An over-arching component of prime minister Modi’s good governance mantra is effective implementation of the laws and policies & programs of the government. He has amply demonstrated this in several areas viz., DBT [direct benefit transfer] of LPG subsidy, Jan Dhan Yojna [JDY], MGNREGA etc with substantially positive outcomes. However, electricity reforms is one area where proper execution is hamstrung primarily due to non-cooperation from states. At the core of reforms initiated by present dispensation in the power sector is improvement in the functioning of state electricity boards [SEBs], greater regulatory oversight over SEBs and power generators besides creating conditions for enhanced competition in the sector so that consumers get the benefit in terms of lower tariff and better quality...
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Gas fiasco – India’s energy security compromised
In its report submitted in November, 2015, De-Golyer and MacNaughthon [D&M] – a consultant appointed by Union government [following dispute between Oil and Natural Gas Corporation’s [ONGC] and Reliance Industries Limited [RIL] over alleged migration of gas from former’s G4PML and D1/E1 discoveries in KG-DWN-98/2 to latter’s D1 and D3 fields in KG-DWN-98/3 off Andhra coast [better known as KG-D6]] – estimated that 0.4 trillion cubic feet [tcf] of gas had migrated from ONGC ‘idle fields’ to RIL. Following this, the government set up a committee under justice A P Shah in December, 2015 to examine the matter and recommend measures to be taken against RIL for “the unjust benefit” it received from the migration of gas taking in to...
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WTO – Rhetoric cannot hide failures
Jeff Zients, Director of the National Economic Council, who is in Delhi for second “US-India Strategic and Commercial Dialogue” has said that ‘US is ready to increase engagement with India to find new common ground at WTO [World Trade Organization] and asserted that the future looks “bright” for this global trade body.” Zients who co-chairs the second US-India CEO Forum alongside the US Secretary of Commerce Penny Pritzker further noted that “the last two WTO Ministerial Conferences in Bali and Nairobi were significant successes, including outcomes on the Trade Facilitation Agreement [TFA], agricultural export subsidies, and public stockholding for food security purposes.” These euphoric statements are at substantial variance with what actually transpired at these conferences. In a brazen display...
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ONGC/OIL ‘unshackled’ – government must stay on course
For Oil and Natural Gas Corporation [ONGC] and Oil India Ltd [OIL] – central public sector undertakings [PSUs] in the business of oil and gas exploration and production, the year 2016-17 brings unprecedented cheer. The ministry of petroleum and natural gas [MPNG] has proposed that the government won’t be asking them to share the burden of subsidies on LPG and kerosene. To put things in perspective, a bit of background is in order. During 2004-2014, under directions from then government, ONGC and OIL offered discount on supply of crude to downstream oil PSUs viz., Indian Oil Corporation Limited [IOCL], Hindustan Petroleum Corporation [HPCL] and Bharat Petroleum Corporation [BPCL] to cover a portion of under-recoveries that latter incurred on sale of...
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Advancing budget date – freedom from British legacy
The news of Modi – government seriously pursuing changing the date of presentation of Union Budget from the last day of February [a practice continued from the British era] to last day of January is music to the ears of every one who has lived with the pains and nuances of the extant dispensation. The last time India de-linked from the vestiges of colonial raj [though that was more symbolic] was also under NDA – government then led by Vajpayee. In 2000, it switched over to presenting the budget at 11 AM instead of customary 5 PM on last day of February [a follow-up to presentation of British budget earlier in the day]. Reform is in DNA of NDA Such...
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Tackling inflation – get out of monetary policy groove
The International Monetary Fund [IMF] has released a staff paper on “Monetary policy transmission in developing countries – evidence from India” which concludes that the co-relation between monetary policy changes and aggregate demand [which has a direct bearing on inflation] in developing countries like India is weak. The revelation has come at a time when the government has amended the RBI Act [June 27, 2016] to set up a Monetary Policy Committee [MPC] and is now in the process of constituting it [it will have 3 nominees from GOI and 3 from RBI including the governor who will also be its chairperson]. The union cabinet has also fixed the inflation target at 4% [+/- 2%] for a 5 years [2016-2021]....
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Tata exit from fertilizers – symptomatic of deeper malaise
Tata Chemicals Limited [TCL] made headlines on August 10, 2016 by announcing sale of its urea business [it has a plant in Babrala, Uttar Pradesh with 700,000 tons ammonia and 1.2 million ton urea capacity] to Yara Fertilizers India Private Limited [YFIL] – Indian arm of Norway’s Yara lnternational ASA – for a sum of Rs 2670 crores [after obtaining all regulatory approvals and court sanction, the transaction will be consummated within 9-12 months]. TCL had decided to exit fertilizers long back. However, a number of earlier attempts had failed as it did not find any taker; even this one is a distress sale and will fetch the company only 2/3rd of the money so far invested. Tata has also...
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Minus gas – GST will boomerang on fertilizers
The passage of the 122nd constitution amendment bill [already cleared by Lok Sabha last year] by Rajya Sabha [RS] on August 3, 2016 paves the way for introduction of the Goods and Services Tax [GST]. This is a ‘trans-formative’ reform that will convert the Indian Union of 29 states in to a seamless national market enabling free movement of goods and services as a single ‘uniform’ tax replaces a plethora of existing taxes – at the central and state level. A single uniform tax regime applicable across all states and union territories will drastically reduce transaction cost [due to elimination of cascading effect of tax-on-tax and withdrawal of a host of local levies] and result in substantial increase in efficiency...
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PM agri–insurance scheme – challenges ahead
Farmers in India are constantly under the threat of drought and other natural calamities such as floods, hailstorms, pest attacks etc leading to unprecedented loss of crop output. Unable to pay back loans [taken for growing crop], tens of thousands of them commit suicide every year. It is a national curse. The issue has been debated several times in the parliament wherein parliamentarians across the political spectrum pledge to put an end to it but things have so far remained at a standstill. The Pradhan Mantri Phasal Bima Yojna [PMPBY] launched by Modi – government early this year has come as a beacon of hope. Under PMPBY, a farmer will be compensated for the crop loss by paying small premium...
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FDI in retail – policy mess getting worse
The government has substantially liberalized the policy environment relating to foreign direct investment [FDI] thereby bolstering the prospects of increasing foreign fund inflows. But, that is hardly true for investment in retail which is the fastest growing sector. The biggest stumbling bloc is the policy maze which gives too many confusing signals and gives scope for varied interpretations. Even worse, it gives too much of ‘discretion’ to the bureaucrats in deciding as to who would be allowed and on what terms. It tantamount to bringing the license raj through the back door. For the purpose of FDI, the retail sector has been divided in to several classes which is completely out of sync with international practice of treating retail as...
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