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With the global economy adrift, Finance Minister Nirmala Sitharaman sought to carve out an ark for India in her fifth Union Budget by trying to nudge domestic consumption and reluctant private investments upwards, while also seeking to create a feel-good factor among specific segments of voters as the government gears up for the 2024 Lok Sabha election.
She summed up the BJP-led government’s achievements since 2014 as “leaving no one behind”, taking just 200-odd words to outline the doubling of per capita income to ₹1.97 lakh, the increasing formalisation of the economy and the expansion of targeted benefits. She then used the rest of her Budget speech to soothe sections of society that may have felt a tad left behind over its nine-year tenure.
To assuage the salaried middle class, deflated by a sustained streak of high inflation, the tax-free limit under the new exemption-less income tax regime was raised to ₹7 lakh from ₹5 lakh.
The cap on non-government employees’ leave encashment at the time of retirement was raised to ₹25 lakh from ₹3 lakh.
Editorial
PMAY share rises by 66%, with more focus on Tier 2 and 3 cities (Page no. 10)
(GS Paper 3, Economy)
Giving a huge boost to affordable housing, the Union Budget presented on February 1 increased the allocation for the PM Awas Yojana (PMAY) by 66%.
Finance Minister Nirmala Sitharaman also announced an Urban Infrastructure Development Fund (UIDF) which will be used to create urban infrastructure in Tier 2 and Tier 3 cities.
PMAY was allocated over ₹79,000 crore this fiscal as compared to last year’s ₹48,000 crore. The scheme was launched in 2015 with the objective of providing affordable housing to all citizens. The scheme was created to assist the middle-income community, economically disadvantaged groups (EWS) and low-income groups (LIG).
This Credit Linked Subsidy Scheme (CLSS) is aimed to provide its beneficiaries with an interest subsidy to avail loans to purchase or build a house.
The Finance Minister said in her Budget speech that states and cities will be encouraged to undertake urban planning reforms and actions to transform cities into “sustainable cities of tomorrow.”
This means efficient use of land resources, adequate resources for urban infrastructure, transit-oriented development, enhanced availability and affordability of urban land, and opportunities for all.
Ms. Sitharaman said that the Urban Infrastructure Development Fund will be established through the use of priority sector lending shortfall.
This will be managed by the National Housing Bank, and will be used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities. The Centre will spend ₹Rs 10,000 crore per year for the fund.
A Budget that signals growth with stability (Page no. 10)
(GS Paper 3, Economy)
The Economic Survey that was placed in Parliament before the presentation of the Budget for 2023-24 has laid emphasis on the point that India has staged a remarkable broad-based recovery to reach the level of income that existed before the outbreak of the novel coronavirus pandemic.
There have been a series of shocks that began with the pandemic, followed by the war between Russia and Ukraine and the accompanying sanctions that have been imposed by the West on Russia, the slowdown and the recession in major parts of the world and the rise in inflation leading to sharp increases in interest rates, followed by capital outflow and the pressure on the exchange rate.
Even though the economy has staged a recovery and surpassed the pre-pandemic income level, it is still 7% below the pre-pandemic GDP trend; growth has to be fuelled by increasing public investment.
At the same time, with inflation still beyond the upper tolerance limit and aggregate fiscal deficit (Centre and States) still in the range of 9% to 10% of GDP, ensuring macroeconomic stability requires continued fiscal consolidation.
Thus the government is faced with the dilemma of accelerating growth by increasing public investment while containing the fiscal deficit.
With interest payments accounting for 40% of the net revenues of the Centre, there is hardly any room for complacency.
Interestingly, keeping the fiscal deficit limited to 6.4% of GDP in the current fiscal has come about despite a sharp increase in food and fertilizer subsidies, by ₹2 lakh crore.
While the higher than budgeted buoyancy in net tax revenues by almost ₹1.6 lakh crore has helped, a significant part of the adjustment is due to an increase in the denominator, the nominal value of GDP as compared to the assumption made in Budget 2022-23.
The Budget estimate had assumed the nominal GDP for 2022-23 at ₹258 lakh crore whereas the first advance estimate of GDP released a few days ago estimated it at ₹273 lakh crore.
In other words, despite the revenue deficit increasing in absolute terms, from ₹9.9 lakh crore in the Budget estimate to ₹11.1 lakh crore in the revised estimate, as a percentage of GDP, it was from 3.8% of GDP to 4.1%.
In the case of fiscal deficit, the increase was by ₹1 lakh crore — from ₹16.6 lakh crore to ₹17.6 lakh crore, but it was contained at 6.4% of GDP mainly due to the increase in the nominal value of GDP and also the increase in tax collections.
Explained
Is judicial majoritarianism justified? (Page no. 12)
(GS Paper 2, Polity and Governance)
As the recent majority judgment of the Supreme Court on demonetisation comes under criticism, the minority judgment by J. Nagarathna is being hailed for its challenge to the RBI’s institutional acquiescence to the Central government. This questions our blind acceptance of numerical majorities in judicial decision-making.
As opposed to standard matters heard by Division Benches consisting of two judges, numerical majorities are of particular importance to cases which involve a substantial interpretation of constitutional provisions.
In such cases, Constitutional Benches, consisting of five or more judges, are set up in consonance with Article 145(3) of the Constitution. Such Benches usually consist of five, seven, nine, 11 or even 13 judges.
This is done to facilitate decision-making by ensuring numerical majorities in judicial outcomes. The requirement for a majority consensus flows from Article 145(5) of the Constitution which states that no judgment in such cases can be delivered except with the concurrence of a majority of the judges but that judges are free to deliver dissenting judgments or opinions.
As opposed to representatives of the people in legislatures who may act on hunches or popular perception, judges are experts of law and are aware of the arguments for and against the impugned matter.
Given the same, Jeremy Waldron questions why is it that the judges too have to resort to head counting in order to resolve disagreements amongst judges.
All judges on a particular Bench give their rulings on the same set of arguments and written submissions. In light of the same, any differences in judicial decisions can be attributed to a difference in either the methodology adopted and the logic applied by the judges, or, as proffered by the legal realists such as Jerome Frank, upon their own ‘judicial hunches’ which may be an outcome of their subjective experiences, outlook, and biases.
In such circumstances, it is entirely possible that the majority may fall into either methodological fallacies and errors or be limited by their ‘judicial hunch’ respectively.
In such situations, a meritorious minority decision, irrespective of the impeccability of its reasoning receives little weightage in terms of its outcomes.
Our Constitutional history is replete with such meritorious dissents. The dissenting opinion of Justice H.R. Khanna in A.D.M. Jabalpur v. Shivkant Shukla (1976) upholding the right to life and personal liberty even during situations of constitutional exceptionalism is a prime example.
Another example is the dissenting opinion of Justice Subba Rao in the Kharak Singh v. State of U.P. (1962) case upholding the right to privacy which received the judicial stamp of approval in the K.S. Puttaswamy v. UOI (2017) case.
What is the government’s new policy of UPI for NRIs? (Page no. 12)
(GS Paper 3, Economy)
On January 10, the National Payments Corporation of India (NPCI) paved the way for international (phone) numbers to be able to transact using UPI.
A day later, the Union Cabinet approved an incentive scheme for the promotion of RuPay debit Cards and low-value BHIM-UPI transactions (person-to-merchant) in FY 2022-23. The scheme has an outlay of ₹2,600 crore.
In a nutshell, non-resident accounts such as non-resident external accounts (NRE) and non-resident ordinary accounts (NRO), having international numbers, will now be allowed into the UPI payment system.
The NPCI had allowed UPI transactions to and from NRO/NRE accounts linked to Indian numbers back in October 2018.
NRE accounts are those used by non-residents to transfer earnings from foreign soil to India while NRO accounts are used to manage income earned in India by non-residents.
These incomes could be rent, interest, pension, among other things. At present, users from ten countries will be able to avail the facility— Singapore, Australia, Canada, Hong Kong, Oman, Qatar, the U.S., Saudi Arabia, UAE, and the U.K.
Deep Agrawal, Head of Payments at online payment app PhonePe, told The Hindu that the development would allow NRIs to use the payment method for making utility bill payments for their families (or themselves) in India, make purchases from e-commerce or online platforms and make payments to physical merchants who accept UPI QR based payments when they travel to India.
Addressing the infrastructural and technological changes required to support such payments, he said, “Currently, all the internal systems as well as ecosystem players such as banks, NPCI, etc only understand India-based mobile numbers for UPI transactions. With this enablement, a significant number of systems will need to start understanding the same.”
The Merchant Discount Rate (MDR) is the charge recovered by the acquirer from the final recipient of the payment, that is, the merchant. It is collected by the acquirer to compensate the varied service providers and intermediaries in the payment system.
Presently, there is no MDR charge levied for RuPay-based debit card and UPI transactions. Stakeholders are hence concerned over cost recovery for the services they provide.
In August 2022, the Finance Ministry tweeted that it was not planning to levy any charges for UPI services, adding, “The concerns of the service providers for cost recovery have to be met through other means.”
The Reserve Bank of India (RBI) and varied stakeholders expressed concerns about the potential adverse impact of the zero MDR regime on the growth of the digital payments’ ecosystem.
States
Odisha may prove to be first mover on PVTG Development Mission (Page no. 15)
(GS Paper 1, Population and Associated Issues)
As Union Finance Minister Nirmala Sitharaman announced to launch the Pradhan Mantri PVTG (Particularly Vulnerable Tribal Group) Development Mission in order to saturate the PVTG families and habitations with basic facilities, Odisha being home to the highest number of PVTG communities in the country is likely to be benefited the most.
In fact, given the amount of experience Odisha possesses in handling focused and holistic programmes for PVTGs in the past decade, the State could be a first as well as best-mover among all States as far as the newly announced tribal programme was concerned.
Of the 75 PVTGs identified in India, 13 such tribes live in Odisha. As per the 2018 baseline survey, 2,49,609 persons belonging to PVTGs (58,708 households) live in 1,679 habitations in 14 districts of the State.
Union Finance Minister, in her Budget speech, said an amount of ₹15,000 crore would be made available to implement the mission in the next three years under the Development Action Plan for the Scheduled Tribes.
More than four decades ago, Odisha had implemented a micro project to address the basic needs and behavioural change of PVTGs in the State. At present, there are 20 micro projects focusing on the development of PVTGs.
Odisha has also been a beneficiary of the Conservation-cum-Development (CCD) scheme, for which the Union Ministry of Tribal Affairs allocates 100% financial assistance to the State governments having PVTG communities.
Odisha has already made a move towards the PVTG-focused programme without knowing that such a national mission is coming up.
Since 2015, the Naveen Patnaik government had launched the Odisha PVTG Empowerment and Livelihoods Improvement Programme (OPELIP) at an estimated expenditure of ₹711 crore, spread over seven years.
The State government had secured 46% assistance for the OPELIP in the shape of a loan from the International Fund for Agricultural Development. Under this programme, 542 habitations have been taken up for intervention.
News
India, U.S. step up strategic ties with tech plan (Page no. 18)
(GS Paper 2, International Relations)
India and the U.S., launched a programme to enhance their strategic partnership with delegations led by National Security Adviser (NSA) Ajit Doval and his American counterpart, Jake Sullivan, meeting in Washington for the inaugural dialogue of the Initiative on Critical and Emerging Technologies (iCET).
The two sides announced a set of programmes whose aim is to increase the depth and scope of bilateral cooperation in cutting edge technology, including in the defence sector.
The iCET seeks to build supply chains which increase co-production and co-development between the countries and increase linkages between the countries’ start-up ecosystems, both governments said in their statements describing the dialogue.
A White House ‘fact sheet’ released after the meeting highlighted six areas of planned cooperation: strengthening innovation ecosystems, defence innovation and technology cooperation, resilient semiconductor supply chains, space, STEM talent and next generation telecommunications.
The programmes include a Research Agency Partnership between the U.S. National Science Foundation and Indian science agencies; a mechanism to cooperate on quantum computing that will also involve academia and industry; developing a new defence industrial cooperation roadmap; supporting the development of semiconductors in India, including by setting up a taskforce to identify opportunities; and increasing space cooperation, including human spaceflight.
Also announced was a private-public dialogue to further 5G/6G cooperation and the adoption of Open RAN (technology to connect phones to each other and to the Internet) in India.
The U.S. also committed to a speedy review of an application from General Electric to produce jet engines in India for India-manufactured Light Combat Aircraft.
The initiative is a particularly significant milestone in the bilateral relationship, having been announced at the highest level — by Prime Minister Narendra Modi and U.S. President Joe Biden at the Quad summit in Tokyo in May 2022.
This level of backing, plus the fact that it is being led by the NSAs on both sides — with their ability to coordinate across Ministries and departments — not only “distinguished” this initiative but was also critical to its success, a senior U.S. official told reporters on a Tuesday briefing call.