(Image Courtesy: Dedicated Freight Corridor Corporation of India)

 

When United States Government Accountability Office (GAO) issues a report to tighten enforcement of Buy America Act (BAA) of 1933, it is time to turn eyes on Government procurements (GPs) across the nations.

They are akin to Aladdin’s Magic Lamp containing elixir for free & fair global trade.  On the other hand, if a Government’s right to spend is considered as a no-go terrain for globalists, then complete opening up of GPs to imports can be viewed as allowing anyone entry into one’s bedroom. 

GPs, coupled with offsets, impact fiscal space at both ends – tax revenue inflows and expenditure efficiency. Offsets, the popular variant of counter-trade, are invariably invoked by developing countries in big-ticket import in defence and aero-space sectors.

Offsets facilitate transfer of technology and local development of components in the importing country. The arms and aircraft exporters are required be to purchase such components under offset contracts.     

GP plus offsets (GP+OS) perhaps constitute the most pervasive and tolerable form of protectionism. No wonder such protectionism didn’t get mention in the recently held G20 Summit declaration.

Moreover, global hue and cry over rise in tariff and the usual non-tariff barriers has overshadowed the growth of GP+OS. Major institutions should undertake comprehensive studies at both the national and global levels to assess the impact of GP+OS on national GDP, jobs market and global trade.

Do preferential purchases from local businesses outweigh disadvantages in the form of expenditure inefficiency? Do GP+OS facilitate good growth of excise/VAT & income tax (non-customs revenue) by shifting potential business from foreign suppliers of goods and services to local ones? Are they worth their value as they create or protect jobs?  

 (Image Courtesy: dbtbharat.gov.in

 

Aadhaar-based direct benefit transfer (DBT) has hit avalanche of challenges posed by food and fertilizers subsidies. These dole-outs account for the lion’s share of explicit subsidies given by the Union Government.  

Though Cash Transfer of Food Subsidy (CTFS) Rules were notified in August 2015, not one State has discontinued physical delivery of subsidized grain through ration shops. Jharkhand aborted its pilot CTFS in Nagri Block of Ranchi district six months after its launch in October 2017.  Cash transfer was strongly opposed by majority of the beneficiaries. A few lakh beneficiaries, however, continue to be served through CTFS in three Union Territories. 

CFTS can work only when the delivery of food grains across the country is smooth and timely. The Government also has to ensure that open market prices are fair and competitive, a herculean task in an economy of continental dimensions.

Any price volatility in different regions due to supply glitches or market manipulations would make beneficiaries realize the gross inadequacy of cash transferred. Hence the poor masses continue to prefer subsidy in kind as that ensures access to fixed price of coarse grain, wheat and rice. 

They have patience to stand in long queues for grain, which is not always of specified quality.

No one knows whether and when CTFS would be rolled out across the country. Prime Minister Narendra Modi, who loves to speak about Aadhaar-based DBT, remains silent on this issue. 

Mr. Modi also maintains stony silence on turning pseudo-DBT for fertilizers into real DBT under which subsidy goes straight in beneficiaries’ bank accounts. His silence on long-delayed inclusion of urea under nutrient-based subsidy (NBS) scheme for fertilizers is equally deafening. 

 (Image courtesy: taxindiaonline.com)

 

 

“Reduce politics to end policy paralysis: Narendra Modi.” This headline dated 8th April 2013 is the best Governance-cum-Vikas mantra mooted by Mr. Modi. At that time, he was widely perceived as most convincing Prime Ministerial prospect who focused more on development and less on politics.

Unfortunately, Mr. Modi, as PM, has not followed this mantra, thereby leaving his glass overflowing with policy paralysis (PP). He has also not treated PP with his fabled love for speed in decision-making process. He has instead played more politics than any of his predecessors, thereby catalyzing PP. 

PP is a deadly cocktail. It includes backlog of legislative and executive proposals that he inherited from UPA and earlier regimes. The cocktail also includes initiatives that Mr. Modi proposed as Chief Minister but shunned them as PM.

PP, in this column, does not include bucketful of promises that he made at the political rallies. The potion, however, includes initiatives listed by BJP in its 2014 and earlier manifestos for Lok Sabha polls.

Before citing specific instances of PP, we need to recall what Mr. Modi stated at the first ‘Think India Dialogue’ organized by Network 18 in April 2013.

He observed: “All decisions are taken keeping an eye on the next election. Political parties are under pressure to avoid or delay decisions dues to elections”.