Donald Trump and Narendra Modi standing in front of podiums, with the flags of The USA and India behind them.
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The world from Raisina

Sanjaya Baru | Policy analyst and former media advisor to Prime Minister of India

The Indian Express

Baru begins by writing about the Raisina Dialogue, a conclave of foreign analysts and policy makers from around the world started by External Affairs Minister S. Jaishankar. He argues that the two questions on the minds of most foreign delegates would be on the Indian economy and the restoration of normalcy in Jammu and Kashmir.

The ‘Rising India’ narrative from 1991 to 2011 was based on “on the improving performance of the economy and India’s ability to deal with many longstanding diplomatic challenges within a paradigm of reality”, writes Baru. India’s subdued economy, domestic political issues and approach to relations with US President Donald Trump and Chinese premier Xi Jinping have created new challenges for Indian foreign policy, he adds.

Baru notes that foreign relations with both US and China are precarious. China constantly reminds India of the growing power differential between the two and the US has consistently opposed India at the World Trade Organisation (WTO), he writes. Thus, now, the need is to form alliances with the world’s “middle powers”, such as Germany, Japan, South Korea, France, Australia, Brazil and Vietnam. Baru concludes by saying, “Merely because domestic politics has changed, we cannot afford to be adventurous in our foreign policy.”

Is a new India rising?

Harbans Mukhia | Former professor of Medieval History at JNU

The Hindu

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Mukhia lists the rise of certain “fascinating facets” in the tsunami of protests across the country. He starts by noting how all the protests are “civil society’s autonomous protests, devoid of any organic links with any political party.” It is a case of people leading the political parties, he writes. The second trend Mukhia notes is the refusal “to buy the current regime’s divisive Hindu-Muslim formula”.

He writes, “This formula has already fetched the National Democratic Alliance two terms in Parliament but seems to have hit a wall.” Mukhia also states that it is interesting that Muslims are refusing to fall for the strategy of making their identity dichotomous with their Indian identity. “The Muslims have instead sought to assert their religious identity in full concert with their Indian national identity by flaunting both at the same time, which in any case is far truer than the one which counterposes the two”, he writes. Finally what the pan-India protests have resulted in is “exemplary quality of leadership displayed by students from the underprivileged social strata.”

And now, the good news

Gurcharan Das | Author and former CEO of Proctor & Gamble India

The Times of India

Das begins by quoting columnist Matt Ridley, “We are living through the greatest improvement in human living standards in history”. People are glum because they are too caught up in the headlines of the day and don’t take a long view of history, he writes. Be it the use of the cell phones or increased forest area, Das counters all arguments of environmental crisis, rising authoritarian leaders and the slowing economy in India.

He argues that more Indians today have access to cooking gas, toilets, pucca houses and bank accounts. He then goes on to cite a Brookings Institution report, which says “because India has achieved annual economic growth exceeding 7% over the last 15 years, extreme poverty has declined to 5.5%”.

He concludes by explaining that the world is divided between two ideologies that have the utmost contempt for each other. Furthermore, how people view the world depends on whether they are angry or happy at the world. Das himself subscribes to the former. While someone has the absolute right to be depressed or angry they should be careful not to inflict their feelings on their neighbor, he states.

Economic reforms are best done brick by boring brick

Ajit Ranade | Economist & senior fellow at The Takshashila Institution

Mint

Ranade discusses “brick by brick” economic reforms, suggested by the Economic Survey of 2015, which “chip away” constraints on “inclusive and sustainable growth”. Ranade contrasts these with big bang reforms or the sudden deregulation of financial markets.

Most “economic reforms in India happen only in a crisis or by stealth” are usually “unpredictably reversible”, he writes. They usually face resistance from “industry or trade unions, not politicians” which is often why they appear “in the form of an executive decision rather than legislation”, he explains. He cites the example of the electoral bond scheme that was introduced in the 2018 Finance Bill.

Brick by brick reforms are based on the idea of “continuity, not slowness” at “a sustainable speed that gives reforms predictability and stability”, observes Ranade. For instance, to reform India’s food subsidy, leakages to non-farmers should be reduced and then Aadhaar-linked online registration should be set up for poor farmers.

These reforms have “transformative power” and are innovative since they “respond to real needs”, concludes Ranade.

The inequality debate we need

Kenneth Rogoff | Former chief economist, IMF & Professor of Economics and Public Policy, Harvard University.

Business Standard

Rogoff discusses the need for a global carbon tax as the world nears “a point of no return regarding climate change”.

Global temperature is nearing a tipping point and “limiting global warming even to 2°C would require a global carbon price of at least $75-100 per tonne of CO2 — more than double its current level — by 2030”, he explains. Even if Europe and the US purposely stall their “capitalist growth engines”, it still wouldn’t be enough to “contain global warming if emerging economies stay on their current consumption growth trajectory,” he explains.

Rogoff makes two recommendations. First, a global tax on CO2 emissions. He writes that by “equating the price of CO2 emissions globally”, “distortions” would be eliminated.

Second, a World Carbon Bank would help emerging economies in Asia, currently the “biggest contributor” to CO2 emissions,  “buy in to emissions reduction” despite concerns about economic growth, he writes. He argues that this type of system is more transparent than a carbon tax or a quota system, like the one Europe has instituted.

How simplifying capital gains tax regime will help both investors and the income-tax department

T.V. Mohandas Pai | Chairman, Aarin Capital Partners,

S. Krishnan | Tax consultant

Financial Express

Pai and Krishnan make several recommendations for simplifying the capital gains tax regime similar to the two low-tax rates regime for corporate tax that was earlier introduced by the finance minister.

The authors detail the complexities and layers behind the current regime — holding periods are different for different asset types, rates are different for short-term and long-term gains, rules for carry-forward and set-off are also not uniform etc. Ordinary taxpayers are usually confused and end up seeking professional help, they explain.

Pai and Krishnan suggest an income-tax rate of 10 per cent with an exemption of up to 1 lakh extended to long-term capital gains (LTCG) from all financial assets and 15 per cent should be applicable for short-term capital gains. A 50 per cent tax deduction in the year of investment could “incentivise investments in start-up companies”, they add. Investments in listed and unlisted equity shares should be taxed similarly so that investors “choose investments based on risk and reward… rather than …tax considerations”, they write.

LTCG in terms of immovable property should have a lower rate of 10 per cent without indexation benefit so that real estate sector appears attractive to investment, they add. “A simple capital gains tax regime will help investors in compliance and the income-tax department in administration”, they conclude.

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