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Uday: a federalist success story

At our 21 st Annual CEO Roundtable in Thimphu last week, there was spirited debate over the performance of the current administration. A participant suggested that the Ujjwal Discom Assurance Yojana (Uday), a scheme to reform India’s downstream power sector, for all its fanfare was actually a failure of sorts and that India’s renewable energy programme, specifically on solar energy, was lacking on many counts. Whilst it was my intuitive belief that both claims were unsympathetic, I thought it would perhaps be in order to examine the facts in detail and subsequently provide an assessment. This paper, accordingly, presents an analysis of the first of the two issues – the Uday programme. The second will be addressed in a subsequent piece. The electricity distribution crisis: background Electricity distribution has been disastrously managed over the last three decades and in 2015 was on the verge of absolute collapse. Under-priced power, operational inefficiency, broken equip

The Employment Conundrum

Over the last three months, I have had the opportunity of engaging with our clients across various forums and cities. What provided a platform for this interaction was my briefing on four critical initiatives that we believe will, if properly implemented, serve as game changers with a palpable impact on economic output. The question that consistently came up almost everywhere was on the perception of jobless growth and consequently, rising unemployment within India. This has possibly been based on recent press reports and television debates that consistently cite certain headline statistics. These suggest a fall in employment levels between 2011-12 and 2015-16 compared to vigorous growth in earlier years, since 2004-05. Even on the surface, this conclusion does not gel fittingly with other statistics. For instance, indirect tax collections and consumption expenditure, which are both proxies of aggregate spending and wellbeing, do not corroborate falling employment. Tax collections

Farm Loan Waivers

Farming damage In 2008, when the Government of India announced a Rs 60,000 crore farm loan waiver, the decision horrified economists and the financial markets. The waiver, amounting to 1.3% of GDP, would cripple national finances and damage the credit culture. The moral hazard of penalising prudent borrowers would be systemic and enduring. However, its proponents argued that it would free farmers ‘from the suffocating clutches of endemic debt’ and, in the process, also provide a quick consumption stimulus to the economy. Subsequent events proved both assumptions awry and the folly of the decision was absorbed in a hard and painful way. Nevertheless, a lesson was learnt and federal Governments have since avoided a repeat. However, it would seem that it is now the turn of state Governments to blunder. In the last few months, Uttar Pradesh, Maharashtra, Karnataka and Punjab announced waivers of agricultural loans in their states to the tune of Rs 80,000 crore. Fortunately, the