Discoms will be profitable only when they are unshackled from state controls and electricity distribution is deregulated Even as the Central government is making all-out efforts to remove the financial distress of power distribution companies or discoms (situated at the core of the power supply chain, they procure electricity from power generating companies or gencos and distribute it to the consumers) and restore them to robust health, actions of the state governments undermine these efforts. The financial distress of discoms arises fundamentally due to their inability to generate enough revenue to pay for the electricity they buy. For over two decades, they have been incurring losses year after year. They have funded these losses by borrowings from banks and other...
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Articles
Solving the public stockholding riddle
The EU countries want India to be more transparent about its public stockholding (PSH) program and put in place safeguards to prevent illegitimate exports In a meeting of the Committee on Agriculture (CoA) of the World Trade Organization (WTO) – held on October 2, 2023, in Geneva, the European Union (EU) agreed to consider India’s demand for a permanent solution to public stock-holding (PSH) programme for food security. This is a significant change of stance since March 2023, when the EU along with the USA and Canada had challenged it. India has urged WTO members to start text-based negotiations on the issue “as soon as possible, preferably in the senior official meeting scheduled during October 23-24, 2023”. Under text-based negotiations,...
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Rationalise taxes on fertilisers
The cost of making fertilisers available to farmers by itself is substantially higher than the price the Govt wants them to pay, ideally, it should not levy any tax In its report laid in Parliament on August 9, 2023, the Standing Committee on Chemicals and Fertilizers has recommended that the Union Government should propose to the GST Council to reduce tax rates on fertilizers from the current 5 per cent. Initially, fertilizers were placed under the 12 per cent slab. However, following representation made by various states, the tax rate was reduced to 5 per cent. Now, the Committee wants this to be reduced further. It has also asked the Government to “consider favourably the proposal to lower GST on...
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Regulatory boost to self-sufficiency in energy
Modi Government is giving considerable policy support for the exploration of hydrocarbons so that investors can earn assured return on their investments Delivering the 75th Independence Day address, Prime Minister Narendra Modi set the country a target to achieve self-reliance in energy production by boosting the gas-based economy (besides giving a push to electric mobility and hydrogen production). Modi wants the share of natural gas (NG) in the total energy mix to go up from the current around 6 per cent to 15 per cent. Currently, India imports 50 per cent of its NG requirement. This is because domestic production is hovering around a low of 28.6 – 34 billion cubic metres (bcm) in 2020-21 to 2021-22 (down from a...
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Self-reliance in fertilisers
Potash (K), and phosphate (P) are among the three major plant nutrients (the third being nitrogen or ‘N’) needed for increasing the production of foodgrains and other agricultural products. Their requirements are met mostly from imports. A farmer sprinkles fertiliser on paddy crop in Koppal district. The enactment of two laws, viz. the Mines and Minerals (Development and Regulation) Amendment Act, 2023, and the Offshore Areas Mineral (Development and Regulation) Amendment Act, 2023, in the monsoon session of Parliament bodes well for the Indian fertiliser sector. While the first law paves the way for the auction of critical minerals such as potash and phosphate blocks for exploration and processing in India, the second law provides a fixed 50-year production lease for offshore minerals....
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Simultaneous polls are the way forward
Frequent elections impose enormous social and economic costs on the nation, which leads to corruption and disruption The Union Government has set up a committee under the chairmanship of the former President of India, Ramnath Govind to examine holding simultaneous elections to the Lok Sabha (LS), state assemblies, panchayats and other local bodies. Even as the committee has kicked off the deliberations (its first meeting is scheduled for September 23, 2023) the idea is being staunchly opposed by many political parties. The opposition isn’t new as in 2019 when Prime Minister Narendra Modi convened a meeting on June 19 that year to discuss ‘One Nation, One Election’ (ONOE), it was boycotted by about 50 per cent of the parties who...
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Time for 100 per cent FDI in retail sector
One hundred per cent Foreign Direct Investment should be permitted to all retailers, online or offline, big or small, for the growth of this sector During discussions with representatives of e-commerce firms and a domestic traders’ body viz. Confederation of All India Traders (CAIT) held on August 2, 2023, the Department for Promotion of Industry and Internal Trade (DPIIT) in the Ministry of Commerce and Industry made a presentation on the ‘fundamentals’ of the proposed e-commerce policy. The policy is being deliberated since 2018. The DPIIT highlighted seven salient features of the proposed policy: unambiguous demarcation between the marketplace model where foreign direct investment (FDI) is allowed and inventory model where FDI is prohibited; making the policy congruent with the...
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LPG subsidy will hurt the exchequer
The price cut especially for non-ujjwala beneficiaries was avoidable. It will serve no purpose and will be a drain on already strained oil companies For several decades, it has been a common practice for governments to make decisions based on political expediency ignoring economic considerations. The incumbent Modi – dispensation has tried to change this practice but he too has fallen back to business as usual. One such area is the LPG subsidy. On August 29, 2023, the Union Cabinet approved a reduction in the price of domestic cooking gas by Rs 200 per cylinder (14.2 kg) effective from August 30, 2023. De jure, the price of LPG is deregulated. How could the government decide on it? The reason is...
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‘Indigenous’ fertilisers must be explored
The government must pursue indigenous sources of fertiliser raw materials to minimise India’s vulnerabilities on imports The enactment of two laws viz. The Mines and Minerals (Development and Regulation) Amendment Act, 2023 and the Offshore Areas Mineral (Development and Regulation) Amendment Act, 2023 in the just concluded monsoon session of the parliament bodes well for the Indian fertilizer sector. While the first law paves the way for the auction of critical mineral potash (besides lithium and graphite) blocks for exploration and processing in India, the second provides a fixed 50-year production lease for offshore minerals. Potash or ‘K’ is amongst the three major plant nutrients (the other two being Nitrogen or ‘N’ and Phosphate or ‘P’) needed for increasing production...
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Off-budget borrowings are unhealthy in nature
The Union Government wants to ‘pre-pay’ the remaining off-budget borrowings of Rs 170,000 crore over a reasonable period of time Off-budget borrowings or extra-budgetary resources (EBRs) – as these are called in budget parlance — are those borrowings that are raised by public sector undertakings (PSUs) and other agencies of the government such as Food Corporation of India (FCI), Housing and Urban Development Corporation (Hudco), Power Finance Corporation (PFC), NABARD etc to fund its schemes for which repayment of entire principal and interest is done from the Union Budget. The Centre had EBRs close to Rs 670,000 crore by the end of 2020-21. If all obligations about such borrowings are met by the Union government then why does it not...
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