Research Committee

Crux
The news compendium of
SIBM B

Crux is a Research Committee endeavor which aims to provide the

students of the institute with weekly updates on the most
important news worldwide. Each news update in the newsletter
has been analyzed by the members of the Research Committee to
bring you the most relevant points related to particular news.
Along with the news updates, it also covers articles on important
topics which have been in news during the week.

With our newsletter series this time, along with the news we are
also providing useful links to allow you to delve into the topic
further.

You call it news. We call it a step towards awareness.

 Highlights of Budget 2019

• Finance Minister Nirmala Sitharaman, second woman finance minister of India presented 89th Union
Budget 2019-2020 on Friday calling it a 10-year vision.

• One thing that differentiated this budget session from the others is that Sitharaman departed from the
colonial practice of bringing budget documents in leather briefcase and instead bought it in four-fold-red
cotton cloth called 'Bahi –Khata'.

• Part of the union budget will be funded from abroad to avoid crowding out private capital from the
domestic market and at the same time avail low interests prevailing abroad.

• India has become the sixth largest economy in the world and the Budget provided vision for $5 trillion
economy driven by ‘virtuous cycle of investment’ through infrastructure and industrial development.

• In order to boost Industrial Development, the GST rate on Electrical Vehicles is lowered from 12% to
5%. Moreover, government will provide Rs 1.5 lakh income tax deduction on interest payments on loan
for electric vehicles.

• Fiscal deficit in 2019 is 3.3%, brought down from 3.4% and Current Account Deficit has been reduced
from 5.6% of GDP in 2013 to 2.1% of GDP in 2018-19. To ease tax payment Aadhar and PAN are
interchangeable.
• In order to promote employment, a television programme on DD national will be designed exclusively
for start-ups. As MSMEs are a major source of employment, so Rs 350 crore has been allocated for 2%
interest subvention for all GST registered MSMEs on fresh loans.

• ‘Gandhi-pedia’ will be developed to promote Gandhian school of thought.

• Companies having annual turnover of 400 crores, will now be under the bracket of 25% corporate tax
which will cover 99.3% of all the companies.

• In order to curb the liquidity crunch in financial sector proposal for strengthening the regulation of
NBFCs. A recapitalization of Rs 70,000 crore has been proposed in PSBs.

• Budget drew attention to the theme of ‘Naari tu Narayani’ by providing Rs 1 lakh loan under MUDRA
scheme for one woman in every SHG.

• In order to promote welfare among labor and youth various schemes have been launched by government
like
o Pradhan Mantri Laghu Vyapaari Mann – Dhan Yojana (PMLVMY) in which pension benefits
will be provided to 3 crore retail traders and small shopkeepers who have annual turnover of less
than Rs1.5 crore.
o In order to promote R&D National Research Foundation is to be established and Rs 400 crore is
to be provided for World Class Institutions for FY 2019-20.
o Stand Up India Scheme which focuses on skill development has been extended till 2025 and
multiple labor laws are to be streamlined into a set of four Labor codes.

• In order to discourage business payments in cash, tax deduction at source from of 2% is to be charged
on cash withdrawal exceeding Rs 1 crore in a year from bank account.

• To promote Digital payment no charges or merchant discount rates is to be imposed on customers or

merchants who have business establishments with annual turnover of more than Rs 50 crore.

• In order to give more wings to ISRO, New Space India Limited has been incorporated to harness India’s
space ability commercially.
• To boost Agro-rural industries cluster-based development under SFRUTI scheme has been launched
which will focus on bamboo, honey and khadi clusters.

• Pradhan Mantri Matsya Sampada Yojana has been introduced to address crtical gaps in strengthening
value chain, including infrastructure, modernization, production, productivity and quality control.

• Jal Jeevan Mission has been introduced to ensure Har Ghar Jal to all rural households by 2024.

• In a blow to owners of cars and bikes, Sitharaman proposed to increase Special Additional Excise Duty
and Road and Infrastructure Cess each by one rupee a litre on petrol and diesel.

• There is a proposal to increase the surcharge for those earning Rs 2-5 crore 3% and for those earning
above Rs 5 crore to 7%. Custom Duty on gold and other precious metals has been increased from 10%
to 12.5%.

• Vision for the next decade is focused on

o Physical and Social infrastructure
o Digital India
o Pollution Free India
o Make In India
o Water management and clean rivers
o Blue Economy
o Space programmes
o Self sufficiency and export of food grains
o Healthy society
o Team India with Jan Bhagidar

• Government increased threshold of public shareholding in companies to 35% from 25%.

• 1.95 core houses proposed to be provided to eligible beneficiaries under Pradhan Mantri Awas Yojana
Gramin (PMAY-G). These houses are provided with toilets electricity and LPG connections.

• Housing made affordable:

o Modern tenancy laws will be shared with the states to promote renting
o Additional Rs 1.5 lakh tax relief on home loan for purchase of a house upto Rs 45 lakh
References:
https://economictimes.indiatimes.com/news/economy/policy/union-budget-2019-
highlights/articleshow/69984859.cms?from=mdr
https://www.indiabudget.gov.in/
Fiscal Deficit Chart: Bloomberg Terminal
 Economic Survey of India 2018-2019

The theme for this year's economic survey was “Shifting gears with Investment as key driver”. The ideas
discussed here give us an insight into government policies for upcoming fiscal year.

• Shifting Gears:
o India to become a US $5
trillion economy by 2024-
25
o Requires a sustained real
GDP growth rate of 8%
o Savings, Investment and
exports would be the
catalyzing agents
o Private investment would
be the key driver

• Leveraging the Behavioral Economics:

o Decisions made by real people often deviate from the theories in classical economics.
o Therefore, Insights from behavioral economics need to be strategically utilized for social change:
-from BBBP to BADLAV (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi)
-from Swachh Bharat to Sundar Bharat
-from “Give It Up” for the LPG subsidy to “Think about the Subsidy”
-from tax evasion to tax compliance

• MSME Growth:
Economic policies in India have fostered dwarfs, i.e., small firms that never grow.
Small Firms/Dwarfs Large firms/Giants
▪ <=100 employees ▪ >100 employees
▪ Almost 50% of all manufacturing firms ▪ Almost 15% of all manufacturing firms
▪ Contribution to employment 14% ▪ Contribution to employment 75%
▪ Contribution to productivity 8% ▪ Contribution to productivity 90%
• Democratizing Data:
o Due to data explosion the marginal cost of data has declined & the private sector is harnessing it
for profitability.
o Government also holds a rich repository of citizens’ data but is scattered across numerous
bodies.
o Utilizing this information will enable government to improve targeting in welfare schemes.

• Need for Judicial reforms:

o Delays in contract enforcement and disposal resolution are biggest hurdle to the ease of doing
business
o Around 87.5% of pending cases are in the District and Subordinate courts
o 100% clearance rate can be achieved by filling the vacancies in the lower courts &High Courts
• Reducing economic policy uncertainty:
o An increase in economic policy uncertainty dampens investment growth in India which should
be reduced to bring investment in the country

• Keeping up with the change in demographic trends:

o India is set to witness a sharp slowdown in population growth in the next two decades & start
transitioning to an ageing society by the 2030s.
o There are sharp declines in (TFR) across the country & it will be below replacement rate by
2021.
o Therefore, policy makers need to prepare for ageing by investments in health care as well as plan
for increasing the retirement age in a phase.

• From Swachh Bharat to Sundar Bharat and Swasth Bharat:

o Over 9.5 crore toilets have been built and 564,658 villages have become Open Defecation Free
(ODF)
o 30 States/UTs are 100% covered with Individual Household Latrine (IHHL).
o Financial savings from a household toilet exceed the financial costs to the household by 1.7
times.

• Affordable, Reliable and Sustainable Energy:

o Globally India stands 4th in wind power, 5th in solar power and 5th in renewable power installed
capacity.
o Energy efficiency programmes in India have generated cost savings worth more than Rs. 50,000
crore and a reduction in about 11 crore tonnes of CO2 emission.

• Redesigning a Minimum Wage System in India:

o Central Government adopted non-statutory National Floor Level Minimum (NFLMW)- Rs. 35
per day was notified.
o This NFLMW is updated regularly as per CPI
o NFLMW is Rs. 176 per day w.e.f. 01.06.2017

• Updates on smart city: The Survey also showed that projects worth over Rs 2.05 lakh crore are proposed
in 100 cities under the Smart Cities Mission and a significant progress has been made in terms of
implementation of these projects.

Reference:
https://www.indiabudget.gov.in/economicsurvey/
https://science.sciencemag.org/content/333/6042/576/tab-figures-data
GDP Growth Rate Chart: Bloomberg Terminal
 G-20 Summit, 2019

• 14th G-20 summit was held at Osaka, Japan. It was the first G 20 summit held by Japan.
• President of US and China met, where they agreed on a truce to de-escalate the US-China Trade War.
Trump postponed new tariffs on roughly $300 billion a year in Chinese goods that he had threatened to
impose in the future if Beijing did not come back to the negotiating table.
• The US agreed to loosen its punishment on Huawei. Trump also said he would weaken the limits his
administration had imposed on the American technology that Huawei could use.
• POTUS Donald Trump and PM Narendra Modi held discussions regarding Iran, 5G technology, trade
and defense.

• India raised its concern over sanctions on importing oil from Iran while USA demanded from India to
lower tariffs on American products and have a fair and reciprocal trade.
• In the JAI trilateral meeting between Japan, India and America, discussion over Indo Pacific region was
held. All the leaders claimed it to be a productive meeting.
• In the informal BRICS meeting on the sidelines of the summit, PM Modi voiced that terrorism and
racism needs to end and terrorism is the biggest threat to humanity and it also affects economic
development and social stability.
• Special focus on marine plastic waste was given by Japanese PM Shinzo Abe and Osaka Blue Ocean
Vision was endorsed to reduce ocean plastic waste to zero.
References:
https://www.nytimes.com/2019/06/29/business/us-china-trump-trade-truce.html
https://www.aa.com.tr/en/info/infographic/14749
 Hong Kong Protests
• Protests began in June over the contentious extradition bill which has exacerbated to more discontent
with the government.

• The extradition treaty between Hong Kong (HK) and Taiwan was the core reason. The treaty would
mean that HK acknowledges an independent Taiwan which China doesn’t. To circumvent this, China
strong-armed the Chief Executive in transferring fugitives to HK and also to mainland China.
• The protestors are demanding for repealing the extradition bill, resignation of chief executive Carrie
Lam, release of arrested protestors and investigation into brutality by police force.
• USA, UK, Germany and EU are amongst those who have expressed concerns and appealed to the
protestors to negotiate and end their protests peacefully.

Timeline of the Umbrella Protest, 2019 in Hong Kong:

June 12: Thousands of protestors block legislature before an open debate on the extradition
bill. Many protestors were arrested and charges of police brutality were alleged.

June 16: Carrie Lam announces a suspension in passage of the bill. However protests continue
and protestors demand her resignation.

June 21: Carrie Lam directly refuses to accede to the demands. Protestors take the police
headquarters under seige for 15 hours.

June 26: Protests outside 19 consulates of countries which were to attend the G 20 summit in
order to put pressure on China.

July 1: On the day of Handover of Hong Kong, protestors storm into the legislature breaking through
glass and metal doors. Carrie Lam and the protestors blame each other.

References:
https://www.aljazeera.com/news/2019/06/hong-kong-protests-latest-updates-
190612074625753.html
https://www.express.co.uk/news/world/1142380/hong-kong-protest-timeline-extradition-bill-
carrie-lam-latest
 EU Summit Ends in Deadlock
• Leaders of member countries have failed to make the key appointments
o picking a replacement for Jean-Claude Juncker as president of, the European Commission,
o Donald Tusk as head of the agenda-setting European Council.
• Angela Merkel and Emmanuel Macron have clashed again over who will fill the EU’s most senior posts.
• Merkel and Macron have been in dispute over the claims to Juncker’s job of Manfred Weber, a German
MEP who is the centre-right European People’s party’s (EPP) lead candidate for the post.
• Macron has positioned himself firmly against Weber’s candidacy, claiming he lacks the government
experience necessary to deal with the role.
• Merkel has been a steadfast supporter of her compatriot; whose group remained the biggest in the
European parliament after May’s elections.

Reference:
https://www.theguardian.com/world/2019/jun/20/merkel-macron-meeting-fails-to-resolve-row-
over-eu-leadership
 News from around the world
• Paraguay Moves Towards Sustainable Commodities
http://www.ipsnews.net/2019/07/paraguay-moves-towards-sustainable-commodities/
• Financialization Undermines Real Economy
https://www.globalresearch.ca/sensation-financialization/5678986
• Walking The Walk On Financing A Better Future
https://news.sky.com/story/planting-a-forest-the-size-of-the-us-could-stop-climate-change-study-
11757051
• Jaguar Land Rover to build electric cars at UK plant
https://economictimes.indiatimes.com/news/international/business/jaguar-land-rover-to-build-electric-
cars-at-uk-
plant/articleshow/70089734.cms?utm_source=whatsapp_app&utm_medium=social&utm_campaign=s
ocialsharebuttons
• HP, Dell, other tech firms plan to shift production out of China
https://economictimes.indiatimes.com/news/international/business/hp-dell-other-tech-firms-plan-to-
shift-production-out-of-china-
report/articleshow/70055836.cms?utm_source=whatsapp_app&utm_medium=social&utm_campaign=
socialsharebuttons
• Are we fighting a losing battle in a war Against Drugs?
http://www.globalissues.org/news/2019/07/03/25422
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