The Gist of Yojana: November 2014

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 developed.

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.

Active Inclusion

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 become available.

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.

Conclusion

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 inflation.

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! Hyperlink reference not valid.).

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.

Recommendations

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 water quality.

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.

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