Weekly Roundup of Business Newspapers for UPSC CSE. (Period: 16th Nov 2020 to 22nd Nov 2020)
Hello students and welcome to BYJU'S IAS. Welcome to a session on Economy This Week, wherein we'll be taking some of the very important articles that have appeared in various business-related newspapers and we'll be analyzing these particular articles. For this particular video, I've chosen the time period from 16th to 22nd November 2020 and the articles that I've chosen are from Business Line, The Hindu, business-standard, Indian Express, LiveMint and Financial Express. Let's begin the discussion. The first very very important article is with respect to RCEP. RCEP stands for Regional Comprehensive Economic Partnership. Now some of the very important points with respect to RCEP are: One this is one of the free trade agreements that has been signed very recently by 15 countries. Initially, when this was proposed
back in the year 2012, it was actually initiated by ASEAN, which is a grouping of 10 countries. This particular proposal consisted of 16 countries. Out of this India was one of them. India very recently, that is at the end of last year, decided not to join RCEP and it quit the negotiations which were being conducted earlier. As a result of this 15 countries have gone forward and very recently have signed this particular agreement and this has basically been in the newspaper. Now some of the very important points with respect to the concept of RCEP is, understand
this - in order to promote the trade generally, there is a concept of economic integration model which is discussed. In this particular economic integration model at various stages, there is an increased economic integration or the complexity of the trade keeps on increasing. Initially, the concept of economic integration model starts with free trade agreement; after free trade agreement there is a concept of the customs union, after customs union, there is a common market, and after common market, there is an economic union. After this, there is again, political union but that is not important in the context of economics. Now generally what happens in a free trade agreement- in case of a free trade agreement two member countries will sign an agreement with each other under this. They'll basically agree to impose a
certain specialized tariff structure. That is basically- 'A' - Which will export goods to 'B' or let's say services to be 'B' country will either impose a very low amount tariff or no tariffs on these kinds of imports and in return when 'B' will export goods services or investments to country same kind of preferential treatment or preference is given in terms of lower tariff or no tariff. The objective is generally to promote trade amongst these particular countries. Now the Free trade agreements can be done between two countries or multilateral countries or group of countries and the concept of RCEP is a type of a free trade agreement itself. Apart from this, the concept of ASEAN or the grouping of ASEAN partially is a concept of free trade agreement itself. In addition to this, if you speak from the context of India, India has signed multiple free
trade agreements with multiple countries. For example, India has a trade agreement with japan India has a trade agreement with South Korea it has a trade agreement with ASEAN itself. Now the second point customs union under the concept of a customs union these particular group of countries which have signed and fleeted agreement will have common external custom tariffs; that is basically whenever the goods will start coming into these particular countries, in what way the tarrifs will be imposed by all these particular member countries will be decided under the concept of a customs union. Then comes the concept of a common market- under
which basically the services movement will be much freer. And finally, there is a concept of economic union wherein you can find a common monetary policy which could be formed by this particular group of countries, free movement of a people can be found under this particular concept. So this is basically how the economic integration takes place in the global market and whenever there's an economic integration which is happening on these particular lines generally you will see that the trade will keep on increasing the movement of a financials, movement of a capital, movement of human resources, etc. will also keep on flowing from one country to another country and as a result of all of this; investments capital formation, the contribution to global trade, global GDP growth rate, etc will also keep on increasing. This is the basic idea for Economic Integration Model.
Now in the case of India though there was an option for India to join this particular grouping, that is, RCEP; India opted not to join this particular RCEP. What are the reasons for this? Just give me a couple of minutes, I'll explain that particular idea to you. But before that once the RCEP comes into application or implementation, this will be the biggest trading block in the world. RCEP will account for around 30 of the global trade it will also account for around 30% of the global population. The next very important point with respect to RCEP is- it will cover goods, it will cover services, and it will also cover the investment. Now coming to the most important point- Why did the government of India decide not to join RCEP? Here are some of the very very important facts related to this.
First and foremost, India wanted very strict rules of origin guidelines. Now, what is this particular concept of rules of origin? In the case of the china that is the second factor here I'll clip both of them in the case of China, India has a huge amount of a trade deficit with this particular country. Now, what is this idea of a trade deficit? That is basically the difference between imports as well as exports. If imports value is higher than exports generally
will refer to this as a trade deficit in case of china today the trade deficit that india has is more than 50 billion dollars, and in last 15 years this particular deficit has kept on bulging or ballooning in favor of china. Now in case of china, what government of india has done is, in order to control the imports which are coming from this particular country, government of india has imposed multiple types of tariffs. But it has been found that in order to escape from these particular tariffs Chinese exporters are basically rooting their exposure from a third country. Now to counter this, the government of India wanted a very strict rule of origin. Basically in case of rules of the region what happens is the exporter has to prove a certain amount of value addition that has happened in a respective country. For example, again going beyond this particular concept of RCEP, the government of India has introduced CAROTAR guidelines. Under this particular CAROTAR guideline which has come into force very recently,
the exporter will have to prove that at least 35% of the value addition has happened in his home country. That is, a let's say we are importing something from Malaysia, the exporter in Malaysia has to prove that at least 35% of the value edition on this particular plot has taken place in Malaysia itself. If he is unable to prove that then a different level of a tariff is applicable on these particular exports. So basically government of India, when the negotiations were being held under the concept of RCEP, wanted a very strict the rules of origin guidelines and this was not accepted this was one of the reason and here is the current affair - Government of India rather than being dependent on RCEP guidelines has already implemented CAROTA guidelines, which again discusses the basic idea of a rules of origin application. Second- India was very much worried about the trade deficit that already has with china, despite implementing so many tariffs, despite taking measures to reduce the imports coming from China, the trade deficit with China has been ballooning, and the dependence on imports from China also has been increasing. In fact, India joins RCEP, then it has to withdraw certain tariffs, that does basically reduce the customs or the taxes which it is imposing on the imports which are coming from multiple countries especially from RCEP member countries. And if that actually happens
then Chinese exporters would simply flood the domestic market or the Indian market. And if these particular cheaper imports will flood the domestic market, then the domestic manufacturing would be affected in a very great way. That was the biggest concern which has been raised by the government of India for not joining the RCEP. Third - very important reason for the government of India to not join RCEP: is the government of India usually gives the concept of a most favoured nation to its strategic allies. Now you'll ask me a question sir what is a most favored nation the basic idea for most favored nations is one of the pillars under WTO (world trade organization). Most of favoured nation basically means a member
country should not be biased against imports which are coming from another trading partner, that is basically a member country of WTO. That is in simple terms imagine india is conducting trade with 'A', 'B' and 'C'- the most favoured nation basically means that the imports which are coming from country 'C' into india shall not be treated unfairly by government of India; the same treatment shall be provided by india as if these particular imports are coming from country 'A' as well as country 'B'. But having said so even under the concept of WTO, there are certain exceptions to the concept of an MFN. For example, free trade agreements is an exception, a generalized system of preferences is again an exception, so basically the government of India provides the most favoured nation status to its strategic allies but under RCEP, it was being asked to provide most favoured nation to the investments which are coming from other RCEP members. Government
of India did not specifically want or it was not interested in providing this particular MFN status to investments which are coming specifically from china this was another very important reason. Next, fourth - Very important reason is with respect to tariffs. Now understand this, from the 1990s till 2013-2014 the tariffs, that is, average tariffs in case of India have been reducing from 125 percent to around 13 to 14 percent and post that, the tariffs have increased to around 17 to 18 percent. Now here comes the problem under the concept of RCEP,
the government of India was asked to reduce the tariffs on the basis of a 2014 number. But government of India wanted this to be 2019. The basic idea is the tariffs by government of india on the imports have been increasing post-2014 and if 2019 is the base year then the tariffs will be reduced from a higher level to lower level but if 2014 is taken as a base year then the tariffs would be reduced from much lower level to another much lower level. This was another issue which was raised by government of india which was again being negotiated under RCEP. In addition to this another very important reason was- india's experience with other free trade agreements. As earlier mentioned, india has a free trade agreement with South Korea, with ASEAN, etc and India's performance with respect to these particular FTAs has not been very satisfactory. That is as per one NITI-A report it has been shown that
the trade deficit with the signing of these particular freighted agreements has increased in the context of India, that is basically india's a trade deficit with RCEP members after india signed these particular free trade agreements has actually expanded; which in other simple words can be said like this - After signing the free trade agreements the other trading partners have got more benefit out of this particular agreement compared to India. That is a precise reason why these particular free trade agreements are being reviewed by government of India now. So these are some of the reasons which have been cited by government of india for not joining RCEP. Now if government of india doesn't join RCEP, what will happen?
I'm using that term it doesn't join for a simple reason, understand this very carefully, though this particular RCEP deal has been signed by 15 member countries of RCEP excluding india the window for joining RCEP has been kept open under this particular RCEP if any other country wants to become a member of RCEP, it has to give application in writing and then there's a waiting period of 18 months. This particular waiting period is mandatory. But RCEP very recently has stated that this particular waiting period will be waived up for India, it has to give a written application to RCEP showing it's interested to join RCEP. Then what is the situation that will be taken into consideration in order to negotiate with India? So this is the window that they are actually referring to that is open for India to join RCEP even today. Now if India decides not to join RCEP even after this what will be the problem what India will be missing out? First and foremost the former CEA Mr Arvind Subramanian has basically stated that in the global market, because of the pandemic or because of rising protectionist trends amongst some of the developed countries, more and more countries are signing these kinds of multilateral agreements to protect themselves. On the other hand india is moving away or india is moving in exactly opposite
direction, that's the first very important issue. Second very important issue is, if RCEP comes into force without india being a partner in the RCEP or member in the RCEP, then these particular 15 member countries will improve the trade amongst themselves or there is enhanced trade amongst these particular 15 member countries; India will be left out of the block. Next, very important problem with respect to this is - the export-related investments or export to driven investments, india will be finding it very hard to attract this particular export to driven investments if India doesn't join the RCEP. Next very important problem is india is not a very big country in terms of a participation in global supply chains or global value chain systems. If india doesn't become a member of RCEP then india might lose out on joining a major player or becoming a major player in the global value chains in the global market. So these are some of the
issues which have been raised by various experts which would harm the Indian prospects if it decides not to join RCEP any further so these are certainly very important points with respect to this particular RCEP. Now based on this I've given a question here - The term CAROTAR often appearing in the newspaper refers to? It refers to option C- rules regarding the country of origin or rules of origin. Now in addition to this, if you want you can take down a mains descriptive question that is basically "Critically evaluate the RCEP". Again this is a straightforward question whatever we have discussed so far is basically idea of a critical evaluation itself, the question could be given in a twisted manner also but if you can understand what is the concept of RCEP; Why India should have become a member of RCEP? What will happen if India doesn't become a member of RCEP? And, what are the concerns which have been showcased or which have been told by the government of India for not joining RCEP? If you know that more than sufficient and the last final point with respect to the concept of RCEP will be 'Way Forward'. If government of India does not join RCEP, then it has to enter into more and more agreements. What kind of agreements? Free trade agreements; For example, right now the negotiations are going on with European Union, that is another very important market for us if they can sign a free trade agreement with that. another set of negotiations
is happening with respect to United States of America again that is a very important trading partner for us with which specifically we have a trade surplus, so india should enter into more and more free trade agreements so that indian exporters will get access to more markets right with signing of these particular agreements. Second one, manufacturing in case of india should be improved quality manufacturing should take place which will result in india becoming one of the major dominant players in global value chains so these are the two very important way forwards that india should adopt if it does not join the RCEP in the coming days. So the next article is with respect to PSEs and Dividend. First and foremost what is this particular concept of a dividend; any company which has issued shares will pay returns to the owners or the shareholders I'll repeat the statement here imagine company 'C' has issued shares these particular shares have been purchased by the investors now, these are referred to as what? -Shareholders. now these particular shareholders are paid certain returns by this particular company from the profits that it has generated this particular return given to the shareholders is referred to as dividend now government of India owns majority of the stake in CPSCs (central public sector enterprises) and since government of india owns majority of the stake in CPSCs it expects a huge amount of a dividend from these particular CPSCs and next very important point these particular dividends which are garnered by government of india form a very important source of the Non-Tax Revenue Receipts for the government of India now what is this particular non-tax revenue receipts for the government of India understand this whenever the government of india will present the budget. Budget is divided into two parts - one - is called as a revenue side and the second one is called as a capital side.
Now i'll be focused on the revenue side within the revenue side there are two sites one is called as a revenue receipts and the other one is revenue expenditure focus on the first one again here revenue receipts again are two types here one is called as a tax revenue and the other one is non-tax revenue receipts focus on the latter one non-tax revenue residence under non-tax revenue resets government of India collects the receipts in the form of dividends from CPSC's surplus transfer from rbi whenever there is a sale of a spectrum government will also collect a huge amount of charges or revenue from the spectrum sales so these are the three very important source of revenue or non-tax revenue resides for the government of india. In recent times, the government of India's tax revenue receipts have taken a hit. right For example, in this particular article itself it says that the tax revenues are for the month or from the duration April to September, have come down by 21.6 percent compared to the same tenure in the early year and the total tax revenue collected for this particular duration stands at 7.2 trillion rupees and another very important point that you should remember with respect to this particular tax revenue majority of the tax revenues or the sources of tax have taken a hit. That is the tax collections have come down. One very important source of tax revenue which has increased in the present or the current financial year is the excise duty that the government of india collects and specifically this particular exercise duty collection has been higher because of increased excess duty by government of india on petrol, as well as diesel. So coming back to the original discussion here, the total revenues of
government of India have taken a hit. On the other hand, the total expenditure of the government of India especially the revenue expenditure, have kept on increasing. This has forced or this has expanded the fiscal deficit of our government of India. Now at this particular situation, government of india has basically asked these particular CPSEs, which is majorly owned by the government of india itself, to pay higher dividend, rather than being normal dividend, government of India has asked these particular CPSEs- to dip into their reserves. That is basically, the profits which are carried on from one year to next year, the profits which is undistributed are kept in the form of reserves.
These particular reserves government of India wants the CPSEs to dip their hands basically take out these particular resources hand it out to the government of India. Next point the total dividend that is paid by this particular CPSEs to government of India has kept on declining or there has been a declaring trend with respect to the payment of a dividend from CPSEs. government of india as shown in this particular graphical representation you can see that basically the dividends which were transferred from the cps to government of india in the year 2009 2010 that is a year when it peaked was 0.33 of gdp and this has kept on steadily declining and from 2019-2020 data it shows that it stood at a point two four percent of gdp so what it basically showcases is that the dividends which are paid by the cpss to government of india have kept on declining and have declined especially in the last couple of years now in addition to this this decline seems very rational if you look at the profitability of these particular public sector enterprises as per the graph given here the profitability of these particular cps's stood at 1.45 percent of gdp in the year 2009 2010 and has kept on declining and for 2018 and 19 this particular number stood at 0.7 percentage of gdp as the profitability of these particular cps's have been declining the
dividends paid by them to government of india also has taken a hit the next point is with respect to these particular cpscs for the financial aid 19 it has been found that of 1.43 trillion of profits which are generated by these particular cpscs the top 10 cps are accounted for more than 75 percent of these particular profits as a first point second very important point of a 249 operating public sector enterprises for the financial year 19 it has been found that 70 of these particular cps are incurring huge amount of losses which basically showcases the reason for this particular decline in the dividends which are given by these particular cps to government of india in addition to this another very important reason as to why government of india is forcing these particular cps is to pay higher dividends is because of the disinvestment target for the current financial year government of india has set up a disinvestment target of 2.1 trillion rupees out of this it has been able to collect only around 5700 odd crore rupees which comes at around 2.7 percent of the targeted budgeted number so this has put a lot of financial pressure on the government of india as a result of this it has basically sent a notice a guideline to all of these particular cpss to transfer higher dividends to the government of india so this is the gist of the article given here based on this i've given a question here which of the following form part of non-tax revenue resides for the government telecom spectrum receipts yes dividends from cpsc's yes difference from rbi or surplus transfer from rbi all the three are correct option d is the correct option here the next article is in relation to inflation now as per the recent data which has been published in the newspaper the wholesale price index has hit a 8 month high of 1.48 for the month of october and cpi has hit a 77 month high of 7.61 for the same month of october in addition to this core wpi has also reached a very high level that is 18 month high of 1.7
now this is just a data should we mug up this particular data not required what you need to understand is what is the implication of this structure that is very very important for you first and foremost this particular cpi that is consumer price index which is also retail inflation has been hovering more than six percent which is a mandated number that is basically under inflation targeting government of india has asked rbi to maintain the inflation rate four percent with a relaxation of 200 basis points on the either side of the target so this particular retail inflation has been hovering more than six percent for the last many many months in fact in this particular year that is a calendar year except for the month of march in all the months the retail inflation rate has been more than six percent itself now what is the importance of this whenever the retail inflation is higher than six percent it will force rbi not to cut the lending rate i've got a statement here rbi if it wants to promote growth one of the ways of promotion of growth is what cut the interest rates for example cut repo rate which will basically translate into lower lending rates by the banking sector which will increase the lending activity in the market which will lead to economic recovery but because the inflation target mandate is six percent and retail inflation has been hovering more than six percent for many many months now rba is forced or rbi as a decision to cut the lending rates might be postponed that is first very important implication second very important implication is the core wpi the core wpa has picked up and has reached 1.7 percent and this is a 18 month high of the inflation rate or core wpi first and foremost what do you mean by four generally understand this there are two terms so while measuring the inflation one is called as a headline inflation and the second one is core inflation in case of headline inflation we will consider all the commodities and calculate inflation in case of a core inflation there are certain commodities whose prices are very volatile there are certain commodities whose prices are keep on fluctuating to a very great extent in the market hence will exclude them and then calculate the inflation that is called as a core inflation so in case of a wpi core wpi has hit 18 month high of 1.7 percent which basically indicates there is increased demand in the market now third very important point one of the ways or one of the most important ways through which recovery would happen in case of indian market is through higher demand or increased demand when you see wpi data yes there is an indication that there is increased demand in the domestic market but this is slightly undercut by the fact that the retail inflation rate which basically affects all of us that is basically the consumers are affected by this inflation rate has been hovering more than six percent for the last many months generally what happens is when the retail inflation keeps on increasing like this it will basically affect the real rate of returns of the people who are saving in the domestic market and second it also affects the consumption of the households that is in simple terms when retail inflation will start increasing like this it will basically reduce the purchasing power of the households which will reduce the consumption or the purchasing that is done by the households so this is going to again affect the recovery that could happen in the domestic market so these are the three very important implications with respect to this high retail inflation as well as a wpa number or the data that has been given in the newspaper the next article is with respect to lvb bank lakshmi village bank very recently rbi has announced that it will be taking this particular lbb bank and merging this particular bank under dbs which is a wholly owned a subsidy of a singapore bank now what was the reason why rb has done this rb has cited higher npas in this particular bank mounting losses in this bank as per rbi report in the last three years this particular bank has kept on increasing value of the losses and third the deposits in this particular bank have been reducing as per rbi report the deposits have shrunk down to 6900 crore rupees so citing these three reasons rba has announced that it will be merging this particular lbb bank with dbs bank now before this particular decision was taken by rbi it basically put this particular lbb bank under the concept of a prompt corrective action pca under prompt corrective action basically rbi takes some of these particular banks who is a nps whose liquidity whose capital adequacy ratio are deteriorating basically the quality or the performance of this particular bank keeps on deteriorating it will keep it under this particular framework of a prompt corrective action and it will also impose additionally certain restrictions as the condition of the bank keeps worsening the restrictions imposed by rbi will also keep on increasing basically this particular framework was introduced by rbi in order to restore the health of the bank now despite keeping this particular bank under pca from the last in itself the health of the bank has further deteriorated the promoters of the bank or the owners of the bank have not been able to come out with a resolution plan so rba very recently announced that in that particular case we are announcing the merger of lbb bank with the dbs bank now let's go beyond this particular factual information first and foremost understand this with the announcement of rbi the equity capital investors equity capital investors money has been written down what do you mean by this imagine here is a lbp bank if you have invested in the shares of this particular lbp bank it is basically equity capital investment then the value of this particular investment has been reduced to 0 rupees in addition to this if you remember earlier there was one more bank which fell into problems that was yes bank and in case of s bank basically rba had reduced the investments of the investors in the 81 bonds to zero rupees or basically they had written down that to zero rupees but in case of lbv bank it has been reduced to zero rupees in case of equity capital investors these equity capital investors have already opposed this and they are saying we are waiting for the detailed plan to be announced by rbi then we might go to court against this particular rbi action the first very important implication second very important implication is this this time rb has been much more proactive in what way it has not waited for further deterioration of health of the bank before the further deterioration takes place rb has taken an initiative and has announced merger of lbb with dbs third very important point though the argument of equity capital investors is understandable but please understand the duty of rbi is to protect the depositors and this is exactly what has been done by rbi when this particular merger of lbb will happen to dps basically in the new books only the depositors will be transferred like this that is very very important point that you need to make a note of next fourth very important point is this in the last couple of years more and more financial institutions in case of india are coming under a lot of pressure or these kind of financial pressures are happening in more and more financial institutions for example earlier this happened to one of the biggest nbfcs in india island fs infrastructure leasing and financial services there was a problem with respect to punjab maharashtra cooperative bank earlier there was a problem with respect to es bank and now same thing has happened in case of laksmi will ask bank the problem with respect to this is if indian economy has to recover then the banking sector will play one of the very important roles in addition to banking sector it will also be nbfcs which are also very very important in terms of achieving higher growth rate or for that matter even positive growth rates in the coming days but increasingly what is happening is because of various issues because of administrative issues lack of oversight in these particular banks because of certain risky decisions that they have taken because of various other issues these kind of financial institutions are commended lot of financial pressures and this is happening in the indian economy so there is a need to reverse this particular trend in addition to this rb has imposed a moratorium for the withdrawals on these particular banks now what is this particular concept of a moratorium rba has basically stated that the moratorium is applicable for one month and during this particular one month withdrawals of more than 25 000 will not be allowed for a depositor again in certain conditions for example medical expenses if you take the permission more withdrawals or beyond this limit is also allowed to be withdrawn the next very important one that is sixth very important point is this with rb announcing the amalgamation of lbb into dbs is expected to promote functioning of foreign banks in india and moreover against this particular decision various investors have already raised their concern that is basically they are saying on what basis this particular foreign bank was selected by rbi and why specifically dbs so these are some of the very important points related to the announcement of rbi to amalgamate lbb with a dbs bank the next article is with respect to internal working committee of rbi now first and foremost this particular internal working group was headed by pk mohanty that's the first very important point now most important apart from this is the recommendation of this particular intel working group because it is expected that there will be a lot of discussion with respect to these recommendations there will be support from some quarters there will be a position from some quarters on some of these particular recommendations first and foremost this committee has recommended allowing corporate houses to set up banks in india now rba strictly speaking has been opposed to this particular idea of allowing corporate houses to set up and run the banks because basically their concern is how can these particular corporate houses also be the owners and the borrowers in the same bank don't you think there's a conflict of interest right what about the transparency there are so many issues associated with allowing the corporate houses to set up and run the commercial banks but this is one of the very important recommendation given by this committee and in the coming days this will be the recommendation which will have a lot of discussion second very important recommendation is with respect to nbfcs it is basically stated that those particular nbfcs with asset size of over 50 000 crore rupees could be allowed to be converted into commercial banks that is a second very important recommendation again there are conditions for example they are saying that they should have a function for at least 10 years and so on and so forth third in case of nbfcs the promoters ownership should be increased from 15 percent to 26 percent over a period of 15 years this is another very important recommendation fourth very important recommendation is with respect to payment banks in case of a payment banks if they want to convert into small finance bank then the three years experience will be more than sufficient next recommendation if these particular payment banks and sfvs want to be listed then it shall be done after working six years from the date of reaching certain amount of net worth sixth very important recommendation is with respect to minimum capital in case of setting up a bank or a new bank the minimum capital requirement should be enhanced from 500 crore rupees to 1000 crore rupees and second in case of small finance bank this minimum capital requirement should be enhanced from rupees 150 crore to 300 crore rupees so these are some of the very important recommendations given by the internal working group that was set up by rbi to look into the ownership or enhancement of a capital requirement so on and so forth in case of the universal banks in case of the payment banks in case of the small finance banks okay so this is the gist of the article given here the next article is related to atma bharta and its price now in this particular article they have discussed the negative impact that the concept of a self-reliance or atma nirvata will have on the domestic market or domestic economy government of india in the last couple of months has been pushing the idea of us or self freelancer fervently and has been imposing certain guidelines or restrictions on some of the cps's in this article they have discussed the issue that is being faced by one of the public sector company that is bsnl earlier bsnl had put out a tender and had asked request from some of the vendors in the market including the foreign companies government of india asked the bsnl to withdraw this particular tender and start sourcing only from the domestic vendors now citing certain issues this particular company has written to government of india some of the concerns which are raised by this particular company are first in case they want to source on the domestic vendors majority of the vendors who have already shown interest are going to sell these particular equipments for the first time to this particular company so these are the first time sellers to the bsnl second when compared that is in terms of prices these particular vendors who are selling from the domestic market to bsnl or who have shown interest to sell it to bsnl are quoting 50 to 79 percent higher prices compared to when bsnl was sourcing these particular equipments from foreign vendors now third issue is bsnl is competing with private sector companies in the market if this is competing with the private sector companies then first and foremost the equipment or the technology that they are using should be very much updated or should be very high and if you're sourcing these particular equipment from the domestic market only then there will be a concern with respect to this updated version of the technology or the updated equipments or the latest equipments second if the equipment that is sourced is costly or the cost of the acquisition is going to increase then the services which are provided by the bsnl will also get affected and you expect the bsnl to compete with the private sector companies in the market so these are the three very important issues which have been raised in this particular article just make one correction here rather than 79 percent the article quotes that the prices which are quoted by the domestic vendors is a 50 to 89 percent higher than what the bsnl would have paid if their source from the foreign market so these are certain very important issues which have been raised by the bs channel which are cited in the article and article goes beyond this and says the problem with ahmadinejad is not just applicable to bsnl alone it has a larger implications for the overall economy and this has cited one of the papers which has been written by mr arvind subramanian and this particular paper basically cites that in case of india the tariffs between 1991 to 2014 have reduced from 125 to 13 and since then have risen to reach 18 percent and this particular rise in the tariffs is predominantly because the duties have been imposed by government of india on more than 70 percent of its imports or more than 70 of the imports which are coming into india are attracting higher duties which have been imposed by government of india in the last couple of years and if government of india wants to promote more and more economic recovery to happen then the better way would be promotion of exports and the promotion of exports would only happen if the imports are cheaper for these particular companies so these are certain very important articles as well as the questions related to articles for this particular time period thank you have a good day
2021-01-09 19:53
