Car Manufacterers Pushback Against Diesel Car Tax

Additional tax on diesel cars will further impede industry growth: M&M

Terming the calls for imposing additional tax on diesel vehicles as “retrograde”, homegrown auto major Mahindra & Mahindra today said such a move will only further impede growth of the industry which has had a difficult year in 2011.

Reacting to issues raised from various quarters over usage of subsidised diesel fuel for “luxury” and seeking imposition of additional tax to the tune of Rs 80,000 on diesel cars, the company said use of diesel fuel for luxury personal vehicles is less than 0.2 per cent.

“In my opinion to consider an additional tax on diesel vehicles is a retrograde step...” Mahindra & Mahindra President (Automotive and Farm Equipment Sectors), Mr Pawan Goenka, said.

Urging the government not to consider such a move, he said: “In the upcoming Union Budget, this is perhaps the most critical item for the automotive industry which will have a significant impact on the growth of the industry in the upcoming fiscal year.’’

Explaining why such a move would prove counter-productive, Mr Goenka said: “A tax on diesel vehicles will further impede growth of the industry which has had a difficult year in 2011.’’

Of course, the industry estimate of the percentage of diesel used by diesel cars is flawed :Press Release: CSE trashes contention that diesel use by cars is very low.  Got to keep those profits rolling in.

"Playing 'God' with Spectrum"

Playing ‘God' with spectrum

The National Democratic Alliance (NDA), led by the former Prime Minister, Mr Atal Bihari Vajpayee, in power then, never really thought it would lose the Parliamentary elections in 2004. But if it had had some inkling of the impending defeat and wanted another tilt at power, it couldn't have thought of a better ‘Trojan Horse' for the successor government to fiddle around with than the much criticised ‘first come first served' (FCFS) policy of handing out additional ‘spectrum' to mobile telecom operators.

Sounds far fetched? Not really. Consider the evidence. Up until then, it had been a well-settled principle of administrative law that the State cannot dole out any largesse to any section of society, except under the most objective or equitable principles.

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Yet, here was a conscious policy decision taken to give out radio frequency spectrum to mobile telephony operators when even canteen contracts in obscure railway stations are awarded through open tender.

Good overall summary  of the telecom saga.

End of Policy Making by The Elite?

Pushing reforms is no easy task

The Congress has always had a centralised view of India's federal structure. When Jawaharlal Nehru was elected to power in a largely illiterate country, he believed it was his duty to tap a more educated — read Western-educated — elite for policymaking. He then used his vast political capital to push these policies through Parliament. No other Congress Prime Minister had that kind of political clout. Mrs Gandhi worked her way out of that predicament by taking the populist route of ‘Garibi Hatao'.

Mr Rajiv Gandhi tried to protect the right of the elite to make policy by distancing the policymakers from the elected representatives. Policymaking was to take the form of independent missions, led by individual icons like Mr Sam Pitroda. At the same time, the anti-defection law was brought in to ensure that once a directive was issued by the party leadership on a particular policy initiative, the MPs had to vote for it. While the rhetoric of the anti-defection law was to prevent destabilisation of governments, it was used to issue directives on specific policy initiatives.

Mr Narasimha Rao took this institutional structure forward by further distancing the elected representatives from policymaking. The entire process of economic reform was designed by Dr Manmohan Singh and some other economists, and pushed through Parliament with the stated or implicit help of the anti-defection law. In order to ease pressure from the MPs, the Local Area Development Fund was created to provide each Member of Parliament with resources that were to be spent on her constituency. With the MPs having no meaningful role in policymaking, their re-election depended primarily on what they did in their constituencies, and not really on any view that they had on policy.

This political and policy dualism worked very well, as long as the policy initiatives didn't directly affect the MPs constituents. Economic reform that led to high growth rates was all very well, as long as it provided the resources needed for programmes, like the Mahatma Gandhi National Rural Employment Guarantee Schemes (MNREGA), which the local politicians could associate with. It also helped that the reforms in, say, foreign exchange legislation, weren't a major part of the political debate in remote constituencies.

NEW POWER EQUATIONS

But two decades after the initiation of economic reform, this dualism is coming under severe pressure. The low-hanging fruits of reform have been plucked, and the government is being forced to move into territory that directly affects the political debate in local constituencies. FDI in multi-brand retail has been, rightly or wrongly, effectively projected as a measure that will hurt the small retailer. And since there are a large number of people from vegetable vendors to small shopkeepers who can be told their livelihood is at stake, it will be difficult to push through this measure without risking a major, even devastating, political fallout.

USA Pushing For FDI in Multi-Brand Retail

Many people believe that the recently deceased FDI in multi-brand retail was taken purely to help India's farmers and consumers.  They should read this.

India to take up visa rejections issue with US

On its part, the US is expected to push for opening up of India's multi-brand retail trade to Foreign Direct Investment; raise its concern over certain proposals that could ‘curb' FDI in brown field pharma projects and the proposal for mechanism for an oversight by the Competition Commission of India to look at the impact of acquisitions; take up their complaint against the 30 per cent local sourcing requirement in India's solar power generation programme; India's restriction on US diary imports; as well as reduction of tariffs in industrial products in general.

Pension Bill - Only Assurance But No Guarantee?

Pension regulatory bill set to sail smoothly through LS

The government is understood to have agreed to the BJP demand for inclusion of assured returns to retired employees in Pensions Bill. The Standing Committee on Finance, headed by Sinha, had recommended for an assured return option to new subscribers. 

Pensioners are concerned over the fate of their hard-earned money as the new bill proposes to invest the pension funds in the market. The proposed Bill does not ensure guaranteed return to pensioners. The bill will provide legal backing for putting pension funds into stock markets.

At present, pension funds of over 10 lakh employees in the country are managed by domestic players such as Life Insurance Corporation of India, State Bank of India, Kotak Mahindra Bank and Reliance Capital, but foreign companies have evinced interest in the country’s pension market.  The PFRDA bill, if passed, will open country’s lucrative pension sector to foreign players.

So the bill assures return, but does not guarantee it?  And note the innocuous sentence about foreign companies evincing interest.  A bit of a lucky coincidence, for the foreign companies.  A lot of the 'second generation reforms' are somehow just what the foreign companies have evinced interest in.