Through Tortuous Swings And Roundabouts, The Government Makes Progress
An’ losses on the roundabouts
means profits on the swings!
Patrick R Chalmers,
Poet and London Banker.
The Indian Public Sector is not only chronically inefficient,
with just a few companies turning any kind of profit; but also substantially
corrupt. The Private Sector, the Unorganised Sector, even the world of NGOs, is
no better when it comes to venality.
India, with all its promise, is ranked one of the worst
places on earth to do business. All of it, in addition to the creaky and perpetually
needy Government, is in urgent need of major reform, so that it becomes more
lucrative to be honest.
Fraud in PSU Banks in
just the first three months of fiscal 2014, totals to 2,417crores; over half of
the losses incurred by them in 2013-14 (4,183 crores).The sooner these PSU
Banks dilute their equity to 52%, as sanctioned by the Cabinet recently, the
better.
The PSU bank managements, often employed through political
patronage, need to be ousted. Many bankers themselves are involved in the embezzlement.
Such massive losses of public money are unsustainable
by the under-capitalised banks , and these numbers do not include the massive NPAs,
in tens of thousands of crores; some of which are being rescheduled now. Things are much better in the private and
foreign banks, because they use a higher level of monitoring technology and
data analytics to nip the problems in the bud. Perhaps the RBI will show some zeal to push
this privatisation through, and past all the vested interests.
In addition, a stupendous $ 94 billion in ‘illegal capital’
was apparently exported from India in 2012 alone, a lion’s share of it, due to deliberate misinvoicing.
With periodic bans on capital inflows into the bourses via the anonymous
participatory notes, very little of this capital ever returns to this country. So when are we going to finally go fully capital account convertible, to make
such cheating redundant?
Meanwhile, the divestment targets of the Government, over
Rs. 40,000 crores in this fiscal alone, is pending. The time left for this now
is just 90 days, assuming the ongoing market correction bottoms out soon. As it
stands, only a meagre Rs.1,500 crores has been realized from a 5% stake sale in
SAIL so far. Finance Minister Arun Jaitley wants to push it through to gain
credibility for the Government’s fiscal plans. This sale would meet earlier commitments,
before the full budget in February 2015, which will act as a verdict on this
Government’s ability to deliver in the short to medium term.
Second- Generation Reform, except for diesel deregulation, has
been non-existent so far. The FIIs are showing some frustration, retracing part
of the exuberant run-up in the indices
over the last year. The rupee too is beginning to tank, thanks to lack of
growth in the manufacturing sector, despite low inflation.
But still, all this could turn around dramatically.The
results of efforts to initiate the GST, which, when operationalised, is expected
to add up to 1.5% to GDP; and the Insurance Bill, with an estimated $ 10
billion, or more, to come in against the 49% foreign investment quota; if
passed in this session of Parliament, would be a game changer. The Government’s
Reform Agenda would receive a great boost. It would, in one stroke, set the scene
for a resurgent stock market in 2015, and attract a significant amount of FDI
as confidence in India grows.
The Railway Budget, to be presented this time by the acclaimed
Suresh Prabhu, is expected to lay-out the first serious modernisation, reform and
renewal measures, ever undertaken in independent India, for this venerable
institution and lifeline for millions. The FDI expectations in this are massive;
enough to drive up the GDP, and likely to feature Japan, China, and maybe
France as well.
The outcome of the Assembly Elections in J&K and Jharkhand
will also be known very soon. It may well give the BJP an opportunity to form coalition
Governments in both States, a big step up from its marginal presence in both. And all these Assembly wins and near-wins,
with more in prospect, will add to the Government’s numbers in the Raya Sabha,
and solve its legislative problems decisively.
It may appear to some,
that the fringe elements within the Sangh Parivar have been queering the pitch
for the Government. But the fragmented Opposition, rag, tag, and bobtail as it
is, would have found another way to make it difficult anyway.
On the foreign front, though the economic scenario is far
from settled, the thumping snap-poll win achieved by Shinzo Abe in Japan, a
prominent friend of Prime Minister Modi, will give a fillip to Japanese investment
in India as pledged.
All in all, as this year draws to a close, there are good
things to look forward to in 2015.
(801 words)
December 17th,
2014
Gautam Mukherjee
No comments:
Post a Comment