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The recent announcements by the Government of India regarding FDI in single-brand retail, changes to FPI surcharges and renewed talks about monetising state assets has once again brought the focus back on the next steps required to provide further impetus to the economy. The two vital components of the policy changes that stand out and need additional attention are (i) effective auction mechanisms to assist the flow of capital and (ii) promotion of competitive industries.
The fundamental essence of the policies undertaken so far has been to deregulate and assist the flow of capital. Utilising an adequate but less onerous regulatory regime is at the heart of creating and implementing growth-oriented policies. As we move ahead, we must keep an eye on the two focus areas.
Firstly, auctioning government assets and Public Sector Units (PSUs) to generate both much-needed capital as well as efficient organisations is an area that needs urgent attention. The vital aspect of the auctions is to create a template that can be improved upon in the future. And for the template to be developed for the auctions, it is vital to bear in mind that the complexity of government assets that can be auctioned vary significantly. Therefore, the warranted path for auction of Government assets must be cognizant of the complexities involved.
Initially, the process must focus on assets that have a predetermined use and a market value that is easier to assign such as businesses with physical assets that can be valued at market, such as industrial plants. Auctioning off of such assets is easier to decipher and will assist in giving the auction process the much-needed momentum. Once the auction process gains momentum, auction of more complex assets that pertain to “rights” can be attempted. More complex assets are the ones where assigning the “right to usage” may be complicated due to a lack of a visible market price.
The initial auction process would do well to deal with say a business that can produce a specific marketable commodity that can be priced using prevalent market prices. Auctioning an asset that is easier to price will attract investors and inspire public confidence in the process. Auctioning off a factory that can produce a specific product is an example of such an asset. Valuing the asset under consideration is relatively more straightforward. Auctioning off an asset whose usage may have varied options, is harder to price because the optionality may be harder to value, to begin with. The key “mantra” for creating the much talked about asset-monetisation process is executing a plan that is ï¿½measured’: starts from the simple, gradually move towards complexity.
The capital that the auction process generates must be taken as “risk-capital” to help stimulate Indian investments. More importantly, the money generated from such auctions can be used to untangle the domestic credit that is stuck in non-performing assets (NPAs) and provide a boost to new domestic investments. Fundamentally, the capital generated from the monetisation process will significantly improve the velocity of credit flow. While the quantum of money the new regulations and effective auctions can create is vital, the ability of the new policy moves and auctions to be a catalyst forunleashing domestic capital is of equal importance.
The second area that deserves attention from a deregulation perspective is “pricing”. To assist the higher flow of capital, promoting investments and pushing for more significant economic growth, the government must look to encourage competition in sectors rather than hunting for price-caps. While for essential commodities price-caps may be necessary, in general, introducing price-caps or “rent-control” has unfavourable long-term implications which may be counterproductive for economic growth and judicious capital usage.
The reason is not far to seek. One result of “rent-control” or price-caps may result in businesses reducing capital expenditure and investments and focus on capital recovery by “squeezing” assets. Sectors need to be made attractive for companies and investors to boost investments and growth. Hence the aim must be to promote capital flow using policies, instead of restricting investments due to limitations (like a price cap) imposed on the market.
In general, the aim of government policy must not be to set prices but to encourage a competitive industry, that ensures innovation and fair pricing. To ensure that customers get a fair price, the government must provide a competitive industry; not a “rent-control” regime. Artificial price-caps promote the exact opposite behaviour of that intended by policymakers such as low-innovation, low-investment and decline in product quality.
Deregulation of markets to promote investments and economic growth is the path forward. Effective auctions and competitive industries are vital cogs in the economic growth wheel that can contribute significantly to tide over the current issues and boost long-term growth. (IANS)
By Rohit Vaid
Till now, activities associated with laying of power and telecom transmission and distribution lines, roads, highways, railways and construction of facilities such as hospitals, affordable housing, power generation units, water treatment plants, SEZs and certain type of hotels amongst others were given such status.
Besides, these sectors are a part of harmonised master list for infrastructure sub-sectors. However, in April 2021, exhibition-cum-convention centre was included in the list. "Given the focus around electric vehicle, and need for significant investment in charging stations, if the government adds the sector in infrastructure list, the benefits arising out of it will be significant," said Vishal Kotecha, Director, India Ratings and Research. "Infra tag on sectors increases ability to raise funds, access to dedicated funds and lenders, foreign capital, lower interest rates among others."
Given the focus on electric vehicles, the advantages of including the industry in the infrastructure list will be enormous. Free SVG
In recent years, lenders have taken a severe hit on their books consequent to cater to the unique financing requirements of the infra sector. This necessitated regulatory changes and government support from time to time. "The pandemic has hit the retail, hospitality and automobile sectors hard and the need for credit and liquidity support is real and urgent," said Vipula Sharma, Senior Director - Ratings and Head - Infrastructure Ratings, Brickwork Ratings.
"Any likely move to reclassify lending to these sectors as infrastructure lending will enable the banks to lend at concessional rates and extended timeline which in turn would give the sectors time to recover from the three years of repeated extended closures and rebuild their businesses. It would also enable access to funds from a larger set of institutions and funds."
Furthermore, as the economy continues to recover from the prolonged pandemic, the sustainability of the recovery is clearly the key fiscal and monetary policy objective. Consequently, Centre would need to focus on not only enhancing public capital expenditure further in infrastructure but also encouraging the private sector including foreign players to invest in the sector.
The economy is still recovering from the pandemic, and the recovery must be sustained. Unsplash
Lately, the Centre has already taken an initiative to kickstart private sector capital expenditure through the Production Linked Incentive (PLI) programme that has already covered 13 sectors with an aggregate outlay of Rs 1.97 trillion spread over the next few years. "We believe there is a case for considering 'infrastructure sector' status to the healthcare and the EV charging eco-system. The criticality of adequate healthcare infrastructure across the country has increased significantly after the pandemic and the 'infrastructure' tag can be extended to not only hospitals but also diagnostic centres," said Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research. "As regards EV, the government has started to provide cash subsidies for EV purchases but the need of the hour is to build the charging infrastructure in an expeditious manner. The 'infrastructure' tag can clearly help attract funds to the EV ecosystem." (IANS/ MBI)
(Keywords: lending, power, hospitals, rate, capital, government, pandemic, funds, budget, ratings, sector, infrastructure)
A team led by chief scientist Ravi Shankar, is working on two combinations to provide the safest medication to coronavirus patients. "Experts say that a combination of antivirals with different mechanisms can be more effective to counter the viral pandemic. We are working on two combinations - Umifenovir with Molnupiravir (an antiviral) and Umifenovir with Niclosamide (anti-parasitic)," he said.
Also read: Antiviral Remdesivir Receives FDA
Molnupiravur drug has received only Emergency Use Authorisation in India and abroad. Though its usage showed reduced hospitalisation during clinical trials, its biggest drawback are the side-effects, he added.
"Now, we are trying to keep a low dosage of Molnupiravir in its combination with Umifenovir which may weed out the side-effects such as the risk of cartilage and muscle damage. If successful, it will make Umifenovir more effective in Covid-19 treatment," said the chief scientist. The other combination is Umifenovir with Niclosamide.
Niclosamide is known for its efficacy for Covid treatment but the biggest challenge is that its high dosage is required for treatment and that leads to side-effects. A safe and efficacious combination of Umifenovir with Niclosamide is being researched on for the exact dosage in the combination that can give positive results, he added.
CDRI director Prof Tapas Kundu said: "CDRI is working round-the-clock to develop drugs that can help in treating all variants of Covid-19, besides being economical and safe for people. We have achieved a major breakthrough with Umifenovir and are hopeful of developing a new drug to win the pandemic battle."
Molnupiravur drug has received only Emergency Use Authorisation in India.Wikipedia
(Keywords: CDRI director Prof Tapas Kundu, Niclosamide, Covid treatment, Umifenovir, Molnupiravir, safest medication, coronavirus)
External Affairs Minister S. Jaishankar on Friday instructed Indian envoys to Canada and the US, Ajay Bisaria and Taranjit Singh Sandhu, "to urgently respond to the situation" where four Indian nationals including an infant have lost their lives on the US-Canada border. The minister said this in a public tweet. Neither of the two missions have responded on the microblogging site till the time of filing of this report.
In a statement Thursday without identifying the victims, the Royal Canadian Mounted Police (RCMP) stated that "on the morning of January 19, 2022, RCMP officers with the Integrated Border Enforcement Team received concerning information from their counterparts in the United States".
RCMP officers received concerning information from their counterparts in the United States.Wikipedia
"Specifically, the information outlined that officers with the US Customs and Border Protection had apprehended a group of individuals who had crossed into the US from Canada, near the town of Emerson, Manitoba. Further, it indicated that one of the adults had items meant for an infant but that no infant was with the group."
"Upon receiving this information at 9.23 a.m., a search was immediately launched on both sides of the border.
RCMP officers were already patrolling the area and the search began at 9.24 a.m. Extensive patrols were conducted and, at approximately 1.30 p.m., the bodies of three individuals were located on the Canadian side of the border, approximately 10km east of Emerson.
RCMP identified the group as: an adult male, an adult female, and an infant.
At this very early stage of the investigation, it appears that they all died due to exposure to the cold weather. Work is underway to identify the victims and an autopsy has been scheduled.
The search for any possible survivors or additional victims continued throughout the evening of Wednesday, January 19, and RCMP officers continue to patrol the area today. To date, no other victims have been located."
Also read: Sikh man attacked in Canada
US authorities said border patrol officials stopped a 15-passenger rental van Wednesday driven by Steve Shand with two undocumented Indian nationals inside, less than a mile south of the border in a rural area between Lancaster, Minnesota, and Pembina, North Dakota. Shand and the Indian nationals were arrested.
Officials also intercepted another group of five Indian nationals nearby who were walking in the direction of where the van was located, according to the court documents.
The RCMP said it will be conducting an investigation and is working in close collaboration with US Customs and Border Protection and the US Department of Homeland Security.
"All of our agencies are committed to a thorough and comprehensive investigation," the statement said. (IANS/PR)
(keywords: Canada, 4 Indians, smuggled, External Affairs Minister S. Jaishankar, Indian envoys, Canada and the US, Ajay Bisaria and Taranjit Singh Sandhu)