Growth Without Spending

Context: The government has to step in and invest massively in ongoing and shovel-ready infrastructure projects to boost economic recovery. 

7 Measures for Inducing Growth without Increasing Fiscal Spending 

• Stop patronising power theft and offering free, unmetered supply: to solve the problems of the power sector.
• Installed capacity is more but capacity utilisation is below 50%. 
• Technical loss account for some 11%, the rest is given away or stolen.
• Power sector problems result in 
• Increase in bankruptcy and bad loan of power companies.
• Contracts transmission and distribution infrastructure.
• Limits power supply to big towns and disrupts agro-processing industry in rural areas.
• It takes Political Courage to ask people to pay for the power they consume.
• Enforcing rule to beneficiate coal before transporting it (instead of abandoning it): would enable fresh investment in cleaning up coal, boost many related sectors, and free up rail rakes and rail tracks.
• Reducing the quantity of the non-combustible stuff in coal is called beneficiation.
• Reduce Wastage: 40% of coal does not burn and turns into fly ash at power plants. Un-beneficiated coal employs 16% of Railway revenue and 20% of its energy expenditure into wasteful activity.
• Employ dry beneficiation technologies that do not poison freshwater.
• Concede the demand of the aluminium industry to enforce quality standards: on imported scrap 
• Raise import tariffs and slash the import duty on aluminium as it will ensure 
• Cheaper aluminium for small industry.
• Create a domestic scrap collecting, sorting and processing industry.
• Reduce the presence of toxic and radioactive scrap in cooking vessels used by the poor.

• • Promote domestic recycling of metals by aligning import duties for scrap and virgin metal.
• National Infrastructure Investment Fund must buy equity stakes in debt-burdened companies, by giving them capital as equity and recouping at a profit in future.
• National Housing Bank (NHB) must buy equity stakes, directly or through a Special Purpose Vehicle (SPV), in permanently stalled real estate projects.
  • It will infuse equity at realistic valuations, complete stalled projects and realise benefits of real estate’s forward and backward linkages.
• Change the remuneration structure of Public Sector Banks: and reward them for good banking decisions, subject to clawback. 
• Expansion of Trade Receivables Discounting System (TReDS): All government departments with a turnover above ?250 crores (larger than medium enterprises) must join TReDS.
  • It will unblock trade credit for small businesses by eliminating payment delays for small suppliers.

Conclusion: Without adding to the fiscal deficit, these measures would buoy the economy.