The Guinness Book of World Records has recognized India’s direct LPG subsidy transfer as the world’s largest direct benefit transfer [DBT] program. The program nick-named PAHAL [Pratyaksha Hastaantarit Laabh] has within its ambit 146.2 million households [as on December 3, 2015]. While, the recognition is for it gigantic coverage and unprecedented success in reaching out the benefit through the length and breadth of the country, it is symptomatic of metaphorical changes that could come about in the way subsidies are administered and the big push that it could give to Modi’s reform agenda. For decades, Union government gave subsidy on LPG, diesel, kerosene etc by directing oil PSUs viz., Indian Oil Corporation Limited [IOCL], Bharat Petroleum Corporation Limited [BPCL] and...
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WTO (Nairobi) ministerial – target fault lines in AoA
The World Trade Organization’s [WTO’s] draft declaration for the ensuing 10th ministerial meeting at Nairobi [Kenya] on December 15-18, 2015, promises to “address all aspects of agriculture reform as a matter of priority” but does not mention about finding a ‘permanent solution’ to India’s concerns on food security. While, the former is a cleverly worded statement [more of a rhetoric] offering nothing concrete, the latter is definitely a setback. But, for any one tracking the chronology of events since the 9th Ministerial meeting at Bali [Indonesia] in December, 2013, this should not come as surprise. It is abundantly clear that from the day one, developed countries were never serious about finding a permanent solution. Nor, developing countries including India pressed...
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PSU share sale – go for ‘strategic’ route
While, presenting the budget for 2015-16, finance minister, Arun Jaitely had fixed an ambitious target of Rs 69,500 crores for proceeds of divestment in public sector undertakings [PSUs] during the current fiscal. Of this, Rs 41,000 crores was to come from divestment of ‘minority’ stakes and balance Rs 28,500 crores from ‘strategic’ sale. The target was pretty ambitious considering that during 2014-15, as against a target of Rs 58,000 crores [including Rs 43,000 crores from sale of minority stake and Rs 15,000 crores strategic sale], the actual realization was only Rs 26,000 crores. Of this, Rs 22,000 crores came from sale of 10% stake in Coal India Limited [CIL] alone. During the first 7 months April-October, the government has so...
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Centrally sponsored schemes – Modi gives better deal
Modi – government’s budget for 2015-16 has been under attack from opposition parties especially Congress for alleged reduction in financial outlays for a variety of social welfare schemes and development programs. The latter also interpret this as a manifestation of former’s anti-poor policies. The allegations are with reference to centrally sponsored schemes viz., Mahatma Gandhi National Rural Employment Guarantee Act [MGNREGA], Mid Day Meal, National Rural Health Mission [NRHM], Integrated Child Development Service [ICDS] etc. These are based on selective focus on lower allocation in Union budget under certain heads or less disbursement under others. To understand this better, let us look at some facts. There are two types of schemes. (i) central sector schemes which are mainly formulated on...
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GST – facing ‘preposterous’ demands from its initiator
The Constitutional amendment Bill on Goods and Services Tax (GST) was passed by Lok Sabha on May 6, 2015. But, its passage in Rajya Sabha – where the ruling NDA [National Democratic Alliance] is in minority – was stuck due to opposition by Congress and other parties. The bill is being taken up for consideration during the current [winter] session. Congress had agreed to support the bill subject to government agreeing to three key changes. These include (i) no levy of additional 1% tax on supply of goods in the course of inter-state trade [collected by central government and distributed to state of origin]; (ii) bringing crude oil, petroleum products [POL] and natural gas within ambit of GST and (iii)...
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New gas policy – attractive even without pricing freedom
A consultation paper floated by ministry of petroleum and natural gas [MPNG] for stakeholders comments has proposed granting freedom of pricing and marketing to producers of natural gas. This has led exploration and production [E&P] companies to believe that this will enable them to get much higher price than what they are getting under the present dispensation of administered pricing. Ever since a high power committee under Dr C Rangarajan submitted its report in December, 2012 [based on the formula recommended by it, price of domestic gas was US$ 8.4 per mBtu], E&P companies have been clamouring for market-based pricing. But, Modi – government which took charge in May, 2014 neither accepted Rangarajan formula nor their demand for market determined...
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Social Security Agreement – US should shed intransigence
In a just concluded meeting of the Trade Policy Forum [TPF] attended by commerce minister, Nirmala Sitharaman from India and US Trade Representative [USTR], Michael Froman, US has emphatically rejected India’s request for signing a Social Security Agreement [SSA] – nick named totalisation pact. The possibility of signing the Agreement – pending for long – had got a boost early this year when prime minister, Modi raised the issue with President Obama during his January, 2015 visit to India. As a follow up, in August a ‘negotiating forum’ was set up to discuss a possible SSA between India and US. Though the forum is still active, in view of rejection at highest policy making level, chances of getting US agree...
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Fertilizer and food subsidy haunt budget – sans reform
Hamstrung by its inability to achieve target for divestment proceeds from public sector undertakings [PSUs] and lower than expected collection from direct tax revenue, government has resorted to hard posturing in regard to release of subsidy payments under major heads viz., fertilizers and food. In regard to fertilizers, against budget allocation of Rs 73,000 crores for current year, requirement is expected to be around Rs 80,000 crores. Even as ministry of finance [MOF] is likely to provide for additional Rs 7000 crores, it is in no mood to release arrears of about Rs 30,000 crores from previous year. MOF has also rejected a request from department of fertilizers [DOF] for a special banking arrangement [SBA] for short-term loan of Rs...
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SEB reform – catch the bull by horn
In 2012, the erstwhile UPA – government had granted a financial restructuring package [FRP] to deal with a mammoth Rs 200,000 crores debt of ailing state electricity boards [SEBs]. Under it, 50% of the outstanding liabilities were taken over by respective state governments and for balance 50% bonds were issued to public sector banks [PSBs] carrying an interest as low as 9%. The FRP was conditional on states taking requisite steps to increase tariff in a calibrated manner and reduce transmission and distribution [T&D] losses in order to improve realization from sale of electricity so that it converges to its cost of procurement. The overarching objective was to eliminate losses in 2-3 years and thus ensure that they are no...
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Gas allocation must be ‘policy’ driven
A 2-judge bench of the Delhi High Court [DHC] in an interim order, has ordered the department of fertilizers [DOF], ministry of chemicals and fertilisers to resume supply of natural gas to Deepak Fertilizer and Petrochemicals Corporation Limited [DFPCL] – a company manufacturing complex phosphate fertilizers – which was suspended last year. The order is on an appeal by Government of India [GOI] seeking stay on an earlier order of a single-judge [July 7, 2015] which had directed resumption of gas supply. The bench has stated that gas supply to DFPCL will continue till such time government finalizes the guidelines on supply of gas to fertilizer companies and implements the policy decision against two other manufacturers of complex phosphate fertilizers...
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