Walmart, Reliance and Kirana shops

Surjit S Bhalla writes in BS

Thankfully, technology changed and the world became flat. Which meant that politicians, across the world, had less and less influence on the activities of individuals in the service of themselves (aam aurat is too aam to be selfless like the Gods). So the economies started to grow, and this further diminished the size, and the effectiveness, of the Bombay Club.

But old habits die hard; most likely because people are loath to let go of “unearned” profits. It is in this context that some of the major initiatives of the UPA government have to be viewed. Let us start with the most blatant of them all—the recent missive by Ms Sonia Gandhi, the political leader of the government. She has been “reading in the media about Wal-Mart’s proposed entry into India … the desirability to first study the possible impact of ‘transnational supermarkets’ on the livelihood security of those engaged in small-scale retail operations … you may consider having the relevant issues properly examined before further decisions are taken” (emphasis in the original Sonia Gandhi letter to the PM). This gentle reminder to the PM has put protection of the poor aam fruit- and vegetable-selling aurat as the top concern of this government. Economic reforms (globalisation) have only helped the rich. Time for aam aurat to have her day. Such a nice government you say. Let us elect them again (provided they have electorally correct sleeping partners).

But wait a minute. Nowhere in this high command directive is mention made about big Indian businesses entering the retail trade of selling “fruits, vegetables and the like”. Last I heard Reliance had entered the fruit- and vegetable-selling market, and even by international standards, Reliance is Big Time Big. So how does the Reliance entry into the retail trade not hurt your kirana shopkeeper but Wal-Mart does? Sorry, one never gained an answer by asking logical questions from our “in the name of the poor” politicians.

Government unlikely to accept South Indian tea growers’ plea

FE reports

The Central government is unlikely to consider the demand of the South Indian tea growers seeking higher amount for tea replantation and rejuvenation on par with Darjeeling, jeopardising the proposed replanting exercise under the Special Purpose Tea Fund expected to take off from April.

Union minister of state for commerce Jairam Ramesh told FE he had received requests from some quarters in the South, including United Planters Association of South India (Upasi), for hiking the present subsidy limit and also raising the amount from Rs 2.73 lakh per hectare as proposed for Darjeeling. But the centre was unlikely to make changes in the present plan and things would go ahead as proposed, he said.

Sick fertiliser units to get Rs 1k crore | FE

FE reports

Board for Reconstruction of Public Sector Enterprises (BRPSE) has given its nod to revive closed fertiliser units of Fertiliser Corporation of India (FCI) and Hindustan Fertiliser Corporation (HFC).

The proposal will be forwarded to the Cabinet within a fortnight. A senior official at the Department of Fertilisers (DOF), however, said efforts would be made to bring back eight plants of the two companies through public sector participation if the present plan does not work. Expression of interest would also be invited from private sector players, he added.

Orissa to set up venture capital fund for IT firms

BS reports

Taking a leaf out of Karnataka, Orissa is exploring the possibility of setting up a Venture Capital Fund (VCF) for small and medium IT enterprises in the state.

This is in line with plans to set up a National Venture Capital Fund (NVCF) for IT SMEs, which is currently pending with the Planning Commission.

The Karnataka government has already set up a VCF with the Small Industries Development Bank of India (SIDBI) with a corpus of Rs 15 crore to promote the Software Technology Parks of India (STPI). Known as the country's silicon valley, Karnataka is the first state to accept the NVCF proposal and has become a role model for other states.

Currently, Orissa STPI has a catalogue of 100 registered IT/ITeS companies, of which only five per cent are in the big league and the remaining are IT SMEs. State STPI officials said they were aware of the NVCF formation proposal and are already making efforts to establish a state venture capital fund (SVCF).

With whose money? Why?

Curbs put on onion exports | BS

BS reports

The government has swung into action to curb onion exports and check the rise in prices in the domestic market by effecting an 8 per cent hike in its minimum export price (MEP).

The MEP has been increased by $25 per tonne to $330, with effect from February 12. Also, export canalising agencies have been directed to go slow on exports.

“Measures have been taken to make exports less lucrative and augment the domestic availability of the commodity,” said Alok Ranjan, managing director, National Agricultural Cooperative Marketing Federation (Nafed), which revises the MEP every month.

Centre mulls fund to check food prices

FE reports

The government is considering setting up a price stabilisation fund along with a market intervention plan for all agriculture products. This is part of the Centre’s larger gambit to rein in the rising prices of agricultural products.

A proposal to this effect is under the consideration of the agriculture ministry. Officials said a concrete plan to this effect would be firmed up after consulting the ministry of finance.

The move comes at a time when inflation has spiked to a two-year high of 6.58%, mainly on account of dearer food and agriculture products.

Update
FE rightly criticizes the move - here:

Sadly, many of the UPA’s policies illustrate a price control mindset. Instead of intervening only when there is demonstrated market failure, it wants to dictate prices.

Besides, what does price stabilisation mean? Does it mean procurement by the government, as with foodgrains? Other than distortions in resource allocation, such intervention will strain scarce public resources. Even if there is no procurement, it is unlikely that farmers will contribute to the fund in boom years, as quid pro quo for compensation in lean years. The fund will, therefore, not be financially viable, apart from the administrative problem of delivering across 90 million small holdings.

Govt to help India Inc keep on buying

Mint reports

The government has decided it needs to help Indian companies with their global acquisitions.
The finance ministry plans to come up with an ‘outward investment policy’ in the April-June fiscal quarter and will specify the criteria on which companies will be eligible for the incentives.
The policy will offer a slew of incentives, including concessional finance, to assist domestic companies expand the global footprint. “We are hoping to be able to begin work on the policy after the budget,” a senior government official, who did not wish to be identified said.