Insurance

Before the government fell in April, insurance reform was on the top of its agenda. At that point constant disruption of parliament ensured that the insurance bill was not even tabled in parliament. The government has a chance to at least table this bill in the winter session, given the larger majority it controls. This is crucial as it comprises the final leg of the financial sector reforms. The open question is whether or not the bill will pass the majority mark in the Rajya Sabha.

Hospitality

Dwindling occupancy levels, stagnant average room rates (ARR's) and the consequent sagging bottomlines, have become an all too familiar story for the beleaguered Indian Hotel Industry. No wonder then that the newly formed government might do well in according some important sops to revive the fortunes in this sector. Industry status to the hotel and tourism industry and allotment of governmental land at concessional rates, could well be the first steps in the right direction. But perhaps the most significant thing that the government might consider doing is abolishing or reducing the luxury tax.

If implemented, it would take care of a factor, that has been a major bone of contention for the hotel industry. Especially since the 1980's, hotels have had to contend with an expenditure tax on all services provided, be it a mere telephone call or a haircut. This although lowered by Manmohan Singh, was followed up with a "luxury tax" levied by some of the state governments. All of which only led to inflate the final bill of the guest. This has only worked to further remove the sheen from India tourism and consequently the hotel industry. In fact this coupled, together with the bestowment of a core sector status which would bring along the subsequent income tax benefits, should undoubtedly help.

Additionally, the new government would do well to give hotels, some of the exemptions available to exporters, especially since their contributions to foreign exchange are no less significant. An allowance of depreciation on furniture and fixtures over a fixed period of time, would also help.

Perhaps another factor, which the government could consider is the priority development of infrastructure and a politically stable economic climate, both of which would attract business tourists.

Automobiles

This is one area where the government will have to tread a fine line, exercising extreme caution. Largely because it will have to balance the interests of the domestic players on the one hand, with that of the MNC automakers. And in doing so the government will have to bear in mind that the automotive sector is amongst the highest Foreign Direct Investor's in India, in the post-liberalisation era.

The government would do well to rethink the freeing of second hand imports in the post 2000 scenario. A little bit of thought could also be put into the framing of a revamped Auto Policy, in consultation with the DGFT. However, one aspect that the Government need not do a rethink on is the adherence to the India 2000 emission norms for two wheelers and the imposition of the Euro II norms for commercial and passenger vehicles.

Telecom

The telecom sector has seen policy changes being made thick and fast, since last year. Tariff announcements, the internet policy, reduction in license fee for private players and the entry of MTNL/DoT into the cellular business are mere examples of the same.

However, what the government needs to do further in this sector is make some concrete role definitions for bodies such as the TRAI, DoT, MTNL and VSNL. It would also do well to rethink the limitation of four operators per cellular circle and implement something along the lines of a total convergence of technologies. This should help break across all existing monopolies in the telecom sector and ideally allow any operator to provide the entire spectrum of services ranging from basic and cellular telephony to internet and data services, all under one roof. The proposal to replace the draconian license fee, with a one-time entry fee and a revenue share between the government and the operator, should also be streamlined further.

Refining

One of the sectors that desperately needs attention from the government is refining. Decontrol of the sector had slowed down with import duty on crude oil still remaining high and continuing high subsidy on cooking fuels like LPG and kerosene. On top of it, in spite of higher diesel prices the government shied away from increasing its prices since April, resulting in the oil pool account again going in deficit. Now when a sharp increase of 40 per cent (against the recommended 50 per cent) has been announced some of the coalition partners of BJP have asked them to roll it back. If past track record of BJP is anything to go by, a roll back can not be ruled out. Under these circumstances the oil pool will again go for a toss.

What needs to be done by the government is to speed up the deregulation process. Subsidy needs to be cut, which will also mean reduction in prices of petrol and aviation fuel. A reduction in import duty on its key raw material, crude oil will help companies improve their refining margins as the products are now pegged at import parity.

Fertilisers

If there is one industry whose fate is entirely linked to government policy, it is fertilisers. A faulty subsidy policy, which has been largely weighted towards urea has led to a progressive deterioration of nutrient balance over the years. While one appreciates the fact that farm subsidy cannot be simply wished away, one also wishes that the issue were better handled. This is not to advocate that the government should cut farm subsidy or to highlight how much fertiliser subsidy has been costing the exchequer. But that the new government ought to modify the mechanism in order to rectify the worsening N:P:K ratio. Whether the government chooses to hike urea prices or to bring other fertilisers like DAP under the retention pricing scheme is not the moot point. What is material is a clear-cut policy that does away with the uncertainty prevailing in the sector.

Power

Nothing that the central government can do to expedite things. The basic problem is the financial health of SEBs and the capacity of the state governments to give guarantees. Central government has hardly any role to play except for the mega power projects. The only useful contribution that centre can make is not to arm-twist NTPC into going on feeding defaulting states. The alliance partners will have to take initiative to rationalise tariff and break-up and corporatise SEBs. The basic problem is that India has one of the worst (if not the worst) T&D system in the world. This and the refurbishment of existing old plants desperately needs to be attended to. Initiatives will have to be taken by the state governments.

Cement

The government is the largest consumer and infrastructure spending will be key to double-digit despatch growth in post November period.