The idea of ‘One Nation, One Election’ mooted by the Prime Minister, N Modi is being staunchly opposed by a big section of the political class even before the deliberations are kicked off [a meeting convened by the government on June 19, 2019 was boycotted by about 50% of the parties who were invited]. A major ground for their opposition is that this will be an onslaught on the federal polity. The critics opine that in a scenario of simultaneous poll to both the parliament and all the state assemblies, the national issues will dominate over the state specific subjects. This may yield fortuitous benefit to the dominant national party as the voter won’t be able to clearly articulate his/her...
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Tax evasion haunts Modi too
During 2018-19, the union government got net tax collection [after devolution to states] of Rs 1317,000 crore against the target of Rs 1484,000 crore leading to an unprecedented shortfall of Rs 167,000 crore – the shortfall being in both GST [Goods and Services Tax] and direct taxes. Committed to avoid any slippage in fiscal deficit target for the year, it was forced to reduce expenditure which even led to deceleration in GDP [gross domestic product] growth to 6.8% – lowest during the 5 years of Modi – dispensation. This is disconcerting when seen in the backdrop of far reaching reforms implemented by Modi – government particularly GST [introduced on July 1, 2017] and demonetization [announced on November 6, 2016] –...
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Subsidies – the roll-over syndrome
Modi – government has improved substantially over previous dispensations in terms of increasing administrative efficiency, transparency, accountability, reducing bureaucratic red-tape, expediting approvals, enhanced/effective delivery of public services and reaching out subsidies to the needy and poor without leakage. It has also brought about reforms in many areas such as foreign direct investment, infrastructure, defense etc. However, one area where even Modi has not acted differently is the unsustainable high subsidies on fertilizers, fuel and food and roll-over of a big slice of these subsidies year-after-year. During 2019-20, the pay-out on fertilizer subsidy is estimated to be Rs 80,000 crore plus Rs 32,000 crore as roll-over from the previous year taking the total to Rs 112,000 crore. In the interim budget...
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Dealing with NPAs – its’ back to business as usual
In December 2016, Modi – government enacted the Insolvency and Bankruptcy Code [IBC] – a robust and impeccable legal framework for recovery of non-performing assets [NPAs] of lenders in a fast track mode. It also amended the Banking Regulation Act [BRA] [2017] arming the Reserve Bank of India [RBI] with powers to give directions to banks for making reference to National Company Law Tribunal [NCLT] for resolution of NPAs under IBC. Pursuant to the above, on February 12, 2018, the RBI issued an order requiring that in respect of accounts with aggregate exposure of the lenders at Rs 2,000 crore and above, as soon as there is a default in the borrower’s account with any lender, all lenders – singly or...
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RBI gives priority to growth, finally
In the bi-monthly monetary policy review announced on June 6, 2019, the Reserve Bank of India [RBI] has reduced the repo rate/the policy rate [rate at which the RBI lends money to commercial banks] from subsisting 6.0% to 5.75%. Seen in juxtaposition with reduction of 0.25% each notified in the previous two reviews [February and April 2019], the banking regulator has thus brought about a cut of 0.75% in a span of less than six months. In yet another significant move, the apex ban has changed its policy stance from hitherto ‘neutral’ to ‘accommodative’. Whereas, a neutral stance carries with it the possibility of reduction as well as increase [it may even connote no change], an accommodative stance can only mean...
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India’s quest for energy security – challenges ahead
India is heavily dependent on imports for its energy needs viz. 83% in crude oil and 45% in gas. Prime Minister, N Modi has proclaimed his government’s commitment to reduce the import dependence on oil to 67% by 2022 and further to 50% by 2030. Meanwhile, two major developments on the global front are giving jitters to our policy makers. First, the OPEC [Organization of Petroleum Exporting Countries] – a cartel of exporters from the middle-east – which supplies over 80% of India’s oil imports – has decided to continue their planned cut in output [a strategy that was initiated from January 1, 2017]. Together with reduction in supplies from non-OPEC countries led by Russia, this will continue to affect global...
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Modi’s pension plans – benign on the budget
Presenting the interim budget for 2019-20 on February 1, 2019, the then acting finance minister, Piyush Goyal had announced the decision of the government to launch PM Shram Yogi Mandhan [PMSYM] with an intent to provide economic security cover to persons working in the ‘unorganized’ sector in old age. Under PMSYM, a person in the ‘unorganized’ sector and earning less than Rs 15,000/- per month gets pension @Rs 3000/- per month on completion of 60 years age. For this, a worker joining at the age of 29 years contributes @Rs 100/- per month with matching contribution by the centre. A person joining at the age of 18 years contributes @Rs 55/- per month with equal amount by the centre. This...
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Modi 2.0 – will farmers get a fair deal?
If, despite strong resentment among farmers – an important constituency that decides a party’s prospects in elections – Modi got a resounding mandate to rule for another term, it showed their faith in the ability of this prime minister to deliver on his promises – most important being doubling their income. Of course, one can’t rule out the role of PM – KISAN [announced in the interim budget for 2019-20, under it, the centre gives cash support of Rs 6000/- to all small and marginal farmers every year] in bolstering its prospects. But, this is not an amount big enough to bring about a lasting transformation in their living. In order to achieve that, the most crucial requirement is assurance...
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P-notes could be back in a new ‘Avatar’
The ‘rounding tripping’ – a euphemism for the coming back, in the garb of foreign capital, of Indian money which left our shores in a clandestine manner – is a phenomenon that characterized wholly the first decade of the present century, persisted on a somewhat reduced scale during the first half of current decade [2011-2015] and is more or less fizzling out during the second half. The dubious practice proliferated when there was little oversight on money leaving the country and there were tax haven jurisdictions such as Mauritius, Singapore etc ever ready to attract it. The shell companies – mostly owned by persons to whom the money belonged set up in those countries – would then, invest in India....
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Economic reforms – will Modi play the hard ball now?
During his first term [2014-19], Modi had focused on governance reforms, cutting bureaucratic red tape, simplifying procedures, expediting approvals and improving the ease of doing business. The government also spent its energy on effective implementation of welfare schemes ensuring that the assistance reaches the beneficiaries in full vide the direct benefit transfer [DBT] to their bank accounts using the JAM [Jan Dhan – Aadhaar – Mobile] platform. Now, that the public has given him a resounding mandate to rule for another term in the just concluded general elections, he should use the opportunity to crack the whip on long pending reforms. The key sectors crying for immediate attention including food, fertilizers, oil, gas, power, irrigation, credit etc. At present, all...
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