Budget 2014-2015: Employment and Skill Building

Employment

At present the unemployment situation in the country is alarming, with 4.7 crore youth (between 25 and 34 years of age) unemployed. Further it is notable that there are more than 350 millions of young people who are ready to enter the job market in next few years. If not managed the so called demographic dividend may turn out to be curse for the economy. And there is only way to decrease unemployment rate and increase opportunities for jobs for young people.

Skill Building

India at present can use the opportunity of the large number of Chinese labour force and their rising wages to establish itself as a low cost manufacturing hub for the world. This will help us to increase share of manufacturing sector in GDP and provide more employment opportunities to millions of youth. But for this it is important that government put basic infrastructure and policy in place for training and skill building and if India wants to achieve higher growth rate and gain for demographic profile, it cannot do without proper and efficient skill building strategies. It must be ensured by the government that the training institutes are providing contemporary vocational skills and there is flexibility in curriculum, recruitment of teachers, their salaries and placement of their students so that training institutes can adjust according to needs of the market.

Budget 2014-2015: Growth

Growth

Growth is another aspect of Indian economy that needs to be taken care of by the Indian government. In the last two five year plans, the average GDP growth rate in Indian economy was around 8%; however, the same is revolving around 4.5% now, which is hardly sufficient in view of the challenges faced by Indian economy. We need to accelerate growth back into the bracket of 8-10% to gain from the demographic profile of India. For this it needs to bring a lot of changes in overall economy.

Fiscal Deficit
From the below graph it is clear that there had been very high level of fiscal deficit and this is upsetting picture for a slowing economy. Therefore, the government instead of going for populism must ensure fiscal prudence.

The fiscal deficit must be brought around 4-4.5% or at max 5% (subjected it converts deficit into revenues) for better exchange rate and other economic parameters. From the newspaper reports about the revenues collection, the path the fiscal prudence by the government seemed to be a difficult choice by government seeing the proposed expenditures and promises made by BJP during recently concluded election as at present it does not have too much scope for higher fiscal deficit.

Budget 2014-2015: Inflation

Inflation                                                              

Inflation in Indian economy has been very high for long time and this is challenging for the economy as it is eroding the value of Indian rupee in national as well as international market and making life difficult for wages earners. Also considering the social and political unrest in Iraq and other West Asian nations, the problem of high inflation in Indian economy becomes more acute as oil prices would show upward trend leading to higher food and overall inflation in the economy. Government is required to take fiscal initiatives to contain as only monetary policy cannot help government in this regards. From the above graph it is clear that the average inflation during 2012 – 2014 has been around 10% and this is very high for any economy.

Food Inflation

Food inflation in the economy is on higher side and government needs to take initiatives for agriculture sector for better results in medium to long term as no short term strategy would work for because there has huge difference in Indian society of early 2000s and today’s India. India is witnessing tectonic shift in its eating habits across the country either its metro cities or rural areas. This has resulted in changes in demand for agricultural foods but most of farmers are following and cultivating old ways and corps. Government needs to bring the required change in the overall farming sector by promoting some important and vital corps so that it does not have to depend on imports.

Budget 2014-2015: Introduction

For any country, budget is an important vision document and for newly elected government perhaps the most important tool in hand to keep its people’s hopes and expectations sustained for longer time. The present day government with the help of a promising but deliverable budget can keep its own as well as its people’s morale high. Our finance minister is expected to present budget on 10^th July 2014. So to keep the morale of India at higher level he must take of few issues as inflation, food inflation, growth, fiscal deficit, employment and skill building, investment by corporate, manufacturing, agriculture, infrastructure, taxes, subsidies and social security programs and free trade agreements etc.

Government can use tax and expenditure policy to address cyclical issues such as food inflation and low industrial and job growth. For example, government as short term tactical decision can cut import duties on food but raise them on manufactured consumer goods; give tax credits and interest rate subvention for domestic entrepreneurs, promoting MSMEs, encouraging self help groups to establish micro and small industries across the nation, establishing small clusters for MSMEs, building cold storages; re-look FTAs. With the help of these, government can improve the overall economic position of the country. Also at the same time government must aim to increase private and public investment (PPP model) in different sectors (mainly infrastructure) through temporary tax credits.

Government has an opportunity to show to its people that it is dedicated to people of India and will do all required for the betterment of country on all sectors and budget can be used indicate this. If government makes deliverable promises, it can easily achieve those goals (if intends to).

In next few post I will discuss different Issues mentioned above in detail.

The Big Brand of Secularism

Voters in this country in this season of elections are very confused. Basically they have been entrusted to decide as who is secular and who is communal. Precisely, the main task is to decide who is communal. However secularism has always been a funning subject in our country. It has been so funny that even comedy shows would fail to entertain the public as this concept can do! 

At present there are three big brands in market of secularism and communal-ism; namely Rahula Gandhi, Mulayam Singh and Narendra Modi. The pioneer brand these days is Mr. Rahul Gandhi and he is very much worried about influence of ISI on Muslim youth of Muzzfarnagar and he finds RSS and BJP to be the reason for the same. 

NOTA Can Never be a Right Option

These days, intellectuals are so fond of None of the Above (NOTA). They are praising it as panacea of all the problems of Indian political system. NOTA is being said to be an effective tool in the hands of common man of the country to find the solution to non-performing governments and public representatives. But as a citizen of this country, I have different opinion altogether. It is a negative idea itself for a democracy and any democracy cannot afford to be empowered on the foundations of negative ideas. There is need for affirmative ideas and actions to make the government and public representatives more responsive towards people.

Special Court for Women and Children

The way crime against women and children are on rise, time has come that we must need a special court and legal system for women and children which can fast track such cases. Only fast and tough stances can bring changes in our society. And it should be turned into reality else it will be too late. 

We have centuries’ old legal system which can suit to the fast changing society which is being caused by so any factors. We have to abandon the old one and put completely new system that can fit into the new value system that is shaping our country. The new sets of values and ethics are replacing the old ones and it has to be accepted and acknowledged by our society and the government. At India Gate I am seeing a completely different world and yes, this would be the future. So should be accepted than denied the right place in society. That is the only way we can deal with the new sets of values and ethics.

Great Going Dynamic Democracy

Some people are protesting at India Gate against the law and order situation of the nation, the capital city Delhi, for a right cause and reason but they are being beaten by our Honourable Government. Why? Because these protests don’t suit to the ruling class’s discourse. And that’s great. 

Its great to see and be part of such a living and dynamic democracy! How dare the stupid Indians, the Mango People speak against the modern times Gods! Sorry the real gods!!

People cannot say even the right things to this government. We pay taxes every year to these Gods to be raped, killed and beaten if we demand security or protest when denied our rights. We are moving in the right direction! Are not we?

A Party with Difference and Character

BJP presents itself to the Nation as a 'Party with Difference and Character' and nation does recognize this to some extent. Over time this party has been able to garner this image by its constant efforts. Till now it has also shown great resolve to fight against corruption (in Party Statements) however reality might be different. Fighting against corruption in reality is quite difficult and challenging than that of party statements.

We as a nation appreciate this but at the same time want this to be endorsed as well. So should not Mr. Gadkari, the party president, resign from his to post in response to corruption charges on him by various groups and media house to provide political class with an example (Remember Mr. L.K. Advani resigned when he was charged with corruption in early 90s in Hawala Kand episode)? What do you think?

Cutting Fiscal Deficit has Become Obsession

Managing fiscal deficit seems to be more important for the Finance Minister of India and for this holy cause he increased the effective taxes on common folk than increasing the revenues by expanding economic activities and that too in times of crises where consumer confidence is so low. 

Increasing tax can be an option to manage deficit in an economy that is facing severe deficit problems. But it is dependent upon other macroeconomic indicators and factors. But it is always advisable that government should try to keep tax rate reasonable else that will result into black economy getting bigger with every passing day. And today it does not seems that situation is so worse that it needs to anyhow increase effective tax rate; corporate or personal.