Central cabinet has approved the National Capital Goods Policy. Its plan for a three-fold increase of capital goods production to Rs 7.5 lac crore in ten years,from FY15 levels will require a huge amount of investment. As the US economy picks up and the Fed hikes key rates, FDI inflows will taper.
The capital goods policy
Central cabinet has approved the National Capital Goods Policy. Its plan for a three-fold increase of capital goods production to Rs 7.5 lac crore in ten years,from FY15 levels will require a huge amount of investment. As the US economy picks up and the Fed hikes key rates, FDI inflows will taper. Our fiscal credibility alone can attract external investors. For this quantum jump in capital goods output, private sector has to be enabled, and that includes MSMEs. Today, private-sector fixed-capital investment is down to 28.7% of GDP from 33.6% in FY12 .With major states registering a decline in ongoing projects , capital markets are depressed. Banks have gone into a shell from Rs 7 lakh crore hit from NPAs. Unless a consortium of lenders is established, it would be futile to expect individual banks to be bold enough to venture taking a risk. More so, as oversight agencies keep breathing at their neck even as covert political intervention ,continues. The policy would do well to incorporate a framework together with clarity in systems, for large and hassle free capital access to industries, particularly at the medium level.
Ban all diesel cars
Effect on environment because of diesel-driven cars kept aside, big luxury cars should be allowed to take advantage of low-priced diesel. With net procurement cost including that of processing for petrol and diesel being almost same, diesel in India is deliberately priced lower than petrol so as to keep transportation-cost and subsequently commodity-prices under control. As such there is no logic in having an undesired revenue-loss by allowing production of diesel-driven cars in any engine-capacity leave apart restricting just engine-capacity 2000 cc above. The ministry should impose a total ban on production or import of diesel-cars in India in any engine-capacity. Considering CNG-fitted petrol-cars were exempted under two phases of ‘odd-even’ numbered plying of cars on alternate days, larger public-interest demands that only CNG-fitted petrol-cars should be allowed to be manufactured and import in India.