Morning Brief: Rafale Deal Done; Railway, General Budgets Merged; CAD Shrinks To 0.1% Of GDP

Cauvery Issue

After chairing an all-party meet, Karnataka Chief Minister Siddaramaiah informed that the state won’t be releasing any more water to Tamil Nadu until 23 September when a special session of the assembly has been called to discuss the Supreme Court’s decision. The apex Court had directed Karnataka to give 6,000 cusecs water from 21 to 27 September, an order the chief minister had called “unimplementable”.

Main opposition party, BJP boycotted the all-party meet saying that the Siddaramaiah government didn’t take any specific decision keeping the interests of farmers in mind despite holding all-party meetings earlier.​

Rafale Deal Done

The Union cabinet on Wednesday cleared the purchase of 36 Rafale fighter jets from Dassault Aviation. The final deal will be signed tomorrow.

The 36 jets would equip two squadrons of the Indian Air Force. The overall cost of these jets is pegged at Rs 59,000 crore. This means each Rafale will come for around Rs 1,640 crore.

The need for more fighter jets is clear. India requires at least 45 fighter squadrons to counter a “two-front collusive threat” from China and Pakistan but the Indian Air Force is presently operating with barely 25 squadrons. Moreover, 14 of these squadrons are comprised of MiG-21s and MiG-27s which are scheduled for retirement between 2015 and 2024. That may leave India with just 11 squadrons if timely replacements aren’t made.

CAD Shrinks

India’s current account deficit (CAD) for the April-June quarter shrank to $277 million, or 0.1 percent of the gross domestic product (GDP). In the same quarter a year ago, the deficit stood at $6.1 billion, or 1.2 percent of GDP.

The contraction in the CAD was chiefly due to narrowing of the trade deficit to $23.8 billion from $34.2 billion a year ago. If India’s exports are falling, however, imports are falling ever faster.

Rail Budget Merger

The Union Cabinet on Wednesday decided to put an end to the 92-year old practice of presenting the railway and general budgets separately. Both have been merged and will be presented by Finance Minister Arun Jaitley in 2017. The reform is intended to de-glamorise the Railways ministry and discourage the leveraging of the Rail Budget for handing out largesse to vote banks.

The Cabinet also agreed on principle to advance the budget by a month, however, the final decision in this regard will be taken after the next year’s assembly election calendar is known.

Army Was Alerted?

According to The Times Of India, the intelligence agencies had alerted the Army about the presence of a group of eight Lashkar-e-Taiba terrorists ( with specific plans to hit the Army base) across the LoC in Pakistan, waiting for an opportunity to infiltrate into Uri.

The agencies had noticed the eight as well as another group with mixed terror affiliation hiding in the mountains of Uri, watching the Army base from a height. The TOI report claims that the agencies specifically warned of the likelihood of the terrorists crossing over and hitting the Uri camp.

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