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Points for Modi meeting PDF Print E-mail
Thursday, 09 January 2020 00:00
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  • As the recent advance estimates show, FY20 GDP will be the lowest in 11 years; investment fell from 31.3% of GDP in FY14 to 28.8% in H1FY20 and FDI from 2.5% of GDP in FY09 to 1.6% in FY19
  • Growth cannot come back with more G … has to be I …

 

I want to break up my comments into sectoral issues and an overarching one of suit-boot-ki-sarkaar … as long as your govt is wary of doing things for industry, nothing will happen. Vajpayee changed Telecom with NTP 1999 and, over 2-3 years, govt made more money than it lost

 

Your bureaucrats and ministers either don’t know their subject, or they are not telling you the truth

 

  • When govt puts out numbers like Rs 100 lakh crore in FY20-25, it is unbelievable … the bureaucrats/ministers know this … why are they misleading you?

 

  • FY20 alone requires 40% rise in central infra-spend … you are too bankrupt to be able to do that
  • Compared to Rs 36 lakh crore in FY13-17, you want to treble investments over FY20-25!
  • A fourth of infra from power where SEBs are bankrupt … owe Rs 80,000 crore …
  • Association of Power says dues to pvt sector are Rs 46,000 crore after including change of law etc … Naturally, most of these producers are stressed loans
  • 14,000 MW of commissioned plants don’t have PPAs as SEBs don’t have money … if you don’t fix this, how will you get investment? Uday was a total fiasco
  • A fifth to come from roads where, in the last one year, zero pvt investment today
  • Pvt chaps not sure govt will ever intervene if a project gets stuck or has a problem, you do not even pay your dues

 

  • PMO not effective at all …
    • 6 months after Nripendra Misra letter on Apple etc, zero action …
    • Apple Samsung control 60% of global export market and Apple export from China around $150bn which equals half India’s total exports …
    • Samsung produces 100mn phones here, does 400mn in Vietnam….
    • Your ministers boast about jump in India’s phone production, from 6 crore phones in FY15 to 22.5 crore units in FY18, but our imports almost doubled also, to $22bn in FY18 … most of this is just screw-driver, with 10-15% value addition
    • Our mobile exports are $2.7bn but 2025 target is $110bn … can’t do this without Apple or Samsung … need to give them deals/concessions

 

  • Your target was to cut import dependence in oil from 77% in FY14 to 67% in FY22 and 50% in FY30; today it is 85%.

 

  • No gas hike first, then freed but so many caveats and 75% of gas gets 40% of market price …
  • Cairn-Vedanta 10ppt more
  • Service tax on ‘cost petroleum’, royalty payment to govt, ‘cash calls’
  • Just 30 of 55 OALP blocks of Oct 2018 got exploration license so far
  • No pvt investor in last OALP round
  • Cess doubled in 2016 … if cess goes, Vedanta says can raise output 50% or 200mn barrels over a decade
  • Sashi Mukundan …. can double oil and gas output
  • Need to lower cess etc share … will earn more eventually

 

  • Telecom was a disaster even when you came

 

  • Didn’t cut LF/SUC despite high spectrum cost and industry fucked
  • RJio predatory pricing kept quiet … now your minister telling industry to raise prices, Trai discussing a floor price
  • If LF/SUC scrapped, no AGR case
  • When SC happened, you didn’t even file appeal
  • PSUs have to pay Rs 125,000 crore on 35 crore turnover and no appeal
  • Talk of relief to PSUs but not telcos, why?
  • If Voda Idea shuts down, your govt loses Rs 200,000 crore
  • When Voda chief criticized you, RS Prasad was angry … Voda has invested $30 bn in India

 

  • When Rahul Bajaj criticized govt, Amit Shah handled it very well … but Nirmala spoke of how ‘spreading one’s own impressions which, on gaining traction, can hurt national interest’. Who can criticize you? Industrialists have too many issues that need resolving ….
    • Cairn Energy shares $1.3 bn seized on retro demand … if they win, will you pay up?
    • After Walmart spent $16bn to buy Flipkart, you started implementing FDI policy very strictly … Piyush Goyal doesn’t think its flip-flop
    • No farmer complained but seed price controls on Monsanto, even attempt to put a cap on royalty, ASG even told Delhi HC the patent given by Indian Patent Office was illegal
    • Tata Tele wanted out and Airtel bought it, govt gone to SC to oppose merger
    • Didn’t pay in Antrix-Devas case … who will trust India?
    • In Tata Docomo, you told Delhi HC not to honour the award
    • Gulabchand lost Lavasa due to NHAI dues
    • KM Birla …. 35,000 crore of GST input credit for industry not given

 

  • These are the issues that matter, not the EoDB that your govt champions

 

 

Note for Prime Minister on Reviving Investment

As the recent advance estimates show, FY20 GDP will be the lowest in 11 years; investment fell from 31.3% of GDP in FY14 to 28.8% in H1FY20 and FDI from 2.5% of GDP in FY09 to 1.6% in FY19. The only way to fix this is to stimulate investment.

 

The problem, however, is that in most important sector, the investment climate remains poor, either because the ministers/bureaucrats are not applying their mind to the kind of changes that are required or because the government feels that incentives to any sector will be seen as evidence of suit-boot-ki-sarkaar.

 

An important example to keep in mind here is that of the Atal Bihari Vajpayee government that, in 1999, decided to shift telcos from the fixed-license fee regime to a revenue-share one; most accused the government of corruption since the government stood to lose revenue but, within a few years, the industry did so well due to the lower license fees, the government collected more revenues than they gave up. Also, when the government is not worried about suit-boot allegations when it cuts corporate tax rates or hikes import duties, why does it worry when it comes to incentives that will boost sectors like telecom or oil and which will help the country?

 

As a result of the investment climate not being fixed, many of the big targets put out by the government look suspect. The Rs 100 lakh crore infra-spend target between FY20 and FY25 is a good example since this is three times what was spent in FY13-17.

 

Also, a fourth of the investment is to be made in the power sector where the State Electricity Boards (SEBs) are bankrupt and owe the private sector producers Rs 46,000 crore. Who will invest then? So, create a mechanism, as was done for PSUs during the UPA, that if SEBs default on payments, the RBI will deduct this from the state government account and give it to the private firm.

 

Make 24x7 power a legally enforceable right, so SEBs will be forced to sign more PPAs. Right now, 14,000 MW of commissioned plants of the private sector don’t have PPAs as SEBs don’t have money to buy power and so are not signing PPAs. All cross-subsidies should be abolished in five years, or must be funded from the budget.

 

Govt must not be allowed to hold back dues. Apart from power, Hindustan Construction lost Lavaasa as banks took over the project while NHAI owed him more money than he owed the banks (for Lavaasa) but didn’t pay on time.

 

Six months after Nripendra Misra letter on the need to get Apple/Samsung to India, there has been no action. Apple/Samsung control 60% of the $500bn global export market. So ensure decisions are taken quickly.

 

Government target was to cut import dependence in oil from 77% in FY14 to 67% in FY22 and 50% in FY30; today it is 85%. Ensure all prices are genuinely freed – today, 75% of gas gets 40% of market price – and lower levies to global levels to spur production. According to Vedanta, if the oil cess is abolished, it can raise output by 50% or 200mn barrels over a decade.

 

File a petition in SC on AGR telecom ruling.

Cut the dues to just the basic amount to cut out interest and penalty since this is the first time there is a final ruling on what AGR is. The TDSAT had, for instance, ruled in favour of the telcos in the past.

Scrap license fees/SUC in telecom since these were levied – like an EMI on a house – when spectrum was given free. Now that spectrum is paid for, why is the EMI needed? Ideally this should have been done in 2010 when spectrum was auctioned, but at least do it now.

Be realistic about cutting license fees and AGR dues as govt loses the most. If Vodafone Idea shuts down, government will lose a large part of Rs 2 lakh crore dues for AGR as well as spectrum-auction deferred payments.

 

 

Revive the Council on Trade and Industry to ensure legitimate demands/grievances are dealt with quickly. Apart from regular meetings with PM, there should be a secretariat that gets all complaints and ensures they are quickly resolved. The telecom ministry, for instance, is not being allowed GST input credit of Rs 35,000 crore. This is totally unfair.

 

 

 

Last Updated ( Monday, 13 January 2020 08:57 )
 

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