What might PM Narendra Modi announce on 31st December?
- In Politics
- 08:03 PM, Dec 30, 2016
- Hemant Karandikar
PM Modi will address the nation on 31st December. Coming close on the heels of the Big Bang demonetization of 8th November and the tectonic shifts that it unleashed in India's political economy, there is electric excitement in the air.
The Modi Government represents a potent mix of consistency (agenda of development, fighting black money and terror) , efficiency (e.g. foreign policy, renegotiated tax and information sharing treaties, DBT, LPG connections, LED lamp distribution, road building, and GST preparations), out of box thinking (surgical strikes, demonetization) and risk taking (surgical strikes, demonetization). Therefore the imminent televised address is being awaited with bated breath.
It is therefore interesting to try and imagine what Modi might announce on 31st December.
PM Modi and BJP seem to be building a much larger constituency of people at the grassroots level. This constituency consists of the poor, young with aspirations and who have stake in country's future and the middle class. Even the business community finds that his government means business. He has been tapping into Indians' patriotism and willingness to do good. This constituency transcends caste and creed divisions and at times even political affiliations.
Demonetization has received near universal support from Indians despite the obvious pain and suffering. Coming after the very successful surgical strikes against Pakistan, his fight against another enemy of India -the black money - has cemented PM Modi's place in every household.
Here is what PM Modi might cover in his speech on 31st December.
Universal Basic Income
Transferring a onetime amount and or a recurring amount in every bank account meeting certain norms will allow Modi to demonstrate his government's intentions in a clearest possible way. It will also be seen as at least partially redeeming his poll promise of getting back black money and distributing it among Indians. All the infrastructure for this step is in place.
Abolition of Income Tax
This may not happen, but there have been already indications of lower tax rates.
Quick loans at low interest rates
The surge in bank deposits and Jan Dhan/Mudra schemes provide excellent launch pad for this. PM Modi has already hinted this.
A cadre of young educated Indians
The demonetization has resulted in sizeable amounts of black money coming into bank account. Scrutiny of these and prosecution of offenders is vital for success of note ban. Similarly, enforcing the Benami Transactions (Prohibition) Amendment Act, 2016 needs identification of such holdings, investigation, confiscation and prosecution. All this is humungous amount of work. India's tax administration and judiciary don't have capacity to handle it. As Indicated in his recent Goa speech, Modi may announce creation of a cadre of educated young workers to help in this. He may also indicate creation of dedicated judicial cadre and infrastructure to handle the additional work load. All this depends on administrative and legal realities but Modi might indicate quicker ways to make the black money holders pay for their deeds. A cadre of young educated Indians will also make a visible impact on job creation and people's participation in the follow up of note ban actions.
Black Money transactions -high denomination notes
The new Rs 2000 note seems like a honey trap like bank accounts to attract black money. As the raids on bank branches all over the country show, some unscrupulous bank managers have helped black money holders with huge amounts of cash in new notes. Therefore, it is tempting to think that this note may be withdrawn. This is not likely for obvious reasons like new hassle not being worth the gains and a potential loss of faith in currency. The government may keep the sword of note ban hanging.
Limits on cash withdrawals
Logic of demonetization and move towards cashless or less cash economy dictates that cash - at least the high denomination notes -should not be made available at pre-demonetization levels. There may be easing of withdrawal limits. Enough cash within the limits will be made available so that there are no long queues.
Pradhan Mantri Awas Yojana [PMAY]
Housing touches all lives. Modi may also indicate expansion and faster funding of the above scheme that aims to build over 2 Crore affordable homes.
PM Modi may signal expansion of other infrastructure or welfare schemes.
Offerings in India's Maha Yagya
Some of the announcements or implementation of schemes may have to wait for the Union Budget on 1st February. The speech may not have the big bang announcements like note ban, but it seems very likely that Modi will acknowledge peoples' participation in India's Maha Yagya and will make sizeable offerings on behalf of his government.
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