📰 Amendments proposed to make land pooling mandatory
Union Minister says the changes are aimed at overcoming hurdles faced in execution of the DDA scheme
•With the Delhi Development Authority (DDA) facing hurdles in the execution of its land pooling policy, Union Minister for Housing and Urban Affairs Hardeep Singh Puri on Tuesday said amendments to the Delhi Development Act, 1957, have been proposed to speed up its implementation.
•Through the proposed amendments, pooling of land for owners who are yet to express their willingness becomes mandatory once the participation rate reaches the minimum threshold of 70%.
•Also, an amendment to grant powers to the Central government to declare pooling mandatory — even if the minimum threshold of 70% is not achieved — has been proposed.
•Mr. Puri made the announcement at a press meet with Delhi BJP president Adesh Gupta and Leader of the Opposition in the Assembly Ramvir Singh Bidhuri seated beside him.
•Asked whether the announcements were made in view of the municipal elections next month, Mr. Puri said the preparations, including stakeholder consultations, had been going on since last year.
Contiguity factor
•According to the land pooling policy, 70% of contiguous land in a sector is required to attain eligibility for the formation of a landowners’ consortium. While the participation of owners has crossed 70% in various sectors, contiguity is yet to be achieved, leading to no development since the policy was notified in 2013.
•“This [amendment] will speed up the process because the remaining unpooled land will become part of the scheme. It will also eliminate the problem we face with the contiguity of land,” said a senior DDA official.
Two-pronged strategy
•Meanwhile, DDA is looking to issue conditional notices for the formation of consortiums till the time the amendments are approved. “Keeping in view that the proposed amendments will have to follow the due legislative process, which will take time, a second strategy has also been worked out. It has been decided that DDA will issue conditional notice for formation of consortium for the eligible sectors (where 70% land is pooled), stating that the consortium would ensure proper contiguity of all the partially participated khasras at the time of filing the implementation plan,” a press note stated.
•At present, 104 villages – that have been divided into six zones and further divided into 129 sectors — have been identified for land pooling. A total of 16 high-priority sectors in zones L, N and P-II have been identified by DDA, citing a robust rate of participation.
•“We are issuing the notice on the condition that the landowners resolve the issue of contiguity themselves. The landowners who have participated can negotiate with those who are yet to participate, to form contiguous land. This opportunity will help boost the latter’s confidence about the policy,” the senior official said.
•According to the policy, 60% of the land will be used by the owners or developer entity for the purpose of developing residential and commercial facilities, while 40% of the land will be surrendered to service providing agencies, such as the DDA, for infrastructural developments.
•Apart from this, appointment of a ‘land pooling officer’ to prepare a sector plan, and for its notification, has been proposed. Further emphasis has been laid on modifications in the existing policy, such as Additional Development Control (ADC) norms, which include Transferable Development Rights.
•Mr. Puri said regulations for applicants of PM-UDAY, the scheme which allows residents of unauthorised colonies to apply for ownership rights, would also be relaxed. The Ministry proposed doing away with the mandatory provision of a will as many residents did not have the document.
Slum rehabilitation
•“ Jahan Jhuggi Wahan Makan scheme for in-situ slum rehabilitation will benefit more than 50 lakh people by offering pucca homes to those living in informal settlements in Delhi. Three projects in Kalkaji, Jailorwala Bagh and Kathputli colony comprising 8,000 houses are already in progress,” said Mr. Puri.
•Previously, a senior DDA official had confirmed that work on six in-situ slum rehabilitation projects, which aim to provide a total of 10,337 EWS (economically weaker sections) houses, will start this year in Rohini, Dilshad Garden, Shalimar Bagh and Haiderpur.
Bhutanese parliament has decided not to endorse the plan over sustainability and environmental concerns
•With Bhutan continuing to sit out the Motor Vehicles Agreement (MVA) of the sub-regional Bangladesh-Bhutan-India-Nepal (BBIN) grouping, a meeting of the other three countries was held to discuss the next steps in operationalising the agreement for the free flow of good and people between them.
•Meanwhile, Prime Minister Narendra Modi is expected to travel to Colombo at the end of March to attend the summit of another sub-regional grouping, BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), which includes Bangladesh, Nepal and Bhutan as well.
•The BBIN meeting was the first such in-person meeting since February 2020 to discuss the MVA since the COVID-19 pandemic outbreak, and officials finalised the wording of two separate protocols on passenger and cargo movement with an “enabling” agreement.
•“During the meeting, an enabling MOU to be signed by India, Bangladesh and Nepal for implementation of the BBIN MVA by the three countries, pending ratification of the MVA by Bhutan, was finalised,” the Ministry of External Affairs statement said.
•“Operationalising the MVA by concluding the Passenger and the Cargo Protocol will help realise the full potential of trade and people to people connectivity between the BBIN countries by fostering greater sub-regional cooperation,” it added.
Bhutan’s position
•According to the MEA statement, Bhutan sent an “observer team” led by an Embassy official to the two-day meeting held on March 7-8 in Delhi, while delegations of Bangladesh, India and Nepal were led by Director General or Joint Secretary level officers.
•The original BBIN MVA was signed by all four countries in June 2015, but after objections in Bhutan over sustainability and environmental concerns, the Bhutanese parliament decided not to endorse the plan, and former Prime Minister Tobgay Tshering’s government agreed to allow the other three countries to go ahead with the project for vehicular movement (BIN-MVA) in 2017. In 2020, Prime Minister Lotay Tshering told The Hindu in an interview that given Bhutan’s “current infrastructure” and top priority to remaining a “carbon-negative” country, it would not be possible to consider joining the MVA.
India hopeful
•Officials said that while India remained “hopeful” that Bhutan could change its position on the project, it was decided at a meeting in November 2021 to go ahead for now, given that there are no new signals from Thimphu on the project.
•Progress on the seven-year-old project has been slow, nonetheless, despite several trial runs being held along the Bangladesh-India-Nepal road route for passenger buses and cargo trucks. According to the officials, there are still some agreements holding up the final protocols, including issues like insurance and bank guarantees, and the size and frequency of freight carriers into each country, which they hope to finalise this year before operationalising bus and truck movements between them.
•With work on the BIN-MVA now picking up momentum, development banks have also begun to look at the project more closely.
•While the Asian Development Bank has supported the project as part of its South Asian Subregional Economic Cooperation programme, and has been requested to prioritise about 30 road projects worth billions of dollars, the World Bank that has estimated that the implementation of the MVA will potentially see increase in traffic-regional trade within South Asia by nearly 60%, has also announced its interest in supporting infrastructure.
•In February 2022, the World Bank South Asia programme for BBIN listed projects worth $750 million, for which loans were in “the pipeline”. They included upgrading border checkposts and land ports in Bangladesh with a view to upgrading both physical and commercial infrastructure.
📰 Global stagflation risk: On the need to cut fuel taxes
India will have to cut fuel taxes or risk both faster inflation and slower growth
•As Russia’s invasion of Ukraine is set to enter the third week, the economic costs of the conflict in Eastern Europe threatens to stall the shaky global recovery from the COVID-19 pandemic. While the expansive financial sanctions imposed on Russia by the U.S. and its western allies have sent the value of the rouble plunging by more than 60% against the dollar since the start of the conflict, the war-led disruptions to supply and the sanctions have sent the prices of several key commodities soaring: from wheat and corn, to metals including nickel and aluminium, and, most crucially, crude oil and gas. Brent crude futures surged to a high not seen since July 2008, and are currently about 29% higher than before the invasion began on February 24. The price of natural gas has also risen sharply in Europe amid concerns that supplies from Russia could be hit either on account of European nations agreeing to a U.S. proposal to shut the tap on Russian energy exports or by retaliatory sanctions by Moscow. Russia supplies Europe about 40% of its gas requirements, roughly a quarter of its oil and almost half its coal needs, and an embargo on energy supplies from Russia could send already high electricity costs in the countries comprising the eurozone skyrocketing. That in turn would hit consumers, as well as businesses and factories, forcing them to either raise prices or possibly even temporarily shut operations.
•Inflation in the euro area had accelerated to 5.8% in February, mainly on account of a more than 31% surge in energy prices, and with the uptrend in oil prices steepening sharply this week, the outlook for price gains in Europe and worldwide is not encouraging. The IMF, which had in January cut its forecast for global growth in 2022 to 4.4% citing the Omicron variant, rising energy prices and supply disruptions, on March 5 warned that the war in Ukraine posed grave risks to the global recovery. With analysts projecting that crude prices will cross $180 and some traders punting on prices surpassing $200 a barrel, India too can hardly be sanguine, its diplomatic fence-sitting notwithstanding. In a 2019 paper on ‘The Impact of Crude Price Shock on India’s Current Account Deficit, Inflation and Fiscal Deficit’, two senior RBI researchers posited that a $10 increase in the price of oil from a $65 level would raise headline inflation by about 49 basis points (bps) or widen the Government’s fiscal deficit if it decided to absorb the entire oil price shock. India’s policymakers face a tough choice: bear the cost of lower revenue by cutting fuel taxes or risk both faster inflation and slower growth.
📰 Clear signals: On India-China ties and the new global currents
India and China must take on board global currents that could reshape ties
•China’s claim that the U.S. Indo-Pacific strategy is aiming to create “an Indo-Pacific version of NATO”, as the Chinese Foreign Minister, Wang Yi, put it on March 7, is not new. Indeed, even as long as 15 years ago, during the first iteration of the now revived India, Australia, Japan, U.S. Quad, Beijing warned of an impending “Asian NATO”, which, of course, never materialised. The latest statement does, however, assume significance in the current global context and amid the crisis in Ukraine. Mr. Wang, speaking in Beijing during the National People’s Congress, accused the U.S. of “stoking geopolitical rivalry” by “forming exclusive clubs”. He said by “strengthening the Five Eyes” intelligence alliance and “peddling the Quad, piecing together AUKUS and tightening bilateral military alliances”, the U.S. was leading what he called a “five-four-three-two” formation in the region. The broader goal, he said, was “to establish an Indo-Pacific version of NATO”.
•In recent weeks, Beijing has repeatedly blamed NATO for the crisis in Ukraine. While claiming to stay neutral, it has moved to reaffirm ties with Russia, which Beijing on Monday described as “rock solid”. When the two countries’ leaders met for a summit on February 4, China backed Russia on its concerns on NATO’s eastward expansion in Europe, and Russia returned the favour with both criticising the U.S. Indo-Pacific strategy. Beyond their already deep political and economic linkages, these mirrored concerns on U.S. alliances are emerging as a powerful binding glue in the China-Russia axis. New Delhi will need to consider how this will impact its close relations with Russia. By explicitly equating the Quad, which is not a military pact, with other security agreements, China now also appears to be clearly situating India as a part of the U.S. “exclusive club”. New Delhi has rejected that notion. Only last month, External Affairs Minister S. Jaishankar said “interested parties” were making a “lazy analogy of an Asian NATO” and India was not a U.S. treaty ally. Indeed, some in New Delhi have come to view Beijing’s aggressive moves along the LAC in 2020 as a warning sign to deter India-U.S. relations. India’s firm, and correct, response has been to hold the line, and continue deepening ties not only with the U.S. and the Quad but also other Indo-Pacific partners to underline it will not be swayed. The other message from India has been that sensitivity to concerns has to be mutual, and cannot be demanded from one side when ignored by the other; China’s relations with Pakistan being a case in point. Mr. Wang did acknowledge that recent “setbacks” in ties suited neither India nor China — a view New Delhi shares. The two sides will meet on March 11 for the next round of military talks to take forward LAC disengagement. As India and China continue to seek a much-needed modus vivendi to restore ties from the lowest point in decades and ensure peace on the border, they will also need to have a broader conversation about global currents that are reshaping their bilateral relations.
📰 Revive tax increases, stub out tobacco product use
The Government must stop the increasing affordability of tobacco items and also rationalise their taxation under GST
•Despite a relatively high degree of societal attention and debate spurring on the pace of COVID-19 vaccine development, the novel coronavirus pandemic has continued to remain a serious public health concern worldwide. India is reported to have lost half a million of its people to the pandemic over the past two years.
Another epidemic
•But there is a silent killer in our midst that kills an estimated 1.35 million Indians every year. It is the use of tobacco as a result of which more than 3,500 Indians die every single day, as estimated by scientific studies. It also comes at a heavy cost: an annual economic burden of ₹1,77,340 crore to the country or more than 1% of India’s Gross Domestic Product (GDP).
•Although not a communicable disease like SARS-CoV-2, the tobacco epidemic — as the World Health Organization characterises it — has some definitive solutions that can reduce the death toll. Research from many countries around the world including India shows that a price increase induces people to quit or reduce tobacco use as well as discourages non-users from getting into the habit of tobacco use. There is overwhelming consensus within the research community that taxation is one of the most cost-effective measures to reduce demand for tobacco products.
•Nevertheless, ever since the introduction of the Goods and Services Tax (GST) legislation in 2017, there has been no significant tax increase on any tobacco product barring a minor increase in the National Calamity Contingent Duty (NCCD) during the Union Budget 2020-21 which only had the effect of increasing cigarette prices by roughly 5%.
Lost opportunity
•In short, there has been no significant tax increase on any tobacco product for four years in a row which is quite unlike the pre-GST years where the Union government and many State governments used to effect regular tax increases on tobacco products. As peer-reviewed studies show, the lack of tax increase over these years has made all tobacco products increasingly more affordable.
•The Union Budget 2022-23 was an excellent opportunity for the Government of India to buck this trend (of not effecting a significant price increase for the longest time in a row) and significantly increase either excise duties or NCCDs on tobacco products. Needless to say, the tobacco industry and the public health community did expect such a move. This year, when the Finance Minister began her Budget speech, it was interesting to note that the movement of ITC stock was stable in contrast to most other stock indices, which were generally moving up. Just as the Budget speech concluded, and having realised that there were no tax hike proposals whatsoever on any tobacco product, ITC stocks gained by more than 6% and outperformed most other stocks in the next couple of hours. The market was just pricing in an unrealised negative prospect for the company. The reason is this: despite the claims of a business diversification away from the tobacco business, close to 85% of ITC’s profits are still derived from its cigarette segment.
•While the lack of tax hikes has helped the bottomline of ITC, the Budget has dealt a significant blow to tobacco control efforts in India in particular. The absence of a tax increase on tobacco has the potential to reverse the reduction in tobacco use prevalence that India saw during the last decade and now push more people into harm’s way. It is known that more affordable tobacco products could attract new users especially among the youth. It would also mean foregone tax revenues for the Government especially at a time when the Government of India is looking forward to increasing the share of public spending on health; in the recent Union Budget, it has budgeted 2.2% of the total expenditures towards health.
GST Council should act
•The Union Budget exercise, however, is not the only opportunity to initiate a tax increase on tobacco products. The Goods and Services Tax (GST) Council could well raise either the GST rate or the compensation cess levied on tobacco products especially when the Government is looking to rationalise GST rates and increase them for certain items. For example, there is absolutely no public health rationale why a very harmful product such as the bidi does not have a cess levied on it under the GST while all other tobacco products attract a cess.
•Similarly, there is no rationale why the specific cess applied on cigarettes (which is currently the largest component of overall cigarette taxes) has remained unchanged for four years in the face of increasing inflation. Since specific cess is applied as a fixed amount per stick of cigarette, increasing inflation will decrease the significance of this particular tax component making cigarette prices more affordable and reducing its effective tax burden. GST Council meetings must strive to keep public health ahead of the interests of the tobacco industry and significantly increase either the GST rates or the GST compensation cess rates applied on all tobacco products. The aim should be to arrest the increasing affordability of tobacco products in India and also rationalise tobacco taxation under the GST.
