Following on Modi's great win in the India elections, I'm keeping a loose eye on what changes he's bringing to India, which has for decades been dominated by Nehru-Gandhi-Congress Party. Modi is expected to bring in some Gujarat business sense to things although he's been criticized on ethno-religious matters. He was apparently well funded by businessmen and rolled out a slick US presidential-style campaign plastering India with his posters.
19 June on price inflation controls
Nomura 19 June 2014, First Insights - India: Government takes proactive measures to keep food inflation in check, Sonal Varma; Aman Mohunta; "Given the initial signs of food price increases from expectations of a below normal monsoon, the government yesterday announced the following measures to curb food price inflation (see India: Met department lowers it monsoon forecast, 9 May 2014): Onions (~0.54% weighting in the CPI basket): The government has imposed a minimum export price (MEP) of USD300 per metric ton (MT) on onions to discourage exports and increase domestic availability. The state government of Delhi has been asked to supply onions through the government's retail outlets. A similar increase in the MEP was announced last year, although it failed to have a significant impact. However, a more proactive increase in the MEP could be more effective in controlling prices..."
14 June 2014 on new aircraft carrier:
Sea change: Prime Minister dedicates India's largest aircraft carrier INS Vikramaditya to the service of the nation By Rahul Kanwal Published: 23:44 GMT, 14 June 2014; "By choosing to come on-board the INS Vikramaditya in his first trip outside Delhi after taking the oath of office, Modi sent a message to sailors present on the ship and the world that was watching that military matters would be given top priority by his government....Why should we import defence equipment? We must be self-sufficient. Why can't we send our defence equipment to other nations?" For officers and sailors used to the armed forces being neglected by the previous UPA government, PM Modi was a refreshing change. Not only did he present a crisp salute during the Steam Past presented by the 11 ships of the Western Fleet of the Navy, he also reached out to the sailors and promised to make maritime security a national priority. Modi said, "Hum kisiko naa aankh dikhaayenge, naa aankh jhukaayenge, duniya se aankh milaa ke baat karenge (We will not try to intimidate other nations, neither will we bow before others, from now we will look every country straight in the eye and talk)." The PM linked economic progress to maritime security..." Read more: http://www.dailymail.co.uk/indiahome/indianews/article-2658139/Sea-change-Prime-Minister-dedicates-Indias-largest-aircraft-carrier-INS-Vikramaditya-service-nation.html#ixzz34fIaHRN1
Nomura research for 3 June 2014 :
First Insights - India: 100-day agenda and Modi’s top 10
100 day agenda
Yesterday, Prime Minister Modi asked his ministers to come up with a 100-day plan, the following topics discussed as potential areas of reforms:
- Banking Holding Corporation: The finance ministry is mulling over a proposal to create an autonomous holding company for government stakes in various public sector banks (PSBs), and then to use that to raise fresh capital for the PSBs. As this is in line with the Nayak Committee’s (set up by the RBI) recommendations – to set up an investment company to hold the PSB stakes and to reduce government control of day-to-day operations – this should find favour with the RBI and likely made a priority, in our opnion.
- 100% FDI in defense: The ministry of commerce is proposing the removal of FDI limits to fund defense, in line with the BJP’s priority of indigenisation of defense production. With Arun Jaitley holding both the finance and defense portfolio, this is another potential reform that could be announced soon.
Nomura's research highlights for 27 May 2014 include:
First Insights - India: Modi details “minimum government, maximum governance” philosophy
Sonal Varma; Aman Mohunta; Last evening, Mr. Narendra Modi’s secretariat issued a statement from the Gujarat Bhawan on Mr. Modi’s views around “Minimum Government, Maximum Governance”. Key takeaways: Several smaller ministries will be consolidated into larger ministries for improved efficiency and coordination between departments. For example, as we highlighted in our previous note, the ministries of power, coal, petroleum & natural gas and non-renewable energy could be merged into a single ministry of energy. Similar consolidation is likely among the various transportation ministries.
Asia Insights - India: Modi’s lean team
Sonal Varma; Aman Mohunta; Narendra Modi and his team of ministers took oath in a ceremony attended by heads of the SAARC (South Asian Association for Regional Cooperation) nations. Key takeaways:
- A smaller team: Mr. Modi has cut the size of the council of ministers to 45 (23 cabinet ranked ministers, 10 independent ministers of state and 12 ministers of state) from more than 70 in the UPA II government.
- Restructuring and consolidation: Several smaller ministries have likely been consolidated under the umbrella of a larger ministry with the aim of ensuring better co-ordination and efficiency. For instance, Piyush Goyal is likely to be in charge of coal and power, given the need for the two sectors to move in tandem. A lean cabinet will also mean greater accountability.
19 June on price inflation controls
Nomura 19 June 2014, First Insights - India: Government takes proactive measures to keep food inflation in check, Sonal Varma; Aman Mohunta; "Given the initial signs of food price increases from expectations of a below normal monsoon, the government yesterday announced the following measures to curb food price inflation (see India: Met department lowers it monsoon forecast, 9 May 2014): Onions (~0.54% weighting in the CPI basket): The government has imposed a minimum export price (MEP) of USD300 per metric ton (MT) on onions to discourage exports and increase domestic availability. The state government of Delhi has been asked to supply onions through the government's retail outlets. A similar increase in the MEP was announced last year, although it failed to have a significant impact. However, a more proactive increase in the MEP could be more effective in controlling prices..."
14 June 2014 on new aircraft carrier:
Sea change: Prime Minister dedicates India's largest aircraft carrier INS Vikramaditya to the service of the nation By Rahul Kanwal Published: 23:44 GMT, 14 June 2014; "By choosing to come on-board the INS Vikramaditya in his first trip outside Delhi after taking the oath of office, Modi sent a message to sailors present on the ship and the world that was watching that military matters would be given top priority by his government....Why should we import defence equipment? We must be self-sufficient. Why can't we send our defence equipment to other nations?" For officers and sailors used to the armed forces being neglected by the previous UPA government, PM Modi was a refreshing change. Not only did he present a crisp salute during the Steam Past presented by the 11 ships of the Western Fleet of the Navy, he also reached out to the sailors and promised to make maritime security a national priority. Modi said, "Hum kisiko naa aankh dikhaayenge, naa aankh jhukaayenge, duniya se aankh milaa ke baat karenge (We will not try to intimidate other nations, neither will we bow before others, from now we will look every country straight in the eye and talk)." The PM linked economic progress to maritime security..." Read more: http://www.dailymail.co.uk/indiahome/indianews/article-2658139/Sea-change-Prime-Minister-dedicates-Indias-largest-aircraft-carrier-INS-Vikramaditya-service-nation.html#ixzz34fIaHRN1
Nomura research for 3 June 2014 :
First Insights - India: 100-day agenda and Modi’s top 10
100 day agenda
Yesterday, Prime Minister Modi asked his ministers to come up with a 100-day plan, the following topics discussed as potential areas of reforms:
- Banking Holding Corporation: The finance ministry is mulling over a proposal to create an autonomous holding company for government stakes in various public sector banks (PSBs), and then to use that to raise fresh capital for the PSBs. As this is in line with the Nayak Committee’s (set up by the RBI) recommendations – to set up an investment company to hold the PSB stakes and to reduce government control of day-to-day operations – this should find favour with the RBI and likely made a priority, in our opnion.
- 100% FDI in defense: The ministry of commerce is proposing the removal of FDI limits to fund defense, in line with the BJP’s priority of indigenisation of defense production. With Arun Jaitley holding both the finance and defense portfolio, this is another potential reform that could be announced soon.
Nomura's research highlights for 27 May 2014 include:
First Insights - India: Modi details “minimum government, maximum governance” philosophy
Sonal Varma; Aman Mohunta; Last evening, Mr. Narendra Modi’s secretariat issued a statement from the Gujarat Bhawan on Mr. Modi’s views around “Minimum Government, Maximum Governance”. Key takeaways: Several smaller ministries will be consolidated into larger ministries for improved efficiency and coordination between departments. For example, as we highlighted in our previous note, the ministries of power, coal, petroleum & natural gas and non-renewable energy could be merged into a single ministry of energy. Similar consolidation is likely among the various transportation ministries.
Asia Insights - India: Modi’s lean team
Sonal Varma; Aman Mohunta; Narendra Modi and his team of ministers took oath in a ceremony attended by heads of the SAARC (South Asian Association for Regional Cooperation) nations. Key takeaways:
- A smaller team: Mr. Modi has cut the size of the council of ministers to 45 (23 cabinet ranked ministers, 10 independent ministers of state and 12 ministers of state) from more than 70 in the UPA II government.
- Restructuring and consolidation: Several smaller ministries have likely been consolidated under the umbrella of a larger ministry with the aim of ensuring better co-ordination and efficiency. For instance, Piyush Goyal is likely to be in charge of coal and power, given the need for the two sectors to move in tandem. A lean cabinet will also mean greater accountability.