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Demystifying the process: Budget 2016

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By Amit Kapoor

New Delhi: The course of fiscal policy of the government is decided by the budget, which is an important document. This year too seems to be kick started with the halwa ceremony, renowned for commencing the printing of the budget documents on February 19.

Another unique feature of this year’s budget is that some of the key officials have communicated through a series of videos that aim to demystify the budgetary process. These videos also give a flavor about the essential features of the upcoming budget to be presented by FM Jaitley on February 29.

The key officials that have spoken before the budget announcement include the finance minister, the minister of state for finance, and the revenue and the economic affairs secretaries – and all have made some crucial points relating to the budget 2016.

The finance minister, in his interactions, had mentioned the use of technology to the advantage of all taxpayers. Already some 1.4 crore people have been notified of the budget refunds through the technology platforms and their refunds have been processed through the same medium. Roughly 90 percent of the budget filings are done online, and this is where the power of technology is making the tax process smooth and efficient.

The minister of state for finance, in his interaction, has mentioned that the budget will aim to reduce poverty, provide prosperity to farmers, help in job creation for the young people of the country and provide a better quality of life to all citizens. He also expressed his belief that India will continue to be a beacon of growth and stability in a very turbulent global environment.

The economic affairs secretary tried to demystify the budget process and mentioned that it is a long-term process as opposed to the common conception. It generally starts in September with a detailed circular being issued to all the ministries. Post this, in November and December, the Department of Expenditure holds meetings with various ministries about the requirements in the current and the next years.

At the beginning of January, the Department of Revenue makes its forecasts for the current year and the next year. There are the revised estimates for the current year and the budget estimates for the next year. Post this once the revenue and expenditure proposals converge, the finance minister holds consultations with various stakeholders and proposals are concretized at the end of January. Decisions are then taken and post this followed by printing of budget documents.

The economic affairs secretary also alluded to the fiscal deficit and how the government is looking at it. He too was upbeat about India’s performance amid global turbulence and said that budget has to focus on growth as it leads to job creation and economic development.

The revenue secretary, in his interaction, mentioned taxation and the broad structure of the budget. He stated that the total tax revenue projection is Rs.14.4 lakh crore. The income tax revenue is close to about Rs.7.9 lakh crore and the indirect tax revenue is close to Rs.6.5 lakh crore.

Within the income tax, there are two components – the corporate income tax and the personal income tax. The corporate income tax is around 59 percent while the personal income tax is around 41 percent.

On the indirect side, there are three major components: excise duties, customs and service tax. Normally these are roughly the same contribution, but this year, due to the oil duty, the excise duties are close to 39 percent while the other two form the remaining indirect taxes.

The service tax structure is diversified, which is a good thing. The direct side seems as having a shortfall of about Rs.40,000 crore as corporate earnings have been low but this will be compensated by the indirect side which is buoyant. The revenue secretary also alluded to ways and means to reduce the litigation that has been seen as a perennial problem for India’s corporate sector.

In the week ahead, a lot of haze will get cleared on the issues pertaining to the budget. The new media strategy seems to be a good initiative leading up to the budget. Overall the stage is set for a historic budget. It is also hoped that the government succeeds in the balancing act when Finance Minister Arun Jaitley presents the budget in the Lok Sabha at 11 am on February 29. (IANS)

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Here’s how Climate Change has Affected the Economy

Climate vs. Economy: Four Lessons From a Year of Reporting

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Climate economy
People attend a climate change protest in Brussels, Belgium. VOA

Does fighting climate change mean wrecking the economy?

That’s the question my editor posed to me about a year ago. It has been the focus of my reporting ever since.

The rhetoric from climate change skeptics suggests it would. President Donald Trump has made canceling Obama-era greenhouse gas regulations a central part of his tenure. Economic rationales are always front and center.

Meanwhile, Democratic presidential candidates say they will create millions of jobs by transforming the energy system to carbon-free sources.

Climate economy
A graph depicting how the economy is growing in Massachusetts despite the climate change. VOA

Job killer or job creator? Leaving aside for the moment the fact that climate change is already imposing enormous costs that are only becoming worse, I went looking for answers in Massachusetts, Wyoming and Colorado.

Here’s some of what I learned. It’s not simple. And much remains to be seen.

1. Where steps have been taken, the economy has kept growing. 

Take Massachusetts, for example. The Bay State passed the Global Warming Solutions Act in 2008, calling for an 80% reduction in greenhouse gases from 1990 levels by 2050. Massachusetts requires power plants to pay for their carbon dioxide emissions. The state was among the first to require power companies to generate a certain portion of their electricity from renewable sources. The government offers rebates and incentives for renewable energy, energy efficiency, electric vehicles and more.

Greenhouse gas emissions have come down by 17% from 2008 to 2017 in the state.

Meanwhile, Massachusetts’ economy has continued to grow. The state’s total output went up by 19% in that period, outperforming U.S. economic expansion as a whole by 3% in that time frame.

Employment went up in Massachusetts by 9%. The state has invested in growing a clean-energy economy. Jobs in renewable energy, energy efficiency and related areas have grown by 86% since 2010 and now make up more than 3% of the state’s workforce.

It’s hard to know, though, to what extent the state’s climate policies were responsible for either the greenhouse gas reductions or economic growth. From 2008 to 2017, carbon emissions went down in every state but six: Idaho, Nebraska, North Dakota, Mississippi, Texas and Washington. GDP shrank in just four states: Connecticut, Louisiana, Nevada and Wyoming.

That’s largely because cutting carbon has become much easier to do with the rise of natural gas and renewable power.

2. Some of the most significant greenhouse gas reductions have happened not because of state policies but because of dramatic shifts in energy markets.

Climate economy
Wind turbines produce green energy in Nauen near Berlin, Germany. Stephan Kohler, who heads the government-affiliated agency overseeing Germany’s electricity grid. VOA

The biggest factor lowering carbon dioxide emissions nationwide is that natural gas has replaced coal as the main fuel for electric power plants.

Burning natural gas generates the same amount of energy with half the carbon dioxide emissions as coal. The price of natural gas has plunged as drilling technology has made the United States the world’s leading producer. That has helped drive a wave of fuel-switching at power plants across the United States. Coal generation fell 40% from 2008 to 2017, while natural gas climbed 47%.

Renewable energy is growing quickly, but it still makes up a small portion of the power supply. Wind generated just 6.5% of the nation’s electricity last year. Solar produced 2.2%.

Wind and solar are starting to give fossil fuels serious competition, though. After dramatic cost declines over the last decade, these sources are now significantly cheaper than coal and often cheaper than natural gas, even without subsidies.

They need to replace fossil fuel generation much faster, however, in order to take a serious bite out of emissions.

3. Some good jobs are going away. Dealing with the changes is not easy.

Powering the nation is not the job it used to be. Coal once generated more than half the nation’s electricity. Coal mines and power plants are mostly unionized. The jobs pay well and provide good benefits for workers without a higher education.

Coal mining, however, employs 42% fewer workers than in 2011. More than 300 coal-burning power plants have closed or are slated to be shuttered.

There are growing opportunities in renewable energy and energy efficiency. The solar industry employed 242,000 people in 2018, for example, about 45,000 more than the coal industry.

The jobs are not equivalent. Many solar installation jobs are not unionized, don’t pay as well and have fewer benefits than those for people working at coal plants. And a solar farm doesn’t need many workers once it’s built, while a coal plant can steadily employ hundreds.

Workers hurt by the energy transition are a small part of the overall economy. But coal mines and power plants tend to be in rural areas without much else in the way of industry. When these jobs go away, the pain is localized but intense.

Some policymakers are trying to blunt the impacts. Last year, Colorado was one of several states that passed laws aimed at cutting greenhouse gas emissions and included provisions for a “just transition” — job retraining, economic development aid and other measures to help workers and communities find a life after fossil fuels.

Climate economy
Members of the European Parliament vote in favor of the Paris U.N. COP 21 Climate Change agreement during a voting session at the European Parliament. VOA

4.  No one is doing enough. 

The plunge in coal-fired power helped the United States cut its emissions by an estimated 2.1% in 2018. Since 2005, emissions are down 12.3%.

But the United States pledged to cut greenhouse gases at least 26% by 2025 under the U.N. Paris climate agreement. Emissions must go down by 2.8% per year on average to hit that target. It’s not impossible, experts say, but it’s a stretch.

The Trump administration is moving policy in the opposite direction, aiming to weaken fuel economy standards for vehicles, approving construction of a new oil pipeline from Canada and vowing to shore up America’s coal industry.

Meeting the Paris pledge is not enough, however. Scientists say the world needs to get to zero carbon emissions by 2050 to stave off a climate disaster. Almost no one is on track to do so.

Unless cost-effective carbon capture technology appears soon, natural gas will have to go. Transportation, the largest source of U.S. greenhouse gases, will have to go electric (or hydrogen or biofuel) much, much faster than it is. And someone will have to figure out what to do about emissions from energy-intensive industries like glass, steel, aluminum and concrete.

Also Read- People with Inadequate Food Access Likely to Die Prematurely: Study

Does fighting climate change mean wrecking the economy? Not necessarily. But the steps taken so far will not stop the climate impacts we’re already seeing from becoming much worse.

Can we stop climate change before it’s too late? No one has all the answers yet.

But something must be done. Each new climate-related disaster shows the cost of inaction is mounting.  (VOA)