After protracted battle within the bloc [as also with countries outside], members of the Organization for Petroleum Exporting Countries [OPEC] – a conglomeration of oil exporting nations from the middle east – have agreed to reduce their combined output by about 1.2 million barrels a day. Likewise, 11 non-OPEC countries led by Russia have decided to knock off over 500,000 barrels from their supplies. The agreement is effective from January 1, 2017. The agreement has to be viewed in the backdrop of a steep decline in the international price of crude oil from the peak of US$ 117 per barrel in June 2014 to a low of US$ 27 per barrel in February, 2016. During the current calendar, even though...
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Monetary policy – Patel still under Rajan’s shadow
In the first monetary policy review under the MPC [Monetary Policy Committee] dispensation announced on October 4, 2016, the governor, Urjit Patel had reduced the policy rate [interest rate at which RBI lends money to commercial banks] by 0.25%. He had then, maintained an ‘accommodative’ policy stance thereby alluding to apex bank intent for reducing it further. However, in the second policy review announced on December 7, 2016, Patel has dashed this hope by keeping the repo rate unchanged. Concurrently, he has also revised downwards its earlier estimate of GDP for 2016-17 from 7.6% to 7.1% now factoring in the effect of demonetization of 1000/500 currency notes announced by prime minister on November 8, 2016. Put together, the two statements...
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War on black money – beware of hoarders empathizers
After decades of dilly dallying on countering the menace of black money by successive political establishments, for the first time ever, a daring government under prime minister, Modi announced on November 8, 2016 a revolutionary step of demonetizing Rs 1500,000 crores of money embodied in 1000/500 notes. Black money has been at the root of continued impoverishment of the poor, suffering of common man, high inflation, slow growth and declining credibility of India in the comity of world nations. Demonetization has the potential of annihilating the black cash and attendant problems. Further, to rein in generation of black money, the government has taken a number of steps including a concerted drive towards ‘digitization’ and promoting ‘cash-less’ mode of transactions. This...
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Forget deal, Modi has trapped all black cash
Ever since the proclamation by prime minister, Modi on 1000/500 note ban on November 8, 2016, the opposition parties have unleashed a ‘no-holds-bar’ and virulent campaign against the move – both inside and outside the parliament. There is no theme or objective behind this campaign. Even as virtually none from among the public standing in the long queues in front of the banks is complaining [indeed, majority of them have welcome the move and are prepared to live with some inconvenience], almost every parliamentarian in opposition camp wants the world to believe that they are suffering a lot. Sadly, a section of media is lending credence to what they say. There is an urgent need to look at the dynamics...
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Can India survive Trump’s bombshell?
The republican candidate, Donald Trump has been elected by Americans on the promise of protecting their interests and doing all that is necessary to achieve this goal. All along, USA has been a strong protagonist of free flow of international trade and investment in goods and services and accordingly championed liberal policies to foster this [sans a tinge of protectionism in specific areas such as agriculture]. India has benefited hugely from such open policy stance. Now, if Trump were to act on his electoral pronouncements, this will tantamount to a drastic reversal of extant policy stance. It will herald an era of ‘protectionism’ adversely affecting developing countries like India which derive a good slice of its income by doing business...
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Black money – the ‘kachaa’ connection
Barring some short-term hiccups, the master stroke delivered by prime minister, Modi by way of declaring 1000/500 rupee notes as invalid will have a substantial positive impact on the economy. The precise quantum will of course depend effectiveness of the strategies unleashed by Team Modi [including amendment to I-T Act] to counter the maneuvers of black money holders to convert their black in to white. Modi has many more projects up his sleeves [including a frontal assault on real estate, bullion and foreign currency holdings] which he will execute from the start of next year. This should result in extermination of a lot more of black money and garnering more resources for financing development and helping poor. Having dwelt a...
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Currency scrap – bear short-term pain for long-term gain
For almost seven decades since independence, India has been grappling with the menace of black money [and corruption]. Despite political parties of all hues making lofty promises to stem it, it has only increased leaps and bounds assuming monstrous dimensions. Prime minister, Modi who was catapulted to the seat of power on the promise of rooting out this menace [besides delivering good governance and inclusive development] has taken several credible steps viz., plugging loopholes in existing laws/enacting new laws, streamlining procedures /processes and cutting bureaucratic red tape to curb its generation. These efforts continue unabated. Meanwhile, a huge stock of black money already existing in the economy [courtesy, rampant corruption and mis-governance in the past especially the period 2004-2014, better...
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Fertilizer DBT ‘pilots’ – old wine in new bottle
Even as Modi – government has taken plenty of action on reforming a variety of subsidy schemes viz., LPG, food, kerosene etc during the last 30 months of its stint, fertilizer subsidy has received scant attention. In his budget speech for 2016-17, finance minister, Arun Jaitely stated :- “We have already introduced a direct benefit transfer (DBT) in LPG. Based on this successful experience, we propose to introduce DBT on pilot basis for fertilizer in few districts in the country with a view to improving quality of service delivery to the farmers.” The focus on DBT links up with a startling revelation made in the Economic Survey [2015-16]. It stated that “24% of the fertilizer subsidy is spent on inefficient...
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Taxing times – judiciary is even slower than bureaucracy
Giving its verdict on a bunch of petition challenging the powers of states to levy ‘entry tax’ a nine – judge constitution bench of the Supreme Court [SC] has upheld its constitutional validity. The SC has also held that individual cases will be decided by the concerned regular benches keeping in mind laws of the respective states. Even as the regular benches take their own sweet time to conclude proceedings, the affected companies may get breather for a while to actually pay up. But, ‘Damocles sword’ hangs. Having already paid 50% of the amount pursuant to interim orders of apex court, they will have to cough up the balance amount sooner than later. The total liability on the companies/dealers –...
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Bridging rich-poor divide – Modi style
One day morning, my maid informed me that a lady in another flat in the cooperative society [where I live] had offered her Rs 50,000/- to deposit in her account which should be returned in due course. She wanted my advise as to what she should do? I told her emphatically not to fall prey to such machination. The issue brought to my attention is resonating in millions of homes all over India. After prime minister, Modi announced on November 8 [8 PM], 2016 demonetization of 1000 and 500 rupee notes effective from zero hours of November 9, those holding un-accounted income/wealth or ‘black money’ [as it is known in common parlance] have been desperately look for means to convert...
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