2nd March

We’re Still Second

The article talks about the much needed intervention of monetary measures to boost the ailing economy. Although we are the second fastest growing economy, this is not the excuse for complacency.

Recent quarterly growth of 5.3% is an eye-opener. Poor performance of the farm sector has been major reason with crop production growing down for all crops except rice. Although medium term reforms in landholding size, cropping pattern and freer marketing would help but focus should be more on non-farm sector like industries where investment is the key variable. Current govt would be content with increasing consumer spending and investment being a bigger priority then belt-tightening. However, increasing govt expenditure and DA would have limited effect. Instead emphasis should be on boosting export-imports. Private participation in the construction projects would help to provide some boost to the economy. However, property developers are yet to adapt their business models for affordable housing, for which govt has provided subsidies, then just heavy discounts. 

Center cannot go for any further fiscal spree since S&P and Moody’s have already downgraded India on account of its burgeoning fiscal deficit. What is needed is RBI intervention in monetary measures to rescue the already depreciating rupee and bring down the interest rates to encourage lending. Second fastest growing economy is no excuse for complacency.

Roll them out

The article advocates usage of more hybrid cars in India as it has the potential to reduce oil dependency for the nations and reduce the carbon emissions in future.

The recent study by US technology institute stated that if all US cars would be converted to hybrid cars, then the carbon emissions in 2050 would go to the same levels as that of 2000, taking into account the increase in future population density as well as 50 years data. For US the greater disappointment is that in India the hybrid cars found themselves into the showrooms in less then a year of its launch. However, the sales declined and almost stagnated on the account on account of 105% import duty and took off only when the dealers gave a flat 40% discount on the cars. Prospective buyers have to apply to manufacturer for the import duty license and wait for long period apart from paying the hefty duty. The alternative could be domestic production of hybrid cars probably with partnership of Japan. Besides high mileage (21 km/lt), hybrid cars also help in reducing pollution. Besides that, it is also more practical solution then Reva. 

What is needed is a duty waiver on hybrid cars and manufacturing hybrid cars while looking for other options like biofuels. Options can also be explored to bring hybrid cars besides petrol and oil like natural gas which has proven very efficient and less polluting.