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The Budget And India’s Future

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By Amit Kapoor

The past few days have been particularly historic when talking about the impact they can have on India’s trajectory of growth and economic development. It is because the maiden budget from India’s new finance minister was announced on the July 10. It was a test of economic management on the part of the Narendra Modi government. There were a lot of expectations from the budget from all sections of society, be it business, agriculture or even the common man.


This was the budget document that appeared to have provided for a strong economic vision. In a much anticipated move, the FDI limits in defence manufacturing and insurance were moved up to 49 percent from the 26 percent cap, which shows a firm intent on the part of the government to reform the economy. 

Populism and the Economy

Over the past few years, the country has experienced growth in expenditure which has not been able to keep pace with the growth in revenue, leading to a fiscal deficit which is above the 3 percent limit prescribed by the FRBM act of 2003.

It had led the finance minister to indicate in a speech to chartered accountants just days before the budget where he mentioned about the priority for fiscal constraint over mindless populism. It was because, according to him, mindless populism did not help the UPA win the general elections. Generally speaking, there is an “either/or” between populism and the economy. However, the finance minister, in his budget according to us has tried to marry the two. 

The budget has not substantially cut down on the previous schemes but has recalibrated them in a manner, which could benefit the country.

Some schemes on infrastructure – especially investment of Rs. 37,880 crore in the NHAI and state roads will have a multiplier effect on the economy. Also, several new schemes have been introduced, notably among them being 100 smart cities, National Level Skill Programme (Skill India) and Pradhan Mantri Krishi Sinchayee Yojana which will help address urbanization, employment and agriculture. 

The focus for the budget was clearly on the economic aspects rather that pure populism, though continuing the previous government’s schemes goes to show the maturity of the present government in dealing with the issues that matter to the people. In our view, there was clearly a distinct rightward shift as is seen from the likes of scheme on entrepreneurship for which the finance minister has set aside Rs.10,000 crore as well as the step to increase the FDI limits.

Investment and Savings

Investments in India have taken a hit due to a decline in the overall business environment.

The finance minister has done his bit by the asking the PSUs to invest Rs.247,941 to create a virtuous cycle of investment. It is in addition to lifting the cap on FDI as well as as providing relief (in tax terms) to Real Estate Investment trusts (REITs) which shows some definite steps taken to fuel investment. Apart from this, increasing the PPF (Public Provident Fund) limit, as well as the investment limit under Income Tax Act to Rs.1.5 lakh from Rs.1 lakh, will do their bit to encourage domestic savings and investment.

Common Man and the Business Community
One of the biggest achievements of the budget has been in its ability to provide relief and direction to both ordinary people and businesses. Be it increasing the tax exemption limit very minutely from Rs.2 lakh to Rs.2.5 lakhs in the case of individual taxpayers or addressing the issue of retrospective taxation (to be undertaken in fresh cases only by constitution of a committee by CBDT (Central Board of Direct Taxes) in case any action is initiated in such matters).

Also, there is a focus on entrepreneurship and focusing on a stable tax policy as well as easing the conditions for doing business both for big corporations and small and medium sector enterprises.

What will separate this budget is not the content or form of it, but the way in which it gets implemented. We feel the revenue targets will be a difficult to meet. But all in all it is a visionary budget. In our, opinion the finance minister has been criticized for the 29 schemes that were of Rs.100 crore each, it is the best way really to put in the money. If massive allocations are done upfront the impact of failure is catastrophic. To gauge the depth of the river with one foot is indeed wise economic policy. Apart from that, it shows meticulous micro-planning. The budget seems to have taken the first corrective steps to reform the economic woes that the economic survey had pointed out in its chapter Issues and priorities. What remains to be seen is how these issues and priorities are resolved at the ground level. This will point to the general direction in which India is headed in the years to come. 

The article is co-authored with Sankalp Sharma, Senior Researcher at Institute for Competitiveness, India.

Amit Kapoor is Chair, Institute for Competitiveness & Editor of Thinkers.

Canadian News

Joint statement from the Greater Toronto Area & Hamilton Mayors and Chairs

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Ontario Premier Doug Ford, left, and Toronto Mayor John Tory
Ontario Premier Doug Ford, left, and Toronto Mayor John Tory take part in a candlelit vigil to honour the victims of a deadly shooting in Toronto on Wednesday July 25, 2018. Ten-year-old Julianna Kozis of Markham, Ont., and 18-year-old Reese Fallon of Toronto were killed in Sunday's shooting attack, and 13 other people were injured. THE CANADIAN PRESS/Chris Young

We are united in fighting COVID-19 – protecting our residents and saving lives.

While the measures we have taken to stop the spread of the virus have made a difference, this virus has still taken far too many lives in our communities and continues to threaten the lives of our residents.

At the same time, there is no denying the devastating impact of COVID-19 on the economy. Jobs have been lost, many businesses have closed or are at risk of closure, and many families are worried about their financial future.

We’ve been hit hard but that’s why it is so important that we keep moving forward and come back as strong as possible.

Today, the GTHA Mayors and Chairs met to discuss the impacts of COVID-19 on the region and how our municipalities can work together on the economic restart and recovery.

We know the Toronto Census Metropolitan Area alone is projected to lose 355,000 jobs and 28% of GDP along with $894 million in lost wages and $3.7 billion in revenue losses for businesses. This will be felt right across the GTHA but it also threatens the provincial and national economies.

A strong recovery right here in the GTHA is crucial to healing the economic damage done by COVID-19 and helping the families and businesses all governments have been working to protect throughout this emergency.

Ontario’s economy and Canada’s economy need the GTHA to come back stronger than ever when the restart begins.

We are determined to deliver this recovery and we agreed today that the GTHA municipalities will be working together to successfully and smoothly reopen our vital regional economy when the time comes.

We also discussed how we can in a consistent way achieve significant, necessary financial support from the other governments to help mitigate the impact of COVID-19 and protect our ability to contribute to the recovery. A strong recovery needs strong cities and regional governments.

We have agreed we will work together to share information about our respective financial positions and explore together measures we can advocate to the other governments which will help to ensure the financial stability of local and regional governments in the GTHA.

Our child care and recreation programs help parents get back to work.

Our emergency services keep people safe.

Our transit systems get people to work and home safely.

Our major infrastructure projects – often built in conjunction with the other governments – will help kick-start the recovery and create countless jobs.

Our economic development activities attract jobs and investment.

We built a strong and vibrant GTHA and we know that we will need to come back even stronger and as quickly as we can in order to keep Canada’s economy going.

With the cooperation and support of the provincial and federal governments, we are ready to rise to this challenge.”

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Canadian News

Four People Charged in Mississauga Pedestrian Fail to Remain Fatality

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Investigators from the Major Collision Bureau have charged four people in Mississauga’s most recent fatal fail to remain collision.

On Thursday, February 15, 2018, at approximately 8:40 p.m., the victim, a 61 year-old female from Mississauga, was struck by a south bound vehicle as she was crossing Mavis Road in the area of Knotty Pine Grove in the City of Mississauga. The vehicle did not remain and the victim, having suffered major injuries, was pronounced dead at the scene.

On Saturday, February 17, 2018 shortly before 7:00 p.m., Satchithanantha VAITHILINGAM, a 60 year-old male from Brampton, and the driver believed to be responsible in this incident, surrendered to police at 22 Division. Satchithanantha VAITHILINGAM has since been charged with Fail to Remain Cause Death.

Hivissa SATCHITHANANTHAN, a 25 year old female from Brampton, Shajeetha SATCHITHANANTHAN a 28 year-old female from Brampton and Gowtham SATKUNARAJAH a 28 year-old male from Brampton have each been charged with Accessory After the Fact in relation to this incident.

Satchithanantha VAITHILINGAM will answer to his charge on March 12, 2018. Hivissa SATCHITHANANTHAN, Shajeetha SATCHITHANANTHAN andGowtham SATKUNARAJAH will answer to their charges on Monday March 26, 2018 at the Ontario Court of Justice in Brampton

Anyone who may have witnessed the collision, have dashboard video footage of the incident or who may have any information regarding this incident is asked to contact investigators with the Major Collision Bureau at (905) 453-2121, ext. 3710. Information may also be left anonymously by calling Peel Crime Stoppers at 1-800-222-TIPS (8477), or by visiting www.peelcrimestoppers.ca or by sending a text message to CRIMES (274637) with the word ‘PEEL’ and then your tip.

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Canadian News

Justin Trudeau in India: Hug missing! Mounting pressure?

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The much publicized and anticipated visit of Prime Minister Justin Trudeau to India was marred with questions. The questions were centered on the kind of welcome he would be given in the Sikh dominated state of Punjab. Also the famous hug by Indian Prime Minister Narendra Modi was being anticipated. Prime Minister Justin Trudeau finally made his much-touted visit to India. He landed on the Indira Gandhi Airport, New Delhi only to be received by Gajendra Singh Shekhawat not even a Cabinet Minister in Narendra Modi’s government.

He is presently the second rank Minister of State for Agriculture.  That comes in complete contrast to the warmth that Prime Minister Narendra Modi and his NDA government has generally displayed towards the visiting dignitaries.  Only a couple of weeks ago, when the heads of the 10 ASEAN states arrived in India, Prime Minister Narendra Modi didn’t receive Prime Minister Justin Trudeau at the airport, as he has previously done with many leaders including Barack Obama, Xi Jinping, Shinzo Abe, and Benjamin Netanyahu.

The fact that Prime Minister Narendra Modi didn’t join him is all surprising even when Prime Minister Trudeau visited Gujarat. This is unusual because the Indian Prime Minister has set a trend that he always accompanies head of the state when they visit his home state.

Even Chief Minister of Uttar Pradesh Yogi Adityanath did not show up, let alone accompany Prime Minister Trudeau to the Taj. However, during Israeli Prime Minister Netanyahu’s 15 January visit to the Taj Mahal at Agra, Yogi Adityanath had received Netanyahu and his wife and shown them around as well as hosted a lunch for them. For first three days, none from the executive or the elected representative held any meeting with the delegation.

Media in India is trying to spread a message that the cold treatment given by Prime Minister could be because two of the four Sikh members of Trudeau’s cabinet – Harjit Sajjan and Amarjeet Sohi – support the Khalistan movement. However, had that been the case his visit to Punjab would have got a similar response.  However, the Punjab Government led by Captain Amarinder Singh rolled out a red carpet during his stay at Amritsar and even the two leaders held some fruitful discussions.

Thus putting an end to those criticisms that that Prime Minister Trudeau’s visit was devoid of any warmth.  Chief Minister of Punjab Amarinder Singh, for instance who met Prime Minister Justin Trudeau setting aside his earlier prejudice that he exhibited during the visit of Defence Minister Harjeet Singh Sajjan.

In recent months, Gurudwaras (Sikh temples) in Canada, the United States and Australia have banned Indian officials from visiting gurudwaras and the moment started with Gurudwaras here in Toronto. Could that be the reason for Prime Minister Narendra Modi to not accord one of the warmest welcomes that he is known to provide?  Or the use by Canada’s parliament of the term genocide to describe mass killings of Sikhs in India in 1984 has left the Indian Prime Minister disturbed?  However, more than Prime Minister Modi, this could have left the Congress party in troubled waters, but that was also not the case as Amarinder Singh hails from the same party.

The lukewarm welcome to Prime Minister Trudeau can have its political ramifications too. Will it hamper the significant 2015 deal, in which Canada agreed to supply 3,000 metric tons of Uranium to power India’s atomic reactors?

Somewhere Prime Minister Modi has not taken the issue of non allowing entry of Indian officials to Gurudwaras and the statement on Genocide too lightly. Prime Minister Modi however has failed to understand that Canada cannot curtail the right of freedom of speech and expression of its citizen.

Two nations perhaps failed to resolve the matter before Prime Minister boarded the flight from Canada and not welcoming Prime Minister Trudeau could be a tactical decision to put pressure on him. With Prime Minister Modi preferring to meet him at the far end of the tour has conveyed a lot about the myopic approach of Prime Minister Modi.

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