Reduction in the repo rate or pumping of more liquidity is ill-advised as without any guarantee of propelling growth, it will yield negative outcomes In its bi-monthly Monetary Policy Committee’s (MPC) review announced by RBI Governor Shaktikanta Das on December 8, the policy repo rate or RR has remained unchanged at 4 percent. The reverse repo rate or RRR is also unchanged at 3.35 percent. Besides, it has retained an ‘accommodative’ policy stance for as long as necessary. This is the ninth consecutive time since last August that both policy rates have remained unchanged. Das justified saying, “given the slack in the economy and the ongoing catching-up of activity, especially of private consumption, which is still below its pre-pandemic levels,...
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Fiscal splurge has continued unabated
There has been no major event or budget announcement that could qualify as ‘far-reaching structural reform with unanticipated fiscal implications’ Even as the Finance Minister Nirmala Sitharaman prepares for the next budget, it is time to take stock of the fiscal scenario. During 2019-20, the revised estimate (RE) of fiscal deficit (FD) was 3.8 percent of GDP against the budget estimate (BE) of 3.3 percent. In her speech on the Union Budget for 2020-21, she had justified this in terms of the recommendation of the NK Singh Committee on review of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 which permits breach of the target in case of “far-reaching structural reforms with unanticipated fiscal implications.” For 2020-21, she had...
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Fertiliser industry is not yielding results
The Govt should remove control on urea and stop giving subsidy through manufacturers; instead, the Government can give it directly to farmers Inaugurating the revival project —annual production capacity of 1.27-million-ton(MT) neem coated urea — of the Hindustan Urvarakand Rasayan, a public sector joint venture of Coal India Limited, NTPC, Indian Oil Corporation and FCIL — at Gorakhpur on December 7, Prime Minister, Narendra Modi made the following four observations: Despite steep increase in international price of fertilizers during the current year, the Government has ensured that the farmers don’t have to pay more; 100 percent neem coating has helped in reining in diversion of urea to non-agricultural/industrial uses; Gorakhpur a long with four other revival projects currently under implementation...
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Farm laws needed to fill a void
There are 265 crops and the MSP guarantee will have to be given to farmers producing all these crops – this will be a disaster. Farmers celebrate following the announcement of suspension of their year-long protest against farm laws & other related issues, at Singhu border in New Delhi on Thursday. Credit: IANS Photo Following Prime Minister Narendra Modi’s announcement of the repeal of the three contentious farm laws on November 19, protesting farmers lost no time in coming up with a new charter of demands. The most potent of these is a legal guarantee for the minimum support price (MSP). Even as Modi proposed to set up a committee to recommend how MSP can be...
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India should abandon the MSP track now
The Government should consider direct benefit transfer to farmers. It will help eliminate inefficiencies and misuse that go with current MSP regime In view of the new Coronavirus mutation Omicron rearing its head, the 12th Ministerial Conference (MC) of the World Trade Organization (WTO), scheduled to have commenced from November 30, has been deferred indefinitely. The Government should use the interregnum for formulating strategy and coordinate with other like-minded developing countries. The key areas requiring attention are (i) permanent solution to the public stockholding (PSH) program for food security; (ii) a special safeguard mechanism (SSM) for developing countries; (iii) remove the existing inequity in fishery subsidies; (iv) patent waiver for manufacture COVID-19 vaccines; (v) WTO reforms. India runs a mammoth program...
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Repeal of farm laws: PM Modi’s volte-face
The arthiyas, large farmers and traders have successfully protected their turf while small farmers, who constitute the overwhelming majority, have lost On November 19, 2021, announcing his Government’s decision to repeal the contentious three farm laws, Prime Minister Narendra Modi apologized for not being able to convince a section of the farmers about the benefits that these laws would bring them. Are these laws so complex as to become incomprehensible to the farmer? The “Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India”, SAS in short, released by the National Statistical Office (NSO), covering the period July 2018 to June 2019, reveals widespread dissatisfaction among farmers with the price realized from sale of their...
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Directing the retail investor to G-security
Under this centralised system, customers will have a single point of reference to file their complaints, submit documents, track status and provide feedback On November 12, 2021, Prime Minister Narendra Modi launched two innovative customer-centric initiatives of Reserve Bank of India — Retail Direct Scheme (RB-RDS) and the Reserve Bank-Integrated Ombudsman Scheme (RB-IOS). The RDS is intended to give retail investors – mostly the middle class, employees, small businessmen and senior citizens – an option of ‘directly’ investing in their hard-earned savings/surpluses in Government securities, making capital markets ‘easily accessible’ and ensuring that the investment is ‘more secure’. The RB-IOS is aimed at improving customer grievance redress mechanism. What are the schemes? How do these propose to achieve the stated...
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Policy flaws in fertiliser sector
The unprecedented increase in international prices of complex fertilizers primarily di-ammonium phosphate (DAP) as well as raw materials – phosphoric acid and ammonia used in their production – has sent shock waves through the industry. At the beginning of the year, when the prices were up 60 per cent to 70 per cent over last years’ level, the government was in deep slumber. Even as the cost of supplying a bag (50 kg) of DAP went up from Rs 1,700 last year to Rs 2,400, it kept the subsidy unchanged at the last years’ level of Rs 500. As a result, its maximum retail price (MRP) increased from Rs 1,200 to Rs 1,900 inviting farmers’ wrath. The Centre responded by...
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Tax cuts alone won’t help rein in oil prices
Given the fast pace of vaccination and substantially diminished effect of COVID-19, the GDP is expected to register growth close to 10 per cent On November 3, 2021, the Union Government notified reduction in central excise duty (CED) by Rs 5 per liter on petrol and Rs 10 per liter on diesel. Seen in isolation, these cuts may appear to be significant. However, when viewed in the backdrop of the unprecedented increase affected by the Narendra Modi Government ever since it assumed office, this is small. In May 2014, the CED on petrol was Rs 9.8 per liter whereas on diesel it was Rs 3.8 per liter. As on November 2, 2021, it was Rs 33 per liter on petrol...
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Power sector: Missing the wood for the trees
One gets a sense that discoms are not honouring their commitments with regard to lifting quantities mentioned in the Power Purchase Agreements On October 30, 2021, the Ministry of Power notified two sets of rules under Electricity Act, 2003 viz. Electricity (Timely recovery of costs due to Change in Law) Rules, 2021, and Electricity (Promotion of generation from renewable sources of energy by addressing Must Run and other matters) Rules, 2021.The stated objective of the rules is to inter alia sustain economic viability of the electricity sector and ease financial stress of various stakeholders. An idea of the stress can be gauged from the losses incurred by power distribution companies (discoms) — the most crucial link in the supply chain....
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