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...
More Comments are closed
Articles
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...
More Comments are closed
RBI hikes repo rate but more is needed
While there is no guarantee that the RR hike will tame inflation, we can’t rule out the risks to growth Normally, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) conducts a review once in every two months based on which the RBI makes policy announcements at the beginning of each of the following months viz. February, April, June, August, October, December. Deviating from this practice, in early May 2022, Governor Shaktikanta Das announced changes in the important monetary policy instruments. Das increased the policy repo rate (interest rate at which the RBI lends to banks) or RR from 4 per cent to 4.4 per cent. He also increased the cash reserve ratio (percentage of a bank’s total...
More Comments are closed
Fuel tax cuts: Easier said than done
It would be fair to keep the fuel tax rates in a lower slab, say, 18 per cent, but the Centre and States would start wobbling at the very idea To rein in the inflationary pressure, on May 21, 2022, the Narendra Modi Government announced reduction in the central excise duty (CED) on petrol and diesel by `8 per litre and `6 per litre, respectively. The cuts are significant but, given the magnitude of the challenge, these won’t be enough. Let us do a fact check. In May 2014 (when Modi took charge), CED on petrol was `9.8 per liter and on diesel `3.8 per liter. By March, 2020 (this was when the Covid-19 pandemic struck), already the Government had...
More Comments are closed
The policy flip-flop on wheat exports
Obtrusive controls on food supply and distribution are a major constraint on exports. They aren’t also good for India’s fiscal health In the backdrop of increase in international price of wheat (courtesy, Ukraine crisis) early this month, Prime Minister Narendra Modi, had exhorted that India can help meet the global requirements of food deficit countries, provided the World Trade Organisation (WTO) allows it. He also exuded confidence that this had created an opportunity for Indian farmers to increase their income. Even as stakeholders were gearing to undertake export with several of them having signed contracts, on May 13, 2022, the Director General of Foreign Trade (DGFT) put a ban on wheat export with ‘immediate’ effect. The exports under government-to-Government arrangements...
More Comments are closed
Indian power sector is pushed to the brink
Among other things, free discoms from State control, allow them to set tariff for all consumers and permit private firms into the distribution business Faced with an acute power crisis caused amongst others by sudden spurt in power demand in this season, the Modi Government has fired all cylinders to tackle the most crucial of all bottlenecks in the way, namely coal which accounts for nearly 52 percent of total power generation capacity in the country. During April/May2022, the Union Power Ministry – using powers vested in the Government under Section 11 of the Electricity Act, 2003 – issued directions to (i) all imported coal-based plants (ICB) to operate and generate power to their full capacity and (ii) all generation...
More Comments are closed
Strengthening IBC framework, really?
Faced with ballooning NPAs, the Modi government enacted the IBC in 2016 While putting on hold its plans to implement the so-called “fresh-start process” for indebted poor people under the Insolvency and Bankruptcy Code (IBC), the government wants to first focus on bolstering the IBC architecture to yield quick resolution of toxic assets. The reference here is to the delay in completion of the corporate insolvency resolution process (CIRP) as well as the low amount realised by creditors from their non-performing assets (NPAs) — a fancy nomenclature for bad loans. Let us capture a few basics. Faced with ballooning NPAs, the Modi government enacted the IBC in 2016. This legislation overrides all other subsisting laws and gives a strong handle...
More Comments are closed
Food politics hits subsidy reforms
The Government should look at ways for pruning subsidy. Indeed, there is an unprecedented scope for it The Union Government has extended the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for a further period of six months till September 30, 2022. Having already spent over Rs 260,000 crore during the first five phases (the scheme has been in operation since April 2020, the fifth phase ended on March 31, 2022), it will need another Rs 80,000 crore during April – September, 2022. Is the extension justified? In March 2020, the Finance Minister Nirmala Sitharaman had announced the Scheme to mitigate the hardship suffered by people due to a major disruption in economic activity and resultant loss of jobs and income...
More Comments are closed
Reining in fertilizer subsidy in India
From an already high of Rs 83,000 crore during 2019-20, the subsidy could cross Rs 200,000 crore during 2022-23. Fertilizer subsidy or payments made to manufacturers or importers to cover the excess of the cost of production/import and distribution over a low maximum retail price (MRP) – they are asked by the Union Government to charge from the farmers -has increased by leaps and bounds during the last three years. From an already high of Rs 83,000 crore during 2019-20, it increased to Rs 138,000 crore during 2020-21, Rs 162,000 crore during 2021-22 and could cross Rs 200,000 crore mark during 2022-23. Is there a way this escalating trend could be reined in? Subsidy payments are made under two broad...
More Comments are closed
PSU privatisation: lock, stock and barrel
The Government should also unshackle the process of strategic disinvestment from bureaucratic red-tape The ministry of finance has barred public sector undertakings from bidding for other Central Public Sector Undertakings which are on the block for privatisation. The Department of Investment and Public Asset Management has stated: “As a general policy, PSUs (Central/ State/ Joint)/State Governments and Cooperative Societies controlled by the Governments are not permitted to participate in the strategic disinvestment of other PSUs as bidders unless otherwise specifically approved by the Central Government in public interest”. PSUs are undertakings in which the Centre/State Governments or jointly with central and/or State Governments have majority ownership (with shareholding of 51 percent or more) and control. If, the Government decides to...
More Comments are closed