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The Week That Was:

From: Vartaa Editorial Team on Apr 10, 2016

Panama Papers

A massive leak of confidential documents (now called Panama papers) with information regarding companies, high net worth individuals and their accounts from a Panamian law firm Mossack Fonseca has made global headlines and some shocking revelations have come to light. After causing trouble for leaders like Prime Minister of Iceland, UK PM David Cameron and Russian President Vladimir Putin , this issue hit home with names of about 500 Indians featuring in the leak. The list includes billionaire property baron Kushal Pal Singh (recipient of the Padma Bhushan), Vinod Adani, brother of billionaire Gautam Adani and billionaire real estate magnate Sameer Gehlaut, alongwith Amitabh Bachchan and Aishwarya Rai Bachchan. The government is seeking to re-initiate a dialogue with Panama to start sharing tax information to uncover wealth hidden away in foreign accounts. The leak as Economic Times notes may just be the tip of the iceberg.

Kollam temple fire in Kerala

At least 100 people were killed and over 300 injured when an explosion took place at the Puttingal Devi temple during a festival at Paravur in Kerala after a fireworks display. The explosion was so massive that tremors were felt even a kilometer away. Chief Minister Oommen Chandy has ordered a probe in to the fire tragedy.

Oil from Iran

Soon after the US lifted sanctions on Iran in exchange for curtailing its nuclear program, Iran looks to be making a comeback in the oil business by offering price discounts on crude oil. Sizing up the opportunity India is ready to invest $20 billions in the port of Chabahar in southeastern Iran in return for cheap gas and land. Oil minister Dharmendra Pradhan held discussions with his counterpart in Iran for these agreements as well as finalizing the deal for development of Farzad-B oil field discovered by ONGC in 2012.

No water, no IPL

After a petition in court challenging the use of over 60 lakh litres of water in cricket pitches in an already draught ridden state, Maharashtra CM Devendra Fadnavis announced that potable water will not be used for the pitches and matches could be moved out of the state. The BCCI warned that this could result in a loss of Rs 100 Cr to the state and a last minute shift in schedule may be difficult. While the court allowed the first IPL to be played in Mumbai, a decision is pending next week on the fate of the rest of the matches in Maharashtra.

Opinions you must read:

  • Dhananjay Sinha's article on reduction of repo rate by RBI being premature.
  • Chandrajit Banarjee from Indian Express explores the potential of Make in India in defense, while ex-Finance Minister P Chidambaram writes that the government hasn't done enough about the lack of investments in India.
  • While Dikshit Sengupta explores the world of tax havens, Ila Patnaik argues that making Indian taxation simpler will help reduce tax evasions.
  • N Kesavan opens the curtains on the Indian hockey team as the Sultan Azlan Shah cup is kicked off.

Chart of the Week

The accountants in the Govt. of India's Finance Ministry must have a sense of humor. In the Economic Survey report released along with the annual budget, the government released data regarding the number of new bank accounts opened (Jan Dhan Yojana), new Aadhar (identification) cards issued, and Mobile phone penetration. To track the progress of this trifecta of issues, the writers of the report have coined the acronym 'JAM' and improving these metrics is frequently referred to as 'spreading JAM.' At Vartaa, we too thought that the 3 metrics were important to track to get a better idea of overall socio-economic progress in the country. In this three part series we will examine each of these 3 metrics, why they matter, and their progress in recent years.

First up is the J in the JAM- Jan Dhan. Objective of "Pradhan Mantri Jan-Dhan Yojana (PMJDY)" is ensuring access to various financial services like availability of basic savings bank account, access to need based credit, remittances facility, insurance and pension to the excluded sections i.e. weaker sections and low income groups. Roughly translated, it means Prime Minister's People's Wealth Scheme. Prime Minister Narendra Modi announced the scheme during his first Independence Day address in August 2015. The largest initiative of the scheme has been helping people open bank savings accounts.

Why does this matter? "Cash transfers can directly improve the economic lives of India’s poor, and raise economic efficiency by reducing leakages and market distortions" says the Economic Survey report. We couldn't agree more. Direct Benefit Transfers (DBT) gets cash directly into the hands of those in need, reduces corruption involved in disbursing benefits (subsidized food grains, fertilizer subsidies, pensions etc.), empowers people to purchase their items from the best vendor, and gives them flexibility to use the most fungible of assets - cash - for their most urgent needs.

So how has this initiative done since its launch in 2014? If you look at bank accounts alone, the progress is impressive- Over 200 million accounts have been opened as of March 2016. On 20 January 2015, the scheme entered into Guinness book of world records setting a new record for 'The most bank accounts opened in one week,' in the last week of August 2014. Despite Jan Dhan’s record-breaking feats, basic savings account penetration in most states is still relatively low – 46 per cent on average and above 75 per cent in only 2 states (Madhya Pradesh and Chattisgarh). A lot more ground needs to be covered but it is heartening to see the needle move in the right direction. Next week we will discuss the spread of 'Aadhar'- the National Unique Identification initiative.

*Chart renders best on Desktop. We publish a modified version for phone.