For the sixth time in succession, RBI Governor, Raghuram Rajan has refused to budge. In its monetary policy stance released early this month, RBI has retained the repo rate (rate at which banks borrow from RBI) at 8%. This is despite retail inflation during November, 2014 at 4.3% (whole sale inflation has plunged to ‘zero’) already hovering at just half the 8% benchmark set by RBI for January, 2015, below which cut in repo rate can be triggered. This is also despite fragile recovery in GDP growth viz., 5.7% during April-June, 2014; 5.3% during July-September, 2014 and decline in industrial growth by 4.2% in October, 2014, all of which underscores dire need for a booster dose. And, this is despite...
More
No comments
Category: Welfare schemes
What is holding back direct fertiliser subsidy transfer?
SUMMARY Direct transfer of subsidy to farmers holds the key to countering all ills afflicting the fertiliser sector Direct transfer of subsidy to farmers holds the key to countering all ills afflicting the fertiliser sector in India. Successive governments have talked about it and yet none has ventured to implement this. What has held them back? The idea was first mooted nearly four decades ago when, in March 1976, faced with increasing prices of complex phosphate fertilisers—then, there were no controls and manufacturers were free to fix price—the government introduced a flat subsidy at the rate of R1,250 per tonne phosphate nutrient (P2O5). The initial plan was to give the money directly to farmers so that the effective price (net...
More
No comments
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...
More
No comments
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...
More
No comments
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...
More
No comments
Modi’s road to prosperity for ‘Neo-Middle Class’
During his power packed visit to USA with over 3 dozen engagements/meetings, the irresistible Indian prime minister, Narendra Modi held a brainstorming session with high profile American think-tank viz., Council on Foreign Relations (CFR) in New York on September 28, 2014. Apart from discussing Indo-US relations as also India’s relations with its neighbours and other countries, Modi used the opportunity to share his philosophy [contrary to what some of his die hard critics may say, he does not carry any ideological baggage allegedly linked to his association with Rashtriya Swayamsevak Sangh (RSS), mentor & guide of BJP] and approach to development. Thus, during his opening address at CFR, he stated “there is a ‘Neo-Middle Class’ in our country, one which...
More
No comments
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...
More
No comments
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...
More
No comments
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,...
More
No comments
Modi’s prescription for economic resurgence
Critics have derided prime minister N Modi for absence of any major initiative or scheme for nation building in his independence day address on August 15, 2014. Some congress leaders even opined ‘he was giving an election speech’! With a pre-meditated and prejudiced mindset, they won’t be able to see any. One only needs to make an objective assessment to get to the bottom of what he gave to 1.25 billion country men and even to fellow citizens in our neighbour and beyond. Modi’s extempore speech covering a wide spectrum left no one in doubt that he gave us a recipe for social, cultural, economic and industrial, renaissance. This is eloquently captured in a couple of phrases that he coined...
More
No comments