Voice from the Rooftop

Blog of Vincent Augustine D'Souza

Budget 2014

The more things change the more they remain the same.

NDA replaced UPA as ruling coalition in House of Peoples i.e., Lok Sabha.  BJP replaced Congress.  Narendra Modi replaced Manmohan Singh.  However the budget presented by Finance Minister Arun Jaitley on 10/7/2014 was not much different from UPA budgets.

BJP had a chance to undo the damage done by UPA over the years.  It failed.  People who voted for BJP had hopes and expectations.  Hopes were dashed.  Expectations were belied.

There was no repeal of retrospective amendment to Income Tax Act.  That was a huge letdown.  The assurance that NDA government will not bring retrospective amendments has no meaning and setting up CBDT committees to settle tax disputes due to retrospective amendment is opening doors for corruption.

Arun Jaitley did not abolish NREGA, JNURM etc.  Continuation of UPA schemes does not make sense.

Arun Jaitley should have called a press conference at 9 p.m. and answered questions instead of appearing on different channels and answering the same questions.

Fiscal deficit target should have been zero per cent instead of 4.1% for 2014-15.  There was no need to announce new IITs, IIMs, AIIMs, agricultural and horticultural universities etc.  Deficit budget means inflation will continue.

Expenditure Management Commission to look into cutting expenditures was not necessary.  People in government know where to cut expenditure.  Will is lacking.

Increase of FDI limit in defence and insurance sectors from 26% to 49% is good.  It could have been better.

Schemes like Pradhan Mantri Krishi Sinchayee Yojana, Swachh Bharat Abhiyan, Shyama Prasad Mukherji Mission, Deen Dayal Upadhyaya Gram Jyoti Yojana should be left to states, panchayats and municipalities.

Sardar Patel’s Statue of Unity was a private initiative.  There was no need to allocate 200 crore rupees to it.

Arun Jaitley has allocated 100 crore rupees each to schemes like Van Bandhu Kalyan Yojana, Village Entrepreneurship Programme, Promoting Good Governance, National Adaptation Fund etc.  Such schemes should be scrapped.

Various Rural Credit Funds should be scrapped.

There is no need for setting up Kisan TV and Arun Prabha channels.  There are enough DD channels.

Allocation of 10,000 crore rupees to MSME sector to attract private capital should be scrapped.

Government should not be promoting handloom and other products.  Leave it to private sector.

Strange is the proposal to allocate 5,000 crore rupees to set up 3P India, an institution to support PPPs in India.  Public Private Partnership means losses go to public sector, profit goes to private sector.

Let cities develop by themselves.  No need for government to spend money for smart cities.

Debt Recovery Tribunals are a good idea.  Corporates who have defaulted on loans to public sector banks should be punished.  Properties of companies and directors should be confiscated.  If debt is not recovered directors should be put in jail.  Sahara case is an example.  Banks should have a list of borrowers mentioning amount borrowed, amount paid, amount pending, defaults, on their web sites.

Issuing Kisan Vikas Patras is a bad idea.  KVP amounts are to be returned with interest.  That leads to more printing of notes and more inflation.

Government money should not be spent on sports.  Government has no control over Indian Olympic Association and various sports associations.  They are a law unto themselves.  USA government does not spend money on sports and USA is mostly No. 1 in Olympic medals.

Cess, surcharge, levy etc. continue.  What happened to education cess collected over the years?  Who benefitted?

Why investment allowance of 15% to manufacturing firms that invest 25 crore rupees annually?

Some (radio taxi providers etc.) have come under Service Tax.  Some (cotton transporters etc.) are out of Service Tax.

Excise Duty has gone up on some items, come down on some items.  Increasing Excise Duty on cigarettes and tobacco products is a good idea.

Divestment proposals are said to be in annexures.  We will know when they are implemented.

Narendra Modi spoke of bitter pill.  Arun Jaitley spoke against mindless populism.  This budget is bitter pill for some, sweet pill for some, no pill for others.  It is more mindless populism than of Sonia Gandhi.

Reactions to budget are predictable.  BJP and allies have praised the budget.  Other parties have not said anything good about the budget.

Rupee rate and subsidies

There are people who speak against electricity, water, fertilizer, diesel, kerosene, petrol and LPG subsidies. Some even say diesel and LPG subsidies benefit middle class and not poor people. They do not speak against corporate debt restructuring (CDR) and exchange rate manipulation to keep rupee value low. Lakhs of crores of rupees are lost due to CDR. Rupee value is kept low to benefit exporters. For the profit of few exporters 125 crore Indians are made to suffer. If rupee appreciates there is no need for diesel, kerosene, petrol and LPG subsidies.

Foreign exchange increase due to buying dollars has kept value of rupee low against dollar. A dollar is more than more than 60 rupees. Below given are figures for three weeks.

Forex increase is in million dollars. Forex reserve is in billion dollars.

Week ended Forex increase
(in million US $)
Forex reserve
(in billion US $)
6-Jun-14 203.20 312.500
13-Jun-14 950.90 313.536
20-Jun-14 1385.00 314.922
Total 2539.10

If RBI had not bought dollars rupee would have been less than 60 per dollar. If rupee is allowed to appreciate it will be 30 rupees per dollar in a few months. There will be no need for any subsidy and prices of diesel, kerosene, petrol and LPG can come down. Consequently prices of many commodities dependent on them can come down.

India should have agreements with countries for mutual acceptance of currencies. American dollar should be accepted from USA only. From euro zone countries it should be euro. From Russia it should be rouble. From Kuwait it should be Dinar. From UAE it should be Dirham. From South Africa it should be rand. From Saudi Arabia it should be riyal. India should pay in rupees for imports. No trade with any country that does not want currency agreement.

Corporatism thrives. Democracy is a myth except perhaps in Switzerland where there is direct democracy to a great extent. In capitalism those who make loss go out of business. In corporatism when corporates make profit they keep it, when they make loss it goes to taxpayers. Ordinary people have no choice in decisions. That is true in USA, India and many other countries. It is oligarchy is most countries.

Rupee value has been brought down by vested interests. For some years there was quantitative easing of restrictions which meant printing of notes. For five years Federal Reserve Bank of USA engaged in bond buying of 85 billion dollars per month. That means 1.02 trillion dollars per year. Rupee was 40 per dollar. It should have been 20 rupees per dollar. Instead it became more than 60. Bond buying continues in 2014 though less than 85 billion dollars per month. It has been 75, 65, and 55. USA had debased its currency. India has debased its currency even more.

Narendra Modi had promised good days. We have not seen good days. Prices have gone up. Railway fares went up. It may be good days for corporates, exporters and traders but not for ordinary people. For an ordinary person it does not matter how high is the Sensex. Prices of onion, garlic, food grains etc. matter. Modi has to see that inflation is zero, prices are under control and rupee appreciates against dollar and other currencies. Otherwise disillusionment will set in fast and he will be in trouble.

Iraq Civil War

It is civil war in Iraq. ISIS is in war with Iraq’s government headed by Nuri Al-Maliki. ISIS captured Mosul on 10/6/2014. The world noticed. Soon ISIS captured Tikrit.
There are Indians in Iraq. Nurses don’t want to come back. They have taken education loan and loan for visa. In Mosul 40 construction workers did not leave on time. They are in captivity except for one who escaped. In Tikrit there are 46 nurses.
Many Indian Shias have volunteered to fight in Iraq against ISIS. If Sunnis also want to join the fight India will have a problem. It can be Shias and Sunnis fighting in India. Government should take steps to prevent such occurrence.
Barack Obama talked about sending 300 advisers to Iraq and air strikes on ISIS but ruled out boots on the ground. He wants Nuri Al Maliki to quit.
Al-Sistani called on Shias to fight ISIS. The Shias marched in Baghdad displaying their weapons. They don’t want American air strikes on ISIS.
Iran and Saudi Arabia do not want to meddle in Iraq.
Some Americans want military intervention in Iraq. Otherwise it will become a base for terrorists to attack USA. Americans opposed to military intervention in Iraq say USA supplied weapons to rebels in Syria. Area under rebels is jihadist wonderland. In Libya a dictator was removed. Libya became a jihadist wonderland.
ISIS has captured Qaim, Rawah, Anah, Rutba, Turaibil crossing with Jordan and Waleed Crossing with Syria. Many Iraqi soldiers surrendered their uniforms and weapons. It seems they were promised safe passage if they surrendered. ISIS is known to be brutal, ferocious and ruthless. There are videos of ISIS fighters shooting captured soldiers. ISIS had support from locals, mostly Sunnis disaffected with Maliki government, so they could march quickly.
ISIS wants to capture Najaf and Karbala and if they get close to those cities Iran can enter war on the side of Shias. At that time Saudi Arabia and some other countries are likely to join war against Iran.
It is an opportunity for Kurds to establish themselves as a country. If Kurds succeed, Kurdistan will have territories from Turkey, Syria, Iraq and Iran. In 1919 when Ottoman Empire was dismembered, Woodrow Wilson wanted Armenia and Kurdistan to be independent countries. It did not happen then. Armenia became independent in 1991. Kurds wait for their country.
Continuation of civil war will affect oil supply. Price of oil will go up and adversely affect India.
Maharukh Inayet on To The Point, Headlines Today, asked about ISIS being equal to thousand Obamas. Barack Obama is confused with Osama Bin Laden. This has happened to many journalists. Report of ISIS having a plan to target Iraq and Indians being is not credible and seems intended to drag India into war against ISIS. India has ISI problem, not ISIS problem.

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