Instead of the extreme steps proposed by a new policy, the government should consider a pragmatic and flexible arrangement to address the concerns on protection of sensitive data With increasing penetration of internet, surging middle-class and focus on customer convenience and affordable pricing, online retail commerce in India has grown at a phenomenal 70 per cent during the last five years reaching about US $40 billion during 2017. This is projected to increase five-fold to US $200 billion by 2026. Much of the growth has been driven by foreign majors such as Amazon,Walmart/Flipkart and so on under a policy notified in 2016-17 which allowed 100 per cent foreign direct investment (FDI) in the marketplace model of e-commerce. The marketplace is an...
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Union Budget: The way forward
Three important highlights of the Interim Budget presented by Piyush Goyal at the beginning of this month are: (i) Under PM Kisan Samman Nidhi, the Centre will give Rs 6,000 per year to small and marginal farmers (land holding up to two hectares) to be deposited directly in their account to benefit a total of 120 million. The support is with effect from December 1, 2018, and the first installment of Rs 2,000 was transferred to beneficiaries last Sunday; (ii) Under PM Shram Yogi Mandhan, persons working in the unorganised sector and earning less than Rs 15,000 per month will get a pension of Rs 3,000 per month on attaining 60 years. For this, a worker joining at the age...
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India’s burden of fiscal dilemma
Allocation for welfare schemes have not kept pace with an increase in revenues due to which the Government had to resort to a window dressing of accounts In the interim Budget presented on February 1, the Government reported a minor slippage of 0.1 per cent in fiscal deficit for 2018-19 against the target of 3.3 per cent of the GDP. For 2019-20, the fiscal deficit is pegged at 3.4 per cent. The Finance Ministry has indulged in skullduggery to restrict the deficit to 3.4 per cent, which itself is off the three per cent mark for 2018-19, as per the fiscal consolidation road-map (albeit original). With regard to proceeds from disinvestment of shares in Public Sector Undertakings (PSUs), the Government had set...
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Unshackle banks from credit cycle
The Insolvency and Bankruptcy Code is an important legislation that has instilled a sense of urgency among all stakeholders to resolve bad loans but for the momentum to sustain, India needs a committed leadership Banking is inherently a huge profitable business. To get a sense of it, all one needs to do is to look at the thousands of crores of rupees that a bank receives in various savings account on which it pays a meager 3.5 per cent to 4 per cent interest and earns a minimum of 10 per cent by way of lending. Even on account of funds, it garners by way of term deposits — 6.25 per cent to 7.5 per cent, depending on the period....
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GST: falling revenues, rising populism
A major reason behind the body blow the BJP received in the recent assembly elections in three Hindi heartland states of Madhya Pradesh, Rajasthan and Chhattisgarh was the disenchantment among the micro, small and medium enterprises (MSMEs), which employ the maximum number of persons — next only to agriculture. These persons also account for a big chunk of the middle class. Sensing that MSMEs were affected due to faulty implementation of the Goods and Services Tax (GST), besides demonetisation, the GST Council at its 32nd meeting took decisions intended to give them major relief. These include: (i) increased the exemption limit from Rs 20 lakh to Rs 40 lakh (a business entity having turnover below this does not have to...
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Innovation is not exploitation
Controls on GM crops will curb access to new solutions needed to tackle climate change. Our farmers will be the biggest losers Bt cotton, the only Genetically Modified (GM) crop so far allowed for cultivation in India, is genetically tweaked to kill bollworms that ravage cotton crops. It promises substantial increase in return by saving on pesticide use and increase in crop yield. At the price paid for Bt cotton seed, including technology fee paid to biotech major Monsanto, farmers get handsome returns. Since its introduction, the use of Bt cotton in India has increased manifold with the area under coverage, leap-frogging from a mere 50,000 hectare to around 12 million hectare, covering major States such as Gujarat, Andhra Pradesh...
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FDI in retail: The way forward
Only a 100 per cent FDI can create good market dynamics that can address concerns of predatory pricing and market dominance Retailers’ associations have complained to the Government against e-commerce majors such as Amazon and Flipkart giving deep discounts on sales on their platform which is detrimental to the ubiquitous ‘mom-and-pop’ stores. They also apprehend that once the latter is decimated, the former will start exploiting the consumers in the long-run by charging exorbitant prices. Domestic companies in organised retail (or the so-called ‘brick and mortar’ segment) viz Reliance Retail Limited (RRL) and Futures Group among others, too, are facing the heat from these e-commerce giants. They are not against MNCs per se but their grudge is mainly due to...
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Farm loan waivers: road to economic disaster
The waiver of farm loans worth Rs 65,000 crore about a decade ago by the then UPA dispensation, with an eye on the impending general elections in 2009, had a debilitating effect on the finances of the union government (fiscal deficit during 2008-9 was in excess of 6% of GDP). But political parties do not seem to have learnt any lesson. Early last year, the BJP government in Uttar Pradesh granted a mammoth loan waiver for small and marginal farmers, costing the exchequer Rs 36,000 crore. This was followed by the by JD(S)-Congress coalition in Karnataka granting an equally massive Rs 34,000 crore waiver earlier this year. The monster of competitive loan waivers continues to advance with added fury as...
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A policy on MSP will be fiscally suicidal
In all probability, the Government must not tread the path of giving legal backing to MSP. Already, it is struggling to find resources for food subsidy under NFSA. An alternative path is to find platforms where farmers can sell their produce On November 30, 2018, tens of thousands of farmers congregated in the national capital to protest against their financial distress arising out of non-remunerative price for their agricultural output and ever-increasing farm debt burden. They wanted a special session of Parliament to discuss their problems and demanded the passage of two laws (i) to guarantee Minimum Support Price (MSP) for all crops based on the recommendations of the National Commission on Agriculture under MS Swaminathan (2006) and (ii) ‘one-time’...
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No relief in sight for fertiliser prices
India is overwhelmingly dependent on imports for meeting its requirements. That makes us vulnerable to the changing global demand-supply scenario. The Government, will, therefore, need to explore innovative ways to increase self-reliance Farm distress refuses to go away. This time around, the steep rise in prices of fertilisers — a key input used in crop production — during the current year has increased farmers’ miseries. During Kharif (April-September) 2018, the price of di-ammonium phosphate (DAP), a major source of phosphate or ‘P’ nutrient supply, increased by 30 per cent over Kharif (April-September) 2017. Likewise, the price of complexes and muriate of potash (MoP) — main source of ‘P’ and ‘potash’ or ‘K’ nutrient —increased by 15-60 per cent during Kharif 2018...
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