Economic Highlights

New Delhi, 23 January 2017

Move Against NGT

HINTS AT DIFFERENT BUDGET

By Shivaji Sarkar

The Narendra Modi Government has decided to nullify the anti-people and anti-growth decision of the National Green Tribunal (NGT) banning ten-year-old-diesel vehicles and destroying all 15-year-old vehicles in the National Capital Region. The Government, in the Supreme Court opposing the NGT’s order on January 14, 2017, said there was no rationale for removal of diesel vehicles from the NCR.

The move just before presentation of the Union Budget 2017-18 is being seen as a major initiative to free the Indian economy of quixotic decisions. The Budget, now expected to be presented on February 1 instead of February 28, is the second most significant decision since Former Finance Minister Yashwant Sinha chose to break away from the old British tradition of presenting it at 5pm and instead present it at 11 am.

The Government’s move to SC may be seen as a step towards ease of doing business, and make it the fastest growing economy that Modi announced at the Vibrant Gujarat Global Summit. This is also a possible indication of a Budget that would keep the Indian industry on its tack and end nagging uncertainties. Further, it also helps the automobile sector of maintaining the production line as well as free vehicle owners of their worries.

The NGT’s July 2016 order if implemented would lead to junking 2.82 lakh vehicles immediately. Every consecutive year it would have led to the scrapping of over one lakh vehicles in the NCR alone. And, if the cost of a vehicle is assessed at an average of Rs 5 lakh, this would burden the nation of Rs 15 crore avoidable expenses in an NCR population of 1.25 crore. Besides, if this is extended to the entire country, then the cost would be staggering and would lead to disastrous effect.

Recall, the order to deregister 10-year-old diesel vehicles had caused not only administrative chaos but also led to misery of lakhs of people. Additionally, the sudden activities of the transport office and the police in the NCR had led to severe discontent and corruption. Importantly, the Supreme Court revised its own order of 16 December 2015 in August 2016. It lifted the ban on registration of 2000cc vehicles in the NCR through its decision to levy one per cent additional tax.

The NGT’s most unscientific order was seen as a move to boost sales of new vehicles in a country, where people are known to take the maximum mileage from a vehicle by self- modernisation of existing vehicles. It also impacts the Government’s voluntary vehicle modernisation programme (VVMP) – an initiative to increase life of the vehicles and add to the wealth of the people. The VVMP generates employment for maintenance mechanics and longer life for existing vehicles. If 2.82 lakh vehicles are prevented from being junked it helps Indian households spend the money on other productive uses.

Even the most advanced countries of Euro zone or the US had never passed such Tughlaqi orders. The high junking of vehicles in these countries has caused problems of disposal and pollution. The Euro zone is on full swing on producing even diesel vehicles. With Euro VI projected to come to this country, the decision is being seen as a great relief for the industry, which had held up its expansion plans. The NGT-type decisions throw a severe spanner; increase cost of unnecessary policing and create non-essential paraphernalia.

Clearly, the court needs to act faster. Pollution is increasing but to ascribe it only to vehicles is incorrect. It was observed that during the odd-even car rationing there was no reduction in Delhi’s pollution. A fast decision would add wings to the industry and the growth process.

Similar clarity is needed for many other sectors. The recent department of consumer affairs advisory on restaurants levying service charge has added to the confusion. It said that one can refuse to pay it. It opens up avenues for brawls. Instead the Government should say that it is illegal and initiate actions against restaurateurs. Indeed, profiteering must be stopped and a firm law is possible in the Budget.

The Government is likely to base the Budget on a five-point Modi formula – better job opportunities, better income, better purchasing power, better quality of life and better living standards. Obviously, the Government is keen on maintaining the growth pace and save it from shocks of the NGT-type decisions, which bogs it down to continuous fire-fighting.

The five-point formula if implemented is expected to change the face of the country and is an indicator of a Budget that is likely to function as a stress-buster for the economy post demonetisation. At the same time, the FDI flow of $130 billion is likely to create new job opportunities, particularly at a time when owing to Donald Trumpisation of the global economy, jobs in India, even in the IT sector, are shrinking. The US vaulted back into the topmost destination with estimated $384 billion FDI inflows, according to the UN World Economic situation prospects. It may hit future FDI inflow to India.

Better purchasing power and living standards are possible only when programmes generate more jobs and encompass the rural areas and the farm sector. It means the Government has to move away from rhetoric of the past seven decades-- of providing mere lip sympathy to the rural sector and concentrating on urban-oriented industry only.

Financial distress is being seen as a big cause of concern for the farm sector. While the post November 8 fall in vegetable prices by 14 per cent added to the “sheen” of the price index, it has spelt a severe crisis for the farmers. The December 31 address of Modi did spell out some relief such as turning the Kisan cards in Rupay and two-month interest waivers. But these are inadequate.

The Government has to formulate the process of an agriculture policy to ensure sustained growth and remunerative prices to the farm sector. This is critical. It also needs to devise a formula by either allowing the farmers higher prices or ensure higher direct subsidies to keep farm input costs low as the US does. This checks inflationary pressure. Better incomes and purchasing power cannot be assured unless farm productivity increases.

Undeniably, the Indian economy is driven by agriculture. It has to be the pivot of the Budget. A firm farm sector means overall development. Farmers want Modi to move forward for an economy that has moorings in the deep hinterlands. The move against the NGT indicates surprises of a markedly different Budget.—INFA

(Copyright, India News and Feature Alliance)