Announcing the lockdown on March 24, 2020, Prime Minister, Narendra Modi offered the mantra of ‘social distancing’ [put simply, this requires maintaining a minimum distance between two persons] to prevent Covid – 19 pandemic from spreading. Accordingly, all activities involving assembly and movement of persons in group were brought to a grinding halt. Amongst others, these included complete ban on inter-state and intra-state movement of persons. The announcement came under flak from critics who argued that people should have been given time to prepare themselves; this included letting migrant labor working in urban agglomerations [UAs] such as Delhi, Mumbai etc move to their native place. The government’s decision was perfectly in order. Had it given time and allowed people to...
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Discoms on the ventilator, how long?
The power distribution companies [discoms] are the core of the electricity supply, transmission and distribution chain in the country. Mostly owned and controlled by state governments, the discoms source power from independent power producers [IPPs], public sector undertakings [PSUs] viz. National Thermal Power Corporation [NTPC] etc besides their own generating stations. Yet, these have been in the news for all the wrong reasons in particular, increasing losses, galloping debt and rising dues to IPPs/PSUs etc. During 2015-16, the combined loss of all discoms was about Rs 52,000 crore even as their debt had reached a colossal about Rs 400,000 crore. Under an unprecedented financial restructuring packages [FRP] orchestrated by the Centre, the state governments took over 75% of this debt...
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Battered states, bloated demands
Even as corporate, small, medium and micro enterprises [MSMEs], tens of million workers in the informal sector, self-employed and all others impacted by the Covid-19 pandemic are demanding relief package from the union government, the states too have pitched in with a volley of demands which have huge financial implications. This came to the fore during a video-conference held by the Prime Minister, N Modi with chief ministers on April 26, 2020 to discuss the exit strategy after the current lock-down ends on May 3, 2020. Five opposition ruled states have sought close to Rs 225,000 crore: Maharashtra, Rs 50,000 crore ; Chhattisgarh, Rs 30,000 crore; Kerala, Rs 80,000 crore; Rajasthan, Rs 40,000 crore and West Bengal [WB] Rs 25,000...
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Detoxify oil pricing
On October 15, 2018, interacting with global leaders from the energy sector in New Delhi, prime minister, Narendra Modi had expressed concern over the steep increase in the international price of crude oil [then the price had touched US$ 80 per barrel leading to corresponding increase in price of diesel and petrol; this even hurt BJP politically as the party lost three state assembly elections viz Madhya Pradesh, Rajasthan and Chattisgarh] and urged all leading producers/exporters to be more responsible in fixing the price to bring it down from current high to reasonable level. Then, he might not have even contemplated of a scenario wherein the price of crude would plunge to a fraction of the October 2018 level; on...
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Facebook–Jio deal – will it cheer mom-and-pop
Amidst all round gloom caused by Corona virus that has also impacted foreign direct investment [FDI] [during the first quarter of 2020, it has dipped by 30%], comes a buoyant news. On April 22, 2020, the California based US Internet giant Facebook announced its decision to buy 9.99% stake in Reliance Industries Limited [RIL] digital unit Jio Platforms Limited [it owns a wide spectrum of businesses viz. wireless broadband, home broadband, enterprise broadband, narrow-band, internet-of-things businesses and a bouquet of digital apps], for US$5.7 billion [more than Rs 43,450 crore]. While, the deal gives an opportunity to Facebook foray in India’s telecommunication sector [after unsuccessful attempts made in the past], RIL gets to pare its debt – currently about Rs 300,000...
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RBI booster dose – will it work
In a bid to resuscitate the economy devastated by the Corona virus, on March 27, 2020, RBI governor, Shaktikanta Das announced a host of measures to inject liquidity in the country’s financial system; reduce the cost of capital and ease the stress of loan repayments. These included (i) reduction in policy rate [interest rate charged by the apex bank on loans given to banks] by 75 basis points to 4.4%; (ii) 3-month moratorium on payment of installments in respect of all term loans outstanding on March 31, 2020; (iii) relaxation in the norms for cash credit and working capital limits; (iv) reduction in cash reserve ratio [CRR] [portion of deposits, banks are required to keep with RBI] by 100 basis points...
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Amidst Corona worries – golden chance to reform
In the early stage of the Covid – 19 crisis and much before it had assumed monstrous dimensions, the international crude oil market was already oversupplied. Then, OPEC [Organization of Petroleum Exporting Countries] – a cartel of oil suppliers in the middle-east led by Saudi Arabia the lead exporter – and non-OPEC suppliers led by Russia sat together to hammer out an agreement to cut production with a view to bring about a semblance of demand-supply balance. But, the agreement eluded them as Russia refused to back even a moderate cut [it would have only served to help US shale-oil companies to run at full capacity – which it didn’t want]. In sync with the past happenings whenever OPEC didn’t...
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Revamping farm law – the Covid-19 trigger
Amidst a nationwide lockdown announced by the Prime Minister, Narendra Modi on March 24, 2020 to contain the spread of the coronavirus disease, even as an overwhelming share of the economic activity has come to a grinding halt, agriculture too has suffered a major jolt. The crisis has come at a time when Rabi crop [October 2019 – March 2020] mostly winter staple, wheat is ready for harvest. While, on one hand, harvesting operations have suffered due to shortage of labor [courtesy, sudden stoppage of all modes of transport and workers getting stuck where they were] on the other, farmers are unable to move harvested crop to the market for selling. According to an estimate, already, they have suffered loss...
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Corona crisis – shun fiscal profligacy
The economic crisis triggered by Covid – 19 has forced the government to take recourse to some extraordinary measures which include among others 30% cut in the salary of all Members of Parliament [MP] besides the President, Vice-President and the Prime Minister, suspension of the MPLAD [MP Local Area Development] scheme and steep cut in the expenditure by ministries and departments. Reportedly, barring some 18 ministries/departments connected with healthcare and medical infrastructure and other essential services who can spend 100% of their budgeted allocation, for all others, steep cuts are contemplated. Whereas, 33 ministries and departments can spend only up to 20% of the budget, in case of 50 others, the expenditure limit is even lower at 15%. This would...
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Peace Clause – unreliable shield against subsidy breach
In a notification submitted to the World Trade Organization [WTO] – the multilateral body which binds member countries to a common set of rules with regard to trade in goods and services with ‘fairness’ and ‘non-discrimination’ as its underlying principles – India has informed that the value of its rice production during 2018-19 marketing year was US$ 43.67 billion and for that it provided subsidies worth US$ 5 billion. This works out to 11.4% of the value of rice production. Under the Agreement on Agriculture [AoA] of the WTO, a developing country cannot give aggregate measurement support [AMS] – an acronym for subsidies in WTO parlance – in excess of 10% of the value of its agricultural production. The AMS...
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