Some time back, Arun Shourie a senior minister in the then NDA [National Democratic Alliance] government under Vajpayee [1998-2004] and erstwhile member of BJP observed that the economic policies being followed by Modi – government are just a continuation of UPA [United Progressive Alliance] plus the “cow’ [a euphemistic reference to sacred animal worshiped by majority Hindu community in India]. Shourie’s view is shared by many thinkers. UPA – dispensation II [2009-2014] had pushed the country towards economic paralysis with all key indicators i.e. growth [manufacturing in particular], inflation, fiscal deficit, current account deficit [CAD], foreign exchange reserves and infrastructure etc showing dismal trend. In this backdrop and since, Modi is also following the same policies, they aver that outcomes...
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Category: PSU reforms & dis-investment
PSU share sale – go for ‘strategic’ route
While, presenting the budget for 2015-16, finance minister, Arun Jaitely had fixed an ambitious target of Rs 69,500 crores for proceeds of divestment in public sector undertakings [PSUs] during the current fiscal. Of this, Rs 41,000 crores was to come from divestment of ‘minority’ stakes and balance Rs 28,500 crores from ‘strategic’ sale. The target was pretty ambitious considering that during 2014-15, as against a target of Rs 58,000 crores [including Rs 43,000 crores from sale of minority stake and Rs 15,000 crores strategic sale], the actual realization was only Rs 26,000 crores. Of this, Rs 22,000 crores came from sale of 10% stake in Coal India Limited [CIL] alone. During the first 7 months April-October, the government has so...
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Unshackle PSBs via shedding majority control
For generations, public sector banks [PSBs] have been used by the political establishment with impunity to appease their constituencies viz., waiving farm loans especially at the time of elections; salvaging state electricity boards [SEBs] who are made to supply power at throw away tariffs or even free in some states; granting loans to favoured industrial houses without carrying out due diligence and allowing wilful default by certain borrowers [involving quid pro quo] which are clear acts of corruption. All such exogenous imposed actions in total disregard of financial prudence have led to proliferating non-performing assets [NPAs] – a sophisticated nomenclature for bad loans or in simple terms, money lent which cannot be recovered. Together with restructured assets [these are also...
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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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PM Jan Dhan Yojna – panacea to end farmer suicide
Close to seven decades since independence, Indian society continues to suffer from the stigma that ‘farmers feed the whole country but are unable to feed themselves’. The proof of pudding is in eating as thousands of them are forced to commit suicide every year. During the last one-and-a-half decade or so, about 300,000 farmers have committed suicide and the numbers continues to increase unabated. Invariably, analysts attribute this to their inability to generate adequate income [on an average, a farmer earns just about Rs 5000-6000 per month from cultivating land] because of generally low crop yield on one hand and un-remunerative price for agricultural produce on the other. When, viewed in the backdrop of government giving huge subsidies on inputs...
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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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Modi’s ‘Midas touch’ to PSU divestment
With a proactive and dynamic regime led by a ‘charismatic’ and ‘decisive’ Modiji taking charge about an year ago, divestment of government’s share in central public sector undertakings (CPSUs) has once again caught the imagination of public. When, seen purely from the perspective of garnering resources from this exercise to meet fiscal deficit target and thus, help government’s fiscal consolidation drive, 2014-15 was bit of a disappointment. Against a target of Rs 58,000 crores [Rs 43,000 crores from sale of shares and Rs 15,000 crores from divesting its ‘residual’ stake in Hindustan Zinc Limited (HZL) and BALCO], it could get only Rs 26,000 crores [bulk of it Rs 22,000 crores from 10% in divestment in Coal India Limited (CIL) alone]....
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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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Fiscal deficit target (2014-15) – within reach
While presenting his maiden budget (on July 10, 2014) for 2014-15, finance minister, Arun Jaitely had accepted a daunting challenge of achieving fiscal deficit (excess of central government’s expenditure over receipts) of 4.1% GDP – a number set by his predecessor P Chidambaram in the interim budget. Fiscal deficit at 4.1% of GDP translates to Rs 531,000 crores. During April – October, 2014 or just 7 months of current year, about 90% of this or Rs 478,000 crores has been exhausted. This has led many experts to doubt the capability of present government to stick to the target for the whole year. The doubt is reinforced when one looks at increase in tax revenue which was only around 5% during...
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