Deficiency price payment may be way forward as agri market forces are better placed to judge the value of agri products Addressing a conference on ‘Getting Agricultural Markets Right’ (July 6, 2022), Ramesh Chand, who is a Member of the Niti Aayog, proposed the adoption of deficiency price payment system (DPPS) as an alternative to the existing dispensation of procurement of crops from the farmers at minimum support prices (MSPs). What is the problem with the MSP-based regime? How will DPPS help in alleviating it? Under the existing system, agencies of the government like the Food Corporation of India (FCI) buy agri-produces such as wheat, rice/paddy, coarse cereals, from farmers at the MSP and distribute at a subsidized price of...
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Fuel crisis: Government must shed adhocism
Currently, E&P firms are allowed to sell their crude at parity with its international price To deal with the fuel crisis, recently the Modi government has deregulated sale of domestically-produced crude oil; and imposed a cess, or windfall tax, of Rs 23,250 per tonne on crude oil and a special additional excise duty (SAED) of Rs 6 per litre. and Rs 13 per litre on exports of petrol and diesel respectively. On July 20, the SAED on petrol was removed and on diesel was cut to Rs 11 per litre. On on one hand, it expects exploration and production (E&P) companies like Oil India Limited (OIL), Oil and Natural Gas Corporation (ONGC), and Cairn Oil and Gas to increase the...
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Electricity Bill: Where is the spark?
After dilution of its key provisions, the Electricity Bill, 2021, falls short of reform objectives In the draft Electricity (Amendment) Bill or EAB, 2021, proposing amendments to the Electricity Act, 2003 introduced in February last year, the Narendra Modi-led NDA Government intended to bring about two transformative reforms — de-licensing of the electricity distribution business and direct benefit transfer (DBT) of subsidy. Delicensing of the distribution business aims to bring in competition, and give the consumer power to choose suppliers (or “open access”). Even as the Union ministry of power prepares to table a Bill in the upcoming Monsoon session (2022) of Parliament, both the provisions have been dropped. Under the extant arrangements, an overwhelming share of power generated by public...
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Hydrocarbons may give India energy freedom
Windfall tax on oil firms is justified; a robust ecosystem for hydrocarbons can give India the much-needed relief Amid disruption in the global supply chain and steep spike in the international crude prices, the Union Cabinet last week took two major decisions pertaining to the oil sector—deregulation of the sale of domestically-produced crude oil and imposing a cess or windfall tax of Rs 23,250 per tonne on crude oil and a special additional excise duty (SAED) of Rs 6 per litre, Rs 13 per litre and Rs 6 per litre on exports of petrol, diesel, and jet fuel respectively. The Covid-19 pandemic and the ongoing Russia-Ukraine war have acutely affected the global supply chains, besides giving legs to the prices...
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MC12: Advantage developed countries
War against Covid-19 has to embrace all the three critical dimensions: testing, tracking, and treatment At the recent 12th Ministerial Conference (MC12) at the World Trade Organisation (WTO) headquarters in Geneva (June 12-17), it was advantage developed countries – the US, the European Union, the UK, Australia etc., — all the way. The Indian delegation led by Commerce Minister Piyush Goyal occupied the centre-stage steering negotiations in all key areas but the outcome was not in their favour. First, India went to MC12 demanding a Trade-Related Aspects of Intellectual Property Rights (TRIPS) Waiver for all Covid-related therapeutics and diagnostics, besides vaccines. Against this, the MC-12 granted a patent waiver (albeit ‘temporary’ and ‘limited’) only for Covid-19 vaccines which will allow India to authorise...
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India faces sharp fiscal deficit slippage
International crude and fertiliser prices disturbed Government’s budget calculations; welfare expenses are adding to fiscal stress The Modi government has taken a number of measures, including tax cuts and increase in subsidy, to give protection to consumers from the steep rise in international prices of fuel, fertilisers, and food. But it could come at a huge cost in terms of impairing the Centre’s ability to achieve the fiscal deficit (FD) target of 6.4 per cent of the gross domestic product (GDP) set for the current financial year (FY). Before analysing the numbers for the current FY, let us see how things panned out during 2021-22 when India was confronted with rising international prices of the aforementioned commodities. During 2021-22, thanks...
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Control mindset hurts privatisation process
The strategic sale of BPCL couldn’t be carried out because the Government wants to regulate fuel prices After over three years of having initiated the sale of its entire 53.29 per cent shareholding in Bharat Petroleum Corporation Limited (BPCL)—a Central public sector undertaking (PSU) in the sector of refining and marketing of petroleum products—the Government has decided to put it on hold. What could be the reason behind this move? Adopted a big-bang approach to privatisation (when government sells its majority stake in a PSU and transfers control to a private entity) in the Budget for 2021-22, Finance Minister Nirmala Sitharaman had divided Central PSUs in two broad categories—i.e. strategic and non-strategic. The former is subsumed under four subgroups: atomic...
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Power subsidy: Arvind Kejriwal’s volte-face
To promote competition, private firms should be allowed in the distribution business Arvind Kejriwal, chief minister of Delhi, has come up with a proposition: ‘From October 1, 2022, electricity subsidy will be given only to those households who ask for it’. This is bizzare. If the head of a state takes an in-principle decision to give subsidy to anyone who wanted it, as a natural response, almost everyone will say ‘Yes’. But, over 75% of the households are already enjoying a subsidy. So, why ask them? There is something more than what meets the eye. At present, households (HHs) consuming up to 200 units per month are fully exempt from paying any charges. Their number is around three million. For...
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WTO MC-12: Deft handling by India
While it was advantage developed countries all the way, India was able to avoid more harm to its interests At the World Trade Organization (WTO), even as all decisions are taken by consensus and every member country has equal voice, when it comes to actual confabulations, there are glaring inequalities. The developed countries—the US, the European Union, the UK, Australia, etc.—exercise disproportionately greater influence. They set the agenda of meetings, and get away with what they want even as developing countries are made to concur. The outcome of the just concluded 12th Ministerial Conference (MC12) at the WTO headquarters in Geneva (June 12-17) is broadly in sync with this trend seen in the past. For India, the most crucial area...
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Govt faces a dilemma over e-commerce
Any tweak in policy will upset foreign investors, while the status quo will hurt small traders Ever since Indian retail was opened to foreign direct investment (FDI)—albeit through the so-called marketplace model in 2016—foreign giants like Amazon and Walmart-owned-Flipkart have been embroiled in protracted legal battles. In a public interest litigation (PIL) filed in early 2018, the Retailers Association of India (RAI) had alleged violation of FDI norms in e-commerce. On October 31, 2018, the Enforcement Directorate (ED) had informed the Delhi High Court (DHC) that it was investigating violation of the Foreign Exchange Management Act (Fema) against Amazon, et al, but the proceedings are stuck. In another petition filed before the Competition Commission of India (CCI), the All-India Online...
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