Subhash Chandra Garg- Economy, Finance and Fiscal Policy Strategist

Slumping Volumes in Electricity Business- Policy Reforms for Addressing What Ails the Industry? Driving away most valuable customers is the recipe for disaster Electricity sales in India recorded negative growth for the fourth consecutive month in November 2019. In October, electricity demand fell by whopping 12.4%. In contrast, during a span of 180 months, in the 15 years since 2004, electricity demand on year-on-year basis had fallen only four times. Annual growth in 2019-20 has also now slipped in the negative. Does it portend serious trouble in electricity business and for that matter for the growth of Indian economy? What ails the electricity business in the country? Can a business which fleeces its highest paying and most valuable customers thrive or for that matter even survive for long? Electricity supply business in India is essentially in the hands of state electricity distribution utilities (DISCOMs). These utilities have been pursuing a policy of excessively

Over 20000 homebuyers of Jaypee Infra now see the end of the road leading to their homes Home buyers and the lenders overwhelmingly (over 97%) voted for NBCC Ltd to take over bankrupt, essentially a residential real estate company, Jaypee Infratech. The NBCC Ltd., a Government of India enterprise, will now complete the apartments, settle off the lenders and handover the flats to home-buyers, over a period of next four years. Consistent with the murky ways in which residential real estate businesses and transactions have been conducted in India, there is no authentic count of how many homebuyers had actually booked flats in projects of this Company. At one stage, home-buyers group, speaking on behalf of “over 26,000 homebuyers” had alleged in their petition to the Government over Rs. 30,000 crore had been taken by the Company from the homebuyers and lenders. These homebuyers claimed to have booked flats in 2009/2010 , taken loans of over Rs. 15000 crore from the Banks and

Should We Fret Over Onion Prices? Onion prices crossed Rs. 100, on average, in most retail markets and got bought and sold at over Rs. 200 kg in some places during last few weeks. Onion is attracting so much of public, media and government attention as if India were in the midst of a major economic crisis, bigger than slowing GDP or falling investments. Should the nation be fretting over onion prices? India produces around 230 lakh tons of onion, on an average, 18 kg of onion per person a year. India produces a little over 20% of total world onion production. It is second largest producer after China which produces about 25% of total onions. Egypt and USA are the third and fourth largest producers, each with about 3-4% of the global share. India consumes only about 60-70% of the onions produced. Rest is either exported, used otherwise or wasted. India is the largest exporter of onions in the World earning over Rs. 3000 crore in 2018. China, United States of America and Egypt a

RBI Keeps Policy Rates Unchanged: Is Monetary Policy Working to Spur Credit and Growth Monetary Policy Committee (MPC) of Reserve Bank of India today kept the repo rate unchanged at 5.15% and reverse repo rate at 4.90%. This pause keeps the aggregate rate cuts unchanged to 135 basis cuts effected in last five MPC meetings. The articulated objective of rate cuts effected this year is to boost sagging GDP growth? So far, the rates cuts have not contributed to either rise in credit or GDP growth. GDP growth has actually come down to the decadal low of 4.5% in Q2- FY20. Credit growth has slipped below 10% from high of about 15% last year. Is the monetary policy pursued so far delivering? Central Banks have two major instruments to spur growth- lowering interest rates and expanding their balance sheet for creating larger monetary base. The Central Banks expects to reduce the cost of credit by bringing down the policy rates. Lower repo rates are meant to provide cheaper shor