The Indian Panorama

Tag: FDI

  • Indo-US Relations: Economic Respite?

    Indo-US Relations: Economic Respite?

    Amid domestic political opposition by various states and political parties, the Indian government issued a notification clearing the way for the implementation of economic reforms. New Delhi announced massive set of reforms viz. 100 percent Foreign Direct Investment (FDI) in single-brand sector (earlier it was 51 per cent), 51 per cent FDI in multi-brand retail (prohibited so far), 49 per cent in aviation and 74 per cent in broadcast sector (except the TV news channels and FM Radio). The move is not surprising as the proposal regarding the reforms was approved by the cabinet in November 2011. But the implementation of the proposals had been deferred because of lack of a broader consensus among the various states.

    Some states and union territories extended their support in written and asked for its implementation, while other states expressed their reservations on the proposed reforms. Following the announcement, there has been widespread criticism amongst various political parties. They argue that through this step the government is trying to divert the people’s attention from corruption issues faced by the government

    According to them, the small industry sector will be adversely affected by these reforms. However, the government justified these reforms in terms of capital infusion and employment opportunities.

    These economic reforms are being seen as a second wave of reforms after 1991, when reforms were introduced to save India from the severe balance of payment crisis. India integrated its economy with the world economy by adopting the policy of liberalization.

    However, despite the opposition, this move will strengthen the bilateral relations of India with other countries as the foreign companies would get a chance to invest more in many sectors.

    The US media and corporations have hailed the Indian reforms as the biggest positive development in the last decade. US-India Business Council (USIBC) President Ron Somers said that these big bang reforms send a crystal clear signal that India is open for business.

    In fact, the leadership in the US had been pushing India for economic reforms for a long time. Earlier, US President Barak Obama had expressed concerns over deteriorating investment climate and stated that India has delayed decisions on FDI proposals in many sectors. However, corporate minister Veerappa Moily had countered such statements by stating that the US President was not properly informed about the country’s strong economic fundamentals. Thereafter, US Secretary of State Hillary Clinton during her Indian visit in May this year expressed her expectations from India regarding economic reforms.

    This visit was significant because she visited China just before arriving in India. During this visit she met with her Indian counterparts and the Chief Minister of West Bengal.

    There were media reports that during her meeting with Indian officials, Secretary Clinton discussed the investment issue that indicated the US desire of the economic reforms as its business corporation can get benefits from the large Indian market.

    So, one of the motives of Hillary Clinton’s visit to India was to push India for further reforms particularly in the multi-brand retail sector. While in 1991 Indian policy of liberalization was one of the major factors that led to the gradual improvement in Indo- US relations, India’s hesitance of late was now being deemed by analysts in both the countries as an area of discord in Indo-US economic relations.

    The recent reforms in India can be deemed as bonhomie in the Indo-US relations. Despite this, US investors may be hesitant on the absence of Bilateral Investment Treaty (BIT) between India and the US. According to this treaty, the government commits to protect investment in their territory by other countries (82 of them currently). At the instance of lack of security assurance the US investors will find themselves in a disadvantageous condition as compared to other foreign competitors. There is no doubt that these reforms will make way for better Indo-US relations and especially in the economic realm.

    But signing the Bilateral Investment Treaty is a must if both the nations want to gain full advantage from each other’s markets. At the same time, the Indian decision to put on hold its complaint against the US over the visa fee hike in the World Trade Organization (WTO) is also a welcome move from New Delhi as it will strengthen the bilateral relations further

  • No full stops for Congress in reforms race

    No full stops for Congress in reforms race

    NEW DELHI (TIP): Like the Cabinet meeting that cleared FDI in multi-brand retail, the one on October 4 was brief, with finance minister P Chidambaram saying foreign investment in insurance was the need of the hour and the government should not bother about the Bill being defeated in Parliament. The decision was smooth, like knife through butter.

    For the rare display of unanimity among Congressmen on historically contentious moves, the nod to FDI in insurance and pension provided the best evidence that the ruling party had embarked on an irreversible reforms agenda, a sharp departure from political sensitivities that influenced such decisions in the past.

    Observers and insiders underlined that Congress was approving FDI decisions in the middle of elections in Gujarat and Himachal Pradesh, which can have serious implications for its future, mired as it is in a cycle of defeat and in desperate search for victory.

    “It shows that the leadership has calculated that opening the market to foreign retail marts or insurance firms to foreign investment will not influence the voters, irrespective of BJP’s campaign,” a leader said citing that supremo Sonia Gandhi defended FDI in retail during her Gujarat campaign launch.

    The gung-ho reforms mode has been attributed to the economic crisis but it would be a leap of faith for the Congress if governance imperatives are delinked from their political implications.

    That has made observers see a “renewed Congress conviction in reforms”, with possibly the Prime Minister having convinced the leadership about the gains of 1991 liberalization he authored as finance minister.

    Samajwadi Party leader Mohan Singh said his party has traditionally been opposed to such proposals but stopped short of spelling out SP’s stance on insurance reforms. Clearly, Samajwadis are not too sure if the tradition holds true for the future.

    The UPA will be closely watching Bahujan Samajwadi Party chief Mayawati’s rally in Lucknow on October 9 when she will spell out her views on the recent reforms decisions by the Cabinet. Finance minister Chidambaram told reporters, “Legislation is a matter of negotiation and we will talk to the principal opposition party.”

  • Mamata pushes for no-confidence against govt

    Mamata pushes for no-confidence against govt

    New Delhi (TIP): Trinamool Congress chief Mamata Banerjee, who quit the UPA government after foreign direct investment (FDI) in retail was cleared last month, is on the warpath again. Banerjee on Ocober 4 pushed for moving a no-confidence motion to oust the Manmohan Singh government and asked all UPA partners to pull out of his ministry. This came after the Union Cabinet eased norms on FDI in insurance from 26 per cent to 49 per cent and opened up pension sector. The Cabinet also cleared a raft of big-ticket legislative proposals including the new Companies Bill, amendments to Competition Act and Forward Contracts (Regulation) Act.

    Describing the move as ‘immoral and unethical’, the West Bengal chief minister said the Trinamool Congress, a former UPA ally, will meet President Pranab Mukherjee in this regard.

    “Sarkar jaana jaroori hai, desh ko bachane ke liye,” she wrote on her Facebook page, days after Trinamool quit UPA over allowing FDI in multi-brand retail and issues relating to diesel price hike and cap on subsidised LPG cylinders.
    “The minority government cannot play such immoral role. Let us move No Confidence Motion. We have decided to meet the Hon’ble President on this issue,” the feisty leader said.

    “Today, yet another set of anti-people decisions of the Central Government have crossed the Laxman Rekha. These important decisions, which have direct bearing on the livelihood of millions of Indians, taken by a minority government, are immoral and unethical,” Banerjee added.

    “Increase in FDI percentage from 26 to 49 in Insurance Sector and introducing 26% FDI in Pension Sector will make lifelong savings of individuals totally insecure.

    “Is it the intention of the UPA Government to sell out the country? We should unitedly oppose all such moves and will not allow the government to be bailed out after a series of such anti-people decisions,” she said.

    Stating that the people of the country were watching the UPA government, she said, “I will also appeal to those supporting UPA to come out and oppose these moves in the greater interest of the people.”

    Attacking the UPA government of ‘looting’ and ‘lying’ to the country, Banerjee said the cap on subsidised LPG cylinders would hit the midday meal scheme seriously.

    “Is it what the common people expect from reforms? In the name of reforms, ‘loot chalche loot’ (the country is being looted). To suppress it, ‘jhoot chalche jhoot’ (the government is lying),” Banerjee said.

  • HSBC’s PMI stood at 52.8 in September 2012

    HSBC’s PMI stood at 52.8 in September 2012

    NEW DELHI (TIP): The HSBC’s Manufacturing Purchasing Managers Index (PMI)—a measure of factory production—stood at 52.8 in September 2012. The September PMI reading was supported by faster output growth and rising export orders, as per the HSBC survey. The index has remained above the 50 mark for more than three years now, below which it indicates contraction. “Economic activity in the manufacturing sector held steady supported by faster output growth and rising export orders,” according to Mr Leif Eskesen, Chief Economist for India and the ASEAN, HSBC. The Government of India has taken number of initiatives to boost the economy such as allowing multi-brand retail sector to foreign direct investment (FDI), hiking diesel prices by over Rs 5 a litre, plugging the number of subsidised LPG cylinders to six per family a year, allowing foreign carriers to pick up stake in domestic airlines besides liberalising FDI rules for broadcasting sector. In addition, HSBC highlighted that job creation, on the employment front, was recorded in September 2012, the seventh successive month of growth. Payroll numbers increased to meet stronger demand, with some signalling expansions in marketing departments.

  • Mulayam: Will Support UPA to keep communal forces at bay

    Mulayam: Will Support UPA to keep communal forces at bay

    NEW DELHI (TIP): In what would be a huge relief to Manmohan Singh government, Samajwadi Party chief Mulayam Singh Yadav has said that he would support UPA government to keep communal forces at bay.

    Speaking to reporters on September 21, Mulayam Singh Yadav said that he will not withdraw support from the UPA govt.
    When asked about midterm polls, Mulayam said he did not see any immediate possibility.
    There may be a Third Front in the 2014 polls, the SP chief added.

    Meanwhile, with Trinamool Congress set to exit the UPA, the Congress top brass, including Prime Minister Manmohan Singh and party chief Sonia Gandhi, will meet on September 21 evening to decide the future course
    of action.

    A meeting of the Congress core group headed by Gandhi is scheduled in the evening.
    This is the second meeting of the Congress core group which had met only two days back, a day after Mamata Banerjee announced the withdrawal of support.

    Government managers are confident of the numbers even after the withdrawal of support by the 19-member Trinamool Congress, which has been the second largest constituent of the 15-party ruling alliance.

    With the Centre not in a mood to yield to her demands for withdrawing the decisions on diesel, LPG cylinders and FDI, Banerjee on Thursday said in Kolkata that her party’s six ministers will submit their resignation to Prime Minister Manmohan Singh.

    Trinamool has six ministers, including one of Cabinet rank, in the UPA government.

    After Trinamool’s withdrawal of support, the UPA government’s support in Lok Sabha will come down from 273 to 254 and the coalition will be heavily dependent on Samajwadi Party (22) and BSP (21) for its majority in the House.
    For a simple majority, government needs the support of at least 273 MPs in a House of 545.

  • Bharat Bandh: UPA a minority after Mulayam courting arrest, says BJP

    Bharat Bandh: UPA a minority after Mulayam courting arrest, says BJP

    PATNA (TIP): Describing the nationwide bandh as an “unprecedented” success, the BJP on September 20 claimed the UPA government has been reduced to minority after the Samajwadi Party, an outside supporter of Congress-led coalition, joined the bandh with its chief Mulayam Singh Yadav courting arrest.

    “The spontaneous stir has reminded us the memories of movement led by Jai Prakash Narayan in 1970s,” BJP national spokesperson Ravishankar Prasad told reporters.

    After Mulayam Singh Yadav courted arrest in Delhi, taking part in the bandh against FDI in retail, diesel price hike and limiting subsidised LPG cylinders to a household, Prasad said it was now clear that the UPA government has become minority and lost all moral rights to take crucial policy decisions.

    The SP chief has publicly disapproved of the Centre’s policies, days after another UPA ally, the Trinamool Congress, withdrew support on identical issues, he said. The UPA government was doomed given the public mood against it and it would be thrown out of power in the next Parliamentary elections, Prasad said.
    On the brave face being put up by Congress leaders, he said those who were weak from within generally show arrogance on their faces.

    The senior BJP leader alleged the UPA government has problems with loss to exchequer due to subsidies in fuel products, but it has no qualms in waiving non-performing loans of industrialists and presiding over various “scams plundering public money.”

    Slamming the Centre’s decision to allow 51 per cent FDI in multi-brand retail, Prasad said the measure would only boost local and foreign corporates, and claimed that a section of corporates was putting pressure on the media to support it.

    “They are those who will benefit once the foreign retailers come over to India to set up shops,” he said. On the UPA trying to woo the BJD to make up numbers after withdrawal of support by the TMC, Prasad claimed BJD president Naveen Patnaik had not taken the final decision.

    Patnaik has been an anti-Congress leader all of his life, the BJP leader claimed.

    On CPI(M) general secretary Prakash Karat’s reported remarks about revival of the Third Front, Prasad said there was no likelihood of a government being formed by Third Front leaders in future as was the case with former prime ministers V P Singh, Chandrashekhar, H D Deve Gowda and I K Gujral. On the prospect of the Mulayam Singh Yadav as a prime ministerial candidate of the Third Front, Prasad said he has nothing to say on this question.

    Despite Chief Minister and JD(U) leader Nitish Kumar’s call that he would support any party which grants special status to Bihar, he said Kumar’s anti-Congress credentials were beyond doubt.

    “Nobody will support a government that has been afflicted with paralysis,” Prasad said, but added Kumar was entitled to his own views.