New Delhi must stand its ground on subsidy cuts 14 Sep 2012 The government has announced a bold 14 percent hike in the price of diesel. Now it needs to stay the course, embrace the decision rather than apologise for it, and move fast to get even more done. A shift in public spending from consumption to investment is the ultimate goal.
Regulator’s past haunts India’s Sahara case 14 Sep 2012 The chairman of India’s securities watchdog is under a cloud. Last year, a deputy wrote to the prime minister alleging his boss was going easy on Sahara. Now that the conglomerate has been ordered to repay $5 bln to 30 mln investors, the regulator needs to show his independence.
India’s bad economic data may spur better policy 12 Sep 2012 Almost flat industrial production will help the new finance minister and the central bank trade a fiscal deficit cut for a rate cut. Without some action, a ratings downgrade looms. That threat could help overcome political resistance to reducing wasteful fuel subsidies.
India sensibly considers foreign tax U-turn 3 Sep 2012 With the economy in the doldrums and a reform agenda threatened by political gridlock, the government should rush to accept an expert panel’s recommendation of a U-turn on tax proposals. That helps with the route in; next is to help returns by speeding up the economy.
How can India’s Sahara pay back $3 bln? 31 Aug 2012 India’s Supreme Court has ordered the group to refund cash it raised from millions of small investors, plus interest. That’s a victory for the little man. The next question is how the sponsor of India’s cricket team and owner of New York’s Plaza hotel can comply with the ruling.
Oil’s climb raises risk of Asian stagflation 30 Aug 2012 Growth is slowing, but crude has climbed by a quarter in the past two months. That’s not good for energy-hungry Asia, which relies heavily on imports. Higher fuel costs could keep inflation high, making it more difficult for central banks to cut rates as economic growth slows.
Poor governance creates Indian “robber barons” 29 Aug 2012 When the government is likely to change contract terms, investors in infrastructure have good reasons to take money when they can. Indians should be angry about the New Delhi airport operator’s alleged $4.3 billion real-estate loot, but the government deserves most of the fury.
India’s coalgate fiasco could be an opportunity 28 Aug 2012 The government’s flawed coal policy has caused political gridlock. New Delhi needs a plan to show it’s learned from its mistakes. Handing mines to individual firms hasn’t helped get the black stuff out of the ground. A better approach would be to break Coal India’s monopoly.
Risky borrowing rules show India’s growth anxiety 27 Aug 2012 The new Indian finance minister is anxious for growth. To bypass the high cost of capital at home, he is pushing companies to borrow in foreign currencies. That’s almost always a bad idea. India’s external debt is not a problem yet; but it can become one all too easily.
Indian politics turns from hope to fear 24 Aug 2012 With elections looming, the government’s economic story is deteriorating. And so, as a result, is its politics. When all else fails, communal tension helps shore up the bases of both main parties. That helps them in the face of strong regional parties. But it’s a disaster for India.
Time to draw a line under India’s crony capitalism 21 Aug 2012 India’s national auditor has once again highlighted too-cheap sales of state assets. Going forward the answer is simple: auctions that are transparent and profit-maximising. The past is harder to clear up. The government and business community need to show they’re sorry.
Delhi’s mission to Mars more than confectionery 16 Aug 2012 It may seem wasteful to launch satellites when half India’s children are malnourished. But the $80 mln at stake is relatively small, and symbolic feats can pay economic dividends. Besides, it will take more than abandoning a space programme to close India’s massive wealth gap.
India’s central bank faces a "No, minister" moment 16 Aug 2012 By promising to take “calibrated” risks to stimulate investment, India’s new finance minister has raised expectations of monetary easing. But hasty rate cuts while inflation is sticky and a trade gap yawns is a bad idea. The central bank has good reasons to resist all pressure.
An alternative Independence Day message for India 15 Aug 2012 The prime minister’s actual speech was a sugar-coated set of contradictions. His prediction of 6.5 pct growth is optimistic, especially as he failed to deal head-on with the tough political choices needed to achieve that pace. Breakingviews has the speech he should have given.
Freer fuel price could start Indian chain reaction 14 Aug 2012 The country’s clever new finance chief, Palaniappan Chidambaram, needs a sharp idea to cut the fiscal deficit. Deregulating fuel prices would help in many ways, including a lower subsidies bill, more valuable state-run firms, more efficient resource allocation and eventually more investment.
India begins the post-Mukherjee clear-up 9 Aug 2012 The former Indian finance minister’s reign was stained by economic meddling and political favouritism. Now he is gone, and some of his excesses are being reversed. An enemy has been pardoned and a friend has not received a plum job. This could be the beginning of a better era.
Indian telcos need a regulatory boost to grow 8 Aug 2012 Bharti Airtel, the market leader, has reported a 10th straight decline in quarterly profit. Overcrowding is forcing prices to rock bottom, and uncertain regulation is preventing consolidation. More data usage will be a boon. Healthier telcos will make a healthier economy too.
Strong third Indian party could be game-changer 6 Aug 2012 Anti-corruption campaigner Anna Hazare is developing a political party. His cobbled-together group doesn’t look credible, but a well structured force could be kingmakers – and would be a constructive alternative to the regional parties which have paralysed Indian coalitions.
India’s power vacuum needs to be filled 1 Aug 2012 You couldn’t make this up. As the country suffered from the largest blackout in history, the government promoted the power minister and replaced him with a part time substitute. Delhi badly needs to turn the economy around, but it suffers from a gigantic leadership deficit.
Take hope from India’s power and water failures 31 Jul 2012 Forget trivial reforms like FDI in aviation. What India needs most is improvements in chronically mismanaged infrastructure. But change is hard when the systems are working, even badly. So a huge power outage and yet another unnecessary crop shortage could prove a blessing.