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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Category: Governance reforms
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 walks the talk on labour reforms
Increasing unemployment is a major issue in India. Every year a whopping 10 million youth join the workforce and only a fraction of these are lucky enough to find a proper job. Absorption of workforce in the organized sector has been abysmal. Time and again, industries and businesses have minced no words in emphatically stating that the biggest factor that prevents them from create quality employment is that their hands are tied down by antiquated labour laws. By nature, business is a risky proposition subject to frequent ups and down. Situations may arise when sheer compulsion of survival in a downward phase may require owner to shed some work force. In extreme circumstances, management may even be forced to close...
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Cleansing the maligned coal sector in India
In August/September, 2014 when Supreme Court (SC) declared all 218 coal blocs allotted since 1993 ‘illegal’ followed by de-allocation of ‘all’ except 4 [2 of these are with PSUs viz., NTPC and SAIL and other 2 are for ultra mega power projects (UMPP) given under competitive bidding], this led to a hue and cry. The associations representing the beneficiaries of illegal allotments – in their presentations before SC – submitted that investment to the tune of about Rs 250,000 crores in development of coal mines and another Rs 400,000 crores in setting up of end use projects viz., power, steel, cement etc would be at risk. Commentators too joined the chorus opining that this will affect availability of domestic coal...
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Leveraging MGNREGA for inclusive growth
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) – a flagship welfare scheme of the erstwhile UPA dispensation launched in 2005 – has come under rigorous scrutiny by Modi government with a view to bring it in line with its agenda for inclusive development. Already, based on an examination of all facts regarding working of the scheme, the ministry for rural development (MoRD) has finalized a note for consideration by the cabinet. So, what are proposed changes? Before we take a look at that, a few words about basics of MGNREGA are in order. MGNREGA provides for ‘guaranteed’ employment to a member of a poor family for a minimum of 100 days in a year and pay wage @ Rs...
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Modi’s tirade against corruption & black money
A central point of prime minister Modi’s campaign during general elections was fight against corruption. A related focus area was his commitment to bring back the black money stashed abroad by concerned Indians. With the new government in office for over four-and-a-half months, opposition parties with Congress in the front have started castigating it for its alleged failure to bring back even a single rupee. This is totally unwarranted and un-called for. Modi does not have a magic wand to deliver within such a short period and that too in an area where previous dispensations failed for decades. He needs to be tested on the basis of his actions rather than outcomes which naturally take time. Thus, within a week...
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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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Empowering poor vide PM Jan Dhan Yojna
In India, tens of thousands of farmers commit suicide every year. An overarching cause in majority of the cases is they are heavily indebted and inability to pay back to money lender forces them to the extreme step as they can’t bear consequential torture and exploitation. The agony is palpating in instances whereby even a small loan taken by farmer or a landless laborer from money lender gets transformed in to mountain of debt as interest charged by latter is exorbitant – 4-5 times higher than what the banks charge. At another level, consider a woman at home who struggles hard to keep her earnings safe even as her die-hard alcoholic husband looks for every possible opportunity to pounce. Eventually,...
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