India Insight

Highlights – President Pranab Mukherjee’s address to parliament

The new government will pursue an economic reform agenda that foresees introducing the goods and services tax, encouraging foreign investment and speeding approvals for major business projects, President Pranab Mukherjee said in a parliamentary address on Monday.

Mukherjee also said the focus of the Modi government would be to:

- contain food inflation

- improve supply side of agro-based products

- prepare contingency plans for sub-normal monsoons

- increase public and private investments in agriculture

- address issues in farm pricing and procurement

- set up IITs and IIMs in every state

- have zero tolerance against violence against women and will strengthen criminal justice system

- tackle illegal immigration and infiltration in the north east region

- roll out broadband highways in every village in next five years

- vigorously follow up issue of black money with foreign governments

- focus on social media as a tool for participative governance

- provide predictable, fair and stable policy environment

- make every effort to introduce goods and services tax

- encourage investment through foreign direct investment

- promote labour-intensive manufacturing, tourism for job creation

- move towards a single-window system of clearances to promote manufacturing

- fast-track investment friendly public, private partnership

- liberalise foreign direct investments in defence

- encourage private investments in defence production

- implement reforms in defence procurement

- take up modernisation and revamp of railways on priority

- chalk out infrastructure development programmes for high-speed rails, roads and airports

- launch comprehensive national energy policy and focus on increasing electricity generation

- urgently pursue reforms in coal to attract private investments

- operationalise international civilian nuclear pacts

- ensure every family has good house by 2022

- ensure 24×7 electricity supply by 2022

- follow zero tolerance towards extremism, terrorism and communal violence

- formulate clear rules for allocation of coal, minerals and telecoms spectrum

- work towards putting economy on high growth path

- engage energetically with neighbours, including China

- bring renewed vigour in its engagement with the United States

Read text of president’s speech

(Compiled by Ankush Arora)

Brokerages bullish on Sensex, revise targets after Modi win

By Sankalp Phartiyal and Aditya Kalra

Indian stock markets rallied to record highs in May with the benchmark BSE Sensex breaching the 25,000 mark for the first time after Narendra Modi won a clear mandate to govern Asia’s third-largest economy.

Markets surged as Modi’s Bharatiya Janata Party (BJP) and its allies stormed to power on promises to revive India’s struggling economy, which is growing below 5 percent, and create more jobs for its 1.25 billion people.

The Sensex touched a record high of 25,375.63 on May 16, the day election results were announced, while the broader Nifty hit a life high of 7,563.50 the same day. The Sensex is up 18.1 percent so far this year.

India equity funds ride Modi rally in May, post best month in five years

India’s diversified equity funds outperformed the broader markets in May and recorded their best monthly performance in five years, as stocks rallied on hopes of an economic revival after the Narendra Modi-led Bharatiya Janata Party (BJP) won a decisive election mandate.

Equity funds clocked an average return of 11.57 percent in the month, the highest since May 2009 when funds rose 30.2 percent, data from fund tracker Lipper, a Thomson Reuters company, showed. In comparison, the BSE Sensex rose 8 percent.

Though blue-chip stocks gained, high exposure to better performers in the mid- and small-cap segment, and sectors such as financials and infrastructure, helped schemes outperform the broader markets, experts said.

Kejriwal’s party gears up for Delhi polls with election reforms

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The Aam Aadmi Party (common man’s party), led by bureaucrat-turned-activist Arvind Kejriwal, is gearing up for state-level polls in Delhi this year with an array of candidates chosen for their honesty.

Kejriwal’s election plank is to cleanse India of corrupt politicians and bring more transparency to government. With graft scandals embarrassing the ruling Congress and the main opposition Bharatiya Janata Party (BJP), the Aam Aadmi Party is taking a more grassroots approach to the problem: weed out the bad ones before they become candidates.

Anyone can hope to be a election candidate for the party if they are endorsed by 100 potential voters from the constituency they hope to represent. Political analysts say that’s not too difficult but makes the process more transparent.

Bold moves, smart timing on rail fares, diesel proposal

(Any opinions expressed here are those of the author, and not necessarily of Thomson Reuters)

The railway budget in India is usually presented in parliament a few days before the main budget in February. In a rare move, the railways minister on Wednesday announced an across-the-board increase in passenger fares starting Jan. 21, the first such step in nine years.

The increase is significant. A ticket for an air-conditioned coach with three-tier sleeping berths in a mail or express train from New Delhi to Mumbai will cost 1,205 rupees, up 13 percent from 1,065 rupees.

Heat guaranteed in parliament’s winter session

(Any opinions expressed here are those of the author, and not necessarily those of Thomson Reuters)

It is getting colder by the day in New Delhi but the winter session of parliament, which starts on Thursday, promises to be a heated one.

In September, the monsoon session was largely disrupted by opposition protests. Since then India’s political landscape has gone through drastic, and some dramatic, changes.

Market-friendly Chidambaram toes socialist line with fiscal plan

The usually crisp and precise P. Chidambaram was uncharacteristically vague on Monday while announcing the government’s fiscal consolidation plan. While pledging to bring the fiscal deficit down to 3 percent in 2016-17 from around 5.3 this fiscal, the Harvard-educated minister gave no details on how the government would achieve this feat.

Perhaps the finance minister should remember that uncertainty and lack of clarity can spook markets and investors. We saw that when the government took months to clarify the controversial GAAR norms which made foreign investors jittery.

Chidambaram’s announcement is unlikely to impress investors, rating agencies and lenders like the IMF, who want the government to slash subsidies and cut spending.

Political crisis in India: Mamata Banerjee moves out, UPA should move forward

It wasn’t unexpected. After more than three long years of association with the UPA II coalition government, key ally Mamata Banerjee is taking her name off the lease, packing up her things and getting ready to move out. Whether she has taken Congress’ chances for holding power in India with her depends on how strong — and willing — the party’s other friends are.

This move, precipitated by her anger at urgent government moves to fix India’s economy, is a case of better late than never. There is no point being part of a coalition if you don’t like how it works or the decisions that it makes.

Banerjee isn’t moving out just yet. After giving the coalition 72 hours to relook at its recent initiatives, she has given another 72 hours to the coalition before her ministers resign on Friday, Sept. 21. Her demands: rollback diesel prices, scotch a plan to allow foreign direct investment in India’s retail businesses and spend more money on keeping home cooking gas prices artificially low.

Congress’ 2007 leadership whispers underscore 2011 election dangers

Rumblings within the ruling Congress party that suggested the “jettison” of Prime Minister Manmohan Singh after the party’s electoral failures in state elections in 2007, cited in a secret diplomatic cable published on Monday, are a timely reminder of the dangerous implications of failure for Congress in elections this month.

India's ruling Congress party president Sonia Gandhi watched by Prime Minister Manmohan Singh (L) fills nomination papers seeking to retain her post as the party chief at her residence in New Delhi September 2, 2010. REUTERS/B Mathur

The electorates of Assam, Kerala, Pondicherry, Tamil Nadu and West Bengal will go the polls this month to elect new state legislatures, in the first tests of public confidence in India’s ruling party that has been implicated in a string of multi-billion-dollar corruption scandals over the past nine months.

Singh, a 78-year-old technocrat and economic reformist, had his leadership questioned by senior aides to Congress President Sonia Gandhi, who mooted a more politically sellable replacement following electoral defeats in Punjab and Uttarakhand, detailed a U.S. state department cable accessed by WikiLeaks and published by The Hindu newspaper.

The bitter truth behind BJP’s deafening budget silence

To some, the parliamentary walkout by India’s opposition prior to the vote on the country’s annual budget motion marked the failure of India’s ruling Congress party to engage with its primary adversary, the Bharatiya Janata Party (BJP), over its claims that the Prime Minister had lied to parliament to protect his own reputation.

To others, the sight of BJP leader Sushma Swaraj leading her MPs out of the chamber as Finance Minister Pranab Mukherjee prepared to deliver the most important parliamentary bill of the year encapsulated the sorry state of India’s increasingly bitter partisan politics that show no signs of repair since trumpeting corruption became the opposition’s raison d’etre.
Lawmakers and leaders of India's main opposition alliance led by the Hindu-nationalist Bharatiya Janata Party (BJP) including Sushma Swaraj (front, L) and L.K. Advani (front, R) attend a protest against rising prices wearing aprons with protest slogans inside the premises of the Parliament House in New Delhi REUTERS/Stringer(INDIA)
Swaraj would later tell The Hindu that her walkout was to avoid disrupting the passage of the bill, but the damning point rang out loud and clear: the opposition had decided the corruption drumbeat was more important than the budget.

Mukherjee had earlier pleaded with senior BJP leaders to allow the budget to be debated prior to any discussion on a parliamentary privilege motion submitted against Prime Minister Manmohan Singh by Swaraj, promising a two-and-a-half hour debate on the issue after the budget had passed.

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