A file photo of Prime Minister Manmohan Singh with UPA chairperson Sonia Gandhi.
Singh is king, again. For the last couple of months, the doctor in Manmohan Singh has prescribed surgery to cure all economic ailments.
For many, the Congress-led United Progressive Alliance (UPA) II government’s bold decision to break a long-standing policy deadlock by approving a series of reforms in areas that range from diesel de-control to mutil-brand retail FDI, is a strong indication it is determined to revive India’s slowing economy.
At a time even India Inc. had begun to express doubts over the Prime Minister’s ability to steer the country back on the path of reforms that he had ushered in 1991, Singh bit bullet after bullet in the space of approximately 90 days.
However, there is one school of thought that envisages that the Prime Minister is eyeing early elections in December 2013. His opponents term the recent reform initiatives as a purging exercise. The UPA II is heavily banking on Food Security Bill to drive home the point that the government is serious about the welfare of aam aadmi. The corruption scandals and other setbacks have dented Singh's impeccable reputation as an incorruptible man of integrity.
Political pundits are of the view that Singh’s idea is to bequeath a legacy that would endear and not repel him to future generations.
Here is an economic report card on Manmohan Singh government in the last few months
Edit | Freedom for oil firms on diesel welcome -- but must be real
It is important to note that India’s government has spent too much for too long on wasteful subsidies, and the diesel subsidy is perhaps the most wasteful of all. It is the most poorly targeted of subsidies. It is taken advantage of by car owners and generator users, who are among the richest Indians; while less well-off Indians using two-wheelers pay for their petrol at market-linked prices that are much higher. This has also contributed to a worrying dieselisation of India’s economy. Diesel is sold at almost Rs 10 a litre below the sustainable price for the fuel, and the annual bill for that to the central government comes to Rs 96,000 crore.
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Oil firms allowed to fix diesel price; subsidised LPG cap raised
Unwilling to announce a hike in diesel price, the government on Thursday allowed oil marketing companies to increase the price in small doses periodically and bring it in line with global rates.
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Also See | Graphic (Moving back and forth)
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Edit | Railways moves forward
The government’s announcement on raising railway passenger fares for all classes of travel was long overdue. Basic fares for all categories, except a small segment of upper-class and air-conditioned travel, have remained unchanged for almost 10 years. As a result, the Indian Railways’ losses in passenger operations are estimated to have risen to Rs 25,000 crore in 2012-13, a fourfold increase over 2004-05.
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Govt increases railway fares by up to 25%, after a decade
Barely a month-and-a-half before his Budget, Railway Minister Pawan Kumar Bansal has sprung a surprise by announcing an across-the-board fare rise– the first in 10 years. The refusal by successive ministers to raise passenger rail fares has strained the railways’ finances, sapping its capacity to lay new track, modernise services and improve safety. But predictably, the Opposition, including the Trinamool Congress, which threw a spanner in the railway fare hike plans on many occasions, slammed the move.
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GAAR deferred by 2 yrs
In a breather to foreign investors, especially those coming via Mauritius, the government has deferred the controversial General Anti-Avoidance Rules (GAAR) by two years, making the norms effective from the 2016-17 assessment year. The Parthasarathi Shome committee had recommended that GAAR be pushed three years further. All other major recommendations of the panel were accepted, with some deviations.
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Also See | Graphic (GAAR: All about the tax plug)
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Govt changes Net police rules
Cops can no longer register complaints of online hate content without clearance from officers of the rank of inspector-general in the metros and deputy commissioner or superintendent of police in other urban or rural areas. The government specified this following criticism that the Information Technology Act, specifically Section 66A, was being misused to stifle freedom of expression, as in the recent arrest of two young women over Facebook comments in Palghar, Maharashtra.
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Companies Bill passed
The government gave a facelift to 56-year-old companies act. On 18 December, the Lok Sabha passed the Companies Act 2012. More importantly, the bill gives more teeth to shareholders. Now, they can take legal action against fraud. Also, it closes a window for independent directors as they won’t get any stock options.
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Parliament passes Banking Bill
The Lok Sabha cleared the Banking Laws (Amendment) Bill, 2011, after Finance Minister P Chidambaram agreed to drop the contentious proposal on allowing banks to do futures trading. He also clarified status quo would be maintained on the jurisdictions of RBI and the Competition Commission of India ( CCI) in the banking sector.
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FDI sails through Parliament
The UPA government won a parliament vote on allowing foreign supermarkets into the country, paving the way for Prime Minister Manmohan Singh to press ahead with more reforms, including freeing up a cash-strapped insurance sector.
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The decision on diesel is likely to cut the subsidy bill by Rs 12,900 crore on account of hike in price of fuel sold to bulk consumers like Railways and state transport undertakings. Diesel accounts for 59 per cent of the estimated Rs 160,000 crore fuel subsidy bill in 2012-13. The government is expected to save about Rs 9,000 crore of raise in price for retail buyers.
Bharatiya Janata Party
Prakash Javadekar | The party opposes the government design to increase diesel prices ... It is being done under the garb of allowing OMCs to review prices periodically. This is escapism of the government from its duties.
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Dravida Munnetra Kazhagam
M Karunanidhi | The poor and middle class cannot afford an increase of 50 paise per month. Moreover, the hike will have direct bearing on all other essential commodities.
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Communist Party of India (Marxist)
Prakash Karat | The common people are already hard hit by price rise of commodities. Deregulation of diesel prices will put additional burden on them.
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Samajwadi Party
Kamal Farooqi | This way the price of diesel will go very high. Plus there are no benefits for the farmers. I think it is very dangerous. It is an anti-farmer policy.
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Bahujan Samaj Party
Mayawati | Former Uttar Pradesh Chief Minister and BSP chief slammed the UPA government for its decision to deregulate diesel price, saying it would affect prices and hit common man badly.
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Nationalist Congress Party
Nawab Malik | In the wake of diesel price hike, NCP demands cash subsidy for farmers who use water pump... high end diesel cars should be charged more.
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Trinamool Congress
Derek O'Brien | The Rajya Sabha MP termed the decisions as all 'gas and gimmicks'. He tweeted: "the Congress-led minority government is not managing the economy as much as damaging the economy..."
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