Citizens' Issues
Modi govt used first 100 days for 'oiling the machinery'
Modi government's approach will be incremental, although moving – ideology-wise – in the right direction. The goal is that the government machine will become more efficient, which will be positive for productivity and growth, says Nomura
 
As the Narendra Modi government completed its first three months in office there has been a raft of analysis of its performance in the first 100 days. The main question of course is, “Where are the reforms?” Amid some murmurs of disappointment, there is general agreement that the government needs to be given more time.
 
"Looking for Big Bang reforms may mean missing the wood for the trees – most of the changes are micro, rather than macro in scale. Broadly speaking, there are two kinds of reforms: those focussed on oiling the machine i.e., getting work done, and then those that are more strategic and/or long term, " says Nomura in a research report.
 
Investor perceptions of government performance have often been gleaned from the media in the past, though Nomura said it believe that with the Modi administration this may do it a disservice. Compared to the previous government, the level of Prime Minister Modi's engagement and communication with the media is limited. For instance, on his travels abroad he has opted to bring a limited press entourage. "The focus, perhaps, is to let the work speak for itself. This has two implications: 1) it means harder work for journalists and researchers to ascertain the reality; and 2) at some point the hard work will reflect in better economic data. However, until that happens, there may seem to be a vacuum of sorts, while the  reality may be very different," the report said.
 
According to Nomura, over the past three months, the Indian government's focus has primarily been on oiling the machine; getting work done and getting it done faster.  Inter-ministerial co-ordination has improved. Accountability at the ministry level has risen due to the abolishment of the empowered group of ministers, group of ministers and standing committees, it added.
 
"Other changes," Nomura said, "are more hearsay."
 
'Deliverables' is the new buzzword. Monthly targets have been assigned to departments and performance review meetings are held frequently. Progress by different ministries on the announcements made by the prime minister during Independence Day and by the finance minister in the union budget is monitored closely. 
 
According to Anil Swarup, an additional secretary in the Project Monitoring Group of the Cabinet Secretariat, “In the previous government, our job was just to see that the clearances would happen and we would assume that it was translating to work on the ground. The present government has asked us to do the legwork and make sure that it is.”  
 
Nomura said, "These changes do not make for interesting headlines, but their economic impact cannot be underestimated. Few have doubted India's potential to grow, but execution has usually been the country's weak point. If work can be done, if delivery can match the promise, then the large inefficiencies in the system can be reduced and productivity, which fell sharply in the last five years, can be reversed."
 
According to Nomura, the second set of reforms deals with addressing more structural challenges facing the economy, such as food inflation and boosting productivity in agriculture, a structural fiscal correction with a focus on both cutting subsidies and raising revenues, reducing corruption, dealing with the challenge of urbanisation, governance reforms in public sector companies and public sector banks, and creating jobs for the young, which is linked to boosting the manufacturing sector, especially small and medium-sized enterprises.
 
"In this regard, performance so far has been underwhelming. On food inflation, minimum support prices -MSP- have risen at a slower pace and the government has included potatoes and onions under the Essential Commodities Act, which empowers states to undertake de-hoarding operations to control prices. It has also urged state governments to remove vegetables, fruits and other perishable commodities from the Agricultural Produce Market Committee (APMC) Act, aiming to bring the farmer and consumer closer. However, a lot more needs to be done on food inflation and the use of trade policies to control prices is a longer-term disincentive to private sector investments," the report said.
 
Nomura said, there is as yet no clear game-plan to tackle subsidies and this decision has perhaps been deferred to the expenditure commission. Diesel under-recoveries have largely vanished, but this is due to the previous government's staggered price hikes. Hence, the government seems to be using its political capital very cautiously. Perhaps, it has the upcoming state elections in mind and wants to consolidate its position in the Rajya Sabha, or Upper House.
 
According to the report, the broad interpretation, therefore, is that Big Bang reforms are unlikely. It said, the Modi government's approach will be incremental, although moving – ideology-wise – in the right direction. The goal is that the government machine will become more efficient, which will be positive for productivity and growth, but the verdict on other structural changes is still out.
 
Nomura feels that indigenous production appears to be the policy focus for the NDA government. "The hike in foreign direct investment (FDI) limit in defence is aimed at boosting domestic manufacturing of defence equipment. One of the targets of the digital India campaign is to boost domestic manufacturing of electronics and target zero net electronic imports. The government's push to digitally empower the country, and a bank account for every rural household (under the Jan Dhan Yojana), can be used to better-target subsidies, cut down leakage and create a wider tax network, which could aid fiscal consolidation. Similarly, the move towards online project approvals will automatically lower the scope for corruption," it added.
 
Another focus of Modi government is on improving the ease of doing business. Apart from online clearance of projects, the government has proposed some amendments to the Apprentice Act to increase the availability of skilled manpower through on-the-job training. There is a desire to move towards lesser regulation: the period of validity of industrial licenses has been extended; states are urged to scrap the Boiler (Inspection) Act and move to self-certification; and a committee has been set up to review and repeal archaic rules and regulations. 
 
Labour matters in India fall under both central and state jurisdiction. At the central level, the government is actively considering amendments to a number of labour laws, including: an increase in overtime hours, relaxing the earlier bar on employing women in factories for night shifts, and initiating a single unified web portal for online registration and inspection reports, among other things, to reduce the amount of paperwork. 
 
Nomura said, "These changes are happening on the micro level, but if they can be made, they may have a more far reaching effect and can act as a bridge to the longer-term goals of better infrastructure, creating jobs, boosting competitiveness and developing the manufacturing sector. 
Maybe there is a method to the possible madness."  

User

Nifty, Sensex may be headed down – Friday closing report
Nifty will be headed to 8,000 if it goes below 8,050
 
We had mentioned in Thursday’s closing report NSE's CNX Nifty rallies may not sustain even if new highs are hit. On Friday, although the index opened higher, it showed a declining trend after the first 45 minutes of range-bound move on the bourse.
 
S&P BSE Sensex opened at 27,127 and moved lower to hit a low of 26,921 after hitting a high of 27,179. Sensex closed at 27,027 (down 59 points or 0.22%). Nifty opened at 8,100 and moved from the level of 8,123 to 8,050 and closed at 8,087 (down 9 points or 0.11%). NSE recorded a higher volume of 112.48 crore shares. India VIX fell 1.09% to close at 12.9350.
 
Australia's Prime Minister Tony Abbott said that he would sign a civil nuclear deal with Indian counterpart Prime Minister Narendra Modi, thus clearing the way for uranium sales to India.
 
Wockhardt (13.17%) was the top gainer in ‘A’ group on the BSE. It recently announced that two of its anti-infective drugs, WCK 771 and WCK 2349, have received qualified infectious disease product (QIDP) status from the US health regulator. QIDP status allows fast-track review of the drug application by the US Food and Drug Administration. It also said that this is the first instance of an Indian pharmaceutical company receiving QIDP status.
 
National Aluminium (8.73%), hit its 52-week high today, was among the top two gainer in ‘A’ group on the BSE.
 
Jaiprakash Associates (10.34%) continues to be the top loser today also in the ‘A’ group on the BSE on rumours that the promoters were selling their shares. The stock hit its 52-week low today.
Bajaj Auto (1.46%) was again the top gainer today in Sensex 30 pack. 
 
Larsen & Toubro (1.27%) was among the top two gainers in the Sensex 30 pack has won a Rs5,100 crore supercritical power plant order from MP State Utility, 1,320 MW plant to be executed on EPC basis under stringent schedule.
 
Hero MotoCorp (2.16%) which hit its 52-week high on Thursday, corrected today and was the top loser in the Sensex 30 stock.
 
US indices closed Thursday marginally down. Market awaits the influential US  non-farm payroll data for August which is due later today.
 
Except for Shanghai Composite (0.85%), Jakarta Composite (0.23%) and NZSE 50 (0.48%) all the other Asian indices closed in the red. Seoul Composite (0.33%) was the top loser.
 
European indices are trading in the red. US Futures too are trading lower.
 
The European Central Bank (ECB) unexpectedly moved to cut its main policy rates and announced additional measures after a monetary policy review on Thursday.

User

Can NRIs, PIOs and OCIs buy Indian life Insurance?
Insurers seem to be offering insurance to NRIs on a case-by-case basis, but for PIOs and OCIs...
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