Even as Prime Minister Narendra Modi has declared his intent to use Covid–19 as an opportunity to implement big bang reforms, the government is silent on fertilizers – a sector that has been crying for reforms for far too long. To put things in perspective, let us take a look at some basic facts on existing policies. Prior to the 1990s, both urea –main source of nitrogen (N)–and phosphate (P) and potash (K) fertilizers such as di-ammonium phosphate (DAP) and a whole range of complex fertilizers containing N, P&K in different proportion etc, fell under pricing and distribution controls. The maximum retail price (MRP) of each fertilizer was controlled at a low level and excess of cost of production and...
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Articles
Much ado about nothing
Faced with a steep decline in its revenue and increase in expenditure commitment, the Modi Government has opted for a package which is dependent on loans After a long wait of about seven weeks, since the nationwide lockdown began on March 25, Prime Minister Narendra Modi announced the ‘Atmanirbhar Bharat Abhiyan’, a special package of Rs 20,00,000 crore, about 10 per cent of the Gross Domestic Product (GDP), to revive the economy. Finance Minister Nirmala Sitharaman unveiled the details in five tranches during press conferences held between May 13 and 17. The package aims at giving relief to all strata of society impacted by the sudden stoppage of economic activities viz. farmers, workers, migrant labourers, micro, small and medium enterprises (MSMEs), vendors,...
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States must make realistic demands
They should assess the amount needed for April-June, consider what is being given by the Centre and if more is still needed, seek incremental funds only Even as corporates, MSMEs, informal sector workers and others impacted by the pandemic are demanding relief packages from the Centre, the States, too, have given the Government their wish list and five States have collectively sought close to Rs 2,25,000 crore. While Maharashtra has asked for Rs 50,000 crore, Chhattisgarh wants Rs 30,000 crore, Kerala, Rs 80,000 crore, Rajasthan Rs 40,000 crore and West Bengal has demanded Rs 25,000 crore as immediate compensation for the revenue loss suffered because of the nationwide lockdown. Rajasthan Chief Minister, Ashok Gehlot has also proposed setting up of...
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What India should do when oil prices have crashed
With crude price low, the govt should think of moving completely to DBT for food, fertiliser and power. Crude oil plummeted to less than US$ 30 per barrel – drop of 50% over its level in the beginning of 2020. ————————————————————— Much before Covid 19 had assumed monstrous dimensions, the international crude oil market was already oversupplied. Then, OPEC and non-OPEC suppliers failed to reach an agreement as Russia refused to back even a moderate cut. In sync with its past behaviour under similar circumstances (1997, 2015), Saudi Arabia pumped additional supplies prompting tit-for-tat by Russia. As a result, crude oil plummeted to less than US $30 per barrel – drop of 50% over its level in the beginning of...
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Detoxify oil pricing
The COVID-19 outbreak is a rare event and oil exporters may think that after this ends they can continue to extract a higher price from importing countries. This is flawed thinking On October 15, 2018, while interacting with global leaders from the energy sector in New Delhi, Prime Minister Narendra Modi had expressed concern over the steep increase in the international prices of crude oil (at $80 per barrel leading to corresponding increase in price of diesel and petrol) and had urged all leading producers/exporters to be more responsible in fixing the price, to bring it down to a reasonable level. At that time, no one had even contemplated a scenario wherein the price of crude would plunge to a fraction of...
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Post-COVID, farmers will be in distress, revamp APMC laws
Amidst a nationwide lockdown announced on March 24, 2020 to contain the spread of the coronavirus disease, even as an overwhelming share of the economic activity has come to a grinding halt, agriculture too has suffered a major jolt. The crisis has come at a time when Rabi crop (October 2019 – March 2020) mostly winter staple wheat, is ready for harvest. While on one hand-harvesting operation have suffered due to shortage of labour (courtesy, sudden stoppage of all modes of transport and workers getting stuck where they were), on the other, farmers are unable to move harvested crop to the market. According to an estimate, already they have suffered the loss of about Rs 15,000 crore (due to crashing...
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Don’t expect the moon
The RBI has given a boost to the economy in these testing times. But India Inc. argues that this won’t be of help in the absence of demand. This is flawed thinking On March 27, in a bid to resuscitate the economy devastated by the Coronavirus, the Reserve Bank of India (RBI) Governor, Shaktikanta Das, announced a host of measures to inject liquidity into the country’s financial system; reduce the cost of capital and ease the stress of loan repayments. These included reduction in policy rate by 75 basis points to 4.4 per cent; a three-month moratorium on payment of installments in respect of all term loans outstanding on March 31; relaxation in the norms for cash credit and working capital limits;...
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Adopt fiscal prudence
The Govt must implement much-needed reforms to rein in unproductive spends and prevent revenue leakages to create a sustainable basis for balancing its budget The economic crisis triggered by Covid–19 has forced the Government to take recourse to some extraordinary measures, which include among others 30 per cent cut in the salary of all Members of Parliament (MP) besides the President, Vice-President and the Prime Minister, suspension of the MPLAD (MP Local Area Development) fund and a steep cut in expenditure of Ministries/departments. Reportedly, barring 18 Ministries/departments connected with healthcare, medical infrastructure and other essential services, all others are facing expenditure cuts for the April-June quarter. While 33 Ministries/departments can spend only up to 20 per cent of the budget,...
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An unreliable shield
Since the subsidy given to rice farmers has exceeded 10 per cent, India has violated its WTO commitment and invoked the ‘peace clause.’ But how much immunity will this give to it? In a notification submitted to the World Trade Organisation (WTO) — the multilateral body which binds member countries to a common set of rules with regard to trade in goods and services with “fairness” and “non-discrimination” as its underlying principles — India has informed that the value of its rice production during 2018-19 marketing year was $43.67 billion and for that, it provided subsidies worth $5 billion. This works out to 11.4 per cent of the value of rice production. Under the Agreement on Agriculture (AoA) of the WTO, a...
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Corona pushes discoms to the brink
Given the nature of the crisis, all concerned states should promptly release funds from their budgets to enable discoms to clear all outstanding dues This has meant the destruction of nearly 40% of the total electricity demand. ————————————————————- Even as corona has triggered widespread devastation, a major casualty is the power sector. Following the nation-wide lockdown announced by prime minister Narendra Modi on March 24—this was an absolute must given the hyper-contagious nature of the virus and an overarching need to preempt community transmission—most industries and businesses, including the Railways (passenger segment), have downed their shutters. This has meant the destruction of nearly 40% of the total electricity demand. All consumers, be it industries, shops and establishments, households, farmers, etc, fulfil their...
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