NEWS & VIEWS TODAY = 12th, JUNE, 2012 = S&P WARNS OF DOWNGRADE = TELECOM & AIRLINES INDUSTRIES NEED IMMEDIATE REMEDIAL STEPS = FM SAYS- TURNAROUND THIS YEAR

NEWS & VIEWS TODAY

12th, JUNE, 2012

S&P WARNS OF DOWNGRADE

TELECOM & AIRLINES INDUSTRIES

NEED IMMEDIATE REMEDIAL STEPS

FM SAYS - TURNAROUND THIS YEAR

RBI MUST GO FOR GOOD RATE CUT

1.    NEWS :- When S&P talks, Nations listen. S&P presents FACTS and its considered opinions. But, it is not always in a hurry. It takes time, watches and then puts on record its perceptions and its ratings. And that is happening. S&P is to downgrade INDIA to BBB- with Negative outlook, while all other BRIC countries retain their BBB Stable outlook and china has a AA- with stable outlook.

VIEWS :- Indian Governments – both Central and States – are unwilling to follow sound governmental ethics and that is resulting in Indian economy hurtling downwards month after month. The Centre’s UNPRODUCTIVE SCHEMES like NREGS are more than matched by many states, which give huge doles, even when they have no money for any worthwhile capital expenditure, which only can build the states in the long term. 

There is no adequate willingness to infuse productivity into this otherwise imaginative scheme. By all means, reach out to the poor, but make them BUILD something good - for themselves and for the nation. Money should never be a dole or charity.

Populism reaches ridiculous heights in many states – and the lack of economic education among people and the consequent lack of realization – that these populist schemes are destroying the state – make the people elated about the populist schemes. This is unfortunate. 

There is no worthwhile criticism of these schemes. And, if someone does criticize, the governments use their Party muscle in all sorts of unfair ways. Governments at  centre and states are turning to undemocratic means to gag criticism. Look at the way the centre tried to slap cases against all members of Team Anna and Ram Devji – after their absolutely peaceful protest against corruption and Black Money. Look at the way Mamata  Banarjee tried to brand simple questioners as CPM, Naxalites etc in an open TV show. This sort of intolerance does not augur well for democracy.

Centre had a golden opportunity to get the Lok Pal Bill passed and walk away with credits. Even now, it is so. It must only withdraw all cases, stop its Digvijay singhs from initiating wars of words frequently, and go ahead with passing of Lok Pal bill with some understanding and give and take with at least the BJP. Heavens will not fall to the ground if BJP’s views are accommodated in Lok Pal Bill. 

Bills like Land acquisition Bill – with Pro Landowner clauses can be introduced and passed in a day or two – but, it is not even being introduced. And, the Pro land owner mindset is missing. You will deprive some one of his livelihood – and do not want to compensate him adequately? Why? Industry can bear the cost. After all, land cost is a small fraction of the total land cost. And, it is better to get it quick without future hassles rather than too cheap.

Ditto with Telecom tangle. Government’s thinking is likely to kill the industry ( and the telecom consumers) with astronomical licence fees – simply being unable to answer the CAG. Even here, there is no willingness to consult SC and CAG and place before them Government’s own views and consumers’ interests. 

Also, there is no willingness to consult the Opposition. Why? And, the point of wonder is – there is NO SIGNIFICANT REPRESENTATIVE OF CONSUMER INTEREST IN TELECOM! No one sees anybody representing consumers – before the Supreme Court, before Government, before TRAI, before DOT and in the Media! Absolutely surprising. 

Ditto with Airlines Industry. This blog has always maintained that reducing the taxes by at least 50 % is the key to salvage the industry. Now, Jet Airlines Chief Naresh Goyal says just the same thing. He says “ in fact, Indian fares are 200-300%,higher compared with world’s other carriers, let alone the Chinese”, and he says India is the only country to impose service tax on Airlines. The taxation is India is much higher than in China and many other countries. Air India, King fisher, Jet and all other Indian Airlines can be in good health, if only Government reduces taxes of all kinds – on the Airlines Industry. 

Even the Air Port and other ground level support charges are ridiculously High in many Indian Air Ports. The IATA chief, Tony Tyler has heavily criticized India for having trebled airport charges – with a 346% increase in Delhi. And “Delhi Airport has to pay 46% of its revenues to Government. This is neither in the interest of the Airlines nor of the Airport”, the IATA chief has said. This is so at all Air Ports. The Air Port should make revenues from VOLUMES – not from dwindling numbers of INDIVIDUALS. It is unwise. Ditto goes for Governments.

The Government must take a comprehensive look at all these points and make corrections. The idea should not be MAXIMUM REVENUE  for Government, but maximum number of Indians travelling by Air. If this is ensured, revenues will flow in automatically.

The trouble with Industry bodies in India is – they too don’t talk openly till it is too late. 

And that has a lot to do – with Government’s mindset – of not tolerating criticism.  Criticism is Good – if you listen to it. Bill Gates is famous for his sane words on this.

The need for consumer bodies is more than highlighted for each of these Industries.

The Finance Minister says – Turn around this year. He has listed a few factors, the first being Rate cut. One wishes, RBI does go for a GOOD RATE CUT to spur growth, as FM says optimistically.  RBI acted so fast in enhancing Rates every month  last year– like never before since Independence perhaps. Now, it is slow to bring Rates down in the same speed - when growth is getting pulled down drastically every month. A good 3% Rate cut would propel growth upwards fast.

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