The Rs 3 lakh crore channeled via RLRBSD is merely another bailout for discoms. The only obligation placed on them is meeting targets they Should have to met in 2018-19 That the money is being offered on a platter is clear from virtually no obligation on the discoms (the performance targets set for 2018-19 now gets shifted to 2025). In her FY22 Budget speech, FM Nirmala Sitharaman announced that under the proposed Electricity (Amendment) Bill, 2021, the government intends to delicence the distribution business, bring in competition, and give the consumer power to choose her supplier. She also unveiled the Rs 3 lakh crore electricity distribution reform programme to reduce losses and improve the efficiency of discoms. Tantalisingly christened ‘Reforms-Linked,...
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Articles
CPSU privatisation an uphill task
The Centre should de-bureaucratise the process of running PSUs. This should be done even before privatisation is taken up Under a big bang approach to privatisation announced in the Union Budget, Finance Minister Nirmala Sitharaman has divided the Central Public Sector Undertakings (CPSUs) in two broad categories i.e. strategic and non-strategic. Whereas the former is broken up into four subgroups: Atomic energy, space and defence; transport and telecommunications; power, petroleum, coal and other minerals; banking, insurance and financial services, the latter includes all other sectors such as hotel and tourist services, industrial and consumer goods, trading, marketing and so on. As per the plan, all PSUs in non-strategic sectors will be privatised and all loss-making enterprises in this category will be closed....
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Time for Govt to make a clear-cut choice
If the Centre allows gas producers to charge what they want, one shudders to even think of where the fertiliser and power subsidy bill will reach The State-owned Oil and Natural Gas Corporation (ONGC) is forming a new wholly-owned subsidiary company with the objective of sourcing, marketing and trading natural gas. The company is already into exploration and production of gas (besides crude oil) which it sells to a variety of industries manufacturing fertilisers, power, chemicals, petrochemicals, CNG, gas for household consumption and so on. So what has prompted it to set up a separate company solely for the purpose of trading and marketing of gas? It is not a simple case of business restructuring, but an attempt to circumvent control...
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Fiscal deficit target goes for a toss
An offshoot of the economic crisis triggered by the pandemic is manifest in the Centre coming out with the ‘real’ state of its finances. In the Budget presented on February 1 by Finance Minister Nirmala Sitharaman, the revised estimate (RE) for fiscal deficit in 2020-21 is put at 9.5% of GDP. This is almost three times the budget estimate (BE) of 3.5%, which itself was 0.5% higher than the 3% threshold required by the Fiscal Responsibility and Budget Management (FRBM). It was justified by her as due to “far-reaching structural reforms with unanticipated fiscal implications.” The slippage is not just due to a shortfall in tax collection and non-tax revenue, especially proceeds from disinvestment, but also due to inclusion in...
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The Govt should avoid a Catch-22 situation
Team Modi should legitimise direct selling by foreign companies in Indian retail — not just online but also offline — without any riders In view of the complaints by the Confederation of All India Traders (CAIT) regarding blatant violation of the Foreign Direct Investment (FDI) policy and the Foreign Exchange Management Act (FEMA), 1999, by Amazon and Walmart-owned-Flipkart, Union Commerce Minister Piyush Goyal alluded to it while issuing a clarification to ensure that the e-commerce sector works “in the true spirit of the law.” Earlier in December 2020, the Ministry of Commerce had asked the Reserve Bank of India (RBI) and the Enforcement Directorate (ED) to take necessary action against these global e-commerce giants. The above actions may not enthuse when viewed...
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Union Budget FY22 misses the chance to reform fertiliser subsidy
The fertiliser subsidy allocation for FY22 signals there will be no reform this fiscal; deficit targets show this is unlikely in the next five years too The subsidy can be restricted only to farmers having less than two hectares. Under the “Stimulus – III” unveiled on November 12, 2020, the Union finance minister, Nirmala Sitharaman, made an unprecedented announcement to release an additional Rs 65,000 crore towards fertilisers subsidy over and above Rs 71,000 crore allocated in the Budget for FY21. She has followed it up by providing a total of about Rs 134,000 crore in the revised estimate (RE). This should be enough to pay for all subsidy dues, including carry forward from FY20. For FY22, she has allocated...
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How about reining in food subsidy?
Even as the Govt has mustered courage to give a truthful account of the money it spends on food subsidy, there is nothing on the horizon to indicate that this will be reined in In the Union Budget for 2021-22, Finance Minister (FM) Nirmala Sitharaman has given a pleasant surprise. This has to do with the Government’s decision to discontinue with the decades-old practice of so-called “off-Budget liabilities” this time around. “Off-Budget liabilities” is a fancy nomenclature used by governments to denote transfer of certain expenses incurred by the Union Government to the books of its agencies tasked with the implementation of its welfare schemes. This helps the former show lower expenses on its own books, thereby, helping it bring down fiscal...
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Legalising MSP will prove to be anti-farmer
Out of about 150 million farmers, a mere 8% of them get to sell their produce to the state agencies In the continuing stalemate over the three farm laws, the biggest sore point is the insistence of the agitating farmers that the MSP (minimum support price) should be legally guaranteed. At present, the Centre notifies MSP for 23 farm items. The Food Corporation of India (FCI) and other state agencies buy paddy and wheat, besides a few other items such as coarse cereals and pulses, at the MSP. These are meant for feeding the public distribution system (PDS) and giving food to beneficiaries at heavily subsidised prices under the National Food Security Act (NFSA). Out of about 150 million farmers,...
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Reinvigorating growth: Where is the money?
The FM wants to boost growth, but it will be at the cost of fiscal de-stabilisation. One is not sure whether a sustained, rapid surge will come as a huge resource gap remains Taking a cue from the prescription that the Chief Economic Advisor (CEA), Krishnamurthy Subramanian gave in the Economic Survey: 2020-21 that “the Government should come up with more fiscal measures for short-term support to the economy and businesses”, Finance Minister (FM) Nirmala Sitharaman has gone ahead with some “big bang” measures. She has not just attempted to give a boost to industries and businesses in the short-term but has also given an indication of her intent to put them on a high growth trajectory in the medium to...
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Paratroop reforms on the ground
Of crucial importance is the need to actually execute reforms and make them work on ground zero. Unfortunately, this is not happening Unlike the Economic Survey for 2019-20, which was prepared keeping in mind the ambitious target of achieving a $5 trillion economy by 2024-25, this time around, the overarching theme revolves around demonstrating how brilliantly the Government has managed the Coronavirus pandemic. Through lucid elaboration on the details and modeling with facts and figures — using international as well as inter-State comparison within India, Chief Economic Adviser (CEA) Krishnamurthy Subramanian has given ample justification for the “early” and “stringent” lockdown from March and thereafter calibrated lifting of restrictions from June onward. Tacitly, he has also admitted that this led to compression...
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