Borrowing from cricket terminology, media is agog with description of Modi – government first full-fledged budget 2015-16 as a ‘super-budget’. There could not be a more apt description. Finance minister Jaitely has delivered wholeheartedly on the hopes and aspiration of 1.25 billion people of India who only 9 months ago had given Team Modi a resounding mandate to govern and extricate them from the deep economic morass they were plunged in to, courtesy a decade of mis-management and policy paralysis. People gave command to Team Modi on five major planks viz., (i) inclusive development; (ii) building infrastructure; (iii) social safety net (iv) poverty alleviation and (v) countenancing the menace of corruption. On all these counts, the team has delivered without...
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Category: Foreign investment & other inflows
Modi’s juggernaut is unstoppable
Kejriwal led Aam Aadmi Party (AAP) has registered a thunderous victory in the just concluded Delhi assembly elections. AAP has won a monumental 67 out of a total of 70 seats that translates to a scorecard of 96%, a feat rarely seen in elections the world over. While, Congress has been decimated securing a big zero, BJP is reduced to a trifle 3, down from 31 it won in December, 2013. Critics have interpreted this to be a referendum on Modi and even surmised that this will stop his juggernaut. Such interpretation is figment of one’s imagination. It reflects a mindset of his opponents who suffered ignominy of defeat in general elections last year and were desperately looking for a...
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Ordinance route to reforms
Opposition parties are lambasting government for enacting legislation through promulgation of ordinances. Some of them like CPI (M) have even urged the President not to give his assent to recommendations of the Union Cabinet in this regard. What has prompted them to get in to get in to a belligerence mode? Are they justified in leveling such allegations? Does government’s action violate the constitutional provisions? Could it not wait for the bills to be passed by the parliament? The immediate trigger for these provocations is government’s decision to re-promulgate Coal Mines (Special Provisions) Ordinance and promulgate an Ordinance to give effect to provisions of Insurance Act (Amendment) bill to raise FDI (foreign direct investment) limit from extant 26% to 49%....
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Non-adversarial tax regime – Modi-government on track
During the last leg of UPA-II dispensation, there was a substantial deterioration in business environment leading to erosion of confidence in India. This not only dis-comforted foreign investors but also, prompted Indian companies to pursue their investment plans in foreign destinations. Apart from a virtual policy paralysis and various approvals and clearances – especially environment and land acquisition – getting jammed, the investment sentiment received a big blow due to retrospective amendment in tax laws initiated by then finance minister, Pranab Mukherjee in 2012. The amendment was made to negate a judgement of Supreme Court (SC) in Vodafone case which declared untenable tax demand on a transaction in 2007 involving sale of Hutchison shares to Vodafone. SC held that being...
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Modi’s road to prosperity for ‘Neo-Middle Class’
During his power packed visit to USA with over 3 dozen engagements/meetings, the irresistible Indian prime minister, Narendra Modi held a brainstorming session with high profile American think-tank viz., Council on Foreign Relations (CFR) in New York on September 28, 2014. Apart from discussing Indo-US relations as also India’s relations with its neighbours and other countries, Modi used the opportunity to share his philosophy [contrary to what some of his die hard critics may say, he does not carry any ideological baggage allegedly linked to his association with Rashtriya Swayamsevak Sangh (RSS), mentor & guide of BJP] and approach to development. Thus, during his opening address at CFR, he stated “there is a ‘Neo-Middle Class’ in our country, one which...
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Rajan dashes hopes of a rate cut, yet again
For the fifth time in succession, RBI Governor, Raghuram Rajan has dashed hopes of industry and commerce for a reduction in repo rate (rate at which banks borrow from RBI) which has been maintained at 8%. Likewise, reverse repo (rate at which banks lend to RBI) is kept at 7%. Cash reserve ratio (CRR) (share of deposits that banks need to keep with RBI) is also un-changed at 4%. RBI benchmarks the repo rate – or policy rate as it is customarily called in the mint street – to inflation. If inflation is high, repo rate is kept high and vice versa. Prior to September, 2013 (when Rajan took charge), whole sale price index (WPI) was taken as reference point...
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Modi’s 3 D mantra for inclusive development
Among foremost economic reasons for disastrous performance of erstwhile UPA led by Congress in the general elections (May, 2014) was the dismal employment scenario. Price rise and slump in growth were other key factors. This led to huge disenchantment among youth who vented their anger against then ruling UPA dispensation. They also gave an overwhelming mandate to Modi who promised them jobs through his mantra of inclusive development. During the last decade (2004-2014) of UPA rule, employment increased by a meager 15 million which is one-fourth of an increase of 60 million during the 6 year stint of NDA (1998-2004) led by charismatic Vajpayee. Ironically, manufacturing sector – long perceived as the harbinger of employment – is languishing at just...
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RBI’s ‘back foot’ play – wholly unwarranted
In 2014, there has been an unprecedented surge in investment by foreign institutional investors (FII) with a total of over US$ 20 billion having already come in during January-June. But, RBI governor Raghuram Rajan has sounded a note of caution advising government to be circumspect in spending money. Rajan’s warning is based on the premise that ‘FIIs who bring in money can also take it back’. He observed that apart from continuing wind down of QE (quantitative easing), US Federal Reserve may also increase interest rates triggering reverse flow of funds. As custodian of balance of payments (BoP), governor’s caution is understandable. However, to aver that there could be flight of capital is bit of an exaggeration! This may even...
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Modi’s prescription for economic resurgence
Critics have derided prime minister N Modi for absence of any major initiative or scheme for nation building in his independence day address on August 15, 2014. Some congress leaders even opined ‘he was giving an election speech’! With a pre-meditated and prejudiced mindset, they won’t be able to see any. One only needs to make an objective assessment to get to the bottom of what he gave to 1.25 billion country men and even to fellow citizens in our neighbour and beyond. Modi’s extempore speech covering a wide spectrum left no one in doubt that he gave us a recipe for social, cultural, economic and industrial, renaissance. This is eloquently captured in a couple of phrases that he coined...
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Suzuki bid to trample Maruti Suzuki India
Suzuki Motor Corporation (SMC) parent company of Maruti Suzuki India (MSIL) is going ahead with setting up of a car manufacturing plant in Gujarat with 1.5 million units per annum through its 100% subsidiary, Suzuki Motor Gujarat (SMG). During an investor presentation, SMC informed that SMC/SMG intends to fund the investment of Rs 18,500 crores in the plant with own equity and accumulated depreciation. It will make cars on a strictly no-profit, no-loss basis. SMG will enter in to a contract manufacturing agreement (CMA) with MSIL for an initial period of 15 years for supply of entire production to the latter. The CMA could be extended by mutual consent. In case, it is not extended, the “assets would be transferred...
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