"Containing fiscal deficit alone will restore government’s credibility"
Just a day after Tata group chairman Ratan Tata tweeted in defence of Prime Minister Manmohan Singh, while seeking action to restore the credibility of the government, Prime Minister’s Economic Advisory Council (PMEAC) chairman C. Rangarajan spelt out what that action could be, and called for decontrol of diesel prices and foreign investment in multi-brand retail.
“I do hope action in terms of changing prices of petroleum products, more particularly diesel, will come through as early as possible. That is extremely important,” said Dr. Rangarajan, who is a key adviser to the Prime Minister, besides Planning Commission Deputy Chairman Montek Singh Ahluwalia, ever since Dr. Singh took charge of the Finance portfolio.
Speaking at a conference on the country’s economic policy here, the PMEAC chief said that as the days of ‘big-bang’ reforms are done with, the government could move forward regarding approval to foreign direct investment in retail and civil aviation, through executive orders outside Parliament.
“I don’t think that it is necessary or there is a case for big-bang reform. So, I would say that we really need to look at foreign direct investment, and foreign direct investment in retail and civil aviation can possibly be done without going to Parliament. It can be done by executive decisions,” Dr. Rangarajan said, while pointing out that political consensus has to be built up “slowly,” for hiking the foreign direct investment limit in sectors such as insurance and pension.
Mainly owing to opposition from its own coalition partners, the government has neither succeeded in raising the foreign direct investment ceiling in insurance and pension sectors to 49 per cent from the existing 26 per cent, nor has it been able to throw open multi-brand retail business to foreign players.
More importantly, the PMEAC chief felt that decontrol of diesel prices was essential to contain the fiscal deficit during 2012-13 at the budgeted level (5.1 per cent of the GDP) through administrative measures, as this step alone would restore the government’s credibility. “I strongly feel we need to contain [the] fiscal deficit. That is the only way to maintain credibility of the government,” he said.
Keywords: Rangarajan, PMEAC, diesel price regulation, deregulation of diesel price, FDI in retail, fiscal deficit, Indian economy
It looks that much can be said on both sides. Only when we have a thorough study done by neutral experts and have an unbiased true picture, all our views will just be conjectures and platitudes. The Govt. should have done this by now and placed the report before the Nation for eliciting expert suggestions. Other wise it would be premature and dangerous to decide either way.
If we go back 400 years and analyze this situation, Rangarajan would be a minister in a princely-state who gave wrong advice to the King that helped the British to control the Kingdom's fortunes and eventually take it over in due course of time. Our armies had swords, horses and elephants. The British came with Cannon balls and conquered us. Now our small business folks are exactly in similar situation. They have their hands tied and they will be asked to fight these huge big box companies who will wipe them clean in a few years. If Rangarajan can't remember history, let me give him an example of the domination of Pepsi and Coke in India. Sir do you remember the days when you drank Gold Spot and Campa cola? Today if you start a beverage company you will stand no chance! Please stand up and show some spine! Read the history books and know your responsibility for the future of the country.
Rightly said. Many an action of semi-reform nature are very much within the ambit of
the government. Government might not have to go for parliamentary approval. The
experts have to think in right way and adopt right procedure. Where there is a will,
there is a way. The procedural niceties and effective inter-departmental coordination
for clearances etc. will go a long way in ushering in many a progressive measure
through executive action.
decontroling diesel will have many adverse affects that will strike hard
at common man and this again will question government's policies .
decontroling deisel is bound to affect every section of society unlike
petrol. government should consider other option if they want to control
fiscal deficit. agian a bad policy coming to effect.
less than a week after Mr. Obama's comment about the need to open the Indian
Market for FDI in retail and other economic reforms, we now have the chairman of
economic advisory voicing the same. Makes one wonder if the opinion voiced by the
Chairman is after due consideration and evaluation of measures that would be for
economic welfare of India or some other country?
With my limited knowledge i just want to know whether the petrol has
been deregulated in true sense till date?
Whether deregulation of diesel prices would mean the same thing?
Looks like giving the control to foreign companies is the only way RBI knows how to control deficit. Already banks are paying 9.5 - 10% ( tax free )on the NRE deposits. In US the same money earns only 2%, so that leads to 7% devaluation of Rupee and Indian banks paying foreign governments in the form of tax through the depositors. Has RBI become a part of a foreign government?
There is a reason why we are a democracy. How can one even think of
implementing something as critical as FDI in retail outside of
parliament!
And really, are there no other options for growth of a country than to
throw it to some Big Box companies who will bring dollars and dump
cheap products, unethical practices and pose a danger of wiping out
small businesses. How about reviving some of our own small-scale
industries?
And what kind of studies have been done about the impact of FDI in
retail and by that I mean well-rounded studies, not just how many
dollars are coming in. It is critical to look at the long term impact
and not solutions that only last until the next elections.
We need a debate, a full-fledged discussion on this topic. We keep
forgetting that at this point, WalMart wants us more than we want it.
we need to endorse these views as detailed by the experts like
Rangarajan, Manmohan singh, Montek Singh etc. The nation cannot pamper
the 1.21 billion population India with huge subsidies. Subsidies were
brought to rejuvenate the economy when people were in dire state.Now
climate is changing. Significant chunk of the subsidies are enjoyed by
the higher income class lavishing with luxury cars and independent
power genes.
Deregulate prices and encourage public transportation and if need subsidize public transportation attracting with cheaper ticket rates.
In case of LPG, exercise full charges from higher income groups,
partially with middle class and cushion the comfort of subsidy only
for BPLs. People will get accustomed to new prices in sometime and
drive their life accordingly.
mr. rangarajan should concentrate on the tax concessions, reliefs etc given to the corporate sector to the tune of 5 lakh crore of rupees this year to bring down the fiscal deficit. it is irresponsible and inhuman to take any step that may escalate already skyrocketing prices which worstly effecting the poor and common people. because of this policies ambani's etc are benifitting at the cost of the poor. mr. obama may like his statement, but not certainly a common indian citizen.
The Prime Minister's key adviser, Dr C Rangarajan says,decontrol of diesel would
give freedom to state-owned oil companies to fix the price of diesel on their own,
which currently is decided by the government. Is it really so ? This "freedom" can
really be so,only if there are no government directors on the Board of the state-
owned oil companies. In other words, they are in real sense independent of govt
not only in their functioning, but also in the appointments of Directors and Chief
Executives. Picture is same with regard to any other PSUs. Unless the PSUs cease to
be "milking cows" of the administrative ministries, nothing is likely to improve.
PSUs would only be made scapegoats if anything goes wrong,with the government
keeping indirect latent control by proxy over its working.
Decontrolling of diesel price will lead to continuous fluctuation in
the price of food items and transportation charges. How does the Govt.
plan to tackle that?
Is it not a better idea to control the price of diesel and take
diesel-run 'private' vehicles off road in a systematic manner. Why were
diesel cars and SUVs allowed in the first place?
Decontrolling diesel will certainly bring the Govt. down at the
centre but even subsequent govt. of NDA, if comes to power, will not be
able to rescind it.
The Decontrol of Diesel price in not advisable till sufficient LNG entry ports have been created.When there is competition to use the
fuel by Public Transportation and Private Transporters there will be
a continous cry to adjust prices.Time will ensure that Private Passenger hire transporters of the Auto variety will switch to Hydrogen.A timetable is a must and a year from now may be ideal.It may be the question on the relection of the present ruling party.
FDI in retail is also an experimental desire.It is best to give a safe retailer like the Japanese one an opportunity first and then a
Chinese one and then try to offer to those others who only do Muscling.
FDI will allow the Foreigners to CONTROL India's Rupee.M M Singh
is trying his 1991 trick.Already the FIIs are making MM Singh and the
RBI dance to their tunes.When a country loses control of her
Currency,she is doomed. FDI in retail and the petroleum products'
decontrol and price hikes have a connection.This will allow the MNCs
to loot India by setting up Petrol and Diesel pumps.
The OMCs have to first,come clean on the so-called,"under-
recoveries".Once this is done in all fairness,there will be NO need
for FDI in multi-brand retail or decontrol of prices and hikes in
petroleum products.
The so called think tanks of economy should understand the plight of the
common man and make his life a little easier. They should look into
reducing the import tax Central Govt & State Govt(65%) of crude oil so
that the common man is not affected. Let them raise the income tax of
high end induviduals, and folks who stay in 5 start hotels to compensate
this. the problem with these old think tanks is they do not think out of
the box. All these mismanagement was created by them when they where in
service and now they are following it up as economic advisors.
“I strongly feel we need to contain fiscal deficit. That is the only way to maintain credibility of the government. It is necessary to maintain fiscal deficit, maintaining the fiscal at the budgeted level will mean that we need to necessarily take actions, mostly administrative,” he (Dr.C.Rangarajan)said.
~ Truly said. 'Contain' is the mantra. The CAG has been crying hoarse, the very
same message for the past forty years.
I don't understand this fixation with FDI in retail. Is India really struggling in retail trade? Don't our people do it as effectively and efficiently it is possible given our infrastructure? Where is the pressing need to invite FDI? We need to evolve at a pace that is comfortable for our infrastructure. When we have evolved enough, we'll have a good handle on this field and at that point consider slight loosening. Right now the best action is not to open it up. I am disappointed that everyone in this UPA govt is for it.
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