Saturday, March 14, 2020

So many ministers to minister to us.

New Chancellor of the Exchequer in Britain Rishi Sunak unveiled his first budget earlier this week, in which he sought to mitigate the effects of the coronavirus on the economy. He has raised the threshold on National Insurance, which is a tax on earnings to finance social spending, statutory sick pay for those advised to self-isolate, fuel duty to be frozen for the 10th consecutive year, a cash grant for small businesses and "More than 600 billion pounds is set to be spent on roads, rail, broadband and housing by the middle of 2025." "Beside him, the Prime Minister beamed like a doggy handler whose prized pup had just won best in show," wrote Henry Deedes. What a difference from India! Any journalist daring to call the prime minister a "doggy handler" would be beaten up and put in prison on sedition charges, written into law by Lord Macaulay in 1870. Whereas, Sunak has kept tax on fuel unchanged despite the price of crude oil falling by 25%, the government in India promptly jacked up excise duty by Rs 3 per liter to squeeze an extra Rs 390 billion from consumers. The Bank of England slashed interest rate by 50 basis points to 0.25%, reducing borrowing costs and perhaps to weaken the pound to increase exports. The Reserve Bank of India (RBI) spent an estimated $1.5 billion to support a falling rupee because a weak rupee increases the price of imports, especially oil, and adds to inflation. Inflation is predicted to be 1.4% this year in Britain and 1.8% in 2021-22, whereas in India retail inflation came in a 6.58% in February, compared to 7.59% in January. The RBI kept the interest rate unchanged at 5.15% in its last meeting but increased liquidity in banks by cutting the cash reserve ratio. The Governor of the Bank of England Mike Carney has a degree in economics and served as Governor of Bank of Canada, whereas the Governor of RBI Shaktikanta Das is a retired IAS officer with a masters in history. By reducing National Insurance contribution and announcing statutory sick pay Sunak supports the working middle class. In India Dearness Allowance was increased by 4%, from 17% to 21%, for government employees, while increasing the goods and services tax (GST) rate on mobile phones from 12% to 18%. "The central government in India has far too many ministries," wrote Prof Avind Panagariya. India has a whopping 53 ministries compared to Germany with 13 and France with 16. This means, not only a lot of politicians with eye-watering perks, but associated civil servants whose perks would make Bill Gates jealous. While Sunak is trying to revive the British economy ours is strangulated by the government. No wonder unemployment rate has risen to 7.78%. With so many ministers to minister to us.

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