Tuesday, February 18, 2014

Nothing to fear

Thought for the day
“For to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill.”
-          Sun Tzu (Chinese, 544-496BC)
Word for the day
Impugn (trn v)
To attack by words or arguments; to call in question; to make insinuations against; to oppose or challenge as false;
(Source: Dictionary.com)
Teaser for the day
Want a Lok Sabha ticket - hurl your shoe on a minister!

Nothing to fear

Continuing from yesterday, I would like to first deal with the least likely (in my opinion) but most debated feared outcome of the 2014 election, viz., AAP leading the government with full support of Congress party and “others”.
In my view, in the absence of a formal economic policy vision documents presented by AAP, the following four precedents, provide indication towards the likely economic approach of AAP:
(a)   Withdrawal of permission granted by previous regime for 100% FDI in multi brand retail trade,
(b)   Electricity & water subsidy for low users, and
(c)   Challenging the gas pricing formula prescribed by Rangarajan Committee and accepted by the Union Cabinet in an unconventional way; and
(d)   Questioning the Delhi discoms and threatening de-privatization of power distribution function in the state of Delhi.
Sensationalism apart, I believe nothing could be deduced from these instances that would suggest that AAP could bring any radical change to the status quo insofar as the economic policy of the country is concerned. This may however be a matter of concern for those unscrupulous businessmen who misuse loop holes in the policy for personal gains and to the detriment of the common people.
Most non-Congress ruled states, including BJP, have made it clear that they would not permit FDI in multi brand retail trade in their respective states. In fact Rajasthan BJP government has also withdrawn the permission given by the previous Congress government in this respect. There is nothing that makes AAP stand out.
To the contrary, it does indicate that AAP actually is more than willing to side with the traders, who are not particularly known for their compliance standards insofar as the taxation and municipal rules and regulations are concerned, if they see them as their political constituency, much like BJP.
Most parties, including BJP and Congress, when in power have offered electricity and water subsidies for segments like low users, farmers, etc.; so nothing new or worth worrying here. AAP seems business friendly as it has extended the subsidy to the industrial users also without any discrimination.
The FIR against Mukesh Ambani should be seen in the context of the tremendous nuisance value it carries (Ambani now being equivalent of Tata-Birla of 1970’s). The details of FIR suggest it is mostly untenable and carry no implication for AAP, as the complainant is Delhi government not AAP or any of its members. Deriving any indication of economic policy from this would be inappropriate in my view.
The accounts of discoms and operators of E&P assets have been consistently challenged by various parties. It is not a secret that cost escalation of projects through unfair and unethical means is a common practice amongst Indian entrepreneurs. This practice is actually one of the primary source of money laundering. If this practice could be checked – who should be complaining?

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