On 23rd March this year, a large container vessel ran aground and blocked Suez Canal, leading to the maritime shipping traffic coming to a halt at one of the world’s busiest waterways. It had remained struck for 6 days, with more than 400 ships being stranded in the waterway. While the vessel was dislodged using tugboats and dredgers, it caused significant adverse implications to the already suffering global economy amid the pandemic. This rare incident highlights the importance of strategic chokepoints in economic growth.
Last year, the world saw the 25th anniversary of WTO’s establishment amid the turmoil caused by the COVID-19 outbreak. Indeed the global trade body played a critical role in ensuring a stable multilateral trading regime over the past decades. Yet its credibility is currently challenged due to the lack of consensus and crippled dispute resolution system. The pandemic has exacerbated this situation to a whole new level, with protectionism prevailing over the need for liberalisation. The WTO members must cast aside their differences and work towards a mutually beneficial and sustainable future.
Doing Business rankings was forced to be paused following the detection of data irregularities in the previous reports. Following the assessment of previous 5 years’ reports by the internal audit, alterations were found in data from Azerbaijan, the UAE, Saudi Arabia and China in 2018 and 2020 reports. The review process did not identify any further specific data irregularities beyond those affecting these countries. With India currently being at 63rd position, the government is striving towards addressing various hurdles that are preventing the country from reaching the top 50 in this index.
In 2020, India lost arbitration cases to Vodafone and Cairn. These cases were against India’s retrospective taxation regime that came into effect on 2012. On December 21, the Indian government challenged the Vodafone case verdict before the Singapore Court. Given the retrospective taxes’ reputation of being unattractive for investors, the government could do well in removing such taxations – especially at the time when India is considering increasing investments to ensure Atmanirbhar Bharat. Alterations in this regard should be ensured to enable India to become a lucrative investment destination.
The RBI had recently released a report of the Internal Working Group that reviewed the current licensing and regulatory guidelines related to the ownership, control and corporate structure of private banks. This group’s most controversial recommendation was to allow corporate and industrial houses to promote and operate banks within the country. With banks playing a critical role in the economy, this recommendation, if implemented, will have large-scale implications in economic growth.
The Production Linked Incentive Scheme announced recently by the Indian government under the Atmanirbhar Bharat Abhiyan is an important initiative needed for achieving the ambitious goal of becoming a $5-trillion economy. It covers various sectors that already have a considerable advantage but without realising the full potential.
Securities and Exchange Board of India (SEBI) has amended Listing Obligations and Disclosure Requirement (LODR) regulations to remove the gaps in the availability of information on forensic audits of listed entities. However, companies may regard these requirements as onerous, as they may adversely impact their reputation. Measures must be taken to address this issue for intended objectives of improving transparency and increasing disclosure requirements to be effectively achieved.
On July 29, Facebook, Amazon, Google and Apple faced the US antitrust hearings for their anti-competitive practices. Several of these allegations were made in India over the years for multiple times, without any resolutions. Earlier this year, Google and Facebook, invested in Jio Platforms, the telecom and digital subsidiary of the Reliance Industry Limited. This is the first time that both the global tech giants invested in the same entity anywhere in the world. These investments have raised questions regarding the anti-competitive nature of such deals. For government initiatives like Atmanirbhar Bharat, Make in India etc., to be successful, India requires a range of practices that ensures prevention of few firms dominating the whole market and restricting competition in a bid to preserve their dominant role.
The Economic Survey of 2019-20 argued for the need to eliminate crony capitalism in order to ensure public welfare. It suggested the promotion of pro-business policies that does not let companies and businesses form monopolies and survive even in the absence of efficiency and growth. The elimination of cronyism with strong political will is vital now more than ever as there is a high possibility of large businesses making use of their economic muscles to influence political decisions amid the coronavirus-led economic crisis.