Little time left to undo the damage done to the investment climate but the govt can improve its record by halting schemes like RGESS and handing over DBT to the states
From the Prime Minister’s Office to the Planning Commission, all that is being planned to be done currently veers around the acceptance that taking high growth (9%) as a given was a grave mistake which prompted the top brass of the UPA government to take what Jairam Ramesh or Jayanthi Natarajan were doing, lightly, and try and correct at least part of the damage done during the six-odd months left. It could be even lesser!
As a senior government functionary sums it up, ‘go, no-go’ has taken the economy (country) nowhere. So, what is in store for the next few months? Hiking diesel and LPG prices and making efforts to expedite take-off of the projects cleared by the Cabinet Committee on Investments (CCI) so that the investment gloom doesn’t deepen further, are in any case going to happen. Under-recovery in diesel has jumped to R14.50 per litre and the oil-marketing companies (OMCs) are losing R470 on the sale of every LPG cylinder, and a decision on raising prices can’t be avoided. With this, there is also a plan to go back to the old formula for allocation of gas to the power and fertiliser sectors by pooling the available gas from all sources. This, in fact, is a bad idea as till the time gas production improves in the country, any shifting of gas from fertiliser to the power sector for the 18,000 MW idle capacity in the south will just create more problems rather than solving one.
Clearly, though the government is trying to make-up for as much of the lost ground as possible, it will be difficult to take bold measures to improve the investment climate or spur growth quickly. But the government can certainly look at improving its track-record in planning and implementing some of the big schemes that it has launched—the Rajiv Gandhi Equity Savings Scheme (RGESS) and the direct benefits transfer (DBT) scheme (minus LPG) are two such.
In case of RGESS, the recipe for its failure was written in its conceptualisation and clearance. Those designing the scheme in the finance ministry named it after former prime minister Rajiv Gandhi just to ensure there was no opposition to it from any quarter. The scheme notified in November 2012