According to the medium-term expenditure framework [MTEF] statement recently released by the finance ministry, the food subsidy bill of the union government is projected to increase from Rs 145,000 crore during the current year to Rs 175,000 crores during 2018-19 and further to Rs 200,000 crores during 2019-20. This comes as a big disappointment to all those who have been anxiously looking forward to Modi – government deliver on its reforms agenda especially in regard to food subsidy which is a big resource guzzler – next only to interest payments and pension. Considering that such an assessment [steep increase] is being made less than two years before its term comes to an end implies that no reform is in the...
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Tata Sons – oppression of minority shareholders continues
Tata Sons – the primary holding company of over US$ 100 billion conglomerate – is planning to convert itself from existing ‘public limited company’ status to a ‘private limited company’. It has also sought change in the name of company from Tata Sons Limited [TSL] to Tata Sons Private Limited [TSPL]. For this purpose, it proposes to amend its Memorandum of Association [MoA] and Articles of Association [AoA] and has convened its AGM on September 21, 2017. Tata Sons is a closely held entity controlled by family owned trusts. Tata family owned trusts alone hold 66% shares. The family of Cyrus Mistry holds 18.4 per cent stake [through Cyrus Investments and Sterling Investments], while the remaining shares are held mostly...
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Are pharma MNCs fleecing patients?
According to a recent study published in the Journal of the American Medical Association [JAMA], it costs a company just $648 million on an average in research and development [R&D] to bring a cancer drug to the market — a small fraction of the $2.7 billion the pharmaceutical industry claims is the average cost of drug discovery. It further shows that within about four years of approval [no drug is allowed to be marketed without taking prior authorization/registration from national regulator under the relevant jurisdiction], revenue from the sale of the drugs studied was on average nine-fold higher than the R&D spending. Even accounting for what the money would have earned if invested in the market, the returns are seven times the costs. The...
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NPAs – is the axe falling on common man?
Under the erstwhile UPA – dispensation particularly during its second consecutive tenure 2009-2014 [this is the time when ‘crony capitalism’ had reached its nadir], public sector banks [PSBs] recklessly gave loans to corporate houses/businesses without assessing the viability of the projects and conducting due diligence. Ten of thousands of crores were pumped into power, steel, telecommunications, textiles and infrastructure. The ability of the concerned projects/businesses to generate required cash to service the loans was in doubt from the day one. There was an element of ‘inevitability’ in such loans becoming non-performing assets [NPAs] [if an installment is not paid within 90 days from due date, the account is treated as NPA]. Indeed, these did become NPAs but were not recognized...
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Contract farming – enabling environment needed
In his budget speech [2017-18], finance minister, Arun Jaitley had announced union government’s decision to bring a model contract farming Act with the intent to protect farmers from price volatility by ensuring guaranteed price for their produce. As a follow up, a draft legislation has now been released for comments from stakeholders including farmers. The latter have been given 30 days to give their suggestions. Thereafter, a final`model’ contract farming Act is expected to be released in November after incorporating the suggestions. This will serve as a guide for states to bring required legislation. Because of the heavy dependence on rainfall [70% of the cultivated area is rain-fed and even for balance 30% under irrigation, rainfall is a crucial factor...
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LNG contracts – put ‘India first’ for securing best price
India is deficient in energy resources [albeit conventional] especially oil and gas. Whereas, 80% of our oil requirement is imported, in case of natural gas, the import dependence is about 35%. The latter is a ‘clean’ fuel and ‘environment friendly’. It is therefore natural that in the overall energy mix, the government is laying greater emphasis on use of gas more so in fertilizer and power plants. Fertilizers and power together consume nearly 75% of the total gas consumption. These sectors also cater primarily to the requirements of vulnerable groups. Fertilizers supply essential plant nutrients to some 120 million farmers households more than 80% of whom are small and marginal or poor in short. Power too is used by farmers...
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11th WTO ministerial – India must not play defensive
In the run up to the upcoming WTO ministerial in Buenos Aires [December, 2017], ex-commerce minister, Nirmala Sitharaman has once again reiterated India’s resolve to seek a permanent solution for public stockholding programs for food security besides taking up two other proposals viz. special safeguard mechanism [SSM] against sudden surge in imports of agricultural products and movement of short-term services providers. But, India is up against heavy odds as during her recent visit to WTO, Geneva [July, 2017] , US, EU, Canada, Australia and Japan had rejected a proposal submitted by G-33 Group of developing countries in this regard. At the same time, developed countries wanted to bring to the table issues such as e-commerce and disciplines for micro, small,...
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Demonetization – Modi deserves ‘Nobel Prize’
The suspense has finally ended with the Reserve Bank of India [RBI] in its Annual Report giving details of the high denomination viz. 1000/500 currency notes in circulation [these were declared invalid on November 8, 2016 by Prime Minister Modi] that came back to the banking system and those which did not. As against Rs 1544,000 crores embodied in these currency notes as on November 8, 2016, Rs 1528,000 crores had come back leaving a meager Rs 16,000 crores in the hands of public [of these Rs 8900 crores was embedded in 1000 denomination note]. This is just about 1% of value of invalidated currency. The opposition parties especially Congress are citing this to brand demonetization as a sham. P...
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Don’t permit loot in the garb of privacy
The unanimous decision of the 9 judge constitution bench of the Supreme Court [SC] pronouncing right to privacy as a fundamental right as an integral part of the Article 21 [grants the right to ‘life’ and ‘liberty’] of the Constitution has been welcome by all sections – including the union government. Prior to this, the position was vague as the founding fathers of the Constitution did not ‘explicitly’ provide for right to privacy as a fundamental right. An eight-judge bench of SC in M P Sharma’s case [1954] said so and the position was reiterated by a six-judge bench in Kharak Singh’s case in [1962]. The present decision by 9 judge bench overrules those two verdicts and lays down...
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Corporate India – promoter has the last laugh
Less than two weeks back, Infosys – one among the top three IT companies of India [Tata Consultancy Services and Cognizant Technology Solutions being the other two] – got a big jolt when its chief executive officer [CEO] and Managing Director [MD], Vishal Sikka submitted his resignation. After being run by promoters for over three-and-a-half decade, in June, 2014, he was brought in as the first ever professional to commandeer the ship. The change was driven by the compelling need to leverage new technologies viz. data analytics, automation, cloud computing and artificial intelligence for driving growth under a competitive environment which Sikka was best positioned to do. Pertinently, his induction was orchestrated by Infosys founder and the iconic figure Narayana...
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