Regulatory assets are created when state electricity regulatory commissions accept that the tariffs don’t cover discoms’ purchase cost but don’t raise rates The Power Ministry has taken two decisions which have a bearing on viability of the beleaguered power distribution companies (discoms). It has (i) warned state electricity regulatory commissions (SERCs) against creating a pile of ‘regulatory assets’; and (ii) proposed a pool of efficient thermal power units more than 25 years old to act as a balancing source for the increasing share of renewable energy in the electricity grid. Mostly owned and controlled by state governments, discoms purchase power from public sector undertakings (PSUs) such as the National Thermal Power Corporation (NTPC) and independent power producers (IPPs) under long-term...
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News & Media
Delink pricing of natural gas, crude
An annual increase of $0.5 per mmBtu is consistent with its proposal to offer free pricing beginning January 1, 2027 In September 2022, the Ministry of Petroleum and Natural Gas (MPNG) formed a committee led by Dr Kirit Parikh to review the current pricing formula for domestically produced natural gas (NG) and make recommendations to restructure the formula in order to ensure “a fair price to the end consumer.” It has recommended linking the price of NG from legacy fields to the price of imported crude oil with a floor and ceiling. The floor price will be $4 per million British thermal units (mmBtu), and the ceiling price will be $6.5 per mmBtu, with an annual increase of $0.5 per...
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Sanctions on Russia can be suicidal for G7
G7 needs to recognise that actions that restrict flow of goods and services are bound to be counter-productive In a bid to punish Russia for its military action against Ukraine, leaders of G7 viz., the United States, Germany, France, Britain, Italy, Canada and Japan in June this year vowed to explore the feasibility of measures to bar imports of Russian oil above a certain level. In September, 2022, their finance ministers (FMs) said: “They confirm our joint political intention to finalise and implement a comprehensive prohibition of services, which enable maritime transportation of Russian-origin crude oil and petroleum products globally. Providing those services would only be allowed if the oil and petroleum products are purchased at or below a price...
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Fertiliser subsidy must go to farmers directly
This is the only way to eliminate diversion, prevent excess use, promote competition, and lower cost The Centre is planning to conduct pilots in a few districts of the country on a modified version of direct benefit transfer (DBT) in fertilisers that would establish some connection between land holding and the nutrient’s consumption. The intent is to monitor consumption, prevent excess usage and chances of misuse. DBT, as the wording implies, has to do with transfer of fertiliser subsidy. Fertiliser subsidy arises because the Centre directs manufacturers/importers to sell fertilisers to farmers at a low maximum retail price (MRP), unrelated to the cost of supply, which is much higher. In the case of urea, the difference is reimbursed to the...
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Nano urea and some tall claims
Can nano urea help in achieving the stated objective? Can it help to make a dent in the subsidy? The government spends huge sums on fertiliser subsidy — the likely expenditure during the current financial year being about Rs 2,50,000 crore. Credit: AFP Photo Launching an ambitious programme for the promotion of liquid nano fertilisers at the two-day ‘Kisan Samman Sammelan’ at the Indian Agricultural Research Institute (IARI) on October 17, Prime Minister Narendra Modi exuded confidence that it would help attain self-sufficiency in the crucial sector and help farmers enhance their income while substantially reducing the impact on the environment. Already, the Indian Farmers Fertiliser Cooperative Limited (IFFCO) — a major fertiliser manufacturer — is producing indigenously-developed nano urea at its Nano Biotechnology Research...
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Under IBC, protecting minority shareholders
The soul of IBC mechanism lies in timely detection of stress in a firm and selling it as a ‘going concern’ The Securities and Exchange Board of India (Sebi) has proposed a framework to protect the interests of public equity shareholders in case of listed companies undergoing insolvency proceedings under the corporate insolvency resolution process (CIRP) of the Insolvency and Bankruptcy Code (IBC). In 2016, the Modi Government enacted the IBC. This legislation overrides all other subsisting laws and gives a strong handle to the banks for resolving non-performing assets (NPAs) of lenders. In 2017, it amended the Banking Regulation Act (BRA), giving RBI powers to force banks to act if they don’t on their own. On February 12, 2018,...
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RBI should pause rate hikes, boost growth
Since inflation is driven primarily by supply-side factors, the RBI should avoid too many interest rate hikes In 2016, the Government had put in place an institutionalised framework, the Monetary Policy Committee (MPC), to formulate monetary policy and determine the key interest rates. It mandated the Reserve Bank of India (RBI) to fix rates, especially the repo rate or RR (interest rate at which the RBI lends to banks), in such a manner as to maintain inflation—as represented by the consumer price index (CPI)—within the target range of 4 per cent (+/- 2 per cent) for a five-year period ending March 31, 2021 (the mandate has now been extended for further five years ending March 31, 2026). In the case...
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Nano fertiliser move can be a game changer
Nano fertilisers not just promise to cut down subsidy burden but also improve the income of farmers Inaugurating function of the two-day “Kisan Samman Sammelan” at the Indian Agricultural Research Institute (IARI) on October 17, Prime Minister Narendra Modi announced two major policy initiatives — “One Nation, One Fertiliser” scheme under which all fertiliser manufacturing and market companies will sell all subsidized fertilisers under a single brand Bharat; and promote use of liquid nano fertilisers. While the government intends to use “One Nation, One Fertiliser” scheme to reduce the criss-cross movement of fertilizers that will eventually help reduce freight subsidy bills and make quality fertilizer available at lower cost, adoption of liquid nano urea is meant to help attain self-sufficiency...
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Tax surge a cushion to bear hit from subsidies
But tax collection buoyancy has been slowing down since the last year, which calls for tightening slippages In the past, a shortfall in tax receipts of the Union government vis-à-vis the budget estimate (BE) and excess of expenditure over BE led to high fiscal deficit (FD) year after year. To rein in FD, it often took recourse to non-tax receipts such as dividend from public sector undertakings (PSUs), proceeds from selling government shares in one PSU to another, transfer of surplus by the Reserve Bank of India (RBI), proceeds from sale of spectrum for telecom services, etc. This was unsustainable as reliance on non-tax receipts is unreliable. For instance, dividend from a PSU depends on a host of factors specific...
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Shun freebies, avoid bankruptcy
The reckless spending of taxpayers’ money on ‘freebies’ is neither recognised policy/custom nor sanctioned in a court of law. Credit: DH File Photo Hearing a PIL seeking directions against ‘freebies’ on August 3, the Supreme Court sought suggestions on the composition of a committee that can go into the issue “dispassionately” and make recommendations. It gave a sense that it is for Parliament, besides the Election Commission, to take the initiative to enact a law on curbing freebies. The Union government’s standards of financial propriety clearly lays down that “no authority shall exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its advantage; and the expenditure from public moneys should not be...
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