Ailing sector looking for government's help
As Narendra Modi begins his regime again in the office as prime minister of India, a few struggling sectors are looking for aid from the government’s action plan to come out of the rut.
The sectors involved are of aviation, power, healthcare and along with NBFCs, banks and reality firms. However the question remains what got them into the rut and will the government’s action plan be effective enough to help these sectors out.
Power: The piling debt and the mounting of losses at the Discoms have been a worry for the power industry. The government in it’s first term formed UDAY to improve the operational as well financial efficiency of the debt ridden sector of the country. It’s main aim was to reduce the losses incurred to 15% by the end of financial year of 2019 and thereby reduce the gap between the supply and revenues earned from it to zero.
Till now only 15 states have been successful in bringing down the losses incurred to 15%. However the major problem remains that the discom hasn’t been successful in raising the prices of the power in a structural manner as stated by the Edelweiss Professional Institutional Research.
Aviation: The Jet airway issue has been the latest instance which has reflected how difficult is for the domestic aviation industry and what difficult situations they are going through. Just like the Kingfisher, Jet airway’s operation has been shut down in April resulting in nearly 18000 employees being unemployed.
Experts have been saying and further expect the government to bring aviation turbine fuel under GST which would help down in cutting the tax disparity between the states. The current rates in India are 30-40% higher than what the global rates due to taxation.
Banking, NBFCs: There have been stress in the NBFC sector which has led to a debate whether it is just a liquidity crunch or whether it will lead to insolvency. Adequate capital for the banks which are run by the state is another issue which needs to be taken care of by the bank. It has been estimated that around $30-35 billion are needed to restart the growth of this sector owning to the public sector banks.
Healthcare: The government’s manifest prior the elections stated that the they would set up 1,50,000 health care and wellness centers by the year 2022. Along with proposing a pricing policy for medical devices the government have also promised them to increase the spending in this sector from 1.15% of GDP to 2.50% by 2025.
Ayushman Bharat scheme was India’s first step towards aiming universal healthcare for India. However, economic sustainability of the scheme and provision of quality healthcare services to the poor in remote areas are challenges that must be overcome. The scheme requires sustained funding, proactive participation from the private.