Monday, February 25, 2013

7 potential contenders for PM’s post in 2014


Aditi Phadnis  |  New Delhi  February 25, 2013 


A hard look at seven probable aspirants’ strengths and weaknesses

‘Crucial’ is an overused word. But it is no exaggeration to say that the elections of 2014 will be crucial for both individuals and political parties.

In many ways, 2014 will mark the sunset of several important individuals. It is unlikely that Dr Manmohan Singh will be in the running for the top job for a third time. Amid the virtually unstated premise in the Congress that he will be retired the question then is: will Rahul Gandhi be the top man for the job ? Or like his mother, will the younger Gandhi also renounce power, opting to continuing a dual structure. In which case, who will be the Prime Minister of India?

Newspapers and periodicals are suggesting the name of Finance Minister P Chidambaram. And this much is true: if the BJP’s star campaigner Narendra Modi is going to be projected (and is going to project himself) as Prime Minister on the strength of his record in governance, Rahul Gandhi stands nowhere. The answer to Modi’s governance plank is Chidambaram’s governance plank.

Which brings us to the internal contradictions of the BJP and the RSS. There is no doubt, whatever the minorities, especially the Muslims might say, no minority trusts Modi, though they might vote for him out of compulsion. In Bihar, for instance, in the assembly elections Muslims in Kishanganj did vote for the ‘kamal ka phool’ because they felt that was the only way to bring Nitish Kumar to power. And everything indicates that Modi is unlikely to expound on the ‘Hindus are great’ theme. If anything, he will build on the theme that the Congress is not a political party: it is regency which should be anathema to all nationalist Indians.

But all this comes into play only on the strength of the numbers each party gets in the Lok Sabha. Recently, P Chidambaram told a group of reporters that if an election were held tomorrow, ‘our strength might go down; but the BJP’s won’t go up either’. This sounds right. In the Congress Legislature Party (CLP) in the Lok Sabha, currently out of 204 MPs, more than 30 are from Andhra Pradesh. With the badly fractured Congress, The tally can only go down from Andhra.

The suggestion is that if the Congress gets around 200 seats and it is a manageable coalition, Rahul Gandhi might just decide to make a go of prime ministership. But if the Congress figure goes down to 170 or 180 seats, but it is still the single largest party, cobbling a government together may be difficult. No one knows what will happen then.

Mulayam Singh Yadav is waiting for precisely that opportunity. He is keeping a working relationship open with the Congress; and is out of the sphere of influence of the CPI M which makes him a free agent to accept all blandishments. There is no internal clarity yet about what the Congress thinks of a United Front-like experiment.

So there are lots of alternatives; and there are no alternatives. If India has even a ghost of a chance of getting a Dalit ki Beti as Prime Minister, Mayawati needs to build bridges with all parties: because she certainly will not be able to get 272 seats to form a government on her own. Which is why signals being sent in the budget session have to be watched very carefully. Will it be Congress ? Will it be BJP? Will it be neither Congress nor BJP?


Business Standard examines their CVs to find out how good they’re for the top post

Rahul Gandhi: The Congress considers him a natural candidate to head the government. But does he think he is ready for the job? And even if he is, who will then look after the party? And at the end of the day, will he be able to get the numbers?
 
Strengths
 
  • Young, youthful appeal
     
  • Speaks the language of a large part of India
     
  • Out of the box approach in addressing problems
     
  • Has toured enough to understand where the shoe pinches for ordinary people
     
  • No dispute in the party about his claim for prime ministership
 
Weaknesses
 
  • Stubborn
     
  • Up against a lot of vested interests
     
  • Has little experience, can be rash and immature
     
  • Has allowed himself to be surrounded by a small group, so in the party’s perception, is inaccessible
  • Likes to talk, not to listen



Narendra Modi: His image is that of a ruthless majority Hindu leader: this is the Narendra Modi whom the minorities love to hate and the Hindus love. But lately there is an image makeover. Modi is talking about governance, especially what he has done in Gujarat. Will this line of argument have traction in the rest of India? 
 
Strengths
·
  • Brilliant speaker
     
  • Has the backing of India Inc.
     
  • Has most Gujarati Hindus rooting for him
     
  • Has established his credentials as undisputed leader of the BJP in Gujarat
     
  • Efficient and a details man
 
Weaknesses
 
  • Not really a builder of institutions
     
  • Tends to be factional and vindictive: Sanjay Joshi's case is a classic example
     
  • Does not have the backing of the RSS
     
  • Does not enjoy the confidence of other leaders in his own party
  • Does not inspire the trust of the NDA



P Chidambaram: The economist put its neck on the line by saying he could be a contender for the job. An investment banker said: ‘he’s the best prime minister India will never have’. There is a strong lobby in the Congress which will oppose him tooth and nail. But if Gandhi decides to stick to the party, who else does Congress have ?
 
Strengths
 
  • Intelligent as well as hardworking
     
  • Experienced in governance. His bureaucrats adore him
     
  • Articulate in English as well as in Tamil
     
  • Creative in finding solutions
     
  • Probably incorruptible
 
Weaknesses
 
  • Not fluent in Hindi
     
  • A bit brusque and impatient
     
  • The Congress as a party might have difficulty accepting him
     
  • Has no experience of governance at the level of states
  • Has strong likes and dislikes which can come in the way of running a team



Sushma Swaraj: In many ways she is like Atal Behari Vajpayee: she can contest and win if she puts her mind to it, anywhere from India. And yet there is no one place in India where she can claim to have a base. A powerful speaker, but BJP workers will plump for Modi.


Strengths
 
Powerful orator in Hindi, less effective in English, but has the gift of the gab

Has consciously projected Indian woman image which goes down well 

Has little patience with hypocrisy, says pretty much what she thinks

Can get to the heart of problems of governance easily.

Has a collegiate style of functioning
 
Weaknesses

Doesn’t belong to any one state

Tends to be narrowminded 

Too easily influenced by groupism

Impetuous 

Tends to be autocratic


Mayawati: It will be difficult for Mayawati to get 272 seats and come to power on her own; and as most parties have been stung by her politics in the past, there might be some reluctance to support her.

Strengths
 
  • Intensely political
     
  • Has a constituency which stretches all over India
     
  • Is ready to work hard
     
  • Pragmatic: so what you see is what you get
     
  • Has the ability to convey to her constituency, what she wants them to do

Weaknesses
 
  • Trusts very few people
     
  • Family not in her control
     
  • Has done very little to develop ideology
     
  • Believes in a committed bureaucracy
  • Not always fair in the governance decisions she takes



Mulayam Singh Yadav: By far the most shrewd player, but the Congres is pitted directly against him in Uttar Pradesh and will not support his claim for prime ministership – and frankly, the Samajwadi party has little outside UP.

Strengths
 
  • Experienced in governance
     
  • Knows Uttar Pradesh like the back of his hand
     
  • Knows how to control the bureaucracy
     
  • Understands agricultural India
     
  • Is flexible in political management

Weaknesses
 
  • Vulnerable to manipulation by his family
     
  • Out of tune with the modern economy
     
  • Parochial
     
  • Has no hold outside UP
  • Makes no bones about wearing his caste on his sleeve: so sectarian



Nitish Kumar: The Janata Dal United is not a party. It is a movement. It has shallow roots and has no presence anywhere outside Bihar. In the circumstance, it might be difficult for him to stake claim to the top job.
 
Strengths
 
  • Pragmatic
     
  • has ample experience of governance
     
  • Probably incorruptible
     
  • Adapts solutions to his own reality
     
  • Strongly anti-regency
 
Weaknesses
 
  • Has no party worth the name
     
  • Is excessively reliant on the bureaucracy. His party resents this
     
  • Has no presence outside Bihar
     
  • Tends to rely on a small group: this leads to factions
     
  • Has not been able to build up an independent think tank in the government

New bank licences' aspirants: Reliance Industries, others' shares up on RBI invite



PTI: MUMBAI, FEB 25 2013, 13:03 IST

Shares of entities interested in entering the banking space, including those from Reliance Industries, Birlas, M&M and L&T groups, today surged as much as 8 per cent following RBI's guidelines for giving new bank licences.

More than a dozen corporates as well as state-owned firms such as PFC, LIC and India Post, are likely to apply to the Reserve Bank for licence for setting up banks.

The biggest early gainer was Religare, whose stock was up 7.99 per cent on hopes of its entering the banking sector.

Shares of Power Finance Corporation (PFC), whose Chairman and Managing Director Satnam Singh has said the company would seek approval for entering into banking space in the next board meeting, surged 1.66 per cent on the BSE.

The stock of L&T Finance was up 5 per cent, while that of Reliance Capital was up 1.02 per cent, as both the companies said they will apply for the licence.

Shares of Aditya Birla Nuvo surged 2.72 per cent on the BSE and touched a high of Rs 1,100. The stock was later trading 1.67 per cent up from its previous close.

Among others, M&M Financials stock was up 4.19 per cent, Bajaj Finserv - 3.59 pc, IDFC - 1.25 pc, IFCI - 1.50 pc, IndiaBulls Financial Services - 0.57 pc.

While announcing comprehensive guidelines for new bank licences on February 22, the Reserve Bank said interested entities can file their applications by July 1.

As per the new norms, entities with a minimum track record of 10 years would be eligible for licence after clearance from sector regulators, enforcement, investigative agencies such as I-T Department, CBI and ED.

The minimum paid-up capital for setting up a bank will be Rs 500 crore. The cap on the foreign investment, including FDI/FII and NRI, has been set at 49 per cent.

Is BlackBerry Z10 worth buying?


B T :Nidhi Singal  : February 25, 2013  | 14:08 IST


BlackBerry Z10
Price:
 Rs 43,490
Specs: BlackBerry OS 10; 4.2 inch capacitive display; 1.5GHz dual core processor; 2GB RAM; Wi-Fi, 3G, Bluetooth, NFC; 8MP camera; 1800 mAh battery.
Nidhi Singal
Nidhi Singal
Canadian smartphone maker BlackBerry launched its Z10 handset in India on Monday. The Z10 is the flagship device running on the company's new BB10 operating system, which was announced later last month. While it is too early to say whether the new operating system will help the company beat competition, we will tell you if it is worth upgrading to the Z10. Here is our first experience with the Z10.

Design and Built: The Z10 is an all-touch smartphone. This isn't BlackBerry's first attempt to come up with an all-touch device, but the company has failed miserably in the past. Learning from its mistakes, BlackBerry has finally managed to come up with a fine piece of hardware with intuitive touch input. The rectangular slab with the 4.2 inch display has been done in black and resembles a lot to the iPhone 5 industrial design. The front looks neat as the touch display isn't accompanied with any hardware button (no home key or navigation pad). With minimal controls on the sides, the textured back panel has the camera lens on the top along with the BlackBerry logo in the centre (with NFC chip embedded). 

User Interface: The BlackBerry 10 operating system is a complete departure from the existing BB mobile platform. Based on the QNX platform, it shares some of the gestures we had experienced earlier on the BlackBerry PlayBook. Utilising the touch input to the optimum level, BlackBerry has eliminated the need of having hard buttons like the trackpad. Navigating through the smartphone is simple as there are just a handful of gestures I had to get used too. The screen can be activated and unlocked by swiping upwards from the bottom of the glass panel. When using any app, the same gesture minimises the app and brings you back to the home screen. The minimised apps continue to run in the background and are placed on the 'Active Frames' page. This page can only handle up to eight latest running apps. All the communication, be it text messages, incoming emails, social networking updates, calls and voice mails, everything gets updated under the BlackBerry Hub. And this can be accessed by a single swipe on the thumb. When on home screen, swiping from left to right gives access to the BlackBerry Hub. But when using an app, swiping from bottom towards the right in from of a semi-circle reveals the notifications. Swiping from top to bottom shows options including settings, rotation lock, Bluetooth, Wi-Fi, alarm and notification settings. The new operating system looks refreshed but existing users will take some time to get used to it.
 
Typing: Technically, typing should have been a part of the user interface but the flawless typing experience on the Z10 deserves a special mention. Typing over the touch screen has never been BlackBerry's forte. With the earlier devices, I ended up typing wrong alphabets by default. But not anymore as the onscreen keyboard on the Z10 is impressive. I could not only type quickly but the keyboard also picked up my writing style along with the words and phrases I used often. Then, in due course of time, it started suggesting me the words that I could instantly flick up instead of typing the complete words.

Camera: BlackBerry has not just worked on the overall looks of the platform but has done some great amount of hard work on the camera software as well. The most notable feature on the camera interface is the TimeShift mode. This is a kind of burst shooting mode as it captures a number of shots in less than a second. Then, I browsed through the different shots and selected the best one. The eight mega pixel rear camera is good as it captures decent images during daylight and the flash works well during low light conditions, but it can't be stated as the best camera phone around.

BBM Video: Catching up with the video calling feature (FaceTime) on the iPhone, BlackBerry has now added video calling to its BlackBerry Messenger. Making calls over the BBM is simple as an icon appears on the top of the contact (who is using the device on the BB10 operating system). During the call, I could access type messages and switch the camera mode. There is also an option of screen share that I could not test.

Web Browser: The BlackBerry 10 browser on the Z10 supports flash. The web browser was much faster than before and loaded heavy sites quickly. The recently opened tabs showed pages as thumbnails. Accessing links on email, Twitter or Facebook loaded a new tab on the browser.

Performance: The overall experience of using the Z10 was good. The smartphone comes with some handy apps such as EverNote, Docs To Go, Adobe Reader, Weather, and MovieMaker. While using the device for accessing emails and documents was easy, it also offered a good multimedia experience. I played some heavy graphic games and there wasn't any lag. Even the sound output was above my expectations. BlackBerry claims to have 70,000 apps on the App World but I still could not locate all the best and top apps found on the iOS and Android app stores including Whatsapp and Instagram. The 1800 mAh battery onboard is less than what we have on the latest all-touch flagship devices but it does manage to last a day on a single charge.

What's good: Refreshed operating system; keyboard; TimeShift in camera; touch interface, multitasking.

What's bad: Lack of popular apps.

Bag it or Junk it: A neat smartphone with a refreshing operating system but the expensive price tag does not make it a compelling option worth upgrading.

Budget 2013: Decoding key concepts and jargon from FM's speech




25 FEB, 2013, 04.00AM IST, ET BUREAU 



The government's budget exercise is no different from the way households manage their finances.

 But those big words finance ministers read out in their budget speeches tend to sound intimidating. 

ET simplifies key concepts and jargon for you: 

1) Government Revenues & Spending... 

Government's budget is largely about revenues and expenditure. These are divided under two heads: revenue and capital. Spending is also split into plan and non-plan. 

Revenue receipt/expenditure: All receipts, such as taxes, and expenditure, like salaries, subsidies and interest payments that in general do not entail sale or creation of assets, fall under the revenue account. 

Capital receipt/expenditure: Capital account shows all receipts from liquidating (e.g., selling shares in a public sector company) assets and spending to create assets (e.g., lending to receive interest). 

Revenue/captial budget: The government has to prepare a Revenue Budget (detailing revenue receipts & revenue expenditure) and a Capital Budget (capital receipts and capital expenditure). 

A. Revenues 

Gross tax revenue: The total tax received by the government from which it has to pay the states their share as mandated by the relevant finance commission. The balance is available to the Union government. 

Non-tax revenue: The main receipts under this head are interest on loans given by the government, and dividends and profits received from PSUs. The government also earns from various services, including public services, it provides. Of this, only the Railways is a separate department, though all its receipts and expenditure are routed through the Consolidated Fund of India

Capital receipts: These include recoveries of loans and advances. 

Miscellaneous capital receipts: These are primarily receipts from PSU disinvestment. 

B. Expenditure 

Before we understand government spending, it is important to know the concept of plan and non-plan spending and the Central Plan 

Gross budgetary support: The Five-Year Plans are split into five annual plans. The funding of the Plan is split almost evenly between government support (from the budget) and internal and extra-budgetary resources of state-owned enterprises. The government's support to the Plan, which includes state plans, is called Gross Budgetary Support. 

Plan expenditure: This is essentially the budget support to the annual plans. This is typically considered developmental spending (on health, education, infrastructure and social goals). Like all budget heads, it is also split into revenue and capital components. 

Non-plan expenditure: This is in the nature of consumption expenditure, broadly corresponding to revenue expenditure: interest payments, subsidies, salaries, defence & pensions. Its 'capital' component is small, the largest chunk being defence.


2) ...And The Shortfall

When government's expenditure exceeds its receipts, it has to borrow to meet the shortfall. This deficit has material implication for the economy as bridging it increases public debt and eats up revenues through higher interest payments.

Public debt: The money borrowed by the government is eventually a burden on the people of India, and is, therefore, called public debt. It is split into two heads: internal debt (money borrowed within the country) and external debt (funds borrowed from non-Indian sources).

Fiscal deficit: The money borrowed by the government is eventually a burden on the people of India, and is, therefore, called public debt. It is split into two heads: internal debt (money borrowed within the country) and external debt (funds borrowed from non-Indian sources). Usually the government spends more than what it earns through various sources. This shortfall, which is met with borrowed funds, is called fiscal deficit. Technically, it is the excess of government expenditure over 'non-borrowed receipts' — revenue receipts plus loan repayments received by the govt plus miscellaneous capital receipts.

Revenue Deficit: It is the excess of revenue expenditure over revenue receipts. All expenditure on revenue account should ideally be met from receipts on revenue account; the revenue deficit should be zero. In such a situation, the government borrowing will not be for consumption but for creation of assets.

Effective revenue deficit: This is an even tighter number than the revenue deficit. It is revenue deficit less grants for creation of capital assets.

Primary deficit: It is the fiscal deficit less interest payments made by the government on its earlier borrowings.

Deficit and GDP: Apart from the numbers in rupees, the budget document also mentions deficit as a percentage of GDP. This is because in absolute terms, the fiscal deficit may be large, but if it is small compared to the size of the economy, then it's not such a bad thing, especially if it is being used to create production capacities.

FRBM ACT: The Fiscal Responsibility and Budget Management Act was enacted in 2003 and required the elimination of revenue deficit and reduction of fiscal deficit to 3% of GDP. The financial crisis and the subsequent slowdown had forced the government to abandon the path of fiscal consolidation for a while. A new fiscal consolidation road map is likely to be announced this year.

Ways and means advances: When state governments or the centre face temporary mismatches then the RBI helps them manage these through temporary advances called ways and means advances.

Securities against small savings: The govt meets a small part of its loan requirement by appropriating small-savings collection by issuing securities to the fund.

Treasury bills (T-bills): These are bonds (debt securities) with maturity of less than a year. These are issued to meet short-term mismatches in receipts and expenditure. Bonds of longer maturity are called dated securities.

3) How The Govt Taxes You

The central government imposes many taxes, but they can be divided into two broad categories: Direct Taxand Indirect Tax

Direct tax

This is the tax that business, companies , firms and partnerships and we all pay from our income or wealth. It is called direct tax because the person who pays the tax has to also bear the burden of the tax.

Corporation (corporate) tax: It is the tax that India Inc pays on its profits. It is the single biggest source of tax for govt.

Taxes on income other than corporation tax: It's income-tax paid by 'non-corporate assesses' such as individuals and Hindu undivided family (HUF).

Securities transaction tax (STT): STT is the small tax you need to pay on the total amount you pay or receive when you buy or sell shares on stock exchanges or transact in mutual funds. This is in the nature of a transaction tax.
Securities transaction tax (STT)

STT is the small tax you need to pay on the total amount you pay or receive when you buy or sell shares on stock exchanges or transact in mutual funds. This is in the nature of a transaction tax.

Wealth tax

This is the tax individuals pay on their accumulated wealth. It is levied on individuals, HUFs and companies at the rate of 1% on the amount by which the net wealth exceeds Rs30 lakh.

Capital gains tax

It is the tax levied on profi t or gain made on sale of a capital asset such as shares, house, commercial property. Long-term capital gains tax is levied at 10% & short term at the marginal income-tax rate of an assesse.

Dividend distribution tax (DDT)

Dividends are tax free in the hands of investors but the entity distributing dividends to investors pays DDT to govt.

Minimum alternate tax (MAT)

It is often the case that companies report profi ts but pay no tax. Such cos have to pay a certain minimum tax on their book profits.

Withholding tax

This is a small tax deducted whenever a payment is made that is like an income for the receiver such as dividends, interest, royalty or even capital gains.

Indirect tax

It's essentially a tax on our expenditure, and includes customs, excise and service tax. It is called indirect tax because the tax is paid to the government by the person selling the good or providing service but its final burden is on the consumer. It is considered a 'regressive' tax as the burden is equal whether you're rich or poor.

Customs

Anything purchased from another country and brought into India is subject to this tax. It serves a twin purpose, yielding revenues for the government and protecting Indian industry.

Union excise duty

This is a duty imposed on goods manufactured in the country.

Service tax

It is a tax on services rendered.

GST

A proposed single tax that will replace the plethora of indirect taxes. This will make tax administration effective, compliance easy and evasion diffi cult. Consumers will benefi t from the decline in the incidence of tax.

Consolidated fund

This fund is the government's lifeline. All the revenues, money borrowed and receipts from loans it has given fl ow into this account. All govt expenditure is made from this fund.

Finance bill

For most of us, this is the all important budget document. All tax measures are included in it. The memorandum, another document, explains the provisions of the Bill in simple terms.
Finance bill: For most of us, this is the all important budget document. All tax measures are included in it. The memorandum, another document, explains the provisions of the Bill in simple terms.

Contingency fund: As the name suggests, any urgent or unforeseen expenditure is met from this Rs 500 crore fund, which is at the disposal of the President. The amount withdrawn is returned from the Consolidated Fund.

Public account: This is an account where the government acts more like a banker, as this is a collection of money belonging to others such as public provident fund.
5) The Social Agenda

Swavalamban

This is a co-contributory scheme to promote voluntary retirement savings towards pensions. The government makes a contribution to NPS account of unorganized sector workers.

Aadhaar

It is a 12-digit individual identifi cation number that serves as a proof of identity and address, anywhere in India.

Bharat nirman

Bharat Nirman is UPA's ambitious plan to build infrastructure in rural India: Irrigation, roads, water supply, housing, rural electrifi cation and rural telecom connectivity.

Food security act

The govt plans to provide highly subsidised foodgrain to majority of the population. It is expected to be rolled out in the next fi scal.

Swabhimaan

This is a government campaign to extend banking facilities through business correspondents to habitations having population in excess of 2,000.

Direct cash transfer of benefits

It is a poverty alleviation initiative under which welfare benefits are given directly to the poor in cash (in their bank accounts) rather than in the form of subsidies.

6) & Some More...

Direct taxes code (DTC) Bill

This is a comprehensive revamp of the income tax law that has been in the works for many years.

Abatement

This is like a discount with reference to taxes. Abatement is given when the tax is not levied on full amount but on a portion of the transaction.

Resources transferred to the states

The Centre gives funds to states in two ways: a share in taxes and budget support for their plans. These are largely in the nature of grants, and include those given to states for managing Centrally-sponsored schemes.

Disinvestment

The process of sale of government shares in state-owned entities.

Qualified foreign investors

Foreign individuals, groups or associations that are eligible to invest directly in India. They must be from countries that follow global anti-money laundering rules.

Viability-gap funding

Financial support to a public-private partnership (PPP) infrastructure project to make it viable for the private-sector investor.

Budget 2013 : Yashwant Sinha blasts Chidu-nomics, UPA policy










First Post :FP Staff Feb 25, 2013

Watch Firstpost’s exclusive discussion with BJP Leader Yashwant Sinha below:
Blaming the current UPA government for its failure to contain inflation due to wrong economic policies, former Finance Minister and senior BJP leader Yashwant Sinha said the government’s populist measures such as food security and NREGA are not only creating an indolent workforce but also a non-performing and high-cost economy.
In a live discussion with Firstpost yesterday organised through the Google HangoutSinha said the first and foremost task of P Chidambaram on 28 February, when he presents the 2013-14 budget, is to see that he does no further damage to the economy. He should cut expenditures, but not the kind that is vital for growth. “The finance minister is cutting expenditure but the quality (of the cuts) is not known, which is key for growth revival. Suppose the finance minister cuts the expenditure by Rs 1 lakh crore, it will not have any benefit unless he cuts down on unproductive expenditure,” said Sinha.
Agreeing that 5-6 percent is the new normal for growth now, Sinha said the current budget situation could not be worse and blamed the 2008 budget for today’s mess. “In 2008, the UPA decided to completely throw away the responsibility of a  Fiscal Responsibility and Budget Management Act , which enabled them to take liberties with the fisc and float a massive deficit of Rs 100,000 crore.”
And it was this high fiscal deficit, high interest rates and low investment growth that led to a loss of confidence in the economy. Sinha also stressed on the government’s ignorance of the supply side in dealing with inflation, which has resulted in low growth today. An attempt to curb inflation only by depending on monetary tools such as increasing interest rates, squeezing liquidity, etc, can only bring a short-term impact. His solution includes addressing supply side bottlenecks by releasing a large portion of the 80 million tonnes of foodgrain that is still being hoarded by the government, rather than introducing a food security bill.
However, with inflation still high, he does not advocate a further cut in interest rates. “There is too much pressure on the RBI to cut rates, but this is not the right time to reduce rates. The government first needs to control inflation.” He said only if the government can tackle inflation and there is a trend decline in inflation in the next six months, will the RBI have any elbow room to deal with this crisis. Raising rates when inflation is high will only result in low savings.
He also opposed the invention of any new tax, be it an inheritance tax or super-rich tax,  and said compliance is the key to mop up revenues. “The current tax rates have survived various governments since 1997. It  will be sad if Chidambaram revises his own rates. Compliance is an issue, not tax rates. Raising tax rates will result in more avoidance,” explained Sinha.
Sinha also called for increasing the Rs 1 lakh tax deduction limit under Section 80 C of the Income Tax Act to bring back domestic savings to at least 36 percent from the current 30 percent levels.
The BJP’s economic policy
He also opposed the invention of any new tax, be it an inheritance tax or super-rich tax,  and said compliance is the key to mop up revenues
He also opposed the invention of any new tax, be it an inheritance tax or super-rich tax, and said compliance is the key to mop up revenues
If the BJP were to come back to power in 2014, reviving growth would still remain a tightrope walk due to the current government’s populist schemes, which have created a consumption-led demand rather than investment-led demand.
As an immediate priority, the BJP would first correct the macroeconomic problems of  high inflation and high interest rates by tackling the supply-side problem and scrapping the food security bill.
The problem of high current account deficit and savings needs to be dealt with by encouraging domestic savings and reviving investor confidence, rather than relying solely on foreign investment. He said that in the absence of domestic savings, foreign borrowing is a dangerous idea because short-term volatile funds can go belly up at any time and create a south Asia type of crisis.
” I am wary of this, I will invite FDI, but not in sectors where it is not required. FDI can at best be the icing on the cake. It cannot be the bulk of investible sources,” said Sinha.
Second, the BJP would tackle sectoral issues by allowing FDI only in sectors that require it, rather than sectors which will kill the Indian industries, such as multi-brand retail.
In order to revive the economy, it would expedite the national highway projects. ” The problem of the current government is that it is not decisive enough and sectoral issues, like that between the environment and coal ministry, or environment and highways, is never sorted out.” A decisive government, on the other hand, will sort out all such issues in quick time and introduce policies to deal with natural resources in the right manner.
Third, the BJP would bring back the bring back the Fiscal Responsibility and Budget Management Act to reduce the fiscal deficit by raising revenues to a level which is fixed as the target.
And fourth, the BJP would take up more infrastructure projects like housing, rural development, highways and agriculture development so as to create investment demand, after which consumption demand is bound to follow.
According to Sinha, Finance Minister Chidambaram is currently looking for quick fixes for the economy, which will not solve India’s fundamental problems.  He believes India has always progressed with caution, and FDI is no panacea to India’s problems.

Quote For this Week : Always give your Best..You will be the best



Always give your Best

You will be the Best

Be Bullish

Stay Positive....

You are Always a Winner...my dear Super Champ

Go Ahead and Forge Ahead da