Friday, February 12, 2010

Deregulation of Oil Prices in India

Raghu is a clerk by profession who lives with his wife and two daughters. He uses the city bus services to commute daily to his office. Though not highly educated, he loves going through the newspapers to keep him abreast of the latest happenings. He is especially fascinated by the news related to the ‘aam aadmi’ (a typical middle class person; the new rage amongst the TV channels and politicians). He was happy that the government was making special efforts to keep oil prices in check so that people like him could benefit. The efforts of the central government had helped him keep his household expense viz. LPG cylinder, bus tickets etc in check. 

But he was surprised how his neighbour Rajesh, a businessman, could afford the latest gas guzzling cars when the government was finding it so tough to keep the fuel prices in check. In order to satisfy this curiosity, he asked this question to Rajesh. Rajesh replied, “In the existing scenario when the international price of crude oil is constantly threatening the 100$ (per barrel) mark and in India you could still afford it for Rs 50 per litre, why not make the most of it?” After replying, Rajesh sped past him in his latest SUV. Raghu was puzzled. Was the government step really pro-aam aadmi or was it bad policy? For the past few days the news related to a panel headed by a gentleman named Kirit Parikh has caught his attention as it is related to “deregulation” of oil prices in India. He wonders what this topic is all about and how does it affect an average Indian? Let’s try to answer his question.

Wednesday, February 10, 2010

Is the Government ready to roll out the GST?

(This article was published in the 7th Dec, 2009 edition of the Financial Express. The Link for the same can be found here.)

Reaching a consensus between the Centre and states on the issue is the biggest stumbling block

The goods & services tax (GST) is part of the proposed tax reforms aimed at evolving an efficient and harmonised consumption tax system in the country. Presently, there are parallel systems of indirect taxation at the central and state levels. The world over, goods & services attract the tax. But what is the key to the introduction of GST? The first step is to progressively harmonise the service tax rate and the Cenvat rate. The central government plans to roll out GST by April 2010. Therefore, the question is, are we ready to do it?

Monday, February 8, 2010

Does anyone lobby for the common man in the budget?

(This article was adjudged as two of the best entries by Mint newspaper, Hindustan Times Media Ltd from all over India for this topic related to Budget 2010)

What does a common man expect from the budget? Lower inflation, lower tax rates, more avenues to save taxes, extension of the social security net, emphasis on health, education & infrastructure and above all a budget that is comprehensive and transparent in nature.

But what do they get? Some populist declarations that are unlikely to be sustainable (Ricardian equivalence ensures that we fear the future rather than enjoy the present), changes in direct taxes that benefit the business class much more than the common man (doing away with the standard deduction: salaried class had once again taken a hit compared with businesspeople, who could continue to write off business expenses), further shrinkage of social security net (lowering of interest rates on PF being debated every now and then), indirect taxes like service tax that ensure that the price that he has to pay shoots up. Wasn’t it true during the financial meltdown when the government was busy doling out sops to the industry, the FMCG companies were increasing the prices as well as decreasing the quantity of their offerings. It was not a surprise that they raked in mullahs while the common man suffered again. Reforms like GST wait because it creates a system too transparent and efficient for the industry. Imposition of education cess, leakages in the development schemes, rising interest rates or inflation etc in the end are borne by the common man.

So, we can say that though the industry looks most concerned as well as vocal, the one who suffers silently is the common man. He might benefit here or there by some populist measures (esp. when the election are round the corner), but it’s too short lived. So, when a industrialist or a politician can defend one's turf effectively using jargons like deficit, WPI etc why would somebody lobby for the common man in the budget? It’s not a surprise that nobody does.

Women corporates: the key to better balance between growth and risk ?

So, the gender issue is back. We are again debating the existing divide between the male and the female workforce. But thankfully the issue doesn’t pose itself as a problem this time.Rather, it tries to find a solution. It aims to strike the right kind of balance between growth and risk in the business world. The recent financial turmoil has ensured that we debate it now else it will be too late. So, the million or should we say the billion dollar question is: Is increased women participation the key to better balance business growth and risk?

Sunday, February 7, 2010

Role of youth in indian politics

Rahul Gandhi, Agatha Sangma, Varun Gandhi & Sachin Pilot have a common thread running through them. Can you tell me what? For most of us they are the young face of Indian politics. Dig Deep! There is one another connect. They all are scions of political families. A post election analysis of the recently constituted 15th Lok Sabha shows that 50 of the 81 young MPs come from political families. That’s a whopping 62 per cent who aren’t exactly self-made.