Why? Because Modi wants the votes of Mumbais railway commuters in the coming Maharashtra state election. This is as cynical and cowardly as anything the Congress can be accused of. Modi is providing greater rail freebies than Singh had proposed. So much for tough love. Indias sugar industry has long been a mess because high state advised prices bear no relation to costs or economics. They aim simply to buy the votes of cane farmers. Sugar mills suffer huge losses, cannot pay farmers, and so farm arrears of tens of thousands of crores pile up periodically. This insane system needs scrapping. Instead the Modi government last week increased subsidies for sugar exports, increased import duties on sugar, and increased the amount of sugar-based ethanol that has to be blended with petrol from 5% to 10%. These freebies and distortions are aimed at somehow enabling mills to pay cane dues of farmers. Far from reforming a monumentally stupid system, Modi has kept it alive through additional stupidities. Why? Because Maharashtra is a big sugar producer, and Modi wants to ensure that the states farmers will vote for him in the coming state election. The Congress government had screwed up enough courage to virtually double the price of natural gas from April1, bringing it closer to global rates. This would have made it economic for companies like ONGC to produce gas from high-cost offshore deposits. Implementation here too was postponed by the Election Commission. Modi has now postponed gas price revision till September. Manmohan Singh was willing to bite the bullet, but not Modi.
Posted on: Sun, 29 Jun 2014 22:28:42 +0000
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