In a freewheeling interview given to a leading national daily, Minister of state for power and renewable energy RK Singh, informed about a scheme for rural areas viz. Kisan Urja Suraksha evam Utthaan Mahabhiyan [KUSUM] already approved by the cabinet and will be launched within a time frame of 2-3 weeks – to be implemented over a period of three years. Intended to promote the use of solar energy in rural areas, the scheme allows a farmer to use his barren land – currently lying fallow – to set up a solar plant on it for 1 MW or so [in case, the land is cultivable then he can set it up on stilts and grow crop below]. Whereas, during...
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FDI in e-commerce – the logjam
In a meeting with stakeholders in the e-commerce segment – including multinational companies [MNCs] such as Amazon, Flipkart etc – the minister for commerce and industry, Piyush Goyal categorically ruled out any change in the extant policy on foreign direct investment [FDI] in ‘market-place’ model of e-commerce. This has led to huge disappointment among foreign majors who were hurt by the amendments/clarifications to the 2016-17 policy [Press Note (PN) 3] made vide circular dated December 26, 2018 and were looking for necessary correction to remove the anomalies – as they perceived. The U. S. – India Business Council [USIBC] – a US-based lobby group – even termed the amendments as ‘retrospective’ which created uncertainty of the policy environment. What was...
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Fertilizers movement via waterways – policy hurdle
The government has approved transportation of fertilizers through coastal shipping and inland waterways. This is a welcome move as it offers the possibility of significant reduction in freight cost besides taking less time in reaching the material to consumption points and being environment friendly as well. It has also approved freight subsidy on the cost incurred on movement of fertilizers through this mode. In case of single mode or multi-modal transportation which includes coastal shipping, ‘the freight subsidy will be restricted to railway charges or the actual freight incurred, whichever is less’. Further, ‘only movement of subsidized indigenous fertilizers viz. urea and phosphate and potash fertilizers – through coastal shipping/inland waterways will be eligible for payment of freight subsidy at...
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‘One Nation, One Election’ – brooks no delay
The idea of ‘One Nation, One Election’ mooted by the Prime Minister, N Modi is being staunchly opposed by a big section of the political class even before the deliberations are kicked off [a meeting convened by the government on June 19, 2019 was boycotted by about 50% of the parties who were invited]. A major ground for their opposition is that this will be an onslaught on the federal polity. The critics opine that in a scenario of simultaneous poll to both the parliament and all the state assemblies, the national issues will dominate over the state specific subjects. This may yield fortuitous benefit to the dominant national party as the voter won’t be able to clearly articulate his/her...
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Tax evasion haunts Modi too
During 2018-19, the union government got net tax collection [after devolution to states] of Rs 1317,000 crore against the target of Rs 1484,000 crore leading to an unprecedented shortfall of Rs 167,000 crore – the shortfall being in both GST [Goods and Services Tax] and direct taxes. Committed to avoid any slippage in fiscal deficit target for the year, it was forced to reduce expenditure which even led to deceleration in GDP [gross domestic product] growth to 6.8% – lowest during the 5 years of Modi – dispensation. This is disconcerting when seen in the backdrop of far reaching reforms implemented by Modi – government particularly GST [introduced on July 1, 2017] and demonetization [announced on November 6, 2016] –...
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Subsidies – the roll-over syndrome
Modi – government has improved substantially over previous dispensations in terms of increasing administrative efficiency, transparency, accountability, reducing bureaucratic red-tape, expediting approvals, enhanced/effective delivery of public services and reaching out subsidies to the needy and poor without leakage. It has also brought about reforms in many areas such as foreign direct investment, infrastructure, defense etc. However, one area where even Modi has not acted differently is the unsustainable high subsidies on fertilizers, fuel and food and roll-over of a big slice of these subsidies year-after-year. During 2019-20, the pay-out on fertilizer subsidy is estimated to be Rs 80,000 crore plus Rs 32,000 crore as roll-over from the previous year taking the total to Rs 112,000 crore. In the interim budget...
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Dealing with NPAs – its’ back to business as usual
In December 2016, Modi – government enacted the Insolvency and Bankruptcy Code [IBC] – a robust and impeccable legal framework for recovery of non-performing assets [NPAs] of lenders in a fast track mode. It also amended the Banking Regulation Act [BRA] [2017] arming the Reserve Bank of India [RBI] with powers to give directions to banks for making reference to National Company Law Tribunal [NCLT] for resolution of NPAs under IBC. Pursuant to the above, on February 12, 2018, the RBI issued an order requiring that in respect of accounts with aggregate exposure of the lenders at Rs 2,000 crore and above, as soon as there is a default in the borrower’s account with any lender, all lenders – singly or...
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RBI gives priority to growth, finally
In the bi-monthly monetary policy review announced on June 6, 2019, the Reserve Bank of India [RBI] has reduced the repo rate/the policy rate [rate at which the RBI lends money to commercial banks] from subsisting 6.0% to 5.75%. Seen in juxtaposition with reduction of 0.25% each notified in the previous two reviews [February and April 2019], the banking regulator has thus brought about a cut of 0.75% in a span of less than six months. In yet another significant move, the apex ban has changed its policy stance from hitherto ‘neutral’ to ‘accommodative’. Whereas, a neutral stance carries with it the possibility of reduction as well as increase [it may even connote no change], an accommodative stance can only mean...
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India’s quest for energy security – challenges ahead
India is heavily dependent on imports for its energy needs viz. 83% in crude oil and 45% in gas. Prime Minister, N Modi has proclaimed his government’s commitment to reduce the import dependence on oil to 67% by 2022 and further to 50% by 2030. Meanwhile, two major developments on the global front are giving jitters to our policy makers. First, the OPEC [Organization of Petroleum Exporting Countries] – a cartel of exporters from the middle-east – which supplies over 80% of India’s oil imports – has decided to continue their planned cut in output [a strategy that was initiated from January 1, 2017]. Together with reduction in supplies from non-OPEC countries led by Russia, this will continue to affect global...
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Modi’s pension plans – benign on the budget
Presenting the interim budget for 2019-20 on February 1, 2019, the then acting finance minister, Piyush Goyal had announced the decision of the government to launch PM Shram Yogi Mandhan [PMSYM] with an intent to provide economic security cover to persons working in the ‘unorganized’ sector in old age. Under PMSYM, a person in the ‘unorganized’ sector and earning less than Rs 15,000/- per month gets pension @Rs 3000/- per month on completion of 60 years age. For this, a worker joining at the age of 29 years contributes @Rs 100/- per month with matching contribution by the centre. A person joining at the age of 18 years contributes @Rs 55/- per month with equal amount by the centre. This...
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