Budget Impact – States’ burden to run 32 of 63 schemes shoots up

State governments will now have to bear either the entire or an increased financial burden to run half the schemes being rolled with the assistance of the Centre.

At least eight centrally sponsored schemes will henceforth not get any Union finances at all while 24 schemes will see significant cuts in central share with the states having to put in money.

The eight schemes which stand de-linked from central funding are — the National e-governance plan, Backward Region Grant Funds, scheme to modernise police, another to develop export infrastructure, the scheme for setting up 6,000 model schools, the National Mission on Food Processing, the Rajiv Gandhi Panchayat Empowerment Scheme and lastly, the scheme on tourist infrastructure.

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Via – tribuneindia.com


What is net neutrality?

The U.S. Federal Communications Commission has set new rules to regulate Internet providers. ISPs would be barred from blocking or slowing access to any website or content on the web, for instance to benefit their own services over those of competitors.

CLICK HERE for details about the concept of net neutrality and the FCC’s work to regulate Internet traffic

Via – The Hindu

A look at India’s last five annual budgets

With the BSE Sensex gaining nearly 30 percent in 2014 and about 6 percent so far this year, investors are eagerly awaiting reforms in the budget, which is being billed as a “make-or-break” event for the government of Prime Minister Narendra Modi.

Based on a new calculation method, India grew 7.5 percent year-on-year in the last quarter and is on track to expand 7.4 percent in the year through March 31, but experts say the revised growth numbers are at odds with evidence on the ground.

Here’s a look at budgets between 2010 and 2014 — the hits, the misses, and how they affected the common man.

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14th Finance Commission gives States a huge tax windfall

The 14th Finance Commission, headed by former RBI Governor Y.V. Reddy,  has recommended a 10 per cent jump in the devolution of tax revenues to States to 42 per cent, in keeping with Prime Minister Narendra Modi’s plans for greater flexibility to States. The total devolution to States will rise to 45 per cent of Union tax revenues in 2015-16.

In a letter to all Chief Ministers, the Prime Minister said the increase in resources given to States will give them the required freedom to tailor make development schemes to suit their needs.

The higher tax share to states would also have a significant impact on the Centre’s revenue and expenditure projections and the fiscal consolidation roadmap to be presented in the Union Budget 2015-16 on February 28.

The Commission has also recommended ₹2.87 lakh crore as grants to local bodies, using criteria of population and land area that would be divided into a basic grant and a performance grant. While panchayats would be given ₹2 lakh crore in grants, municipalities would receive ₹87,143 crore.

Though it did not award any special dispensation to debt-ridden States, the Commission has provided ₹1.94 lakh crore as a post devolution revenue deficit grant. This would help wipe out the revenue deficit of  States like Kerala, West Bengal, Himachal Pradesh and Andhra Pradesh.

The Commission has also  suggested that the government should set up a GST compensation fund to pay States for revenue losses once the goods and services tax is implemented. The compensation should be given to States for five years, with 100 per cent compensation being paid in the first, second and third years, and 75 per cent and 50 per cent compensation in fourth and fifth year, respectively.

Coal block auction: Companies see benefits in long term

The bigger pluses for metal companies which have won leases for coal blocks in the ongoing auction are long-term in nature, say analysts. Compared to the cost of import, the current bid prices are still lower. The price in international markets is in any case much lower from the peak of a few years earlier and, hence, companies would benefit when prices revive. This is apart from raw material security.

So far, Hindalco Industries, flagship company of Aditya Birla Group, has won two small mines, Kathautia in Jharkhand and Gare Palma IV-5 in Chhattisgarh. Vedanta Group company Bharat Aluminium (Balco) has won the Chotia mine in Korba, the area from where it had also earlier sourced coal, from the Gevra & Kusmunda mines of South Eastern Coalfields.

Though Hindalco is paying a high price for captive coal in the auctions, almost close to landed cost via the e-auction route, the landed cost from the mine allotted will still be at a 30-35 per cent discount from imported coal.

For Balco, the Chotia mine in the Korba region has not changed much for the company in terms of coal pricing.

NITI Aayog: States demand greater financial devolution, flexibility

Demands for greater devolution of funds to States from non-NDA Chief Ministers dominated the first meeting of the Governing Council of NITI (National Institution for Transforming India) Aayog.

Prime Minister Narendra Modi chaired the meeting on 7 February 2015, at his 7 Race Course Road residence.

Tamil Nadu Chief Minister O. Panneerselvam pitched for higher flow of funds from the Centre to the States and demanded that States’ share of funding of flagship programmes be limited to 25 per cent only.

Uttar Pradesh Chief Minister Akhilesh Yadav sought 90 per cent grants for central schemes saying Prime Minister Modi’s new mantra of ‘Sabka Saath, Sabka Vikas’ was not possible without provision of adequate resources to economically weaker States.

Kerela Chief Minister Oommen Chandy demanded that the Aayog continue with the functions the erstwhile Planning Commission performed — of determining, in consultation with the Union Finance Ministry and State Governments, the amount of resources to be made available to the States for Plan and Budget preparation.

Noting that India cannot advance without all its States advancing in tandem, the Prime Minister said that he envisioned different States competing with each other in promoting governance initiatives, in a spirit of cooperative, competitive federalism. Mr. Modi said that though the world had started looking at India differently, the biggest challenge for the country still was how to eliminate poverty. He said jobs cannot be created, and poverty cannot be removed without growth. “First and foremost we should aim at a high rate of growth,” he said.

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Via The Hindu