India is facing all round flak for its decision to oppose approval of Trade Facilitation Agreement (TFA) in meeting of WTO General Council (July 24/25, 2014) unless firm and time bound actions are taken to address concerns of developing countries in regard to support to resource poor farmers for food security. A pure technical view of the decisions taken at the 9th WTO ministerial held in Bali (December, 2013) would prima facie seem to suggest that India is at fault. In that meeting, group of developing countries or G-33 had agreed to the so called ‘Peace clause’ [a euphemism for not taking any penal action for violating commitments under Agreement on Agriculture (AoA) )] but with the caveat that this...
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Prune subsidies vide censoring producers
Contrary to expectation, there was no big bang reform in regard to subsidies in Modi-government’s maiden budget presented on July 10, 2014. However, Arun Jaitley announced setting up of an expenditure reforms commission (ERC). While, we may have to wait for ERC recommendations until next budget in February, 2015, meanwhile Jaitley has given some ideas on direction in which government intends to move forward. Thus, he opines that extant dispensation of subsidies which he describes as ‘un-quantifiable’ and beneficiaries ‘un-identifiable’ cannot be allowed to continue. He emphasized need for replacing this by a system of direct subsidy transfer to poor. To countenance menace of subsidies, Jaitely alluded to fundamental need for consumers/users to pay for increase in cost of goods...
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ONGC resources eroded by un-warranted levy and subsidy sharing
At a time, when Modi dispensation at the centre has pledged to take up administrative and judicial reforms in a big way, it is confronted with a legacy where actions of none other than Gujarat government may be becoming a stumbling block. A case in point is latter’s decision to collect royalty of 20% on discount given by Oil and Natural Gas Corporation (ONGC) on sale of crude to downstream oil PSUs. The decision was upheld by Gujarat High Court (GHC) which on Nov 30, 2013 ordered ONGC to pay dues of around Rs 10,000 crore retrospectively from April, 2008. ONGC challenged GHC order in Supreme Court (SC). On February 13, 2014, SC stayed GHC’s order but directed ONGC to...
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Fertilizer reforms – deliver bitter pill for ‘achchhe din’
While, replying to debate on President’s address, the prime minister unveiled a 5 points agenda for ushering in a technology-led second green revolution in India. One of these is issue of soil health card (SHC) to every farmer to apprise about status of his soil. SHC will mention inter alia recommendations for fertilizer use taking in to account nutrient status of soil and crop type. The information will be computerized and each farmer given a unique identification number (UIN) to download the card for his farm. If the mission can be achieved within 5 years term of this government and farmers start following recommendations as per their respective cards, it will revolutionize the way Indian agriculture is practised. However, mere...
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UPA-appointed Governors – should exit with honour
Congress, and other opposition parties have launched a tirade against Modi government for its polite request to governors – appointed during erstwhile UPA dispensation – to put in their papers and thus give a free hand to latter in running the affairs of the country. Astutely ignoring its own actions in 2004 (when UPA came to power) in dismissing lock stock and barrel governors appointed during the earlier NDA regime (1999-2004) – in some cases, not even giving time to make an honourable exit (for instance, Gujarat’s Kailashpati Mishra) – Congress is now citing a judgement of the Supreme Court (SC) in 2010 which requires that government cannot arbitrarily transfer/remove appointed governors without ‘compelling’ reasons. Any words of un-solicited advise...
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Suzuki bid to trample Maruti Suzuki India
Suzuki Motor Corporation (SMC) parent company of Maruti Suzuki India (MSIL) is going ahead with setting up of a car manufacturing plant in Gujarat with 1.5 million units per annum through its 100% subsidiary, Suzuki Motor Gujarat (SMG). During an investor presentation, SMC informed that SMC/SMG intends to fund the investment of Rs 18,500 crores in the plant with own equity and accumulated depreciation. It will make cars on a strictly no-profit, no-loss basis. SMG will enter in to a contract manufacturing agreement (CMA) with MSIL for an initial period of 15 years for supply of entire production to the latter. The CMA could be extended by mutual consent. In case, it is not extended, the “assets would be transferred...
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Vacillating BJP on FDI in multi-brand retail
During parliament debate in 2012, BJP had vehemently opposed foreign direct investment (FDI) in multi-brand retail (MBR) arguing that this would affect millions of traders besides small and medium enterprises. In run up to general elections, BJP’s prime ministerial candidate, Narendra Modi hinted at reviewing party’s stance when he opined that our traders should gear up to face competition from organized retail. He exuded confidence they can do! However, in its manifesto released on April 7, 2014 BJP categorically ruled out FDI in MBR while welcoming it in all other sectors to give a boost to jobs, build assets especially infrastructure and access to niche technology and special expertise. Now, Nirmala Sitharaman, Minister of State with independent charge (MoS-IC) for...
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Food Security – need for a paradigm shift
Indian electorate has given an overwhelming mandate to Narendra Modi led NDA to conduct affairs of nation on plank of development and good governance. Congress led UPA has been routed. People have rejected its hollow promises of access to quint-essentials of life as a matter of right. All through his election campaign, Rahul Gandhi (RG) brow beated about a volley of fundamental rights granted to people under UPA dispensation. He talked loudest about right to food to demonstrate that his party was sensitive to livelihood concerns of poor. India has been ruled by Congress for over six decades. Through most of this period, it has consistently proclaimed its commitment to ameliorating lot of poor. It milched ‘Garibi Hatao’ slogan to...
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Is India’s intellectual property (IP) regime WTO compliant?
In the just released Special 301 report on trade and industry practices,the US Trade Representative (USTR) has stopped short of downgrading India to ‘Priority Foreign Country’ (PFC) list. Under Special 301, USTR tracks intellectual property (IP) rights record of countries and lists countries that could face trade sanctions and other countries whose IPR regimes are deemed to be areas of lesser concern. If on review, it identifies substantial deterioration in its IP regime, the country gets downgraded to PFC status. India may have escaped it for now, but ‘damocles sword’ hangs as USTR intends to conduct what it calls ‘out-of-cycle’ reviews to promote engagements on IPR challenges with India. Describing as unilateral probe under US law which India has not...
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KG-D6 gas fiasco – defending the ‘indefensible’
In any natural resource-based industry where exploration, development and commercialization of a resource involves substantial investment, the investor has to be extremely careful and circumspect. Before initiating the project and spending money, through a rigorous and scientific process involving inter alia surveys and complex exploration techniques, the company must make a credible assessment of the quantum of resources in place and projection of viability taking in to account the production and likely price. For a resource like gas which belongs to the nation and where necessary investment running in to billions of dollars are allowed to be fully recuperated ‘up front’ by the operator under production sharing contract (PSC), the bar in terms of ‘credibility’ and ‘authenticity’ of reserves in...
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