The Govt is doing a good job of supplying food, fuel and fertiliser at subsidised cost but the largesse recipients are unlikely to make space for other deserving people An overarching policy instrument Prime Minister Narendra Modi uses in relentless pursuit of a welfare State is his unflinching commitment to ensuring adequate supply of three essential items, namely fertilisers, food and fuel, to the target beneficiaries/consumers at ‘throwaway’ price or even for free. In fact, he tells them about his intentions in this regard well in advance. Look at these facts: Urea is a widely used fertiliser that supplies primary nutrient nitrogen or ‘N’ and constitutes nearly half of India’s total fertiliser consumption. To make it affordable to farmers, the...
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RBI dividend aids Government finances
The RBI’s dividend transfer provides a substantial fiscal cushion to the cash-strapped Government, but it must be prudent in fiscal management and resource allocation In the amendment to the Fiscal Responsibility and Budget Management (FRBM) Act through the Finance Bill 2018-19 (the amendment was based on the recommendations of Dr N K Singh’s committee mandated to review the FRBM Act (2003)), the Modi – the Government had pledged to achieve fiscal deficit or FD (excess of total expenditure over total receipts) of 3 per cent of gross domestic product (GDP) by the FY 2020-21. Following the Corona pandemic that played havoc with the economy leading to plunging revenue and ballooning expenditure during 2020-21 and the resultant zooming of FD to...
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Do not withdraw capital support for oil PSUs
The Government slashes equity infusions for three major oil sector CPSUs by 50 per cent, contradicting its 2023–24 budget commitments In the Budget for the financial year 2023-24 (April 1, 2023, to March 31, 2024) presented on February 1 last year, the Union Finance Minister Nirmala Sitharaman announced an equity infusion of Rs 30,000 crore in three Central public sector undertakings (CPSUs) viz. Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL), are majority-owned by the Government of India (GOI). She had also proposed Rs 5,000 crore for buying crude oil to bolster its strategic reserves (SRs) in underground storages at Mangalore in Karnataka and Visakhapatnam in Andhra Pradesh. The equity infusions in...
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Stopping thieving through DBT
A lot of pilfering from fertiliser subsidies is happening due to policy flaws. This can be curbed if only the subsidy is given under Direct Benefit Transfer On January 22, 2019, addressing NRIs and Indian-origin people at the inauguration of the 15th Pravasi Bharatiya Divas convention in Varanasi (Uttar Pradesh), Prime Minister Narendra Modi recalled what Rajiv Gandhi had Stated “Of the funds the Central Government sends, only 15 per cent of that reaches the people. If one rupee is sent from Delhi, only 15 paise reaches the villages, 85 paise disappear. Even as the country’s middle class kept giving tax honestly, this “loot” of 85 per cent also continued”. Modi added “I also want to tell you today’s truth...
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Reining in food inflation
During the fiscal year 2023–24, the Union government launched a scheme to sell food at subsidised rates under the Bharat brand. Bharat Chana was introduced in July 2023, Bharat Atta in November 2023, and Bharat Rice in February 2024. Under this scheme, the Food Corporation of India (FCI) buys cereals from farmers and sells them to the National Agricultural Cooperative Marketing Federation of India (Nafed) and the National Co-operative Consumers’ Federation of India (NCCF). The Nafed and NCCF then directly sell Bharat brand products to the general public through retail stores, mobile vans, and e-commerce platforms such as Amazon and BigBasket. These products are priced lower than the market price. For example, Bharat Atta is sold at Rs 27.5 per...
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Rationalise regulations for e-commerce
When the Government expects foreign companies to do almost everything that a retailer does, how can it deny these firms the right to sell? Way back in 2019, Delhi Vyapar Mahasangh (DVM) an organisation of retail traders in the national capital had lodged a complaint with the Competition Commission of India (CCI) alleging anti-competitive behaviour by Amazon Seller Services (ASS) and Flipkart Internet Private Limited (FIPL). The CCI is an authority established under the Competition Act, of 2002. The Act prohibits anti-competitive agreements and abuse of dominant position by enterprises and regulates mergers, amalgamations acquisitions etc to ensure that there is no adverse effect on competition. Amazon and Flipkart are global giants operating e-commerce marketplaces in India through their subsidiaries,...
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Plug leakages in fertiliser subsidy
The real reason behind the leakage is control of the MRP at an artificially low level. Dubious players have a huge incentive to divert and rake in the moolah As part of the 100-day agenda of Modi 3.0, the Government intends to administer fertiliser subsidies more effectively and cut down on leakages and diversions to build on the success of neem-coated urea. It intends to conduct a pilot in a few districts on a modified version of the direct benefit transfer (DBT) that seeks to establish a linkage between the land holding of a farmer and nutrient consumption. A proposal in this regard mooted in 2020 is being resurrected. To make urea – a widely used fertiliser that supplies primary...
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With power freebies, debt comes calling
The core dilemma persists: How to prevent debt while ensuring universal electricity access? This issue entails policy intricacies and power sector reforms In an interview, Union Power Minister RK Singh revealed he has been telling States that electricity is not free. “If any State wants to give free power to any category of people, they can go ahead and do so, but you have to pay for it”. Singh’s exhortation to the States assumes significance in the backdrop of a spate of announcements by the latter to give free electricity to certain consumers which affect the viability of power distribution companies or discoms (they buy power from generating companies or gencos and supply to the consumers). He argues “like any...
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A clause that doesn’t buy peace
The 13th Ministerial Conference of the World Trade Organisation held in Abu Dhabi in February 2024 ended in a deadlock. However, the Union Minister for Commerce and Industry, Piyush Goyal, who led the Indian delegation, was “completely satisfied.” On the contentious issue of finding a permanent solution to India’s public stock-holding (PSH) programme for food security, he was alluding to the so-called ‘peace clause’ sanctioned at the 9th MC held in Bali (2013), and that arrangement stays. Does it help? Under the PSH programme, government agencies, such as the Food Corporation of India (FCI), buy agricultural produce such as wheat, rice/paddy, and coarse cereals from farmers at the minimum support price (MSP) and give it free to India’s poor under...
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Income inequalities hamper sustainable growth
While the nation’s GDP is poised to surge by 7.6 per cent in the current financial year, concerns loom large over the sluggish pace of private consumption During the current financial year, the Indian economy is expected to register a growth of 7.6 per cent in real gross domestic product or GDP. Coming on top of growth of 9.1 per cent during 2021-22 and 7.2 per cent during 2022-23, India’s performance is spectacular. Emboldened by this trend and Modi’s commitment to pursue economic reforms with greater vigour during its third term, analysts are hoping for growth of above 7 per cent on a sustainable basis. But, there is a catch. Private consumption which accounts for as much as 55 per...
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