Centre takes one step forward, two back - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Centre takes one step forward, two back

Mar 17, 2000

One step forward. Two back. Well that’s what the recent policy measures and indications of the government indicate. The centre has approved a voluntary retirement scheme (VRS) for public sector units. On the other hand, it is contemplating a roll back of the cut in subsidies. Not only that, the centre has also hiked the subsidy component by raising the support price for wheat. The government has proposed an 11% cut in the subsidies bill during the year FY2001. However, these two measures – partial roll back of the cut and hike in food subsidy, will more or less undo the process of limiting the growth in subsidies.

The one step forward is the centre’s approval of the VRS scheme for the central public sector units. The move IF implemented will go a long way in increasing the competitiveness of the public sector units. In case this leads to a rise in profitability (it probably should) the government's hidden subsidies (a multiple of actual subsidies) too will decline over a period of time. This would augur well for the central government finances.

However, in totality these policy initiatives will have the effect of delaying the process of reforms pertaining to subsidies. This is mainly due to the procedural hurdles the government is likely to face while implementing the VRS scheme. On the other hand, the effect of the hike in subsidies will be immediate.

Coalition politics. That’s the reasoning for these policy measures. However, there is a need to ‘bite the bullet’ and this is recognised by all. The government needs to contribute to this by stepping up the disinvestment process and also by digging in its heels as far as the subsidies issue is concerned.

Equitymaster requests your view! Post a comment on "Centre takes one step forward, two back". Click here!

  

More Views on News

Ride the Indian Real Estate Revival with this 'Different' Smallcap Stock (Profit Hunter)

Mar 23, 2021

Affordability in the housing segment has never been so good in last one and a half decade. Here's how you could make the most of it...

My Latest Stock Recommendation (Fast Profits Daily)

Oct 9, 2020

How I picked an exciting stock using trends from both the commodity and equity markets.

Data is the New Oil but It's Also the New Sugar. Here's How to Fight it (Profit Hunter)

Jun 1, 2020

Is too much data hurting your quest for market beating returns?

Quantum Mutual Fund: Hum woh nahi hain (The Honest Truth)

Apr 29, 2020

Ajit Dayal on how the mutual fund industry robs you of your wealth.

This One Trigger Could Turnaround Yes Bank's Stock Price (The 5 Minute Wrapup)

Oct 16, 2019

If Yes Bank manages to do this, it could be the start of a much-needed turnaround for the bank.

More Views on News

Most Popular

My Recent Recommendation Will Profit from the Global Supply Chain Crisis (Profit Hunter)

Mar 31, 2021

A tiny chemical company, started in the Licence Raj era, is a great example of a new wealth creating opportunity.

My Stock Trading Strategy (Fast Profits Daily)

Mar 31, 2021

In this video I'll show you exactly how I go about picking stocks for trading.

4 Stocks to Make Your Portfolio Immune to the Second Covid Wave (Profit Hunter)

Apr 6, 2021

Rather than predicting the market, successful investing is more about preparing well and placing your bets accordingly.

If the Market Falls, I Will Do This... (Fast Profits Daily)

Apr 1, 2021

What should you do if the market falls? In this video, I'll tell you what I will do.

India: Recovery Stalled by Vaccine Games? (The Honest Truth)

Apr 13, 2021

Ajit Dayal on how India's vaccine strategy will impact the markets.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

MARKET STATS