunities for the youth. Population growth has slowed from an annual 2.5% in 1971-81 to 1.3% in 2010-11. It is below 1% in states like Bengal, Punjab, Maharashtra, Odisha, Assam and Himachal Pradesh.

The Union Budget for 2019-20 showed confidence that the Indian economy can touch $5 trillion level within a few years, without evidence of the funds or framework of systems to achieve it. Those having annual income of up to Rs 5 lacs, are not required to pay any income tax. This includes self-employed as well as small traders, salary earners and senior citizens. There will be an additional imposition of 3% on those having taxable income from Rs 2 crores to Rs 5 crores, and 7% on those having taxable income of Rs 5 crores and above. The direct tax revenue had significantly increased by over 78% from Rs 6.38 lac crores in 2013-14 to Rs 11.37 lac crores in 2018-19. Taking advantage of softening of crude prices, there will be an increase of special Additional Excise duty and Road and Infrastructure cess on petrol and diesel, by Rupee one a liter. TDS of 2% will be payable on cash withdrawal exceeding Rs 1 crore in a year, from a bank account. Those who do not have PAN can file tax returns using Aadhaar, and Aadhaar can be used wherever PAN is required. A target of Rs 1,05,000 crores of disinvestment receipts, was set for FY 2019-20. An additional income tax deduction of Rs 1.5 lac on interest paid on electric vehicle loans will be allowed. The customs duty on gold and other precious metals is increased from 10% to 12.5%. The Housing and Urban Affairs Ministry's budgetary provisions were pegged at Rs 48,000 crores, a hike of nearly 17% from 2018-19. The health sector outlay of Rs 62,659.12 crores in 2019-20 fiscal, is the highest in the last two financial years A sum of Rs 29,000 crores is allotted for the women and child development ministry for 2019-20, a 17% increase. The Defense budget remain unchanged at Rs 3.18 lacs crores, the amount set aside in the interim budget of Feb 2019, notwithstanding expectations of steep hike in resources to modernize the armed forces, and procure critical military platforms.

The Railways received a budgetary allocation of Rs 65,837 crores, and the highest ever outlay for capital expenditure amounting to Rs 1.60 lac crores, in 2018-19, the outlay for the Railways was Rs 1.48 lac crores, while budget allocation was Rs 55,088 crores. The budget 2019-20, allocates funds of Rs 7255 crores for construction of new lines, Rs 2200 crores for gauge construction, Rs 700 crores for doubling, Rs 6114.82 crores for rolling stock, and Rs 1750 crores for signaling and telecom.

The total allocation for school and higher education is Rs 94,85 crores, a rise of 11.5% from the previous year's budget. The 9.4% increase for higher education, could be too little to implement the newly introduced 10% reservation for the economically weaker sections. The union government allocated Rs 130485 crores to agriculture sector in budget 2019-20, almost Rs 51,000 crores up from the revised allocation of 2018-19. The government has proposed to increase budget allocations for the ministry of Agriculture and Farmers Welfare by over 78%.

After a projectile landed less than 100 meters (330 feet) away, injuring two migrants, the UNHCR refugee agency had already called in May, 2019 for the Jajouracentre, while holds 600 people, to be evacuated. The hangar type detention centre is next to a military camp, one of several in Tajoura, east of Tripoli's centre. On 02 July 2019, an airstrike hit a detention centre for mainly African migrants in a suburb of the Libyan capital Tripoli, killing at least 55 people, and wounding more than 30. The toll was the highest from an airstrike or shelling since eastern forces under Khalifa Haftar's Libya National Army, launched a ground and aerial offensive three months ago to take Tripoli, the base of Libya's internationally recognized government. It was the second strike on Tajouracentre during, the recent fighting, even though its coordinates had been communicated to the warring sides. Depending on the precise circumstances, it may be a war crime. For African migrants, fleeing poverty and war, Libya is one of the main departure points. The migrants try to reach Italy by boat, but many are picked up and brought back by the Libyan coast guard, supported by the European Union. Thousands are held in government run detention centers, in what human rightsgroups and the United Nations say are often inhuman conditions. The hapless migrants were largely from Sudan and Morocco. Following the impact of the air strikes, some refuges and migrants were fired upon by guards, as they tried to escape.

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Vol. 52, No. 3, Jul 21 - 27, 2019