The Gist of Yojana: November 2014
Marginal Realignment Of Tactics to Strategy
Macroeconomic Determinants of Growth
At the macroeconomic level, there is stimulus for different
types of investment and for household saving all of which raise growth. Column I
in Table I gives the percentage difference between the Budget Estimates (BE) of
the present budget and those in the interim budget indicating a restructuring
away from budget of the previous government. Column 2, with the increase in the
2014-15 July BE over 2013-14 Revised Estimates (RE), gives the expected increase
in expenditure that will impact the economy. Column 3 has the similar promises
made in the interim budget. Column 4 is an indicator of the feasibility of the
promises since it gives actual past performance-the change in 2013-14 RE over
actuals of 20 12-13.
Apart from the marginal turnaround in public investment,
there are many measures to reverse the fall in private investment and increase
its productivity. This is essential to reverse the slowdown in manufacturing.
These include temporary tax credits for investment, with eligibility for the
investment allowance extended to an investment of Rs. 25 crores, from the
earlier threshold of Rs. 100 crores.
An IT enabled e-BIZ single window is to coordinate Central Government
services for industry, many industrial corridors and clusters are to be
Promoting Foreign Direct Investment in strategic sectors such
as defence production and insurance will also directly increase investment,
domestic jobs, technology, and financing. FDI limits have been raised from 26 to
49 percent so that management and control remain with India. Other concessions
have been given with respect to built up area and capital conditions, especially
for low cost housing and for smart cities.
Concrete action to reduce food inflation is limited to a
promised sale of food stocks. But the budget does recognise the importance of
working closely with States to modify the APMC acts and promises other steps to
improve agricultural marketing including improving warehousing and restructuring
the Food Corporation of India. Interventions in agriculture are correctly
focused on improving infrastructure-irrigation, watershed development, feeder
separation in power, roads and housing.
Last year fire-fighting reduced the current account deficit
and strengthened ‘the rupee, but increasing domestic financial savings and
deepening domestic markets are important among longer term measures to maintain
a sustainable balance of payments. While taking steps to that deepen domestic
financial markets, it is good that the finance minister has not further
liberalized foreign debt flows.
Two factors limit the increase in public investment. First,
it takes time to ramp up the system to spend effectively, particularly if the
direction of spending has to be changed. Second, the funds constraint prevents a
rise in public investment unless there is a fall in other government
expenditures. The budget’s attempts to change the composition of government
expenditure towards investment remain marginal because there is not much
economizing on revenue expenditure, there are some tax concessions, and the
fiscal deficit target is maintained.
The commitment to long-run fiscal consolidation, however, is
very much a positive, especially in the Indian context where we are just
recovering from extreme external fragility induced by government overspending.
But sticking to the letter of the short-run may lose an opportunity to improve
the composition. Quality and sincerity of fiscal consolidation matters more.
Supply-side factors largely drive inflation but we have among the highest rates
of youth unemployment in the world and need to act vigorously, just as many
Western countries are doing to kick start growth.
The second issue is to limit transfers to capacity.
Re-designing transfers so they build capacity would achieve this, even as they
increase equality of opportunity. A stable government, at the beginning of its
term, has more freedom to act quickly towards shifting from populism towards
productivity. A reluctance to risk a departure from the status-quo would be a
dangerous misreading of the election mandate.
The ‘virtual’ middle class has exploded as social .media
raised awareness. Rural peri-urban migration has created a large neo middle
class, and the country’s demographic profile has increased the share of youth.
All these sections gain more from a good working environment as compared to
doles. Even the lower income classes stand to gain as a richer set of jobs
Improving Systemic Incentives
Faster decision making requires systems that enable this.
Obsolete administrative structures lead to delays. This became clear in 2009,
when the share of non-performing bank loans rose as infrastructure projects were
delayed. The latter predated the big corruption scandals starting with the CAG
report and Common wealth games that blew up in 20 I O. So, while corruption and
the fear of CBI enquiries do create delays, they are not the major cause of
government paralysis. But this issue is not addressed in the budget.
Although, the number of ministers has reduced in the present
government as compared to the previous government, budget allocations are still
made for 49 ministries compared to 50 for the UPA. There is no serious attempt
to synergize across schemes and ministries to saving costs. Instead, many new
schemes have been announced, with small initial seed capital. The finance
minister is, however, using the inability of government to spend effectively to
ration initial allocations. It improves incentives if more is given to those who
are able to use it well. But supporting institutional changes are required to
ensure implementation. New technologies are to be leveraged to improve
governance.The major increase in tax revenue has come from increasing the tax
base for services, in line with the expected change to GST. A low rate and large
base philosophy suits India’s large population size, and meets criteria of
fairness, although the growing class of Indian billionaires can afford to
contribute more for the country’s development. The continuing temporary
surcharge on the wealthy could be shifted to a higher threshold and made
permanent. Technology, information in the TIN database, and applying a
consistent consumption tax through the GST, can all help expand India’s low tax
base. Only 3 per cent of Indians pay taxes compared to 20 per cent in China. So
the potential for expansion is enormous. The budget takes only a very small step
in this direction.
Although, the overall tactics are aligned to the strategy,
the alignment is only marginal as yet, because the various strands are not well
integrated together to tell a coherent story of how they work together. This is
unfortunate because the measures for raising different types of investment, and
improving their financing will reinforce each other to raise growth and jobs. As
will the focus on employment intensive sectors, infrastructure, housing,
agricultural marketing and crop movement. There are also small beginnings in
better systems, incentives, composition of public spending and public services.
Apart from contributing to growth, these can help improve equality through
capacity creation so that the economy does not hit bottlenecks. A composition of
government expenditure weighted towards consumption had earlier raised
Yamuna River Cleaning: Prevailing Issues and Mitigating Measures
India’s attempts to Clean the rivers started in 1985 with GAP
for water quality restoration of the Ganga River. Based on the CPCB’s findings,
the Government started Yamuna Action Plan phase I (YAP) in 1993 (CPCS, 2007).
The plan was launched with financial assistance from the Japan Bank for
International Cooperation (JBIC). The National River Conservation Directorate (NRCD)
under the Ministry of Environment and Forests (MoEF), is the executing .agency
for YAP. The Uttar Pradesh Jal Nigam (UPJN), the Public Health Engineering
Department (PIlED) in Haryana, the Delhi Jal Board (DJB) and the Municipal
Corporation of Delhi (MCD) in Delhi are the Project Implementing Agencies (PIAs).
YAP covers three states, namely Haryana, Uttar Pradesh (U.P.) and Delhi
(Planning Commission, 2007).
YAP I was scheduled for completion in April 2002, but the
planned projects continued until 2003. Initially, the plan was formulated to
cover pollution abatement works in 15 towns (six in Haryana, eight in U.P., and
one in Delhi), for which JBIC sanctioned a soft loan of Yen 17.77 billion. The
beneficiary states turned out to be Haryana (Yen 6 billion), Uttar Pradesh (Yen
8 billion), and Delhi (Yen 3.77 billion). However, in April 1996, the Supreme
Court directed adding six additional towns of Haryana under YAP I, which has
been funded through the Plan funds of MoEF.
Despite diverse activities under YAP I, the river quality was
not up to the desired standards (CPCB, 2006-07). It was found that the sewerage
component of Delhi has been underestimated and the STP capacity created by the
city government concurrently with YAP remained under-utilized (CPCB, 2006-07).
MoEF, India launched YAP II in December 2004. It was scheduled to be completed
by September 2008. JBIC signed a new loan agreement with MoEF on March 31, 2003,
based on the works accomplished under YAP I, and sanctioned an amount of 13.33
billion Yen, which is 85 per cent of the total cost estimated to complete YAP
II. It has been noted that even though time and investment have been spent, the
pollution load in the river has only gone up. The BOD load has increased from
117 tonnes per day (tpd) in 1980 to 270 tpd in 2008 (CSE, 2009). Looking at the
impacts of YAP II, the GoI has approved YAP III in December 2011 with an
estimated cost of Rs. 16.56 billion and Delhi being the main focus (Error!
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Therefore, it is imperative to study and evaluate various pollution control
interventions for Delhi stretch of the River Yamuna.
The river enters Delhi near Palla village after traversing a
distance of about 224km and is again tapped at Wazirabad through a barrage for
drinking water supply to Delhi with “zero” or little flow downstream (d/s) the
barrage. Afterwards, the river receives untreated or partially treated domestic
and industrial wastewater. Again, after traversing approximately 25km (d/s
Wazirabad barrage), water is diverted into the Agra Canal for irrigation and
again the river is trapped at Okhla barrage. Subsequently, negligible or no
water is allowed to flow through the barrage during dry season. Downstream Okhla
barrage, the river receives domestic and industrial wastewater generated from
East Delhi, Noida, and Sahibabad areas which joins the river through Shahdara
drain. Finally, Yamuna receives water through other important tributaries and
joins the River Ganga along with an underground River Saraswati at Prayag
(Allahabad) after travelling approximately 1370 km (CPCB, 2001-02[a]).
The river quality drastically deteriorates d/s Wazirabad
barrage in Delhi and doesn’t meet the required standards due to the addition of
13 drains carrying partially or untreated domestic, industrial, and diffuse
wastewater into the river and lack of freshwater ‘: The city generates According
to the 2021 Master plan of Delhi, DJB plans to augment the STP capacity, CETP
capacity, and recycling and reuse potential of the city which would result in
minimizing the wastewater generated into the river Yamuna. The proposed “green
belt” under each zone has also beer calculated in the master plan (2021)
(MPD-2021, 2007). Such areas an used for agricultural purposes, farm houses or
plantation at roadside DJB has also proposed an interceptor sewer plan to
minimize the rive’ pollution.
It is extremely important to minimize the sewage generation
and wastewater flow into the river by constructing STPs with recycling and reuse
options as it would result in improved sewage infrastructure in the city with
minimal pollution load to the river. However, due to high wastewater discharge,
it would still not result in attaining the desired river class “C”. Therefore,
considering the money inflow under YAP, it is important to revisit the need of
attaining class “C” for Delhi stretch of the river.
The initiatives under YAP are considered to be in the right
direction, but the concept of effective implementation would need further
engineering inputs, including the way to enhance freshwater flow into the river
system. The following section details a few strategies to restore the river’s
Improving Sewerage System
River front development needs to be looked upon as both an
economically- viable and environmental-friendly solution to promote the concept
of “green city”. Riverbanks must be developed as parks with fountains,
artificial falls, playground, grassy land, water sports, flow channels, ponds,
plantation, etc., which could be used to create artificial aeration facilities.