Inaugurating the revival project – annual production capacity of 1.27 million ton (MT) neem coated urea – of the Hindustan Urvarak & Rasayan, a public sector joint venture of Coal India Ltd (CIL), NTPC, Indian Oil Corporation (IOC) and FCIL – at Gorakhpur (Uttar Pradesh) on December 7, 2021, Prime Minister, Narendra Modi made the following four observations:- (i) despite steep increase in international price of fertilizers during the current year, the Government has ensured that the farmers don’t have to pay more. (ii) 100 percent neem coating has helped in reining in diversion of urea to non-agricultural/industrial uses; (iii) Gorakhpur along with four other revival projects currently under implementation will add 6 million tons (MT) to existing annual urea...
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Farm laws – Modi’s volte face
On November 19, 2021, announcing his Government’s decision to repeal the contentious three farm laws viz. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 and The Essential Commodities (Amendment) Act, 2020, Prime Minister, Narendra Modi apologized for not being able to convince the nation about the benefits that these laws would bring to a section of the farmers. Are these laws so complex as to become incomprehensible to the farmer? The “Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India”, SAS in short, released by the National Statistical Office (NSO), covering the period July 2018 to June...
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Cut in fuel taxes – not an unmixed blessing
On November 3, 2021, the Union Government notified reduction in central excise duty (CED) by Rs 5 per liter on petrol and Rs 10 per liter on diesel. Seen in isolation, these cuts may appear to be significant. However, when viewed in the backdrop of the unprecedented increase affected by Modi – Government ever since it assumed office, this is small. In May 2014, the CED on petrol was Rs 9.8 per liter whereas on diesel it was Rs 3.8 per liter. As on November 2, 2021, it was Rs 33 per liter on petrol – a cumulative increase of Rs 23.2 per liter. On diesel, it was Rs 32 per liter – higher by Rs 28.2 per liter. The...
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Fuel crisis – a wake-up call
During 2014-15, Coal India Limited (CIL) – a public sector undertaking (PSU) – had produced 494 million tons (MT). This was a record 32 MT higher than during 2013-14 and higher than a cumulative increase of 31 MT in the previous 4 years. In 2015, this prompted Modi to set a target of 1500 MT for 2019-20. Of this, 1000 MT was to come from CIL and remaining 500 MT from private firms. During 2019-20, India produced around 730 MT with CIL contributing 685 MT. Forget the target, the production fell much short of the demand leading to 300 MT import in that year. In 2020-21, domestic output declined to 716 MT courtesy, Covid. During the current year, even as...
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Air India sale – better late than never
On June 28, 2017, the then Finance Minister, Arun Jaitely had announced the ‘in-principle’ decision of the Union Cabinet for strategic divestment of Air India (AI) and five of its subsidiaries. Over 50 months thereafter, on September 8, 2021, the Government has informed about it decision to privatize AI and its 100 percent subsidiary namely Air India Express Limited (AIEL) and its 51 percent share in Air India Air Transport Services Limited (AIATSL). The iconic Maharaja – as the airlines is nicknamed – has gone back to the hangar of Tata Group almost 68 years after the company was nationalized in 1953. The AI privatization saga reveals four major pitfalls. First, the move has been half hearted from the day one. This...
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Why Modi doesn’t repeal farm laws
Even as Modi has demonstrated resilience while navigating other reform measures, on the three farm laws, he has refused to budge despite nearly 10 month long protest by farmers demanding their repeal. Here are the prime reasons. Let us start by referring to the results of a recent exercise termed “Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India” or in short SAS released by the National Statistical Office (NSO) covering the period July 2018 to June 2019. It reveals widespread dissatisfaction among farmers with the price realized from sale of their produce; it varies depending on the commodity. The shares of farmers dissatisfied are cereals: 25%; fruits: 28%; pulses: 32%; oilseeds: 35%; vegetables:...
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Defending public stockholding program at WTO
In the run up to the 12th WTO (World Trade Organization) Ministerial Conference (MC-12) scheduled to be held from November 29, 2021, India has made two submissions; first, subsidies given for maintaining food security programs of developing countries should be allowed without any limit and second, member countries who give trade distorting farm subsidies in excess of US$ 10 billion should eliminate them within three years. India runs a mammoth program of Public Stockholding (PSH) for food security purposes. Under it, agencies of the Government like the Food Corporation of India (FCI) buy agri-produce such as wheat, rice/paddy, coarse cereals etc from farmers at the minimum support price (MSP) and distribute at a heavily subsidized price of Rs 1/2/3 per kg through...
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Banks bail out – make it transparent
In the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman had proposed setting up of a bad bank. Crafted as National Asset Reconstruction Company Limited (NARCL), it will bundle up all the non-performing assets (NPAs) of banks and sell them to investors such as private equity funds, alternative investment funds (AIFs) and so on, by putting a turnaround plan in place. On September 16, 2021, she announced the broad contours of the action plan. Under it, the NARCL will purchase NPAs from banks under 15:85 structure, wherein it will pay up to 15% of the agreed/discounted value of the loans in cash and issue Security Receipts (SRs) for the rest. The Government will provide sovereign guarantee – valid for a...
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Asset monetization – will it take off
In her maiden budget presented to Parliament on July 5, 2019, Finance Minister Nirmala Sitharaman laid a roadmap for catapulting the Indian economy to $5 trillion by 2024-25, its most crucial component being investment in infrastructure to the tune of a mammoth Rs 100,00,000 crore (US$1.4 trillion) over a period of five years (read: 2020-21 to 2024-25). As for funding, 39% of this amount was to come from the Union Government and States each and the balance 22% from the private sector. The Centre’s contribution at 39% works out to around Rs 40,00,000 crore over 5 years or Rs 800,000 crore per annum. Against this, the revised estimate (RE) for capital expenditure during 2020-21 was Rs 439,000 crore. Even assuming...
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Urea subsidy regime – time to reform
Come October 1, 2021, the price of natural gas (NG) on supplies from fields given to Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) on nomination basis as well as those given under given under the New Exploration and Licensing Policy or NELP will increase from the current US$ 1.79 per million British thermal unit (mBtu) to US$ 3.15 per mBtu – up by US$ 1.4 per mBtu. From November 1, 2014, this price – known as administered price (APM) – is a weighted average of the price prevailing at four global locations viz. UK, US, Russia and Canada. The price is revised every six months. Going by the emerging trend, the APM gas price is likely to...
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