Published on July 11, 2014
5 years of economic decay & The Budget 2014 & Way forward: 5 years of economic decay & The Budget 2014 & Way forward Dr. Abhijit Phadnis Thane 11.7.2014 PowerPoint Presentation: NDA Government UPA Government Inflation is an indicator of how efficiently an economic environment of a country is managed. See the take off of prices in last 5 years! PowerPoint Presentation: NDA Government UPA Government Worsening balance of trade (exports – imports) is an indicator of our competitiveness, which we have badly lost in the last 5 years. This is despite relatively stable oil prices! One of the biggest reasons is the increase in capital goods import. These imports are not for manufacturing for global exports but in substitution of domestic manufacturing ! PowerPoint Presentation: NDA Government UPA Government But for money sent by NRIs to support their families, our current account deficit would have gone for a toss! See the significant change from NDA regime to UPA one! PowerPoint Presentation: NDA Government UPA Government While Rupee did decline in the first half of the NDA Raj, it did recover in the later half. During the UPA regime while it strengthened in the initial 3 years continuing the earlier momentum, it has been in a secular fall since then! Fall in the Rupee is not a cause but an outcome of economic mismanagement! Fall in the Rupee PowerPoint Presentation: NDA Government UPA Government During the NDA regime the growth rates did fluctuate, partly because of bad agricultural years, but what we see in the last 3 years is a saga of low rates of growth, in spite of rain God being kind! The first 5 years of UPA regime did see good growth on the back of infra investment by the earlier regime, but the momentum was lost completely on the back of mega scams! PowerPoint Presentation: NDA Government UPA Government While growth in industrial production steadily improved during NDA regime and continued in the first term of the UPA government, momentum was lost in infrastructure development. With issues in governance, the growth in industrial production has often gone into negative territory. If India has to emerge as a global power, manufacturing is vital! PowerPoint Presentation: NDA Government UPA Government During the NDA regime the external debt remained stable and close to USD 100 Billion. It has surged 4 times in a decade and has gone far beyond our reserves of about USD 305 Billion. What was the entire external debt during NDA regime is now our short term debt, repayment of which will again create pressure on the Rupee! PowerPoint Presentation: NDA Government UPA Government While fiscal deficit increased during NDA reime , they tried to discipline it through FRBM Bill which later became an Act. UPA kept fiscal deficit in control in the initial period but completely lost it the second term, despite the fact that they could not do much on infrastructure, except the airport infrastructure! Populist schemes can create further havoc in the years to come unless checked well in time! PowerPoint Presentation: The Budget PowerPoint Presentation: Main themes Budget 2014 Infrastructure Push NH of 8500 KMs Safe drinking water SP Mukherji Rurban Mission DD Upadhyay Gram Jyoti Yojana Inland Navigation 16 New Port Projects PM Gram Sadak Yojana Urban Renewal & Transport 15000 km of Gas Pipelines Smart Cities: Rs . 7060 Crores Swachchha Bharat Abhiyan Redirecting MNREGA focus Mission on Low Cost Housing Scaling up of PNG Usage PowerPoint Presentation: Main themes Budget 2014 Agriculture Development of Cattle breeds Warehouse Infra Fund PM Krishi Sinchayi Yojana Reorienting APMC Interest Subvention for ST Loans Two More Agricultural Research Inst. New Agri./ Horti . Universities Rural Infra Fund Kisan TV Neeranchal Watershed Development PowerPoint Presentation: Main themes Budget 2014 Investment linked tax incentives Changes for reducing tax litigation Push for MSME Sector PPP Model for many projects All Clearances under 24X7 E-Biz portal National Industrial Corridor Authority Mainstreaming PPP model Advance ruling for residents Encouraging Private Sector PowerPoint Presentation: Main themes Budget 2014 Avoidance of Retro Amendments Insurance: limit aised to 49% Township related norms relaxed Fairer Resolution of Old Cases Defense: limit raised to 49% Permission to mfg. companies for e-retail Foreign Investments PowerPoint Presentation: Main themes Budget 2014 Revamp IDR & create BhDR IND-AS from 2016-17 Uniform KYC across all sectors Consolidation of PSBs accepted in principle Capital Market, Banking & Insurance Indian Financial Code 5% WHT on bonds issued abroad LT Funds for Infra w/o CRR, SLR Differentiated Banks PowerPoint Presentation: Main themes Budget 2014 Cheaper Goods REITs Increase in Housing Interest Deduction Kisan Vikas Patra Increase in 80C limit Increase in Tax Slab Min Pension for organized sector Education related initiatives Common Man PowerPoint Presentation: Main themes Budget 2014 5 Tourist Circuits Cleaning of the Holy Ganga Archeological Sites Buddhist Pilgrimage Circuit Pilgrimage Rejuvenation & Spiritual Augmentation Drive (PRASAD) National Heritage City Development & Augmentation Yojana Displaced Kashmiri Migrants Arun Prabha for North East Culture & Ethos PowerPoint Presentation: Main themes Budget 2014 Expenditure Management Commission Targeted Subsidy Regime Fiscal Prudence & Discipline PowerPoint Presentation: Draught Conditions Geo-political Issues Aggressive Tax Collection Assumption No target date for GST, DTC Some Areas of Concern PowerPoint Presentation: Way forward .. Important implications: Important implications First government which is not shy talking of our cultural ethos The days of ‘free lunch’ are over, the days for rent-seeking will be over too More wide-spread opportunities than only in a few cities as of now More affordable housing as pressure on existing cities will start receding Entrepreneurship more than employment mindset Blossoming of huge domestic tourism industry; with India shining on the global tourism map in 5 years time! More responsibility on people, not only on government! Important implications: Important implications Gradual emergence of ‘I don’t to ‘I do’ trust you governance culture Phase of consolidation, expect build up in the next budget Government will aggressively partner with private sector for building the country Bringing down inflation will be a priority of the government Foreign investment will play an important role: we will be a cautiously open country Thank you: Thank you Time for an economic revival!