Not just in RBI, across sectors a reversal of reform

Aug 17 2013, 10:36 IST
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SummaryFinance Minister P Chidambaram's attempts to talk up the rupee today after it slid to a record low.

to the power scenario of the eighties.

In the highways sector, too, it is back to the basics with the government signaling a shift from the build-operate-transfer model to the old engineering, procurement and construction (EPC) route since the beginning of this year.

The risk component of the projects is now entirely back with the government. Private companies will merely build a project and let the government run the maintenance. Similarly a bidder can sell his entire equity in the project at any stage if his finances become tight creating an incentive scenario for them to call in sick.

As a Crisil note points out, over the next 12-18 months, most road projects will be awarded through the EPC route boosting its share in total investments to about 40 per cent in the next five years from 28 per cent in the past five years.

In the fertiliser sector, the government had claimed that the adoption of nutrient-based subsidy regime from April 2010 for decontrolled fertiliser was one of the biggest reform measures as it did away with setting of prices for the sector. In June this year, however, the department of chemicals and fertilisers brought back price control quietly through an office memorandum.

No wonder, as many as 22 out of 27 companies in the investment-linked sectors (among 2008 Nifty constituents) have displayed negative returns in the same period.

The Civil Aviation ministry, too, is in the process of making operational an economic cell to monitor domestic airlines’ pricing mechanism. The cell, according to reports, would analyse data on tickets sold by airlines under different price buckets and would refer cases to the Competition Commission of India in case of any “discrepancies”.

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