Under its “Make in India” initiative, Modi – government is pulling all stops to give a boost to indigenous industry even if it means cutting down on imports. While, use of WTO compatible measures such as increasing import duty is welcome, it would raise many eyebrows if the government starts giving orders to stakeholders even with regard to their production/import decisions. This is precisely what it has done to manufacturers/importers in the agro-chemical sector. Before we look at the diktat, at the outset, a bit of background check is in order. According to a statement by the then Union Agriculture Minister, Sharad Pawar in Parliament, nearly 10-30 per cent of crop production — valued at about Rs.1,50,000 crore a year —...
More No comments
Blog
FDI in retail – return of ‘license raj’
A discussion paper released by the commerce ministry on the draft policy for e-commerce has led to more confusion in regard to the role of foreign direct investment [FDI] in Indian retail. At the outset, let us take a look at a major policy announcement in 2016-17 regarding e-commerce – commonly referred to as Press Note [PN] 3. The guidelines notified vide PN-3, allow 100% FDI in the so called ‘market-place’ model for e-commerce – an IT platform where sellers and buyers conduct transactions. An e-commerce company working on this model merely acts as a facilitator by offering to them services such as booking order, raising invoice, arranging delivery, collecting payment, stocking goods etc. It does not own stocks and...
More No comments
Pruning subsidies – sustainable solutions needed
The union government seems to have made a good beginning in regard to achieving its fiscal consolidation goals for the current year. During the first quarter ending June 30, 2018, the fiscal deficit [excess of total receipts over total expenditure] is Rs 429,033 crore which is 68.5% of the annual target set in the budget. The corresponding figure for the first quarter of last year was 81%. This is commendable when seen in conjunction with a substantial jump in capital expenditure to about Rs 87,000 crore during the quarter ending June 30, 2018, an increase of 27% over the corresponding quarter of last year. This is 29% of the full year target. A key feature of the emerging trend is...
More No comments
Modi’s photo-up with industrialist – it’s all about transparency
Ever since Prime Minister, Narendra Modi took charge, the grand old party, the Congress has repeatedly attacked him for allegedly being in the company of “corrupt” industrialists and businessmen even while accusing him of neglecting the farmers and the poor. To buttress its charge, the latter has blasted the former of waiving loans of the defaulting industrialists and showing no sensitivity whatsoever towards the mounting debt of the farmers. All of this is encapsulated in the ever resonating jibe of Congress President, Rahul Gandhi ‘soot boot ki sarkar’ – a euphemism for a government that is obsessed with advancing the businesses of the industrialists. In his first ever blunt rebuttal, while launching as many as 81 investment projects worth over Rs...
More No comments
Bt cotton – unapproved in, approved out
It is ironical that despite prime minister, N Modi’s exhortation to stakeholders for embracing new technology in all spheres of economic activity for accelerating growth, at the ground level, the innovators face huge resistance from the very institutions which are expected to provide a supportive environment. The introduction of genetically modified [GM] crops provides a classic example of how the administrative authorities, regulatory bodies and the institution of judiciary have orchestrated a game-plan to throttle attempts to bring in new technologies that hold huge potential for increasing agricultural productivity and farmers’ income. Bt [Bacillus thuringiensis] cotton [the only GM crop so far allowed for cultivation by farmers in India] is genetically tweaked to kill bollworms that ravage cotton crops. It...
More No comments
Stop using RBI as a ‘milch cow’
The union government has invariably rode piggy back on profit making public sector undertakings [PSUs] and public sector banks [PSBs] to boost its non-tax revenue [using a variety of means such as high dividend/special dividend, divestment of its stake at premium etc] for the purpose of keeping fiscal deficit [excess of total revenue over total expenditure] within the set target. However, little is known about a subtle role that Reserve Bank of India [RBI] – India’s central bank – plays in helping central government in its fiscal consolidation drive. It does so by transferring huge surpluses to the centre year-after-year. During the last three years viz. 2015-16, 2016-17, 2017-18, it transferred Rs 65,900 crore, Rs 40,600 crore and Rs 58,000 crore...
More No comments
Inclusion of oil and gas in GST – long way to go
Replying to the debate in the parliament on July 20, 2018 on the no-confidence motion against his government, prime minister, N Modi gave a comprehensive account of the various schemes, reform measures and achievements during the last 4 years of its stint. A prominent reform measure listed by Modi was the Goods and Services Tax [GST] launched on July 1, 2017. Dwelling on the contentious issue of 5 hydrocarbon products natural gas, crude oil, petrol, diesel and aviation turbine fuel [ATF], he opined that under the UPA – version of the constitution amendment bill [2010], these products were excluded. If, that bill were to be enacted into a law then there would have been no possibility to include them at...
More No comments
Poll sops derail fiscal consolidation
In elections-after-elections to state assemblies, it has become normal practice for political parties of all hues to promise waiver of farm loans in a bid to swing votes in their favor. They even succeed in forming government. Last year, in Uttar Pradesh [UP], loan waiver to all small and marginal farmers promised by BJP was a major factor in catapulting it to power in the state. But, it cost the state exchequer around Rs 36,000 crores. In Punjab, Congress won elections on the promise of waiving all outstanding farmers bleeding the state by thousands of crore. Recently, in Karnataka, the coalition government led by JD [Secular] leader, HD Kumaraswamy has announced a loan waiver [albeit partial] costing the state about...
More No comments
Dealing with NPAs – ‘Project Sashakt’ will weaken banks
A legacy problem that continues to haunt Modi – government is high non-performing assets [NPAs] of public sector banks [PSBs]. Swept under the carpet for several years by the erstwhile UPA regime, it has acted with alacrity in recognizing the NPAs and created a robust architecture for resolving them in a time bound manner. It enacted the Insolvency and Bankruptcy Code [IBC] [December 2016]. Superseding all existing laws on bankruptcy [those were ‘piecemeal’ and lacked ‘bite’], this is a holistic legislation that forces the banks and judicial bodies into prompt action. It has made amendment in Banking Regulation Act [BRA] arming the Reserve Bank of India [RBI] with requisite powers to give directions to banks for making reference to the...
More No comments
Minority shareholders – judiciary endorses oppression by brute majority
Cyrus Mistry – scion of the Shapoorji Pallonji Group [SPG] which holds 18.4% shares of Tata Sons Limited [TSL], holding company of the Tata Group – was elevated to the position of Chairman, TSL in 2012 [after serving several years as director on its board] with full support of Tata Trusts that has majority ownership of TSL at 66%. Mistry continued at helm for 4 years even as his performance was commended by the promoters as well as independent directors of all leading group companies viz. Tata Motors Ltd [TML], Tata Steel Ltd [TSL], Tata Consultancy Services [TCS], Tata Power Ltd [TPL], India Hotels Co. [IHC], Tata Chemicals Ltd [TCL] etc. Yet, he was removed in a meeting of TSL...
More No comments