Thought for the day
”Without doubt, machinery has greatly increased the number of
well-to-do idlers.”
-
Karl Marx (German, 1818-1883)
Word for the day
Polaris (n)
The North Star
(Source:
Dictionary.com)
Teaser for the day
Ved Pratap Vaidik...Digvijay Singh...Arvind
Kejriwal....Rakhi Sawant....Veena Malik....Poonam Pandey!
Some random thoughts
Since its formation Modi government has advocated the use of
private public partnership (PPP) model of development rather aggressively. Both
railway as well general budgets respective ministers have laid strong emphasis
on use of PPP for developing infrastructure of national importance.
However, recently the Surface Transport Minister Nitin Gadkari
suggested that "the government has decided to put all public-private
partnerships (PPPs) in the road sector on hold for two to three years as just a
few infrastructure firms have any capacity to put all public-private
partnerships (PPPs) in the road sector on hold for two to three years as just a
few infrastructure firms have any capacity to invest in new projects". (read
here)
The suspicion here is whether there is some discord within the
government as regard to aggressive use of PPP model?
I view these two apparently divergent stance are part of the
same script. The capital starved government would certainly be keen on private
participation in the development of key infrastructure projects. However,
learning from the past experience, the balance sheet strength of the private
partner must be the foremost concern to ensure smooth and timely execution.
Insofar as existing stalled PPP projects are concerned where the
private partners are in default, the government should consider selling these
projects on as is where is basis for faster execution rather than buying these
on its own book. This will only add to the pressure on bank's asset quality and
fiscal health of the economy.
In an interview
earlier this week, the Finance Minister Arun Jaitely stressed that "for
utilities the user will pay for what they use. Unless users pay, utilities
can't survive." This could mean higher electricity charges as well as a
cut in subsidies. This essentially means that the government intend to
materially cut subsidies on energy and transport.
As an analyst I would tend to
believe that it is a step in right direction to ensure (a) energy
efficiency, (b) proper capital allocation, (c) effective and targeted subsidy
programs and (d) structurally improved fiscal health of the government.
However, as a consumer I have some serious doubts. For example,
(a) On paying
"Fair fare" for rail travel will I get full service?
What is "Fair Fare" is also a matter of debate. To me
the fare calculated based on the bloated and highly inefficient cost structure
is not fair for me. I would like the employee costs (pensions, perquisites,
bungalows etc.) to be recalculated as per current competitive pay structures.
(b) I am happy to pay
full price for transport fuel and cooking gas, provided an even playing field
is given to all potential suppliers and I am given an option to buy from
whatever seller I wish to. I should not be forced to pay for the PSU
inefficiencies of OMCs.
After all no one is complaining for full and fare telecom tariff
or even air tickets.
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