For India now progressively moving towards an energy use configuration that is environment friendly [increase in share of non-fossil fuel such as nuclear, solar, wind, hydro etc], a steep decline in the cost of power generation based on solar and wind to level even below Rs 3 per unit – enabled primarily by reduction in the cost of equipment and services – has come as a boon. The state electricity boards [SEBs]/power distribution companies [PDCs] are keen to be a part of this transition and would like to procure power at a lower rate so that this benefit can be passed on to consumers. Besides, this will also help them in reducing losses and make their operations financially sustainable so...
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FDI in food retail – don’t regulate investors
Every year, farmers are forced to sell their produce especially perishable items viz. fruits and vegetables at throwaway price [quite often even destroy as the realization is not enough to cover even the cost of transporting to the mandi/market]. A major bottleneck is absence of infrastructure for handling and storage which apart from denying farmers their due also causes loss of output worth about Rs 100,000 crores annually. The problem has been festering for generations despite both the union government and states recognizing the dire need for setting up the infrastructure and umpteen committees making recommendations in this regard. Even the domestic private corporate has hardly taken any initiative in this regard. This is despite their being allowed entry in...
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War on black money – Modi stands vindicated
Last year when on November 8, 2016 Prime Minister [PM] Modi announced demonetization of high denomination viz. 1000/500 currency notes [at Rs 1544,000 crores, these accounted for 86% of the currency in circulation], this was met with strident opposition not just from the political class but also some leading economists including former PM, Dr Manmohan Singh. The critics bombarded Modi with a tsunami of charges that included inter alia mis-appropriation of the hard earned savings of common man and using that to waive loans given to corporate big-wigs; imposition of financial emergency with persons not being allowed to withdraw money from their own account; causing unprecedented misery to the poor who was made to stand up in the queue [leading...
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GST – cooperative federalism, at what cost
A few days back, union finance minister and chairman, GST [Goods and Services Tax] Council – all powerful constitutional body set up under the constitution amendment Act to determine the tax structure and the rates under the Act – Arun Jaitely was confronted with a question as to why we cannot have one or two rates in consonance with the global practice. Jaitely’s answer was that for India with wide disparities in incomes and majority of people living below the poverty line, ‘the tax on an item like chappal/footwear [mostly used by the poor] cannot be the same as on a luxury car which is invariably the privilege of a rich person’. Yet, he did not rule out the possibility...
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Fertilizers and food – reforms put in deep freezer
In the medium-term expenditure framework statement [MTEFS] – a statutory requirement under the Fiscal Responsibility and Budget Management Act [FRBM] [2003] – presented by Modi –government, the spend on fertilizer subsidy during 2018-19 and 2019-20 has been kept unchanged at Rs 70,000 crores being the provision in the budget for current year 2017-18. The allocation for food subsidy has been increased from Rs 145,000 crores during 2017-18 to Rs 175,000 crores during 2018-19 and further to Rs 200,000 crores in 2019-20. These numbers are completely out of sync and in contradiction with the government’s commitment to ‘rationalize’ and ‘target’ both fertilizer and food subsidy [i.e. give these to the poor/deserving only] – made in successive budgets as well as the...
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Deceleration in bank credit – a good omen
According to the Reserve Bank of India [RBI], during the financial year 2016-17, credit growth plunged to a whopping six-decade low of 5.08 per cent as against 10.7 per cent in the previous year [as on March 31, 2017, banks’ outstanding credit was Rs. 7,501,000 crores – down from Rs. 7,881,000 crores as of April 1 2016]. This is the lowest since 1953-54 when it had inched up by a paltry 1.7 per cent. Critics including former finance minister, P Chidambaram under UPA – dispensation cite low credit growth in support of their contention that the economy is not doing well. They have even used this to question high GDP [gross domestic product] growth data churned out by Modi – government viz. 7.1%...
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Farmers not yet out of middleman’s clutch
The Indian agriculture scenario is known for continued impoverishment of the farmers arising due to vagaries of nature on the one hand and poor realization from selling their produce on the other. Ironically, low price paid to the farmers does not translate in to low price for consumers either; instead, the latter pay high price. If, both farmers and consumers are losing then, without doubt, it is the middleman who is making gain. The middleman/trader exploits every conceivable situation, be it surplus production or shortage to his advantage. Recent developments in Madhya Pradesh [MP] in regard to supply and prices of onion and tomato bear ample testimony to this harsh reality. Early this year [January-February], farmers in the state were...
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DBT-Power – It’s a non-starter
Recently, during an interactive with a leading economic daily, union power secretary, Ajay Kumar Bhalla gave an indication of the government’s intent to launch direct benefit transfer [DBT] for giving power subsidy. Alluding to a clutch of pilot projects for DBT-Power to be launched soon, he exuded confidence that this will help in curbing wasteful electricity consumption, limiting power subsidies to really needy and denting losses of state electricity boards [SEBs]/power distribution companies [PDCs]. It will also help bring down current hefty tariffs charged from industrial customers. The move is prompted by DBT success for giving LPG subsidy and similar initiatives for fertilizers and foodgrains. Has the idea yielded desired outcomes in LPG? Has it really been kicked off in other...
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Aadhaar – citizens’ welfare versus privacy
Even as Modi – dispensation is pulling all stops to deliver good governance, a major stumbling bloc is intervention by the judiciary; courtesy, a spate of PILs [public interest litigation] on almost every issue that concerns administration and delivery of public services. Unlike the executive where once a decision is taken, it gets implemented within a given time frame [under present government, things are happening in a fast track mode], any matter coming to the court for its decision inevitably gets delayed. A case in point is use of Aadhaar for dispensing various services. The Unique Identification Authority of India (UIDAI), established by UPA – II in 2009, issues Aadhaar cards to the citizens. Under the scheme, every citizen is...
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11th WTO ministerial – should address ‘anomalies’ in AoA
In a joint paper submitted to the WTO’s [World Trade Organization] Committee on Agriculture, on July 17, 2017, India and China have lambasted developed countries including the US, the EU and Canada for consistently giving trade-distorting subsidies to their farmers at levels much higher than ceiling applicable to developing countries in respect of to such subsidies. According to the paper, “developed countries corner more than 90 per cent of global Aggregate Measurement of Support [AMS] [a technical jargon for trade-distorting subsidies] entitlements amounting to nearly US$160 billion which is beyond their de minimis [maximum permissible level of AMS]. In contrast, most developing countries have access only to de minimis resulting in a major asymmetry in the rules on agricultural trade.” The overarching objective...
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