In the first quarter of 2013, oil (Brent crude) was well over $120 per barrel. By the next quarter, the price was down to $98, only for it to climb back up to $115 a year later. Now the price is down to $102. Anyone who thinks he can predict where oil prices will go next should recall the forecast by The Economist many moons ago that oil was on its way down from about $10 to $5 per barrel. That was shortly before the price took off for the stratosphere, and the surge did not stop till the price reached $140 in 2008. A crash followed in the next year, bringing the price down to less than a third of its earlier level. So all those who think that "good days" have come on account of falling oil prices should keep their fingers crossed.That, however, is not an adequate policy prescription, which must hold good during times of low as well as high oil prices. The government should start with two assumptions: first, that oil prices are fundamentally unstable and susceptible to wide fluctuation

T N Ninan: A new oil price policy

Business Standard

In a country where original Gandhi ran not one paper but two, the telecom regulator's recommendations fail the reality check

T N Ninan: 'Fit and proper' publishers

Much has been written in criticism of the government's torpedoing of a global agreement on trade facilitation. There is another side to the story. If the West could have got a deal with India by offering to end the absurdity of using agricultural prices of 1986-88 as the benchmark for deciding whether price subsidies exist in 2014, why didn't it? There is manifest logic to shifting the base years (which would have eased Indian concerns about its food security situation), just as there is logic to not holding up trade facilitation. If there was no deal, therefore, does the blame rest only with India - or with everyone else too? When one strips the masks away, what is laid bare is that trade talks, while preferable to trade wars, are still essentially power play in which there is no right and wrong. Every country is a free trader when it sees advantage, and a trade warrior when it does not. The operating reality is that if you have clout, you influence the trading rules. If you don't, yo

T N Ninan: Don't be vulnerable

Which states do you think recorded the fastest growth in non-agricultural and non-governmental employment, after 2005? If you think you have the answers, think again. Three of the best-performing states were Assam, Uttar Pradesh (UP) and Himachal Pradesh, with employment numbers showing an astonishing 69 per cent to 79 per cent growth, over about eight years. Welcome to the puzzle that is the Indian economy - or perhaps to the puzzle of India's economic census.These quixotic numbers have been produced by the latest (sixth) such census. It records all economic "establishments" (including one-person outfits working from home, or even with no fixed place of work) that produce some part of their output for the market. However, it excludes all farming and plantation work, as well as workers in administration and defence services. Also excluded are domestic help, drivers and the like. For the record, the number of establishments is an impressive 58.5 million, and they employ 127.7 million (w

T N Ninan: Enterprise at the base of the ...

Once a year, the United Nations Development Programme (UNDP) releases its Human Development Report. This puts out a country-wise Human Development Index, which is constructed by using a combination of years of schooling, life expectancy and income indicators. Like its predecessors, the 2014 report (released two days ago) allows one to compare India's performance with other countries. The country's over-all rank is 135 - which puts it nearly three-quarters of the way down the list. Just over 100 of the total list of 187 countries are in the "High" or "Very High" human development category. India is bracketed with over 40 other countries in the Medium Human Development category (index ranging from 0.550 to 0.700). India's score for 2013, at 0.586, places it near the bottom of the Medium category - which is understandable since it crossed from Low to Medium only six or seven years ago.The list bears out once again that human development is linked closely to income. The richest countries h

T N Ninan: Only 'above average'

Nearly four months into the financial year, and two months into the Modi government, what can be said about the prospects for the economy? The tentative conclusion must be that expectations and optimism have run a little ahead of the facts - but it is also a fact that the business mood has changed for the better. It will take time to fix accumulated problems, even as immediate prospects have been dampened by the poor monsoon. This latter could halt or even temporarily reverse the downward trend in inflation rates. Fortunately, global oil prices have eased. Still, the Reserve Bank will have to be careful about retaining monetary control as the effects of the drought work through the system. Then, the Budget numbers are ambitious on the revenue side, and it would be as well to prepare mentally for some expenditure cutbacks should the need arise, so that fiscal correction does happen.The real growth kicker, therefore, will come only in the next financial year - especially if there is seri

T N Ninan: Real uptick is months away

The new government is full of good intentions about getting investment going. It justifiably wants to increase investment in the railways because, as the railway minister more or less said, the system is in a shambles. It also wants more roads, ports, metro transport systems, airports, broadband lines to every village, industrial corridors, smart cities and more - all of which the finance minister mentioned in his Budget speech. The problem is that it finds itself constrained by the lack of resources. The railway minister held out the weak and unconvincing promise of foreign investment and public private partnerships (PPPs) making up for the government's lack of funds; the finance minister simply doled out small amounts of cash that were clearly inadequate.The funny thing is that the government has the money - but it is going into subsidies that Mr Jaitley has chosen to leave untouched. Out of the vast sums that the government proposes to spend this year, barely one in 15 rupees will g

T N Ninan: No shortage of money

Arun Jaitley

I didn't have enough money to do more for the common taxpayer: Arun Jaitley

The Rangarajan committee, set up two years ago to take a fresh look at poverty issues, has according to a newspaper report recommended a radically new way of deciding who is officially poor. New in India, that is, because the approach that the committee has reportedly recommended is already in practice in the US and Europe: poverty is defined, not as an absolute level of income, but relative to the average levels of income. The US says all those whose income is 40 per cent or less than the average (median, not mean) are poor; Europe is more generous, and puts the cut-off at 60 per cent of the median income.Such an approach has been advocated repeatedly in these columns, and would allow sanity to enter the poverty debate. Given that incomes are low in India, the poverty line should be in line with the more generous European model: 60 per cent of median income (properly measured, not what is reported by the National Sample Survey). This would place India's official poverty line much high

T N Ninan: A fresh poverty line

Two things can derail the economy: a bad monsoon and high oil prices. This year, it is beginning to look like a double whammy

T N Ninan: Double whammy

It's a favourite term with editorial writers: "bite the bullet", they say, when advising the government of the day to take tough financial decisions that are bound to be unpopular with people. Most of the time, it is bad advice. The term itself is archaic, as it harks back to pre-anaesthesia days when patients going under the surgeon's knife had to "bite the bullet" to avoid involuntarily biting off their tongues. In these days of permanent elections, governments should be (unlike Mr Suarez on the football field) "willing to bite but afraid to wound". Two thousand years earlier, Kautilya advised in the Arthashastra that taxation should not be felt to be heavy, and increases should be graduated. In other words, if the ruler wants to collect more money in whatever form, do it gently, causing as little pain as possible.The best example of how this works is the monthly increase of 50 paise in the price of diesel. You don't (or barely) notice that the price has increased, but it has for sev

T N Ninan: Take a bite, don't wound

BJP is frequently referred to in foreign publications that need to explain things Indian to their uninitiated readers as "right-wing, Hindu nationalist"

T N Ninan: The problem with labels

Ten days after the Narendra Modi government was sworn in, it has become clear that this is indeed going to be a "Modi sarkar"; very much so. The early pointers to this include the new stipulation that all major policy decisions will be taken by the prime minister, and the move to establish a direct line of communication with all secretaries to government departments - whom Mr Modi met for three hours or more, with no ministers present. The encouragement to officials to go ahead and take decisions, with the promise that the prime minister would protect them, and the instruction that they should get in touch with him directly in the event of any difficulty, makes the message clear: no minister is going to stand between senior officials and the prime minister. Indeed, ministers are being asked to be on their best behaviour - don't hire relatives as your personal staff, and ensure that ministers of state are properly occupied.Further signals will come when key appointments are made, includ

T N Ninan: Draft the CMs

In the style of Bob Dylan, let's ask the questions for which the answers are "blowin' in the wind"

T N Ninan: A song for our times

Narendra Modi takes charge as prime minister on Monday. Expectations are high that he will deliver on many fronts, and there has been no shortage of free advice. Let me add my ha'penny worth.First, the Bharatiya Janata Party (BJP) has a majority in the Lok Sabha, but the country needs to prevent a recurrence of fringe political parties or groups holding coalition governments to ransom. The anti-defection law applies to individual legislators, not to parties that can join and leave coalitions at will. They should be subjected to the same discipline as legislators: if a party leaves a coalition, it must give up its seats in the House and face fresh elections. There will be those who try to circumvent this by offering issue-based support without joining a coalition; this can be countered by the President (or governor) calling the coalition (not the party) that has the largest number of seats in the House. This will rewrite what has euphemistically been called coalition dharma, and reduce

T N Ninan: Five things to do

For two-thirds of a century, the Congress has occupied pole position in Indian politics. That has now changed; the party has shrivelled to less than a tenth of the Lok Sabha, and Narendra Modi's triumphant Bharatiya Janata Party (BJP) is now the truly national party. A constituency-wise map of the country shows a vast field of saffron, and Congress seats like scattered monsoon clouds. This is a change of seismic proportions. The BJP has established dominance in its areas of strength, and a growing presence in areas where it has not existed so far. The Congress on its part is now without a strong base anywhere, having been wiped out in its earlier stronghold of Andhra Pradesh, bested in Karnataka, routed in Maharashtra, sidelined in West Bengal, marginalised in Uttar Pradesh, and drawn a virtual blank in more than half a dozen key states across the heartland - a repeat of its rout in the state elections five months ago.Mr Modi's massive victory, comparable in impact to Indira Gandhi's s

T N Ninan: A paradigm shift

Memories can be short, so here is a reminder of how these elections have shaped up. In June last year the Bharatiya Janata Party (BJP) made Narendra Modi the convener of its election panel. Three different opinion polls conducted in the following month (July) gave the BJP-led National Democratic Alliance (NDA) seats in the range of 156 to 197. The Congress-led United Progressive Alliance (UPA), in comparison, got 134 to 184 seats. The gap between the two ranged between 13 and 22 seats - quite modest, and the positions were potentially reversible since the polls were nine months away.Mr Modi was made the party's prime ministerial candidate in September. A poll in August-October showed a seat split of NDA-186 and UPA-117, the gap having widened now to a more definitive 69 seats. By December, the story had changed further. Eight polls done between then and March gave the NDA seats in the range of 211 to 246, while the UPA's putative tally was 92-139. The gap between the two had widened to

T N Ninan: To whose credit?

Manmohan Singh

Was Manmohan Singh a better No. 2 than a No. 1? Did he place too high a premium on survival, and thereby achieve too little? The author looks for the answers in Singh's record

Manmohan Singh: Leader or led?

The Soviet system collapsed because its economy underperformed. From growing faster than the developed market economies in the 1950s and 1960s, and matching their speed in the 1970s, Soviet growth in the 1980s slipped to well below those of the market economies. By 2000, when Vladimir Putin came on the scene, Russia was on its knees as its economy had shrunk by nearly a half since the Soviet collapse, causing widespread misery. The country's resurgent power after that was on the back of renewed growth at a sustained annual rate of seven per cent. That, however, has slipped to 3-4 per cent in recent years, and now to virtually zero. Can the country, while losing economic momentum and witnessing a flight of foreign capital, hold out in a new test of wills against the West?The fate of the Soviet system's former satellite states tells its own story. Those that became more market-oriented and swung westward have done better than those that stayed within the Russian fold as members of the Co

T N Ninan: Putin model & Russia's future

Looking at the top 10 private business houses, and how well they did, presents a mixed picture

T N Ninan: UPA's corporate report card

The index is not the most reliable barometer, as there are questions about the accuracy of its data

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