FM's Press Conference - 4
May 16, 2020

FM is following up with the reform blitzkrieg! Here is the fourth instalemnt

The Steps

  1. Coal sector reforms
  2. Mining
  3. Defense Manufacturing
  4. Misc

Like the past few days of announcements, most of these involve policy decisions and credit facilitation. Not outright grants or dole.

Why Now?

A lot of questions are being asked…why this sudden interest in reforms? After all, many of the steps have been in discussion for years if not decades! Does it replace demand side action such as giving out cash? Does it help the target groups like farmers, MSME, migrant workers with their immediate problems? Some of these announcements resemble what’s been said already in budget speeches, if not this year, in earlier years. What’s new?

These are valid questions. But let us not look at gift horse in the mouth!

More important question is, will they remain just announcements? Will there be many a slip between…after all this is India where a whole array of formidable, well entrenched opposition to reforms and presevation of status quo exist both among the clever and the gullible. These people dont want the gravy train to stop.

The clever, like corrupt babus, corrupt netas, dalals and intermediaries all know how to make sure announcements remain just that. Even if enacted they introduce rules and notifications that defeat the purpose. And if all that can fail, they incite the gullible workers and farmers into agitating, violence and anarchy. They can stall the Parliament, create diversions, use the corrupt yellow media rake up “anti-Muslim atrocities” or whatever half truths and lies they can come up with. Now we have Western “liberal” media happily joining these lynch mob as well.

Will Modi stay the course? Will these things become irreversible gains for the country? Time only can tell.

Coal sector reforms

The end of CIL monopoly, auction of new blocks, simpler licensing terms are all music to ears. But given the socialist mindset in this country, naturally this will face the biggest hurdle. All sorts of dubious concerns such as safety will be raised. To avoid the sort of problems we had in telecom, a revenue share mechanism is being proposed.

Perhaps signigicant is the removal of captive usage restrictions. That can mean better use of existing resources, something that be quickly implemented.

It is important that these are seen through - with legislative and other changes.

Defense sector

Corporatisation of Ordnance Factories may be symbolic (and pointeless) but will be opposed tooth and nail for what it may lead to - privatisation. If that is what the goverment wants to do, best say that upfront so that opposition can be dealt with. If not it will amount to the same thing anyway -waste time on opposition yet have a have baked reform.

The amount of noise our arms brokers and corrupt political families and their damaads can create in media over domestic production of weapons is legion. Very often we see planted articles in corrupt yellow media about “failure” of indigenous weapons and how “superior” imported ones are. Or questioning decisions that do not benefit their paymasters.

All this and more will now have to be faced before defense sector reduces relying on overseas arms merchants and the corrupt ecosystem it has spawned.

The increase of FDI limit will encourage more to venture but not many have, at this point. Even if they come, they have to follow our laws as well as those of their home country. Which may not always be in sync with our priorities. Best is if we can have Indian companies. A good beginning can be made at least in spares, supplies and other things in the periphery before attacking major weapons systems.

We have to watch this space.

Misc

There have been a lot of announcements on space sector, aviation and airports etc. As we pointed out earlier, let us look for real change in the ground.

The MRO sector is a natural fit for India given its engineering talent, a small but growing base for making parts for Airbus/Boeings of the world and even complete aircraft, cheaper land as compared to, say, Singapore, ideal location between Europe and Far East, and now hopefully more government support. Numerous procedural hassles for everything from import of components to repair & return of engines and harassments in the hands of Customs need to be taken care of. These are businesses where time is money and our babudom has zero understanding of this concept. They tend to treat every transaction as suspect either to delay it, block it and feel good about it or extract bribes out of it.

Let us hope the intention will be followed up with strong procedural & administrative backing. If not others like Malaysia or Thailand may catch up.

In summary, it seems the government has caught the reform bug. The first year of Modi 1 was promising then got bogged down due to failure of Land Reform bill and the loss of Bihar elections. Then came demonetisation, GST and then the need to fight elections. Right now, COVID or no Corona, we have a regime that is secure and an oppposition that is in tatters. Their media coolies too have been reduced to a point where they are writing OpEds encouraging use of “continuous misinformation with little regard to truth”. These is the sort of media India has been living with along with the loot and plunder of the dacoit families they shill for!

The road is long and hard…but first few steps have been taken!

We wish FM and PM good luck!!

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