ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Incomplete Story of the Political Economy of the Power Sector

Mapping Power: The Political Economy of Electricity in India’s States edited by Navroz K Dubash, Sunila S Kale and Ranjit Bharvirkar, New Delhi: Oxford University Press, 2018; pp 400, ₹ 1,195.

Doing Business Rankings: Reforms Must Focus on On-Ground Realities for Trade Facilitation

The latest Doing Business (DB) 2020 report places India 63rd among 190 countries, 14 places ahead of its position the previous year. While reforms in the areas of enterprise promotion and reducing red tape are always necessary, reform measures exclusively to attain a higher rank might jeopardise the priorities of that sector. The real success of a higher rank in DB could be in the form of hard infrastructure and last-mile connectivity rather than reducing a few certifications and office visits, making DB reforms go beyond just serving a higher rank.

The Banking Conundrum

Neo-liberal banking reform was launched in the early 1990s to address the low profitability of the public banking system and the large presence of non-performing assets. It set itself the objectives of cleaning out NPAs, recapitalising the banks and modifying banking practices to restore profitability and drastically reduce NPA volumes. This did initially have some effect. However, while the NPA ratio fell between the early 1990s and the mid-2000s, it has risen sharply since then. Moreover, while earlier priority and non-priority loans contributed equally to total NPAs, more recently, large non-priority loans to the corporate sector account for the bulk of NPAs. An analysis of these features reveals that these trends are indicative of the failure of neo-liberal banking reform in India.

Economic Reforms and Agricultural Growth in India

It was argued that economic liberalisation would ensure a favourable shift in the terms of trade for agriculture in India, enabling producers to plough back surplus from cultivation to make long-term improvements on land, and raise agricultural productivity and growth rate. Contrary to expectations, there was no noticeable improvement in the terms of trade for agriculture during the reform period. Moreover, decline in capital formation in agriculture, inadequate expenditure on irrigation and extension services in rural areas, and a dearth of cheap institutional credit, resulted in a slowdown of agricultural growth and heightened livelihood insecurity for a substantial proportion of those dependent on agriculture.

Dynamics of Inflation in Services

Price developments in services need to be analysed on the basis of CPI to study their contribution to inflation in relation to that of goods. At present, services sectors account for almost 50 per cent of the aggregate GDP. Higher price increases, rising productivity and increased tradability could create a â??virtuous circleâ?? associated with a higher share of services in GDP. However, reforms and privatisation programmes, if not associated with increased efficiency, may also contribute to a rise in charges and services prices.

Coal : Deep in Trouble

Reforms in the coal sector seem once again to be heading nowhere. The bill to amend the Coal Mines (Nationalisation) Act, 1973, which was to be tabled in the ongoing winter session of parliament, has been deferred on the recommendation of the group of ministers. If the move was aimed at heading off the planned three-day strike called by the unions of state-owned coal companies, it did not succeed. The non-INTUC trade unions struck work at the mines of Coal India (CIL) and its seven subsidiaries nationwide, causing widespread disruption of production and dispatch. In addition to registering their opposition to the bill, the strike was also in protest against the non-payment of arrears as per the sixth national coal wage agreement. The unions are now reportedly planning to launch an indefinite agitation to press their demands. Considering that Eastern Coalfields (EIL) and Central Coalfields (CCL), two of CIL’s three loss-making subsidiaries, are believed to have suffered an estimated daily loss of Rs 50 crore and Rs 90 crore respectively during the strike, the unions’ move will deliver another blow to the struggling coal behemoth.

Aspects of Banking Sector Reforms in India

This paper examines some of the consequences of the banking sector reforms in India which were an integral part of the liberalisation process of the economy initiated in 1992. In particular, the data show that, in the post-reform period, investment in government securities by banks has remained persistently high and there has been a significant reduction in the flow of credit (as a proportion of deposits) to the real sectors of the economy. There have also been significant changes in the flow of credit to various groups and sectors within the economy, some of which might be thought not to be in conformity with the stated social goals of the government.

Electoral Reforms: Need for Citizens' Involvement

There is no escape for concerned citizens and civil society groups from getting involved in politics without being politicians. They have to use all available means to change and continuously monitor the functioning of the political system. These means include using the judicial system through public interest litigation, the media for information dissemination and statutory organs such as the Election Commission and the Law Commission which have both proposed major initiatives for reforming the electoral system.
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