Why the decline

When the rupiah fell below the 77 level after the Russian-Ukrainian war escalated and crude oil prices spiked, the Reserve Bank of India (RBI) sold dollars to prevent a fall in the value of the rupee. The RBI intervention – dollar sales via PSU banks – began when the rupiah broke through the 76 level and headed towards 77 against the dollar.

The RBI sold $5.135 billion to the banks on March 8 and simultaneously agreed to buy back the dollars at the end of the swap settlement period. When the central bank sells dollars, it sucks up an equivalent amount in rupees, thereby reducing rupee liquidity in the system. The influx of dollars in the market strengthened the rupiah which reached the level of 77 against the dollar on March 8th. On March 17, the rupee jumped 41 paise to close at 75.80/81 against the dollar.

Pressure on the rupee

Putting heavy pressure on the rupee, foreign investors have withdrawn Rs 41,617 crore so far in March. The outflow came after withdrawals of Rs 45,720 crore in February and Rs 41,346 crore in January. With this, REITs have withdrawn Rs 2,25,649 crore (excluding REIT investments in IPOs) since October 1, 2021, mainly anticipating an interest rate hike by the US Federal Reserve.

Additionally, Brent prices soared to a nearly 14-year high of $140 as the war in Ukraine escalated. As India imports nearly 80% of its domestic oil requirements, high crude prices would have led to a sharp increase in dollar requirements.

Sharp drop in FCA

The main components of foreign exchange reserves are foreign currency assets (FCA), gold assets and IMF SDRs (special drawing rights). The RBI sold dollars from its FCA kitty – kept in global central banks, foreign banks and foreign securities – to bolster the rupiah.

According to central bank data, FCA plunged $11.108 billion to $554.359 billion in the week ended March 11. The FCA includes the effect of the appreciation or depreciation of the dollar and non-US units such as the euro, the pound and the yen held in foreign exchange reserves.

However, with the surge in gold prices in the context of the Russian-Ukrainian war, the value of gold reserves increased by $1.522 billion to $43.842 billion during the reference week.

For the week ended, the country’s foreign exchange reserves decreased by $9.646 billion to $622.275 billion. Reserves had increased by $394 million to $631.92 billion in the prior week ended March 4. They reached a lifetime high of $642.453 billion during the week ended September 3, 2021.

By Express press service

HYDERABAD: The Enforcement Directorate (ED) has provisionally seized 15 real estate properties worth over Rs 13.51 Crore belonging to Hyderabad-based M/s Servomax India Private Limited (SIPL) in a multi-tier bank fraud case -crore. The attached properties are in the name of parents of directors Poreddy Chandrashekhar Reddy and Avasarala Venkateswara Rao and their benamidars. The attached properties are located at prime locations in and around Hyderabad.

ED had in January arrested Rao for causing a loss of around Rs 402 crore to a consortium of public sector banks by engaging in various fraudulent practices. The ED has launched an investigation against Venkateswara Rao, Chandrasekar Reddy and other defendants based on a case registered by the CBI.

During the investigation, ED discovered that SIPL had obtained loans from a consortium of banks, including letters of credit (LC), bank guarantees (BG) and a working capital loan, and then had them misappropriated and had not used the loans for the stated purpose and had not repaid the loans.

The fund’s lead investigation revealed that the company had received LCs on behalf of its related fictitious entities and without the supply of material, the LCs had been discounted and returned the proceeds of the LC discount and the promoters l had used for personal gain and to invest as share capital and advance loan in their businesses.

Moreover, the money was also withdrawn in cash and through the accounts of its small employees. During the investigation, two Benamidars Atluri Prasad and J. Rajesh of M/s Maruthi Travels admitted to laundering the proceeds of crime at the request of the main accused.

Despite SIPL being liquidated through NCLT, the promoters managed to alienate the proof of concept (POC) and purchase assets on behalf of their family members and benami entities.

Further investigation is underway, ED officials said.

ED seizes properties in illegal ephedrine manufacturing case

In a separate case, the ED has provisionally seized real estate worth Rs 1.61 Crore belonging to S Nagaraju, Gadiparthi Satyanarayana and K Raju Paranthaman in connection with a case related to the illegal manufacture of ephedrine , a psychotropic substance.

The properties are located in Telangana and Tamil Nadu.

ED initiated a money laundering investigation against the accused based on a complaint filed by the DRI under the NDPS Act for the illicit manufacture and trade of ephedrine.

ED found that the defendants generated proceeds of crime to the tune of Rs 5.23 Crore by trading in illegally manufactured ephedrine. The investigation revealed that entire transactions were carried out in cash without receipts, invoices and permits from the relevant authorities.

It has also been found that properties were acquired by the accused by making cash payments which are the proceeds of crime and as a result, 16 land properties located in Telangana and Tamilnadu valued at Rs 1.61 Crore have been provisionally seized under the Prevention of Money Laundering Act. (PMLA). Further investigation is underway, ED officials said.

Kirloskar Ferrous Industries, a leading manufacturer of pig iron and gray iron castings, has taken a majority stake in specialist seamless tube maker Indian Seamless Metal Tubes (ISMT) for Rs 670 crore.

The deal involves Kirloskar investing Rs 670 crore in ISMT, of which Rs 476.63 crore represents a 51.25% stake and the remaining Rs 194 crore is an unsecured loan to the tube maker, the sources said. companies in a press release.

The transaction, advised by city-based investment banker Singhi Advisors, also involves an open offer to acquire up to 25.05% of ISMT worth Rs 239.7 crore, under take standards. control of Sebi.

The proceeds will be used for a one-time settlement of ISMT loans of approximately Rs 3,359 crore. The one-time settlement of Rs 670 crore was approved by its lenders in February.

ISMT is a major manufacturer of seamless tubes with an integrated steel mill, as well as a debt-financed power plant. But the investment didn’t go as planned, leading to stress and the eventual sale.

The lenders, holding 70% of the principal debt, had planned to allocate the debt to asset reconstruction companies, but due to the pandemic this did not work out, leading to a one-time settlement accompanied of a change of direction.

This is the second instance in the listed company space following the acquisition of CG Power & Industrial Solutions by the Murugappa Group in 2020 in a single settlement accompanied by a management change.

With the acquisition of ISMT, KFIL seeks to integrate its iron ore business with seamless tubes on a consolidated level and diversify the current product portfolio with steel and seamless tubes.

For the first nine months of FY22, KFIL reported revenue of Rs 2,716 crore versus Rs 1,291 crore a year ago and recorded net profit of Rs 340 crore versus Rs 167 crore.

ISMT is the nation’s largest integrated manufacturer of specialty seamless tubes and produces tubes in the diameter range of 6-273mm and operates an alloy steel plant that produces a wide range of alloy steels from 20-225mm of diameter.

ISMT reported a 100% increase in revenue to Rs 1,553 crore for the first nine months of FY22 from Rs 768 crore in the same period of FY21, but posted a loss net of Rs 171 crore during the period compared to Rs 231 crore a year ago. .

Founded in 1991, Kirloskar Ferrous Industries is a leading manufacturer of pig iron and gray iron castings. The group has a 130-year manufacturing and engineering heritage.

It supplies foundries across the country and contributes to automotive, motors and compressors, textiles, pumps and other manufacturing industries.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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HYDERABAD: The TSRTC getting a ‘rough deal’ in the budget has raised fears that the transport utility company could take on more debt. Management already owes nearly Rs 2,500 crore to staff and retirees in salaries and pensions. The debt burden that was borrowed in the form of loans to run the transport company has now hit Rs 2,900 crore, which includes Rs 1,000 crore of non-budgetary loans in 2021-22.

According to official sources, out of the Rs 2,500 crore the company owes its employees, there are Rs 783 crore owed to the Employees’ Thrift & Credit Cooperative Society (CCS), the Provident Fund (PF) of 1 Rs 239 crore and Rs 385 crore under the Staff Retirement Scheme (SRBS),

“It is a fact acknowledged by the management that over the past two years the company has suffered losses to the tune of Rs 4,285 crore. , the Corporation has only received around Rs 1,000 crore,” an official said. The TSRTC will have to continue with more than half of the buses over 10 years old. Most of the buses used in the city have at least seven years Virtually no new buses were added to its fleet after the formation of the state of Telangana.

Even the buses serving the long-distance lines were bought four or five years ago. It is feared that the situation will only get worse in the coming days, as rather than increasing the fleet and extending the routes, the company may have to reduce its operations. Rural areas are likely to suffer if efforts are not made to keep society afloat.

Growing debt may affect operations

Management already owes nearly Rs 2,500 crore to staff and retirees in salaries and pensions. According to official sources, out of the Rs 2,500 crore the company owes its employees, there are Rs 783 crore owed to the Employees’ Thrift & Credit Cooperative Society (CCS), the Provident Fund (PF) of 1239 crores of rupees and 385 crores of rupees under the staff pension scheme.

study at IIT Roorkee and pursuing her bachelor’s and master’s degrees in technology at a time when women weren’t allowed to dream of a life beyond domestic life At Poshak Agrawal mother the greatest inspiration he could have asked for in his life.

His mother’s daring educational feat opened his eyes to gender inequality from an early age, and he understood how women behaved differently, even in the day-to-day aspects of their lives.

One such incident that cemented Poshak’s understanding of how a woman negotiates the world around her was when he once observed the women’s compartment in the subway. He realized that the need for a women’s compartment had arisen because “women in India don’t have a lot of safe space just to be”. And it existed everywhere, not just when it came to travel.

Poshak juxtaposed his inference from his observation of the subway to the institution of finance and financial services, and came to the conclusion that women felt alienated from the system because money was inherently the domain of men. He decided to do something about it.

While still thinking about how he could make women’s finances easier, he met Rahul Subramaniam at a bike stand at Princeton University, and the two immediately hit it off.

Rahul, at the time, had closely followed what was happening in India vis-à-vis the digital revolution, as well as the feminist waves where traditional, cultural and gender barriers were broken down, and knew he wanted play a role in it.

Upon their return to India, the idea took a bit of a back seat as the duo focused their efforts on helping Indian students get into the best colleges in the world through their startup, Athena Education. But after demonetization brought fintech startups to the fore, they decided to finally combine their passion for gender equality with finance, and installation Inasmuch asFlorence CapitalInasmuch as in 2017.

Florence Capital, based in Gurugram is basically a lending platform that caters only to women, in partnership with Apollo Finvest India Ltd, an NBFC. He helps women get loans easily and makes Florence a “safe space” for women to explore loans and other financial services.

The founders call what they do “ethical loan” because they are transparent, credible and direct when undertaking loan applications. Not only do they work with loan applicants to assess their credit needs, but they also outline how repayments — or lack thereof — would affect their credit scores. Florence helps women to understand what loans would be right for them so that they don’t borrow more than they should and see their creditworthiness drop.

“There are so many strong, hardworking women who struggle every day to improve the quality of their lives, but they lack the financial means and resources to pursue their dreams and live the life they want to live. This is the problem that gave birth to Florence Capital. We want to give women the safe space that they have always been denied (in finance),” Poshak said. Your story.

Most Florence Capital users come from urban areas, Tier 1 and Tier 2, and generally borrow money to medical expenses, household expenses, education and development. As much as 50 percent are either new credit or have a very thin credit profile, while 50% have a thick credit history, Rahul says, adding that the startup will also expand to Tier 2 and Tier 3 cities.

woman centered

One feature that sets Florence Capital apart from many others is its collection team, who fully includes women.

Credit Collection Agencies primarily employ men who intimidate, threaten and even use brute force to collect loans, as seen in several loan applications that have been flagged by the government over the years. For women, sexual violence is often the POS of most abusers, whose fear, again, prevents women from seeking and accessing credit.

Florence Capital employs only women in its debt collection team, and operates on empathy to understand why a borrower has been unable to repay their loan, instead of resorting to threatening calls and visits.

Financial education and literacy, especially for women, is another area where Florence Capital stands out. His Florence Learn platform is not only a learning platform where women can arm themselves with financial knowledge, but also a safe space where women can interact with each other, learn from each other and even discuss related issues to money.

Florence Capital users also have the ability to access individual financial advice that can help them better understand their own financial situation, as well as plan the line of credit they wish to avail themselves of.

To date, the startup has enabled over 1,300 women to access loans and disbursed Rs 4 crore in total loans.

He raised a pre-series A round investors such as Mike Novogratz, CEO of Galaxy Investment Group; Amit Singhal, founder of the Sitare Foundation; Steve Kreider and Zach Kreider of Harrow Capital; and Rishi Jaitly, founding CEO of Times Bridge; and tries to go around the bridge further.

Florence Capital was generating revenue from day one, he said, adding that he hopes to lift a Series A round very soon.

The startup, like any other lending institution, derives its money from interest it charges its customers, along with the 2-3% processing fee. Interest rates vary between 18 and 30%, he added.

Florence Capital’s competitors include female-focused lending and financial services apps such as Inasmuch asBasedInasmuch as, Inasmuch asLXMEInasmuch asfemwealth and Inasmuch asSALTInasmuch asalthough it competes with NBCFs which also aim to make lending to women faster and easier.

With the global pandemic having destroyed the livelihoods of many, women are finding it harder to rebuild, especially without funds when they need them. A solution like Florence Capital can help meet these needs.

Access to most mobile internet users in India along with the ability to deliver mobile content and applications in Indian languages ​​gives Jio-Facebook a substantial advantage in reaching all Indians currently connected to the internet.

In April 2021, in a video release, Mukesh Ambani, the chairman of Reliance Jio announced an investment from global social media giant Facebook for a 9.99% stake for Rs 43,574 crore, which values ​​Jio at a mind-boggling Rs 4.62 lakh crore. Subsequently, Jio raised over Rs 1 lakh crore in a bid to reduce growing debt and interest obligations on its balance sheet.
In January 2020, the Supreme Court of India declared Internet access a fundamental right under Article 19 of the Constitution. The United Nations Commission on Human Rights passed a non-binding resolution in 2016 that makes internet access a basic human right. India then opposed this resolution at the UN.
Mark Zuckerberg, founder and CEO of Facebook, published a 10-page white paper in August 2014 outlining his idea of ​​how the Internet should be made accessible to everyone and access to data should be a fundamental right. Globally, many technology leaders and public policy experts were skeptical of Mark Zuckerberg’s intentions. Facebook has spent a huge amount of money promoting this idea in India under the internet.org initiative. However, they demanded that Facebook-related apps be given priority over the network, which was fiercely opposed by internet equality rights advocates. The courts supported this position and the effort disappeared within a few months.
Over the past decade. we have seen the impact that technology has had on social and other aspects of human life caused by the GAFA factor, where GAFA is the acronym for the major global technology giants Google, Amazon, Facebook and Apple. This does not take into account Whatsapp and Instagram (both now part of Facebook), Microsoft or Twitter which, with the exception of Microsoft, focus more on social networks. Regional players are also excluded, which would include regional tech players and telecom giants like Verizon, AT&T or Comcast, Walmart and other e-tailers in the US, BSNL and Flipkart in India or tech giants in China’s closed internet arena like search engine Baidu, instant messaging service WeChat or Jack Ma’s Alibaba. If two or three of these players were to combine forces where they have a majority market share, they would have an almost insurmountable lead over their closest competitor in second place. The Jio-Facebook deal spawned such a partnership with the idea of ​​creating a gigantic JioMart to compete with Amazon and Flipkart in the online marketplace, as well as hyper-local essentials delivery giants like Dmart- Ready and Big Basket.
Facebook bought WhatsApp in February 2014 for $16 billion at an effective price of $55 per WhatsApp user. At that time, WhatsApp had almost no revenue as it was and is still ad-free. So what justified such a high acquisition cost? In 2014, WhatsApp had over 500 million users worldwide and was adding over 1 million users daily. Facebook then had about 890 million users, but its growth was much slower. Facebook acquired WhatsApp to achieve this user growth. In a similar deal, Facebook acquired Instagram in 2012 for $1 billion when the company had just 13 employees.
According to Google, a large portion of new Indian users are joining Internet access content in Indian languages. This number makes sense because almost the entire English-speaking population already has internet access and the majority of added users come from rural areas where Indian languages ​​are the primary means of communication. Jio has already launched several of its phones and apps in major Indian languages. Access to all mobile internet users in India along with the ability to deliver mobile content and applications in Indian languages ​​gives Jio-Facebook a substantial advantage in reaching all Indians currently connected to the internet.
The Jio-Facebook and by extension WhatsApp with its Indian user base of over 400 million gives the partnership a very wide reach in India, rivaled only by Google. Google, in addition to its search business, also owns Gmail and YouTube, the world’s leading providers of email and video streaming services. Unlike Google Pay, Facebook-owned WhatsApp’s payment service had been in its pilot phase in India for more than two years now. This was due to its delay in complying with RBI’s data localization regulations. WhatsApp then submitted a report to the Supreme Court stating that its payment platform now complied with RBI requirements. The audit report was prepared by an independent third-party auditor, certified by the central government cybersecurity firm CERT-in. WhatsApp Payment has recently launched in India. This could potentially integrate well with the Jio-Mart platform.
Regulators like TRAI and the Competition Commission of India must ensure a level playing field. From a government perspective, they could encourage other industry leaders to form similar collaborations. For example, Google with its search user base, Gmail and YouTube could partner with Vodafone, Airtel or BSNL depending on the target market. They could additionally collaborate with DMart or Big Basket to be a healthy competitor for JioMart. We are living in exciting times with India planning to launch 5G services in 2022. Multimedia content, e-commerce and other services delivered over high-speed networks, coupled with rural penetration, would go a long way in realizing the dream of basic universal Internet access as a fundamental element. law.

Credit and financing for MSMEs: As the digital payments ecosystem continues to grow in the country, with businesses and individuals adopting digital instruments such as the Unified Payment Interface (UPI) to conduct transactions, the Ministry of MSMEs, on the other hand, also makes sure to give voice to the government’s digital payments initiative. In fact, the majority of transactions carried out by the Ministry of MSMEs and its attached offices last year were almost entirely digital.

According to the Ministry of MSMEs, all of its offices including Khadi and Village Industries Commission (KVIC), National Small Industries Corporation (NSIC), Office of the Development Commissioner (DC MSME), Coir Board, National Institute for Micro, Small and Medium Enterprises (NI-MSME) and the Mahatma Gandhi Institute for Rural Industrialization (MGIRI) have been digitally enabled.

According to the annual report of the Ministry of MSMEs for the year 2021-22 released last week, 41.36 lakh transactions amounting to Rs 27,292.98 crore were recorded across the six offices of the Ministry of MSMEs in during the nine-month period ending December 2021. 87.32% or 36.11 lakh of these transactions were digital, down slightly from 90.19% during the April-December 2020 period. a year ago. However, in terms of value, 98.53% or Rs 26,891.22 crore of transactions were conducted digitally last year, compared to 92.02% in 2020. Overall, the number of digital transactions last year was also higher compared to transactions of 33.76 lakh in 2020.

Comments from the Ministry of MSMEs for this story were not immediately available.

MGIRI led the count of digital transactions among the six MSME offices with zero offline transactions. All 659 transactions worth Rs 5,552 crore were completed digitally. In contrast, NSIC recorded 94.9% of its transaction volume digitally, followed by 94.4% at NI-MSME, 93.70% at Coir Board, 90.49% at DC-MSME and 87.02% at KVIC. The highest number of 34.12 lakh digital transactions were made at KVIC compared to 89,483 digital transactions at DC MSME; 88,640 at NSIC; 17,805 at Coin Board; and 2,089 at NI-MSME.

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“In accordance with the recommendations of the Committee of Secretaries (CoS) and the directives of the MeitY, a Committee on Digital Payments has been formed within the Ministry under the chairmanship of the Secretary (MSME) to enable the Ministry and its attached offices to successfully complete the implementation of the “Digidhan Mission”, the ministry said in its annual report.

The digital payments market is expected to grow at a compound annual growth rate of 27% over the FY20-25 period. Growth of retail electronic payment systems including National Electronic Funds Transfer (NEFT), mobile banking and development of payment acceptance infrastructure is expected to boost digital payment transactions by Rs 2,153 lakh crore in FY20 to Rs 7,092 lakh crore in FY25, the Indian private Equity and Venture Capital Association (IVCA) and Ernst & Young had stated in its India Trend Book Report 2021.

However, a CLSA report in December last year pegged the value of the digital payments market in India to rise from $300 billion (Rs 22.35 lakh crore) in FY21 to $1 trillion. dollars (Rs 74.52 lakh crore) by FY26. To further encourage digital payments, Finance Minister Nirmala Sitharaman in her budget speech earlier this month had proposed to establish 75 Digital Banking Units (DBUs) in 75 districts across the country by regular commercial banks.

Multilateral finance agency Asian Development Bank has offered $68 million in financing to IIFL Home Finance to expand its footprint in the affordable and green housing segment.

The financing includes a direct loan from the AfDB of $58 million and another concessional loan of $10 million from the Canadian Climate Fund. The Canadian fund will also be channeled through the ADB.

The local currency loan size is Rs 508 crore.

This is IIFL Home Finance’s first loan from the AfDB or any other development finance institution, Managing Director Monu Ratra told ET.

The blended cost of the fund is around 8.1% per year, he said.

“The AfDB financing will help us improve the penetration of affordable green housing in India’s deeper markets and fulfill the dream of many Indian families of owning their own home,”
Ratra said.

The loan will be split into two tranches, an AfDB spokesperson said, responding to questions from ET. Of this amount, Rs 433 crore is earmarked for loans to female borrowers or co-borrowers from low income groups with a particular focus on India’s lagging states, and for mortgages on certified green affordable housing.

The balance of Rs 75 crore is intended to be loaned to developers for the construction of certified green affordable housing, the spokesperson said. This should encourage developers to adopt green certification standards in the construction of affordable housing.

ADB already has an existing link with IIFL Home Finance to promote green housing initiatives in India aimed at reducing carbon emissions and conserving water and energy.

Buildings contribute about 35% of carbon emissions and the vast majority of the housing stock is yet to be built in India. Domestic units can be designed in accordance with climatic requirements and improve carbon efficiency.

IIFL Home Finance provides affordable home loans to economically weaker sections, Low Income (LIG) and Middle Income (MIG) groups in line with the government’s Housing for All effort.

The lender had assets under management of Rs 22,207 crore at the end of December last year, three quarters of which were home loans averaging Rs 17 lakh. He aims to take his book to Rs 30,000 crore by March 2023, Ratra said.

The timing of Finance Minister Nirmala Sitharaman’s budget announcement on the Vibrant Villages program was appropriate. It came ahead of schedule – to be precise, exactly a month after China enacted a controversial law through which it seeks to assert its territorial claim to areas near its borders. In addition, this law covers Chinese “xiaokang” (pattern) border defense villages, many of which are rapidly advancing alongside the outskirts of India along the Tibet Autonomous Region (TAR), across from the east of Ladakh and Arunachal Pradesh.

Both had given way to fresh concerns for India amid an ongoing military standoff with China in eastern Ladakh.

Not much is known at this time about the Vibrant Villages program as the government is still preparing its exact roadmap.

What is known is that it will cover villages on the northern borders, mainly those that India shares with the TAR, and will aim to strengthen infrastructure, connectivity and the economy there.

What is unclear is the final form it will eventually take.

Although this is probably an update and better version of the existing Border Area Development Program (PDBA) piloted by the Ministry of Interior – with other border development plans converging towards him – the overall amount of funds earmarked for this exercise, the implementing agencies and their responsibility are awaiting a decision or perhaps clarification.

While the Center will work to design the finer details of this new program, it is essential that the government take a closer look at a few key aspects alongside, to ensure its success.

The story so far

In his budget speech, Sitharaman said program activities will include “construction of village infrastructure, housing, tourist resorts, road connectivity, decentralized renewable energy supply, direct door-to-door access for Doordarshan and educational channels, and support for the generation of livelihoods”. .

The existing BADP, which covers all border areas and is implemented by MHA through state governments, has a similar mandate.

However, budget documents show that the funds allocated to the program have almost halved from Rs 1,100 crore in the 2017-18 financial year to Rs Rs 565.72 crore for 2022-23.

What is also worrying is a drastic drop in the use of funds by states. In 2020-21, the actual expenditure under this was only Rs 63.97 crore, out of an initial budget allocation of Rs 783.71 crore that year.

The actual expenditure for the following financial year 2021-22 has yet to be made public, but revised estimates for the year paint a grim picture with a reduction to Rs 221.61 crore from Rs 565.71 crore originally allocated.

The reasons for weak state spending could be manifold, such as a small work window of a few months in many border states, the involvement of multiple agencies employed at scattered borders, and also a pandemic in the past two years.

But only a thorough internal evaluation of the regime could shed light on the complex reasons. This was also suggested by a parliamentary standing committee on home affairs in 2018 after finding widespread illiteracy, backwardness, poverty, lack of amenities such as poor infrastructure, connectivity and transport in border areas and noted that the BADP target had not been met.

Lessons learned from the evaluation should be incorporated into the Vibrant Villages program.

Strengthen the border radio network, involve all stakeholders

Efforts should be made to establish a strong radio network in border areas, either community-based or through private initiatives. In these remote areas, no other medium can play a greater role in educating and entertaining the vulnerable border population.

Under the old 11th Five-Year Plan, India’s border areas were to be dotted with radio stations, with at least one FM transmitter every 100 km, which could not be implemented within the specified time frame.

Once done, the content to be broadcast should also be made hyperlocal and exclusive to the specific population. Additionally, solar-powered FM transmitters could be installed to ensure transmission continuity in uncertain weather conditions.

The government had granted the Border Roads Organisation, controlled by the Ministry of Defence, a budget increase of 40% to Rs 3,500 crore for the creation of border infrastructure.

Additionally, under the new scheme, the government may seek to incentivize private actors so that they can invest in businesses – from tourism to fishing or agriculture – that would thrive in certain border areas. Many projects can also be developed in public-private partnership (PPP) mode.

For overall development, the new program is expected to ensure better coordination between all stakeholders – such as the BRO, armed forces and paramilitary forces, state government and local people – bringing them all together on a platform. -common form.

The Center can also take inspiration from the Government of Arunachal Pradesh which has already planned and is in the process of executing three model villages with modern amenities in Kibithoo, Kaho and Musai, as reported earlier by this correspondent during from a visit to the state last year.

No one-size-fits-all approach

Currently, Ladakh, Himachal Pradesh, Uttarakhand and Arunachal Pradesh continue to see their border populations migrating to the hinterland in search of a better life and job opportunities.

Their absence has also been a key reason why China continues to repeatedly attempt to breach the Line of Effective Control (LAC) in many border areas, such as Chumar in Ladakh.

The first line of defense of the borders is the people who physically claim the land there. Thus, improving living conditions to stop this trend should be a top priority for the government.

Finally, instead of a single planning approach for all border areas, there needs to be separate micro-level planning for each area and a bottom-up approach.

This means that special emphasis must be placed on the fact that the program includes the opinion of the affected local population, to involve them in the decision-making process, which in turn will ensure that every aspect of border development is adapted. to their specific needs and aspirations.

The main thing here is to integrate the border population of India without integrating their problems.

Read all the latest Assembly news, breaking news and live updates here.

This is a stunning reversal of opinion on MGNREGA, which was derided just a decade ago by the private sector, political commentators and then Chief Minister Narendra Modi as a ‘handout’ for the poor that would make them lazy and indolent.

Ironically, the economic study of 2021-22 proudly states that MGNREGA has provided a safety net for over 110 million poor Indians. As a reminder, all publicly traded companies and unicorn start-ups combined employ only seven million people.
But, in reality, more than 110 million would have depended on MGNREGA this year, if the program had not run out of money after just six months in the current fiscal year. Demand for work under MGNREGA, which is by definition an unemployment insurance scheme for people in dire straits, is at record highs and apparently many have been turned away due to lack of funds.

In this context, the FM introduced a new economic philosophy in the budget that moves away from direct government social assistance for the needy towards indirect economic impact. Denying expectations of an extended and expanded MGNREGA, FM instead cut the budget for the program and reallocated it to government capital expenditure.

To be clear, lowering the demand for MGNREGA should be our primary economic goal as a nation. It is a demand-driven program and if people are able to find better quality jobs than working for minimum wage, the demand for MGNREGA and therefore spending will also be lower. But dismissing people for lack of funds and artificially suppressing the demand of MGNREGA does not suit a democratically elected government.

The idea that government should step in when private investment is lukewarm and demand is lackluster in an economy is sound and well-established economic theory. In itself, embarking on a program of productive public investment to stimulate economic activity, stimulate demand and catalyze private investment is a laudable goal. The question is: was it right to cut MGNREGA’s spending to fund government investments in this perilous time? And the natural corollary question will be: how else could such a government investment program have been funded?

The Union Government plans to spend an additional Rs 2.5 crore on capital expenditure next year compared to the current year, including Rs 1 crore in loans to states exclusively for expenditure of investment. Sixty percent of this additional investment amount is expected to come from a reduction in food (ration), fertilizer, fuel subsidies and MGNREGA.

The government’s fundamental premise is that we are past the pandemic blues and next year will be a normal year. Extra food grains given during the pandemic can be withdrawn and food subsidies can be reduced by Rs 80,000 crore is believed. Similarly, the government seems to believe that the demand for MGNREGA will decrease next year and has reduced its allocation by around Rs 30,000 crore. The government’s belief that next year will be a “business as usual” pre-pandemic year is a dangerous gamble.

It is important to remember that in September 2019, outside of the budget cycle, there was a sudden announcement of a dramatic reduction in corporate tax rates. As a result, of the more than nine lakh companies that filed tax returns last year, the top 433 companies with profits above Rs 500 crore paid taxes at the effective rate of 20%, while at in fiscal year 2019, these companies paid an effective tax rate. by 27 percent.

The profits of these top 400 companies have doubled and their market value has tripled since 2019. But the total number of people employed by these companies has remained the same. To put it simply, corporate tax cuts have so far cost the government Rs 3 lakh crore (Rs 1.5 lakh crore per year), they have doubled corporate profits, but created no new job.

Since the government believes that next year will be a normal year like 2019, the corporate tax rate could have been reduced to the 2019 rate. This could have generated at least an additional Rs 1 lakh crore in tax revenue, probably more , which could have been used to increase capital expenditure without the need to reduce welfare.

There would have been no economic or social repercussions of this decision since these companies did not increase their investments or create jobs after the tax cuts and they were used to paying taxes anyway tax rate. Similarly, with booming stock markets and massive increases in the capital wealth of the few, an increase in securities trading and capital gains taxes could have yielded at least another Rs 50,000 crore, to be used to increase capital expenditure. India’s capital gains and corporate tax rates are among the lowest in the world, and have yielded no ‘dividend’ in terms of investment or jobs for people. There was a clear and justified rationale for boosting government investment spending by raising corporate and capital gains tax rates and not cutting social spending at such a precarious time for the economy.

Increasing public investment to stimulate economic activity is in principle a good philosophy. Reducing MGNREGA expenditures is an optimal objective but one that must be achieved naturally and not forcefully. Reducing social spending to finance investment spending in the hope of “falling off” economic benefit is a dangerous bet at the present time. Especially, when there were other, more prudent ways to raise funds by increasing progressive direct taxes on large corporations without deleterious impact. For the good of the nation, I sincerely hope that the dangerous bet of the Modi government to finance public investments by reducing safety net allocations will pay off, although I remain skeptical.

This column first appeared in the print edition of February 12, 2022 under the title “At the expense of the poorest”. Chakravarty is a political economist and chairman of Congress party data analysis