India had faced all round flak for its stance in meeting of WTO General Council, Geneva (July 31, 2014) that linked approval of Trade Facilitation Agreement (TFA) with time bound actions to address concerns of developing countries in regard to support to resource poor farmers for food security. It was accused of allegedly going back on declaration at Bali ministerial in December, 2013 and stampeding progress of work under the Doha Round. Some developed countries were even willing to move forward – without India – to seal the deal on TFA leaving food security issue in the lurch. Now, USA not only appears to have made a climb down, but also applauded constructive role played by our leadership in ending...
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Direct fertilizer subsidy payment to farmers – why dither?
Direct transfer of subsidy to farmers hold the key to countenancing all ills afflicting the fertilizer sector in India. Successive governments have talked about it and yet, none has ventured to implement this concept. What has held them back? The idea was first mooted nearly 4 decades ago when in March 1976, faced with increasing prices of complex phosphate fertilizers (then, there were no controls and manufacturers were free to fix price), the government introduced flat subsidy @ Rs 1250 per ton phosphate nutrient (P2O5). The initial plan was to give the money directly to farmers so that the effective price (net of subsidy) paid by them for these fertilizers was correspondingly reduced say by Rs 575 per ton in...
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Modi walks the talk on labour reforms
Increasing unemployment is a major issue in India. Every year a whopping 10 million youth join the workforce and only a fraction of these are lucky enough to find a proper job. Absorption of workforce in the organized sector has been abysmal. Time and again, industries and businesses have minced no words in emphatically stating that the biggest factor that prevents them from create quality employment is that their hands are tied down by antiquated labour laws. By nature, business is a risky proposition subject to frequent ups and down. Situations may arise when sheer compulsion of survival in a downward phase may require owner to shed some work force. In extreme circumstances, management may even be forced to close...
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Cleansing the maligned coal sector in India
In August/September, 2014 when Supreme Court (SC) declared all 218 coal blocs allotted since 1993 ‘illegal’ followed by de-allocation of ‘all’ except 4 [2 of these are with PSUs viz., NTPC and SAIL and other 2 are for ultra mega power projects (UMPP) given under competitive bidding], this led to a hue and cry. The associations representing the beneficiaries of illegal allotments – in their presentations before SC – submitted that investment to the tune of about Rs 250,000 crores in development of coal mines and another Rs 400,000 crores in setting up of end use projects viz., power, steel, cement etc would be at risk. Commentators too joined the chorus opining that this will affect availability of domestic coal...
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Gas pricing – Modi’s ‘modified’ R-formula
For quite some time, media has been agog with strident criticism about Modi government’s alleged inability to come up with big bang reforms. One area where it has been targeted the most for alleged delay pertains to pricing of gas. To put things in perspective, a few words on the background are in order. In 2007, based on recommendation of a group of ministers (GoM), then UPA government had approved a price of US$ 4.2 per million British thermal unit (mBtu) – on net calorific value (NCV) basis – for gas supplies from Reliance Industries Limited (RIL’s) KG-D6 fields [awarded in first NELP (new exploration and licensing policy) round 1999] chargeable for 5 years from commencement of production. This price was...
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Leveraging MGNREGA for inclusive growth
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) – a flagship welfare scheme of the erstwhile UPA dispensation launched in 2005 – has come under rigorous scrutiny by Modi government with a view to bring it in line with its agenda for inclusive development. Already, based on an examination of all facts regarding working of the scheme, the ministry for rural development (MoRD) has finalized a note for consideration by the cabinet. So, what are proposed changes? Before we take a look at that, a few words about basics of MGNREGA are in order. MGNREGA provides for ‘guaranteed’ employment to a member of a poor family for a minimum of 100 days in a year and pay wage @ Rs...
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Modi’s tirade against corruption & black money
A central point of prime minister Modi’s campaign during general elections was fight against corruption. A related focus area was his commitment to bring back the black money stashed abroad by concerned Indians. With the new government in office for over four-and-a-half months, opposition parties with Congress in the front have started castigating it for its alleged failure to bring back even a single rupee. This is totally unwarranted and un-called for. Modi does not have a magic wand to deliver within such a short period and that too in an area where previous dispensations failed for decades. He needs to be tested on the basis of his actions rather than outcomes which naturally take time. Thus, within a week...
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Urea investment policy – a dream shattered
In January 2013, government had notified a urea investment policy (UIP) for new green field projects; expansion of existing units; additional urea from revamp of existing units and revival projects of sick public sector units of Fertilizer Corporation of India (FCIL) & Hindustan Fertilizer Corporation (HFCL). Early this year, it made two amendments in UIP. The first amendment dispensed with the “dispensation of guaranteed buy-back ” outlined earlier. A second amendment requires interested private companies to give a bank guarantee (BG) of Rs 300 crore for every project, while PSUs firms are exempted from it. (In view of general elections and model code of conduct coming in to force, its notification was kept in abeyance. The amended policy has now...
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Modi’s road to prosperity for ‘Neo-Middle Class’
During his power packed visit to USA with over 3 dozen engagements/meetings, the irresistible Indian prime minister, Narendra Modi held a brainstorming session with high profile American think-tank viz., Council on Foreign Relations (CFR) in New York on September 28, 2014. Apart from discussing Indo-US relations as also India’s relations with its neighbours and other countries, Modi used the opportunity to share his philosophy [contrary to what some of his die hard critics may say, he does not carry any ideological baggage allegedly linked to his association with Rashtriya Swayamsevak Sangh (RSS), mentor & guide of BJP] and approach to development. Thus, during his opening address at CFR, he stated “there is a ‘Neo-Middle Class’ in our country, one which...
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Rajan dashes hopes of a rate cut, yet again
For the fifth time in succession, RBI Governor, Raghuram Rajan has dashed hopes of industry and commerce for a reduction in repo rate (rate at which banks borrow from RBI) which has been maintained at 8%. Likewise, reverse repo (rate at which banks lend to RBI) is kept at 7%. Cash reserve ratio (CRR) (share of deposits that banks need to keep with RBI) is also un-changed at 4%. RBI benchmarks the repo rate – or policy rate as it is customarily called in the mint street – to inflation. If inflation is high, repo rate is kept high and vice versa. Prior to September, 2013 (when Rajan took charge), whole sale price index (WPI) was taken as reference point...
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