Prior to the 4th bi-monthly monetary policy review on September 29, 2015, RBI governor, Raghuram Rajan had come under unprecedented pressure to cut the policy repo rate [interest rate at which the apex bank lends money to commercial banks] to help government’s efforts in giving a fillip to the economy and putting it on a higher growth trajectory. Almost all stakeholders viz., industry and commerce, investors, experts/economists were unanimous in demanding a cut. While, refraining from taking any position [lest this be misconstrued as interference in RBI’s autonomy], the government had nonetheless given a ‘subtle’ signal that this brooks no further delay. This was evident when finance minister, Arun Jaitely recently said “common sense requires a rate cut”. That the...
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Category: Infrastructure
E-tailers and retailers – Allow 100% FDI for both
In 2012, the erstwhile UPA dispensation had permitted 51% FDI [foreign direct investment] in multi-brand retail [MBR] with riders. The riders include sourcing 30% of requirements from small enterprises, a minimum investment of US$ 100 million besides giving full leeway to states on whether to grant permission or not. The policy was as bad as saying ‘No’ to FDI in MBR. Modi – government which took charge in May, 2014 has continued with that policy decision. Finding that the direct route of entering MBR was choked, foreign investors have been looking for opportunities to make in-roads. And, they found one in e-commerce where business was growing leaps and bounds. So, how did they manage to grab this opportunity? Under the...
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Rajan should partner in unleashing growth
On the eve of next bi-monthly monetary policy review [September 29, 2015], RBI governor, Raghuram Rajan is under unprecedented pressure to cut the policy repo rate [interest rate at which the apex bank lends money to commercial banks] to help government’s efforts in giving a fillip to the economy and putting it on a higher growth trajectory. Almost all stakeholders viz., industry and commerce, investors, experts/economists are unanimous in demanding a cut. The government has thus far, restrained from taking any position and has left it to the governor to take an appropriate view [giving full respect to RBI’s autonomy]. But, in a recent statement, finance minister, Arun Jaitely made his intent very clear when he opined “common sense requires...
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Stepping on economic independence – Modi’s report card
Commentators across a wide spectrum have felt that prime minister N Modi speech on the 69th Independence Day was stereotyped, lacking in new ideas and did not cover a number of important issues such as foreign relations, relation with neighbouring countries [especially Pakistan], terrorism, internal governance, cooperative federalism, conduct of business in parliament and so on. Some have gone that far to say that the entire 85 minutes address was an extrapolation of his “Mann Ki Baat” [a few have branded this as an exercise in self-adulation]. These are perceptions of all those who for decades have got used to stereotyped addresses from prime ministers who technically though represent the people of India but in their dispositions behave like aliens,...
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Fix coal, fix the economy
If, a person has a vision, chases it with missionary zeal and a robust action plan driven by an apt strategy mix, he is bound to achieve success. Luckily, at this critical juncture when India needs accelerated growth to fulfill the aspirations of millions of unemployed youth and the poor, we have a prime minister in N Modi who embodies all these qualities. The manner in which he has addressed the challenges facing the coal sector proves the point. The position is best encapsulated in a cryptic observation [Anil Swarup, secretary, ministry of coal recapitulated] Modi had made to him 9 months ago when he took charge of the department. Hon’ble prime minister had said “Fix coal, fix the economy”. What...
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Climb-down on Land bill [2015] – blow to development
Nearly 13 months ago on June 26, 2014, central government had convened a meeting of all state chief ministers where almost all of them had expressed serious reservations over the “Consent” and “Social Impact Assessment [SIA]” clauses in the Land Acquisition and Rehabilitation & Resettlement [LARR] Act passed in 2013. They felt that these two clauses were major stumbling blocs in the way of acquiring land for development and infrastructure projects and pressed for necessary amendment in LARR [2013]. Modi – government which had taken charge only a month back [having got a resounding mandate to deliver on its development agenda] responded positively. It came up with amendments to exempt 5 critical areas viz., defence, rural infrastructure [including electrification], affordable...
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Land bill – legal conundrum
Thus far, Congress and other like minded opposition parties have leveraged the vulnerability of ruling BJP in Rajya Sabha [where the latter is in minority] to stall the land bill brought by Modi – government that seeks to amend the Land Acquisition Act [LAA] [2013] by exempting projects in 5 crucial areas of ‘strategic’ importance like defence or critical to development from “Consent” and “Social Impact Assessment [SIA]” clauses. Faced with a stalemate, in a recent meeting of the NITI [National Institution of Transforming India] Aayog Governing Council [GC], chief ministers of the BJP ruled states proposed that the state governments may enact their own legislation suiting their requirements. The central government concurred this being a pragmatic approach as individual...
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Development on ‘leased’ land – a dangerous idea
Even while the provisions of the Land Acquisition Act [LAA] brought by the then UPA – government in 2013 were being debated, some sections including chief ministers from Congress ruled states had expressed serious concerns over its efficacy in ensuring smooth acquisition of land. After the Act came in to force from January 1, 2014, those apprehensions came true as during the 18 months since then, only a few hundred acres of land has been acquired. Meanwhile, in a meeting convened by Nitin Gadkari [then in charge of rural development ministry] on June 26, 2014, majority of the states and union territories including from Congress ruled states viz., Karnataka, Kerala, Maharashtra and Haryana had pressed for deletion of the “consent”...
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Indian economy – poised for robust growth in 2015-16
During the first year of its tenure, Modi – government focused on filling the pot holes in a dilapidated economy left over by a decade of mis-governance and policy paralysis under erstwhile UPA – regime. More importantly, it laid the foundation for putting India on an accelerated growth trajectory. For details, pl read:- Modi delivers ‘scam-free’ India Continuing its relentless drive to take things forward in every area [not letting even minute things go off the hook and ensuring full synergy with macro thrust on ‘development’ and ‘good governance’], Team Modi has kept up the momentum during the current fiscal. One clearly sees some green shoots particularly in critical areas like core industries, public investment and fiscal deficit [all 3...
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Repo rate cut – transmission can’t be automatic
Last year 2014, RBI governor Raghuram Rajan had conducted 6 monetary policy reviews and each time refrained from any reduction in the repo rate [commonly termed as the policy rate] – interest rate at which the apex bank lends money to commercial banks. Each time, governor argued that the underlying fundamentals primarily retail inflation [represented by consumer price index (CPI)] were not such as would warrant reduction. Pertinently, even in December, 2014 review when CPI was at a low of 4.3% in previous month or almost half of the 8% target set by RBI for January, 2015, he did not budge. In 2015 however, Rajan has given up his stubborn stance having reduced the repo rate three times by 0.25%...
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