After a long wait of about 7 weeks since the nation-wide lockdown on March 24, 2020, Prime Minister, Narendra Modi announced on May 12, 2020 ‘Atmanirbhar Bharat Abhiyan’, a special economic and comprehensive package of Rs 2000,000 crore, about 10% of gross domestic product [GDP], to revive the economy. The finance minister, Nirmala Sitharaman unveiled the details in 5 tranches during press conferences held on May 13 – 17, 2020. The package aims at giving relief to all strata of the society impacted by sudden stoppage of economic activities viz. farmers, workers, migrant labor, micro, small and medium enterprises [MSMEs], vendors, small merchants, self-employed, middle class etc. Given its mega size, an immediate question that comes to mind is whether...
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Category: Infrastructure
Mass movement of migrant labor – a Himalayan Blunder
Announcing the lockdown on March 24, 2020, Prime Minister, Narendra Modi offered the mantra of ‘social distancing’ [put simply, this requires maintaining a minimum distance between two persons] to prevent Covid – 19 pandemic from spreading. Accordingly, all activities involving assembly and movement of persons in group were brought to a grinding halt. Amongst others, these included complete ban on inter-state and intra-state movement of persons. The announcement came under flak from critics who argued that people should have been given time to prepare themselves; this included letting migrant labor working in urban agglomerations [UAs] such as Delhi, Mumbai etc move to their native place. The government’s decision was perfectly in order. Had it given time and allowed people to...
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Telecom industry on the brink; Trai, banks need to play proper role
In an order delivered on October 24, 2019, the Supreme Court (SC) directed the telecom service providers (TSPs) to pay ‘unpaid’ dues towards license fee and spectrum usage charges (SUC) to the department of telecommunication (DoT). In doing so, the SC accepted DoT’s interpretation that adjusted gross revenue (AGR) (license fee and SUC is charged as a percentage of AGR) includes – apart from telecom services revenue – revenue from non-telecom services such as rent, profit on the sale of fixed assets, dividend, interest etc. Given the inherent character of the order with focus on including revenue from non-telecom services as well, it requires even companies such as Gas Authority of India Limited etc (they had taken licenses for setting up their...
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Telecom industry on the brink
Bringing to a climax more than a decade old court battle between department of telecommunication [DoT] and telecom service providers, in an unprecedented judgment, on October 24, 2019, the Supreme Court [SC] ordered the latter to pay ‘unpaid’ dues towards license fee and spectrum usage charges [SUC]. The unpaid dues [call these additional liabilities] arose consequent to the SC accepting the DoT interpretation that adjusted gross revenue [AGR] [license fee and SUC is charged as percentage of AGR] includes – apart from telecom services revenue – revenue from non-telecom services viz. rent, profit on sale of fixed assets, dividend, interest etc. The additional liability on private telecom service providers is a whopping about Rs 147,000 crore for the period 2006-07 to 2016-17...
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Freebies – road to fiscal disaster
In the just concluded elections in Delhi, the electorate has returned Arvind Kejriwal [AK] to the coveted position of Chief Minister with a thumping majority [Aam Aadmi Party (AAP) won 62 out of a total of 70 assembly seats even as its dominant rival BJP secured a mere 8; the third main contestant in the fray Congress got none]. Kejriwal claims that this is a vindication of the ‘development model’ pursued by him during the last 5 years since February 2015. He vows to pursue this in Delhi during the next 5 years and has crafted plans to leverage it for establishing the footprint of AAP in other states. What precisely is the model? Will the states be able to...
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Aspirational India – long on vision but short on resources
The Union Budget for 2020-21 presented to the Parliament by the Finance Minister, Nirmala Sitharaman on February 1, 2020, confirms apprehension that the actual fiscal deficit [FD] for 2019-20 would exceed the budget estimate [BE] by a significant margin. Sitharaman puts it at 3.8% of GDP [gross domestic product] against the target of 3.3%. However, she has justified this deviation in terms of the recommendation of the NK Singh committee on review of the Fiscal Responsibility and Budget Management [FRBM] Act [2003] which permits breach of the target in case of “far reaching structural reforms with unanticipated fiscal implications”. For 2020-21, the finance minister has provided for FD of 3.5% as against 3.0% as stipulated under the FRBM Act. Here...
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Long on vision, short on means
The credibility of the fiscal consolidation glide path has been dented which is also reflected in the Sensex falling by over 1,000 points after the Budget announcements The Union Budget for 2020-21 presented to the Parliament by Finance Minister (FM) Nirmala Sitharaman on February 1 confirms apprehensions that the actual fiscal deficit (FD) for 2019-20 would exceed the Budget Estimate (BE) by a significant margin. Sitharaman puts it at 3.8 per cent of the GDP against the target of 3.3 per cent. However, she has justified this deviation in terms of the recommendation of the NK Singh Committee on review of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 which permits breach of the target in case of “far-reaching structural reforms...
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Can invisible hand work?
Seen from an economist’s perspective, the Economic Survey looks eloquent. But execution could run into a logjam as politicians are prone to controlling the consumer The Economic Survey for 2019-20 has been prepared by the Chief Economic Advisor, Dr K Subramanian, keeping the ambitious target of achieving the $ 5 trillion economy status by 2024-25, set by Prime Minister Narendra Modi, at its centre. The rigorous analysis (a lot of it involves running of “regression equations” — a euphemism in econometric analysis to bring out correlation between various economic parameters) done by the CEA has to be seen in the backdrop of deceleration in the GDP (gross domestic product) growth to its 11-year-low of five per cent during the current year (first...
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Act, before it is too late
Taking a ‘fair’ and ‘realistic’ view of all receipts and expenditure of the Govt, its fiscal deficit is turning out to be almost double the three per cent target sought by the NK Singh panel Having achieved the fiscal deficit (FD) target for three years in a row, the Narendra Modi Government missed it in 2017-18 and 2018-19. During 2017-18, the actual FD expressed as a percentage of the Gross Domestic Product (GDP) was 3.5 per cent against the target of 3.2 per cent. For 2018-19, the then Finance Minister, Arun Jaitley had set a target of 3.3 per cent as against three per cent sought by a committee under NK Singh, former Expenditure Secretary and current Chairman of the 15th Finance...
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The dawn of a new era
Slowly but surely, India has manoeuvred its way through digital transformation. It must build on this success and the communication revolution to a new level for the creation of a vibrant economy Having missed the first and second industrial revolution of the 19th and early 20th century (courtesy the subjugation of India to colonial rulers of those times) and even the third technology-driven revolution (this one was primarily due to the “protectionist” and “inward-looking” Government policies, which were not conducive to embracing technology), India is at the forefront of leading the fourth industrial revolution — a digitally driven one —with speed and scale. The digital revolution calls for a shift from mechanical and analogue electronic technology to digital electronics, which...
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