Category: Welfare schemes

PSUs dividend – an order ingrained in archaic mindset

Faced with a massive shortfall in resource mobilization from disinvestment of shares in central public sector undertakings [PSUs] [Rs 40,000 crores] and proceeds from direct taxes [Rs 50,000 crores], Modi – government has issued a diktat to all PSUs to help it avoid slippage in fiscal deficit target of 3.9% of GDP set in the budget for the current year. It has directed them to give a minimum dividend of 30% of profit after tax [PAT] or 30% of government equity whichever is higher. PSUs having substantial free reserves and capability to make good profits on a sustained basis are required to give special dividend and issue bonus shares. As regards their capital expenditure needs, it goads them to increase...
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Too little too late

PM Modi needs to shed his soft-pedalled approach displayed in the “GiveItUp” campaign and bring the LPG subsidy to a full halt. The government has announced that from January 1, those earning more than Rs 10 lakh per annum will forgo subsidy on LPG on a self-declaration basis. This appears to be a grandiose announcement but in terms of reforms, it is a typical case of “too little too late”. At present, there are a total of 163 million registered LPG customers. Of these, 147 million people are availing subsidy. The remaining 16 million is accounted for by about 10 million–bogus/ fictitious persons–who were eliminated following the government’s drive to credit subsidy directly into the bank account of customers under...
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LPG subsidy cut – too little, too late

The government has announced that from January 1, 2016, all those earning more than Rs 1 million per annum will forgo subsidy on LPG [liquefied petroleum gas] on self-declaration basis. This appears to be a grandiose announcement but in terms of reforms, it is a typical case of “too little and too late”. At present, there are a total of 163 million registered LPG customers. Of these, 147 million are availing of subsidy. The difference 16 million is accounted for by about 10 million [bogus/fictitious persons] who were eliminated following government’s drive to credit subsidy directly in to the bank account of customer under PAHAL [Pratyaksha Hastaantarit Laabh] and around 6 million who voluntarily surrendered their subsidy entitlement under Prime...
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Have Indian banks plunged in risk zone?

An increasingly stressed financial system continues to haunt Modi – government. The more it endeavours to address the maladies afflicting the scheduled commercial banks [SCBs] [through a host of initiatives such as “Indradhanush” and recapitalization of public sector banks [PSBs]], the more grievous these become. A semi-annual Financial Stability Report [FSR] recently released by RBI governor, Raghram Rajan makes it official. The gross non-performing assets [NPAs] [bad loans which do not yield any return] of all SCBs increased from 4.6% of gross advances as in March, 2015 to 5.1% in September, 2015 and are projected to increase to 5.4% by September, 2016. The restructured standard advances as percentage of gross advances [these are potentially bad loans but salvaged by relaxing...
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Economic policies – NDA versus UPA

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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US should shed rigid stand

In a just concluded meeting of the Trade Policy Forum, United States Trade Representative (USTR) Mic-hael Froman, emphatically rejected India’s request for signing a Social Security Agreement (SSA), nick named totalisation pact. The US argued that, “India did not meet the legislative requirement of minimum social security net (SSN) for 50 per cent of its population.” When Commerce Minister Nirmala Sitharaman drew his attention to the Atal Pension Yojna, Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana in addition to Employees Provident Fund Organisation, the US official’s reaction was that being “non-mandatory”, those schemes did not qualify for social security. The USTR opined that he is open to discussing new social security schemes that India may...
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Centrally sponsored schemes – Modi gives better deal

Modi – government’s budget for 2015-16 has been under attack from opposition parties especially Congress for alleged reduction in financial outlays for a variety of social welfare schemes and development programs. The latter also interpret this as a manifestation of former’s anti-poor policies. The allegations are with reference to centrally sponsored schemes viz., Mahatma Gandhi National Rural Employment Guarantee Act [MGNREGA], Mid Day Meal, National Rural Health Mission [NRHM], Integrated Child Development Service [ICDS] etc. These are based on selective focus on lower allocation in Union budget under certain heads or less disbursement under others. To understand this better, let us look at some facts. There are two types of schemes. (i) central sector schemes which are mainly formulated on...
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Social Security Agreement – US should shed intransigence

In a just concluded meeting of the Trade Policy Forum [TPF]  attended by commerce minister, Nirmala Sitharaman from India and US Trade Representative [USTR], Michael Froman, US has emphatically rejected India’s request for signing a Social Security Agreement [SSA] – nick named totalisation pact. The possibility of signing the Agreement – pending for long – had got a boost early this year when prime minister, Modi raised the issue with President Obama during his January, 2015 visit to India. As a follow up, in August a ‘negotiating forum’ was set up to discuss a possible SSA between India and US. Though the forum is still active, in view of rejection at highest policy making level, chances of getting US agree...
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WHERE ARE THE BIG BANG REFORMS?

The Modi Government should be applauded for bringing in key changes, but action is missing in vital areas such as fertilisers, food, power and kerosene. There is a need for reforms in these sectors which are loaded with subsidies  Prime Minister Narendra Modi should be applauded for bringing in governance reforms, liberalising foreign direct investment and increasing ease of doing business, but action is missing in vital areas such as fertilisers, food, power and kerosene. These areas are in dire need of big bang reforms. Inefficiency, cost padding/gold plating, pilferage/leakages and corruption are rampant in these sectors, leading to the ballooning of subsidies and associated difficulties, in adhering to fiscal discipline. An expenditure management commission, headed by former Reserve Bank...
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Supreme Court renders ‘Aadhaar’ dysfunctional

Believe it or not but it is true. From October 7, 2015 onwards if a person wants to open an account in a bank using Aadhaar card, he cannot do so. If, he wants to buy an insurance policy using this card as proof of identity, he can’t. If, he wants to draw pension on its strength, he can’t. A recent order of the apex court has brought all these and a host of other very basic activities to a grinding halt.  Let us look at the facts. Aadhaar card is a bio-metric identification card issued by Unique Identification Authority of India [UIDAI]. So far, over 900 millions cards have been issued which is many times more than any other...
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