Budget 2019: After election, it's Modi's key chance to spur waning economy

Budget 2019

Prime Minister Narendra Modi has his first chance since a decisive election win to spur an economy that’s quickly lost its status as the world’s fastest-growing major one.
Newly appointed Finance Minister Nirmala Sitharaman is expected to boost spending and provide tax relief to consumers in her maiden budget on Friday. That will probably widen the budget gap to 3.5% of gross domestic product in the year started April 1 from 3.4% targeted in February’s interim spending plan, according to a Bloomberg News survey.
Growth slowed to a five-year low of 5.8% in the first three months of 2019 -- well below China’s 6.4% expansion -- putting pressure on Modi to deliver on a stimulus plan to kickstart consumption, a bedrock of the economy. With the global outlook turning gloomy amid heightened trade tensions, and the Reserve Bank of India already cutting interest rates three times this year, the focus is shifting to the government to play its part.
“For the next budget exercise, the development goal might supersede the rigid objective of fiscal austerity,” said Soumya Kanti Ghosh, group chief economic adviser at State Bank of India in Mumbai. “Sticking to a particular fiscal number is not that important in the current scenario.”Sitharaman will need to balance allowing the budget deficit to widen without risking a credit-rating downgrade and rattling bond markets. Key to that will be finding additional revenue to finance higher spending and keeping borrowing under control.
Here are other key things to watch for in the budget:

Taxes : Revenue from consumption taxes and customs levies undershot targets last year, and Sitharaman will need to find additional resources to fund welfare programs without increasing the tax burden on individuals.

Why not use Budget 2019 to reveal what it takes to fund a welfare state?

Budget 2019

The one thing finance minister Nirmala Sitaraman must do in her budget statement is to be transparent and upfront about the actual borrowings by the government.
In 2018-19, the Food Corporation of India (FCI) borrowed at least Rs 1,00,000 crore to meet the cost of Centre’s food procurement program. Similarly, the National Highway Authority of India has borrowed on behalf of the Centre to build roads. Public sector oil companies and electricity utilities have borrowed on the Centre’s account to deliver subsidies to the poor, whether in the Ujwala gas cylinder scheme or building last mile electricity infrastructure.
Interestingly, the BJP-led NDA government has formalised this arrangement by making public sector undertakings (PSUs) and other public utilities borrow heavily on behalf of the government so that the debt remains on the PSU’s balance sheet and out of the Centre’s budgeting. The Centre has even agreed to service such debt by paying the interest on such borrowings by the PSUs.
In 2014, after Narendra Modi became prime minister, finance minister Arun Jaitley had loudly protested in Parliament that the UPA had passed on a lot of unpaid subsidies to the NDA by way of debt taken by the same entities like the Food Corporation of India and oil PSUs who had been handed government bonds in lieu of subsidy payments. Ironically, what the UPA did to the NDA is now being done by the NDA to itself. Nirmala Sithraman can rightly ask Jaitley the questions that Jaitley had asked P Chidambaram.

 Therefore, Budget 2019 offers the chance to start a clean slate and be upfront about total public borrowings taken to fund the Centre’s programmes.

Health ministry to ban e-cigarettes; stakeholders urge govt to reconsider

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Company News

For over a year now, the Indian government has been looking to ban e-cigarettes. Electronic cigarettes are used by some as a replacement to conventional cigarettes with tobacco. This concept is prevalent in European Union (EU).
It is believed that e-cigarettes are less harmful than regular ones. However, given the health hazards associated with smoking them, the health ministry has decided to ban e-cigarettes. 460 e-cigarette brands are available in India, with various configurations of nicotine delivery in almost 8000 flavours.
Experts have claimed that e-cigarettes are harmful as the nicotine in it is addictive in nature. Many states have already banned e-cigarettes and now the health ministry is planning to ban the import of it too.
This was done in states after an advisory issued by the centre. Punjab, Maharashtra, Karnataka, Kerala, Bihar, Uttar Pradesh, Jammu & Kashmir, Himachal Pradesh, Tamil Nadu, Puducherry and Jharkhand banned use of e-cigarettes. The ban is also on flavoured hookah.
Since the time health ministry decided to ban the use of electronic cigarettes, stakeholders from across the world have been trying to prove that e-cigarettes are less harmful and has led many to even quit smoking.

  Lobby groups have been writing to the government on how people have quit smoking once they replaced their normal cigarettes with electronic cigarettes. They have quoted data from the United States to site the same.

Chattisgarh govt raises retirement age of private sector labourers to 60

Company News

The Chattisgarh government has decided to increase the retirement age of industrial labourers working in private sectors to 60 years from current 58 years, a senior bureaucrat said Tuesday.
Following the demands from various labour unions for increasing retirement age of such workers, Chief Minister Bhupesh Baghel has decided to increase the retirement age to 60 years from existing 58 years, Secretary, Labour department, Subodh Singh told PTI.
Employees and labourers working in various undertakings, factories, industries and commercial institutions would now retire at the age of 60 years, he added.
This will be applicable to all undertakings, including factories, establishments, institutions and other industrial units coming under the purview of the Chhattisgarh Industrial Employment (Standing Order) Act, 1961, and the Chhattisgarh Industrial Employment (Standing Order) Rule, 1963, he said.
Singh said a final notification will be issued within 15 days after disposing of the suggestions received from all stake-holders.

 He added that if needed, the employer of the given undertaking can increase the retirement age of any given employee by another two years upto 62 years.

How fixing female malnutrition can boost India's economy by $15-46 billion

Company News

Afsana Bano is 25, or so her Aadhaar national identity card said. With glee, she confessed that she was born in 2001. That made her 18, her 5’7 frail figure and delicate bones cradling a three-day-old baby that weighed 2.6 kg instead of the ideal 3.3 kg at this stage.
Bano’s levity and ignorance is representative of a cycle that keeps millions of Indian mothers and children, particularly in the most populous, poorest states, undernourished and incapable of learning and earning enough, thus holding back Indian economic progress, according to several research studies.Bano was 18 when she married and was underweight when she conceived, weighing 51 kg in the eighth month of pregnancy, gaining no more than 200 gm by the ninth.
Studying till class 12, Bano had an above-average education in rural Sitapur, where no more than 16.4% of women have had 10 years of education, compared to 32.9% in UP and 35.7% nationwide. But she never got the attention or counselling that the government health system was supposed to give her.
This is particularly important in Sitapur, where 36% of married women are adolescents, according to the 2015-16 National Family Health Survey (NFHS)--or NFHS-4--data, compared to an average of 21% in Uttar Pradesh (UP), India’s most populous and third-poorest state, by per capita income, and 27% nationwide.

 With 4.4 million people, Sitapur is classified as one of 25 “high priority districts” across Uttar Pradesh and 184 across India identified for special attention to pare child marriage and adolescent pregnancies.But the programme to address early marriage and teenage pregnancy, the Rashtriya Kishor Swasthya Karyakram (RKSK), a five-year-old national youth health programme, was given 1% of National Health Mission (NHM) funding in Sitapur, falling over a year from 3% in 2016-17.

Anil Ambani may sell or lease out Mumbai headquarters to pare debt: Report

Company News

Reliance Group chairman Anil Ambani is in talks with Blackstone and a US-based fund to sell or lease out his headquarters in Santacruz, Mumbai, in a deal that may be worth upwards of Rs 1,500 crore, the Economic Times reported on Monday. However, the deal may be marred by a legal tangle that the property is involved in, the report added.
Several companies of the Anil Dhirubhai Ambani Group (ADAG) are in legal crosshairs for not paying back debt. As of March 2018, the group’s consolidated debt stood at Rs 1.72 trillion. The figures as of March 2019 are not available as group companies like Reliance Infrastructure are yet to declare results for Q4FY19, as reported earlier by Business Standard.
Last month, Anil Ambani said his group has paid Rs 35,000 crore in the 14 months from April 1, 2018 till May 31 this year to lenders. These payments comprise principal repayments of Rs 24,800 crore and interest payments of Rs 10,600 crore. The group raised funds by selling assets, he said.
Ambani said this amount included debt servicing payments by Reliance Capital, Reliance Power and Reliance Infrastructure, and their respective affiliates. "These payments have been made in the face of insurmountable odds and the most challenging financial environment witnessed in the country in decades,” Ambani said in a conference call.

 Ambani said in the last 14 months lenders from all categories - whether banks, mutual funds, insurance companies, provident funds or NBFCs - have not provided any net additional liquidity or debt to any entity of the Reliance Group. “To compound matters, the regulatory bodies and courts have not passed any final adjudication orders on claims aggregating to over Rs 30,000 crore that are due for more than 5 - 10 years to various Group companies, especially Reliance Infrastructure Ltd and Reliance Power Ltd, and their affiliates,” he said. The final decisions have only been inordinately and repeatedly delayed for one reason or the other, Ambani added.

Maruti Suzuki total sales slip 14% in June, domestic sales down 15%

Company News

Maruti Suzuki India Monday reported a 14 per cent decline in total sales at 1,24,708 units in June as against 1,44,981 units in the same month last year.
Domestic sales during the month were down 15.3 per cent at 1,14,861 units last month compared to 1,35,662 units in June last year, Maruti Suzuki India (MSI) said in a statement.
Mini segment, comprising Alto and old WagonR, saw a slide of 36.2 per cent to 18,733 units as against 29,381 per cent in the year-ago month.
The compact segment, which includes models such as New WagonR, Celerio, Ignis, Swift, Baleno and Dzire, clocked 62,897 units last month as compared to 71,570 units in the same month last year, down 12.1 per cent.
In the mid segment, the company said its sedan Ciaz sales were up 47.1 per cent at 2,322 units from 1,579 units in June last year.
Sales of utility vehicles, including Gypsy, Ertiga, Vitara Brezza, S-Cross, were at 17,797 units in June as compared to 19,321 units in the year-ago month, down 7.9 per cent, MSI added.
MSI said its van sales, comprising Omni and Eeco models, were also down 24 per cent at 9,265 units as against 12,185 units in the same month last year.
Sales of light commercial vehicle Super Carry were, however, up 24 per cent at 2,017 units as compared to 1,626 units in June last year, the company said.

 Exports were also up 5.7 per cent last month at 9,847 units as against 9,319 units in June 2018, MSI added.