The government has set up a committee to reform power purchase agreements [PPAs] [it is a contract between generators and power distribution companies (PDCs) setting the terms of electricity purchase by the latter from the former even as the tariff is approved by the state electricity regulatory commission (SERC)] in a manner as to make power available at ‘competitive price’ and give relief to consumers. The move looks laughable when seen in juxtaposition with the extant tariff policy environment as also the position on ground zero with regard to the architecture of PPAs already signed. On tariff policy, under directions from the state governments [they own and control PDCs], PDCs sell electricity to certain category of households and farmers at...
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RBI surplus transfer – much ado about nothing
On the face of it, the decision of the Reserve Bank of India [RBI] – India’s apex bank which manages the currency and payment systems as also the borrowings of the Government of India [GOI] and of state governments besides supervising or regulating banks – to transfer a whopping surplus of Rs 176,000 crore to GOI for the year 2018-19 [for RBI, the accounting year is on July-June basis] gives an impression that the latter has got a bonanza. While, some argue that the centre has ‘stolen’ the money from the RBI [e.g. Congress], others aver that this is easy money which the centre will use for bridging its fiscal deficit. The reactions are exaggerated. First, of the total amount Rs...
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Infrastructure investment hits slow lane
In her maiden budget presented to the Parliament on July 5, 2019, the finance minister, Nirmala Sitharaman laid a road-map for catapulting the Indian economy to US$ 5 trillion by 2024-25. The most crucial component of this road-map is investment in infrastructure to the tune of a mammoth Rs 100,00,000 crore or US$ 1.4 trillion. In the follow through, in an interactive session with the media held on August 24, 2019, she announced setting up of a high level inter-ministerial committee to work out a detailed action plan, operational details including identification of projects. During its first term also, Modi – government gave overriding importance to building infrastructure. Indeed, it achieved a fair amount of success with a cumulative investment...
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CSR levy – an anathema to free enterprise
In a country where tens of millions persons live in abject poverty, suffer from acute malnutrition, live in unhygienic conditions and don’t get opportunity for even basic education, corporate social responsibility [CSR] is an idea which caught the imagination of the both the dispensations under UPA – II and Modi – 1.0/2.0 . When, a company generates profits using the country’s resources besides relying on the capital and labor provided by the public, it needs to pay back to the society. This may be the underlying logic behind CSR levy. The government expects that a company above a threshold in respect of net-worth, turnover and net profit, should spend a given percentage of its net profit on activities such as...
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Gas reforms – holistic approach needed
The Union Cabinet is considering far reaching reforms in the gas sector. These include inter alia setting up of a local gas trading platform to facilitate price discovery, stripping power sector off its priority status in the allocation of domestic natural gas and hiving off the transportation unit of the Gas Authority of India Limited [GAIL] – a public sector undertaking [PSU] which currently holds an overwhelming share of the gas pipeline network. The stated objective of these reforms is to enable energy companies to invest in exploration and development of gas fields in India so as to increase indigenous production and ensure that the country achieves self-sufficiency in this major source of clean energy [currently, 50% of our gas...
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Unshackle the GM seed innovator
Bhartiya Kisan Sangh [BKS] a farmers’ organization linked to Rashtriya Swayamsevak Sangh [RSS] – an ideological front of the ruling BJP – has written to the Prime Minister, N Modi bringing to his attention to large-scale use of unapproved genetically modified [GM] new seeds and their deleterious impact on crop, soil and the environment. They have called for punitive action against companies which are making these seeds available to farmers. The reference in the association’s complaint is purportedly to the presence of Cry1Ac gene [besides more alien pest-protecting genes] in brinjals taken from a farmers’ field in a village in Fatehabad district of Haryana. Cry1Ac gene is a protein produced from insertion of soil bacterium, bacillus thuringensis [Bt] into the...
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Merge all subsidies into DBT
At present, tens of millions persons [including undeserving] are getting a variety of subsidies from the government. These cost hundreds of thousand crore seriously impairing its ability to maintain fiscal deficit [excess of total expenditure over total revenue] within the target range mandated by the Fiscal Responsibility and Budget Management [FRBM] Act. The manner of administering these subsidies is marked by ‘adhocism’ and ‘arbitrariness’. It leads to mis-allocation of resources, promotes inefficiency in production, distribution and use, encourages misuse of funds, makes way for controls through the backdoor, enables bureaucrats to meddle in the affairs of the industry and creates fertile ground for nepotism and corruption. Even as Modi – government has vowed to make India a US$ 5 trillion...
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DBT of fertilizer subsidy – a cruel joke
Early this year, the finance ministry and NITI Aayog mooted a road-map for direct benefit transfer [DBT] of fertilizer subsidy and alluded to club this with assistance @ Rs 6000/- per annum being given under PM-KISAN and give the total amount as quasi–universal basic income transfer. To begin with, this will be run on trial basis in select districts to cover small and marginal farmers only. However, full scale implementation pan-India will be possible in 2-3 years. The finance ministry/NITI Aayog were to put up the proposal to the new government for latter’s approval. But, there was no announcement in the budget for 2019-20 presented by the finance minister, Nirmala Sitharaman on July 5, 2019. Now, a panel under Niti...
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Funding welfare schemes – make it transparent
Modi – government deserves commendation for showing a high degree of sensitivity to the dire need for improving the living conditions of millions of poor and down trodden – residing in both rural and urban areas – by providing all basic amenities such as affordable housing, electricity, sanitation/toilet, fuel/gas, drinking water, health care, education etc. During the last 5 years, it has built about 1.5 crore affordable housing units, given 2.6 crore electricity connections, built around 9 crore toilets, given 7 crore gas connections and provided free medical treatment for expenses up to Rs 500,000/- [with an intent to cover 10 crore families]. Under Modi 2.0, the government has vowed to reach the target of 2 crore housing units by...
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How sugar turns bitter for the consumer?
The Cabinet Committee on Economic Affairs [CCEA] has approved a proposal of food ministry for creation of 4 million tons of sugar buffer stock during August 1, 2019, to July 31, 2020. The government will spend Rs 1,674 crore towards the cost of carrying the stock. The amount would be directly credited into farmers’ account on behalf of sugar mills against their cane price dues. It has also decided to keep Fair and Remunerative Price [FRP] of sugarcane unchanged at Rs 275 per quintal. FRP is the minimum price which mills have to pay to farmers for purchasing sugarcane – raw material used in making of sugar. The price is applicable to the sugarcane purchase made during October 1, 2019...
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