Soliloquies of an Informed Indian

On Tuesday, 4th of April,2017 the BJP led government of Uttar Pradesh announced a loan waiver package of Rs. 36,000 crores. Of the 36,000 crores, 30,000 crores of farm loans up to Rs.1 lakh and 6000 crores worth of defunct farm loan (Non-performing asset (NPA) in banking jargon) would be waived off. This package is intended to benefit nearly 2 crore small and marginal farmers in the state. Politically, it ticks all the right boxes but the economic consequences are borne by the farmers and bankers. The bankers are at the receiving end of this move, as there is a possibility of more loans turning into NPAs. The honest borrower (one who pays his/her installments on time) will have an incentive not to pay as the government takes care of the loans. The announcement in UP will have a domino effect on the farmers of neighboring states as they can stop repaying their loans and put political pressure on the respective governments to waive them off. Lending by banks is done on the basis ...

On Monday the 27 th of March 2017 the Lok Sabha passed the Mental Healthcare Bill 2016. The bill was earlier passed by the Rajya Sabha in August 2016. It now awaits Presidential Assent after which it will be notified in the official gazette and rules will be framed. This bill replaces the Mental Health Act of 1987 which was found inadequate in protecting the rights of mentally ill patients. The bill takes a rights based approach to mental health which is a first in the country. It is a landmark bill because of the following reasons [1] : ·          Decriminalizes Suicide Attempts : The bill seeks to decriminalize Attempt to Suicide which was a crime under Section 309of the Indian Penal Code. Any person attempting suicide will be presumed to be under severe stress and not be tried under the IPC until proven otherwise. The onus of proof now lies with the law enforcement agencies and not the victim. This is the most progressive feature of t...

The Karnataka state budget 2017-18 was presented on 15 th March by Chief Minister Siddaramaiah. It was an election budget and was loaded with populist measures. Among them the move to cap movie ticket price at multiplexes to ₹200 was also announced. Karnataka is the third south Indian state after Tamil Nadu and Andhra Pradesh to cap movie ticket prices in the state. The decision of the government to cap ticket prices has both winners and losers. At the outset it looks like consumers who are the winners but economic reasoning paints a different picture. The current system of flexi pricing of movie tickets was based on the demand. This meant movie tickets would be expensive on weekends due to higher demand and they would be cheaper on weekdays and morning shows owing to weak demand. People who wanted to watch the movie and valued it higher than the price prevailing on weekends would buy the ticket. So on a weekend it wouldn’t be surprising to find people paying as much as ₹600 per...

During the last session of the GCPP Workshop in New Delhi, Anupam had introduced the concept of property rights, Coase Theorem and the challenges Coasian solutions face. We got to know that the fundamental role of a Government in a society is the enforcement of contracts and protection of property rights. The stark reality is we don’t have a clear cut process of granting property rights and Titles yet. A title is a bundle of rights associated with property. An owner of a title can have the rights to possess, lease, mortgage, bequeath, subdivide and sell the property. A transparent and efficient system of granting or obtaining land titles will help in reducing land disputes which clog our civil courts and reduce the transaction costs in the property market. Under the current system, a deed in registered under the Registration Act of 1908 and the registering authority is not concerned with the validity of the documents. Land is a State subject and the Department of Revenue (or Depa...

On the first day of our GCPP Workshop in Delhi, Pranay had asked us blog on a real world example of correlation which doesn’t imply causation also known as the Oldest Mistake in Public Policy (OMPP). The easiest and the most widely debated topic in this context is the whole argument on economic growth versus government debt. Economic growth and government debt are correlated as the increase in rate of growth would generate higher revenues for the government which in turn could be used to reduce the debt burden. It can also be argued the other way round as well i.e. increase in government debt leads to lower economic growth but this is not entirely true. In 2010, American Economists Carmen Reinhart   and   Kenneth Rogoff   published a paper titled “Growth in a Time of Debt” in an issue of the   American Economic Review . [1] The paper contends that when gross debt of a country is 60% of its GDP its growth rates falls by 2% and in those countries where gross ...

When India became independent in 1947, the economy was primarily agrarian with low industrial activity. It became vital for the government of the day to create employment opportunities and attain self-sufficiency through import substitution so as to save foreign exchange. Given the social and economic challenges at the time, public sector enterprise led growth was considered a pragmatic choice. The thinking was investments in public sector enterprises was necessary in strategic sectors of the economy such as railways, communications, and defense to be self-reliant. During the initial decades of the country the public sector units were considered to be the engines of economic growth in the country. The Industrial Policy of 1956 gave an impetus for massive investments in public sector undertakings. As a result PSUs flourished and expanded into a number of areas including non-core businesses such as soaps, watches and personal vehicles. The year 1991 marked the liberalization, priva...

Since the market reforms of 1991, which began with the abolition of Controller of Capital Issues (CCI) and industrial licensing, every government has tried to strengthen the market in one way or the other. Let us take the example of housing or real estate sector in India. Housing was a socialistic obligation of the Government in the late 70s and early 80s as the electoral slogan was ‘roti, kapda aur makaan’ which translates to food, clothing and housing for all. The opening up of economy reduced the entry barriers to the housing market. This period was marked with the rise of new real estate developers founded in the late 80s and 90s such as Oberoi Realty, HDIL in Mumbai and Sobha Limited and Brigade Group in Bangalore. The growth in the real estate market came with a whole gamut of scams and frauds. Of the many real estate scams, a few of them that made headlines were the Adarsh Housing Society scam in 2011, Karnataka Wakf Board land scam in 2012 and Noida land scam worth 3800 cro...