The new Govt is overhauling India’s disinvestment policy. It is supporting non-profit enterprises, and maintaining a strong presence of State-run firms in strategic sectors The new National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi is reviewing the existing disinvestment policy to shift its focus from selling central public sector undertakings (CPSUs) to ‘prudent public wealth management (PWM), supporting not-for-profit enterprises, and ensuring strong presence of state-run firms in strategic sectors’. A CPSU is an undertaking in which the Union government has majority share holding meaning it holds more than 50 percent of its shares. Disinvestment is fancy nomenclature for sale of these shares to private investors. When, disinvestment results in reduction of the government’s shareholding in the...
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Category: Economic outlook
Water crisis in Delhi is entirely man-made
The ruthless exploitation of natural endowments and that too when resources are being put to misuse is unconscionable The gravity of water crisis facing Delhiites has forced the Delhi government to approach the Supreme Court (SC) seeking its intervention to direct neighboring states Haryana, Uttar Pradesh, and Himachal Pradesh (HP) to provide additional raw water supply to the national capital. Initially, the SC directed HP to release 137 cusecs of raw water which translates to 70 million gallons per day (MGD) of more water for the city. It also asked Haryana to make arrangements for ensuring its free flow to Delhi. But, now with HP claiming that it can’t release more than what it is already giving (70 MGD), the...
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The long and short of Modi’s welfarism
The Govt is doing a good job of supplying food, fuel and fertiliser at subsidised cost but the largesse recipients are unlikely to make space for other deserving people An overarching policy instrument Prime Minister Narendra Modi uses in relentless pursuit of a welfare State is his unflinching commitment to ensuring adequate supply of three essential items, namely fertilisers, food and fuel, to the target beneficiaries/consumers at ‘throwaway’ price or even for free. In fact, he tells them about his intentions in this regard well in advance. Look at these facts: Urea is a widely used fertiliser that supplies primary nutrient nitrogen or ‘N’ and constitutes nearly half of India’s total fertiliser consumption. To make it affordable to farmers, the...
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RBI dividend aids Government finances
The RBI’s dividend transfer provides a substantial fiscal cushion to the cash-strapped Government, but it must be prudent in fiscal management and resource allocation In the amendment to the Fiscal Responsibility and Budget Management (FRBM) Act through the Finance Bill 2018-19 (the amendment was based on the recommendations of Dr N K Singh’s committee mandated to review the FRBM Act (2003)), the Modi – the Government had pledged to achieve fiscal deficit or FD (excess of total expenditure over total receipts) of 3 per cent of gross domestic product (GDP) by the FY 2020-21. Following the Corona pandemic that played havoc with the economy leading to plunging revenue and ballooning expenditure during 2020-21 and the resultant zooming of FD to...
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Stopping thieving through DBT
A lot of pilfering from fertiliser subsidies is happening due to policy flaws. This can be curbed if only the subsidy is given under Direct Benefit Transfer On January 22, 2019, addressing NRIs and Indian-origin people at the inauguration of the 15th Pravasi Bharatiya Divas convention in Varanasi (Uttar Pradesh), Prime Minister Narendra Modi recalled what Rajiv Gandhi had Stated “Of the funds the Central Government sends, only 15 per cent of that reaches the people. If one rupee is sent from Delhi, only 15 paise reaches the villages, 85 paise disappear. Even as the country’s middle class kept giving tax honestly, this “loot” of 85 per cent also continued”. Modi added “I also want to tell you today’s truth...
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Redistribution of wealth – a dangerous idea
Addressing a rally in Rajasthan’s Banswara on April 21, 2024 Prime Minister Narendra Modi referred to plans of the Congress party (if it were to come to power) to conduct a survey of the wealth held by individuals and redistribute it. The trigger for what Modi said was Rahul Gandhi’s speech on April 6, 2024 in Hyderabad, wherein the latter promised what he termed as “financial and institutional survey” for re-distribution of the country’s wealth. The re-distribution would be taken up after a nation-wide Socio-Economic and Caste Census promised by the Congress party in its manifesto. The manifesto dwells on income and wealth inequalities, though not redistribution. There is an inherent connection between economic growth and income inequalities. Economic growth happens when...
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Rationalise regulations for e-commerce
When the Government expects foreign companies to do almost everything that a retailer does, how can it deny these firms the right to sell? Way back in 2019, Delhi Vyapar Mahasangh (DVM) an organisation of retail traders in the national capital had lodged a complaint with the Competition Commission of India (CCI) alleging anti-competitive behaviour by Amazon Seller Services (ASS) and Flipkart Internet Private Limited (FIPL). The CCI is an authority established under the Competition Act, of 2002. The Act prohibits anti-competitive agreements and abuse of dominant position by enterprises and regulates mergers, amalgamations acquisitions etc to ensure that there is no adverse effect on competition. Amazon and Flipkart are global giants operating e-commerce marketplaces in India through their subsidiaries,...
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Electoral bonds out, black money in
On February 15, 2024, a five-judge Constitution bench of the Supreme Court (SC), headed by the CJI declared the Modi government’s 2018 Electoral Bond Scheme (EBS) as unconstitutional. The four major considerations behind this order are:- The scheme legitimizes the use of black money in political funding; it lacks transparency and keeps identity of the donor anonymous thereby violating the constitutional right to freedom of speech and right to information (Article 19(1)(a)); it gives rise to ‘quid pro quo’ – a legal jargon for a person in the position of power granting favor in exchange for bribe; it denies equality of opportunity to the voters to exercise their freedom to vote in an effective manner (Article 14). The EBS was...
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Income inequalities hamper sustainable growth
While the nation’s GDP is poised to surge by 7.6 per cent in the current financial year, concerns loom large over the sluggish pace of private consumption During the current financial year, the Indian economy is expected to register a growth of 7.6 per cent in real gross domestic product or GDP. Coming on top of growth of 9.1 per cent during 2021-22 and 7.2 per cent during 2022-23, India’s performance is spectacular. Emboldened by this trend and Modi’s commitment to pursue economic reforms with greater vigour during its third term, analysts are hoping for growth of above 7 per cent on a sustainable basis. But, there is a catch. Private consumption which accounts for as much as 55 per...
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RBI maintains status quo despite inflation optimism
RBI’s commitment to ‘last-mile disinflation’ has prompted a continued tight monetary policy stance, raising questions about its impact on economic growth On April 5, 2024, announcing the decisions taken by the six-member Monetary Policy Committee (MPC) in its first bi-monthly meeting of the current financial year (FY), Governor Shaktikanta Das observed “The elephant has now gone out for a walk and appears to be returning to the forest. We would like the elephant to return to the forest and remain there on a durable basis,” Das was using the elephant analogy to characterise the trajectory of retail inflation as represented by the Consumer Price Index (CPI). Having scaled to a high of 7.8 per cent in April 2022, CPI has...
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