INSUBCONTINENT EXCLUSIVE:
It needs money to appease voters ahead of a tighter-than-expected reelection campaign
So it could use new ways to finance more spending.
Such pressure often leads to bad decisions
This week, a senior official suggested that one solution might be to force big public-sector companies to buy back shares
In particular, the boards of Indian Oil Corp
Ltd., the Oil Natural Gas Corp
companies and riding roughshod over the rights of their minority shareholders
ONGC, for example, needs cash for exploration
Yet its once sizeable cash reserves declined by 90 per cent in the year to June 2018, according to Bloomberg, in part because politicians
The oil behemoth will have to ration funds for exploration as a consequence, even as India continues to import over 80 per cent of its oil
Responding to noisy protests from opposition politicians about high fuel taxes, it recently ordered companies to reduce the price at which
they sell diesel and petrol to consumers
The companies will have to swallow the losses they make as a consequence and minority shareholders will have to lump it.
This is a reminder
of market discipline into their operations
of Indians who have entrusted their money to giant, state-run insurance companies
of India, for example, has been told to buy a state-run bank that has the highest ratio of non-performing assets in the business -- a
In the bigger public-sector companies, cash reserves would have eventually been used for investment
There are only two ways to reduce the deficit: Cut spending, or raise taxes
Instead of deceptive transactions involving listed public-sector companies, the government should try one or both of those instead.
