Global technology companies such as Google, Facebook, Amazon, and Apple have been under the radar of governments in many countries for trying to steamroll competition by either buying their competitors (even if that meant spending mammoth sums) or pushing other vendors to avoid working with them. In June 2019, the US Congress and an antitrust panel of the House Judiciary Committee began a probe into the nature and working of the aforementioned big 4 who together have market capitalization of US$ 5 trillion. Based on collected documents and testimonies from workers of these firms and from rivals (it collected 1.3 million documents), prima facie the panel inferred that they had tried to push them out of the market using unfair...
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Policy rate – stop its downward march
Unlike his predecessors (read: Raghuram Rajan: 2013 – 2016 and Urjit Patel: 2016 – 2018) who used changes in the policy rate – interest rate charged by the Reserve Bank of India (RBI) on loans it gives to banks – primarily as an instrument of targeting inflation, the incumbent governor, Shaktikanta Das has used it mainly for spurring economic growth but without much success. Das – a former economic affairs secretary – who took charge in December 2018 after untimely exit of Urjit Patel handed out a cumulative reduction of 1.35% during 2019. As a consequence, the rate was down to 5.15%. In the wake of deadly Corona virus, just after the first phase of lockdown announced by Prime Minister,...
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High power tariff – no respite for consumers
For almost two decades now, the successive governments have made exhortation about reforming the fledgling power sector with the three-fold objective of (i) supplying electricity at affordable rates; (ii) reducing the burden of subsidy and (iii) make power distribution companies (discoms) viable. Whether, it is the provision for reform the power purchase agreements (PPAs), ‘open access’ under the amended Electricity Act (2003), reducing cross-subsidy so as lower tariff to industries and businesses, increasing the share of renewals in total supply, opening of power exchanges for trading of electricity, direct benefit transfer (DBT) of subsidy to the target beneficiaries and so on, the aforementioned objectives resonate in each of these reforms. Yet, it is ironical that when it comes to developing...
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Bad bank – a bad idea
Even as the efforts made by Modi – government including an asset quality review (AQR) by the Reserve Bank of India (RBI), enactment of the Insolvency and Bankruptcy Code (IBC), amendment of the Banking Regulation Act (BRA), massive capital infusion in public sector banks (PSBs) etc were beginning to yield results in terms of reduction in non-performing assets (NPAs) – a euphemism for loans turning bad – the crisis triggered by Covid – 19 has turned the clock back. According to a report by India Ratings and Research (Ind-Ra), the impact of Covid-19 and the associated policy response is likely to result in an additional Rs 167,000 crore of debt from the top 500 debt-heavy private sector borrowers turning NPAs between...
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FDI in retail – bring from the front door
On April 22, 2020, the California based US Internet giant Facebook announced its decision to buy 9.99% stake in Jio Platforms Limited (JPL) paying more than Rs 43,450 crore. JPL is a 100% subsidiary of Reliance Industries Limited (RIL) and has in its fold a wide spectrum of businesses such as wireless broadband, home broadband, enterprise broadband, narrow-band, internet-of-things businesses, a bouquet of digital applications, e-commerce etc. This was followed by a flurry of investments with big names such as General Atlantic, Silver Lake, Qualcomm, Intel, Vista, Google etc bringing in cumulative investment of over Rs 100,000 crore taking the total to Rs 150,000 crore. In lieu of this capital infusion, they get aggregate shareholding of 30% or Rs 5000 crore...
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Scams – why there is no check
Any promise to act against corrupt politicians, bureaucrats, dubious businessmen and others who misappropriate precious resources is always welcome by the people. This was an overarching factor that catapulted Narendra Modi (he made grandiose promise to eliminate corruption and scams) to the seat of power in 2014 and for a second term in 2019. In case however, the required action is missing, they feel cheated; the pain is even more when the country is hard pressed for resources as during the current year. In an affidavit filed in the Supreme Court (SC) on July 6, 2020, the Union government has suggested ‘there was a trend of people accused in high-value economic offences approaching the SC directly – instead of an...
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Uniform transport tariff for gas – a flawed idea
Speaking at the launch of nation”s maiden online gas trading platform by Indian Gas Exchange (IGX), union minister for petroleum and natural gas (MPNG), Dharmendra Pradhan reiterated the commitment of Modi –government to raise the share of natural gas in the energy basket from existing around 6% to 15% by 2030 in sync with its avowed objective of promoting use of environment friendly fuel. Pradhan also alluded to ‘a new pipeline tariff policy that will replace existing practice of seven different pipeline operators charging separate rates and customers away from gas source paying more than those nearer to source’. The Chairman, Petroleum and Natural Gas Regulatory Board (PNGRB), Dinesh Kumar Sarraf was more specific when he hinted at ‘single rate...
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Securing food by mortgaging future
To shield millions of poor against devastation caused by Covid – 19, on March 26, 2020, the finance minister, Nirmala Sitharaman had announced that the government would give 5 kg of rice or wheat per person per month for ‘free’ to around 80 crore people through the public distribution system (PDS) for 3 months; it would also give for ‘free’ one kg of preferred and region specific choice of pulse per household for 3 months. This was in addition to 5 kg of cereals per person per month, 80 crore persons are already getting at a heavily subsidized price of Rs 3 per kg rice, Rs 2 per kg wheat & Rs 1 per kg under the National Food Security...
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Tackling bank frauds
An overarching promise, Prime Minister, Narendra Modi had made at the time of taking charge for his first term beginning May, 2014 was to root out nepotism and corruption in all matters of governance – be it in various ministries/department or its agencies including public sector undertakings (PSUs) including banks. Modi’s clarion call to all in this regard was encapsulated in the euphemism he often used viz. ‘naa khaoonga, naa khaane doonga’ (neither, I will take bribe, nor allow anyone else to take). To be fair to Modi, his commitment to this overarching principle is reflected in all his policy decisions, administrative actions, delivery of services and overall governance in every sphere. That he has made an mark in dealing...
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Fuel prices – on the escalator
During the last three weeks or so, the oil marketing public sector undertakings (PSUs) viz. Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) have increased the retail price of petrol and diesel continuously almost every day. The cumulative increase works out to about Rs 9 per liter petrol and Rs 11 per liter in case of diesel. As a consequence, the current price of both the fuels in Delhi is about Rs 80.5 per liter. In April/May, petrol was selling at Rs 71 per liter whereas diesel price was Rs 69 per litre. The prices of petrol and diesel are deregulated [petrol since June 2010 and diesel since October 2014]. The oil...
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