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

T N Ninan: Paying the price

Business Standard

Diamond Quadrilateral equivalent in the form of a network of high-speed "bullet" trains will be associated with Narendra Modi

T N Ninan: High-speed folly

The rupee has stabilised and gained ground marginally in recent weeks, like some other emerging market currencies

T N Ninan: Keep it down

Brazil got downgraded last week by Standard & Poor's - the fate that India escaped last summer. Russia has seen $40-50 billion flow out of the country in the first quarter of this year, on top of $60 billion in 2013. India, in contrast, has seen international money flood the country, and therefore the rupee climb to its highest level in eight months - even as the ruble and the real have fallen by 10 per cent and more. The stock market here is one of the better performers. Phasing out of monetary expansion by the US Fed (the "taper") is greeted by the market with a dismissive shrug - quite a change from last April, when the mere hint of a taper caused near-panic.The difference between domestic and international opinion on India is too stark to be missed. Just as it is hard these days to meet an Indian businessman who sounds positive about either the present or the short-term to medium-term future, it is almost as hard to understand why international investors are willing to discount

T N Ninan: Hope or hype?

Critics of Indira Gandhi's Leftist phase (1969-73) have a longish list of the legislation that she left behind as a problematic legacy

T N Ninan: The UPA's worst legacy

Clothes make the man, wrote Shakespeare, whereas Henry Higgins believed that it was your English accent that told everyone where you came from. Higgins had a point: people from Tamil Nadu and Punjab will never speak the Queen's language in the same way, any more than those from West Bengal and neighbouring Bihar will - unless they've been "conventised". But even if you can't change the way you speak, you can certainly change your persona by adopting a different style of dress. Which is perhaps why most people who turn somewhat late in life to politics, after having earned their spurs in other fields, feel it necessary to change the way they dress - as though they have to be born again in a new avatar in order to become, not the successful professional but the people's tribune.Manmohan Singh set the trend in recent times when he became finance minister in 1991. Out went the civil servant's "bush shirt"; we now had him in native kurta-pyjama, to which a Nehru jacket was added when it got

T N Ninan: Melding in - but with whom?

The question in Maruti's relationship with its parent company, Suzuki, is whether the Japanese company intends to treat its minority Indian shareholders fairly. There is no corporate barrier to unfair treatment because Suzuki has majority ownership of Maruti, the "independent" directors seem inclined to sign on the dotted line, and the company is essentially managed by Japanese executives seconded by Suzuki. When Indian shareholders get agitated - as some mutual funds have been these past few weeks - they can knock at many doors, but the operational freedom given to companies is such that it is unclear whether any ministry or regulator will or can intervene. The issue rests essentially with what Suzuki intends to do. And its past record does not offer Maruti's protesting shareholders much hope.Consider the royalty question. Suzuki charges 5.7 per cent of Maruti sales as royalties (nearly double the level that prevailed before the government abolished caps on such payments in 2009). Thi

T N Ninan: Time to tighten up

It is remarkable how quickly the defence narrative has changed

T N Ninan: Exposed defence

If P Chidambaram's Budget speech was an hour-long attempt at presenting his government's and his own record in a good light - as he is perfectly entitled to do - such a "marketing" effort invites the recounting of an alternative retelling of the record. How would such an account read? For starters, it could be said that the last two years taken together have been the worst that the economy has seen in two decades, in terms of growth; there is no previous phase in this period when successive years saw sub-five per cent growth. It could also be said that the last few years have been the worst on inflation; while the finance minister referred in his speech to the latest wholesale inflation rate (5.05 per cent), consumer price inflation is much higher at 8.79 per cent.Third, if one includes the World Gold Council's assessment of gold smuggling into India (which Mr Chidambaram has served to revive), and takes that into the trade numbers, the current account deficit is above three per cent (

T N Ninan: The alternative view

Such is the general preoccupation with domestic issues, economic and political, that even business people are mostly unaware of how much the rest of the world's (especially American) perceptions of India have changed in the last couple of years - in particular, its loss of attractiveness as a place for doing business. This is not because of one or other isolated issue; rather, it is a range of issues that have come to sour the international business mood - from policies that mandate local sourcing to massive tax disputes, from the violation of intellectual property rights to poor quality regulation, and from delayed and/or arbitrary government decision making to (yes) widespread corruption.Each time an issue has erupted, India has scrambled to address it, but usually not fully. It has modified and limited some (not all) local sourcing requirements, and it has pushed back some contentious tax changes or simply dropped them. On other issues (as with the compulsory licensing of drugs, ign

T N Ninan: Failing the smell test

It would help if political parties declared their adherence to some principles and methods for serving core economic objectives, as in what follows

T N Ninan: An Economic Manifesto

Let's give credit where it is due. Over the last six months, the managers of the economy have converted a system in near-crisis into one of the safer places in a battered "emerging markets" grouping. Remember that India was seen last summer as one of the worst performing stock and currency markets, with nervousness underlined by a record current account deficit and the highest fiscal deficit among the major economies. So it is pretty dramatic change when India now presents a reassuring contrast to the traumas engulfing almost all the second-rung economies represented at the G20 high table. The Sensex is about 14 per cent higher than its 2013 trough. The quarterly trade deficit has dropped from $45-50 billion to $30 billion, and the current account deficit from $20-25 billion per quarter to just $5 billion. Capital inflows have held up, so foreign exchange reserves have stopped falling and indeed have gone up by $18 billion in the last four months. When many "G20 Junior" currencies teet

T N Ninan: Less fragile, not bullet-proof

P Chidambaram is quoted as saying in Davos that "As long as the public sector is competitive and run on commercial terms, there is no reason to take state enterprises apart." So let's look at banks. India has 24 listed government-owned banks - State Bank of India and three associates, 14 banks nationalised in 1969, and six banks nationalised in 1980. The combined market value of these banks last weekend, with the exception of State Bank of India, was about Rs 1.59 lakh crore. That was fractionally less than the value of a single HDFC Bank, which started from scratch in 1993 and had a market cap of Rs 1.6 lakh crore. The brightest star on the public sector banking horizon, State Bank of India, had a value on the market (Rs 1.13 lakh crore) that was less than that of ICICI Bank (Rs 1.21 lakh crore). In other words, two private banks of relatively recent vintage commanded greater value than the entire public sector banking system. Why, a government-owned stalwart like Central Bank of Indi

T N Ninan: Money in those vaults

History may or may not be kinder to Manmohan Singh than his current interlocutors in the media and critics among politicians. But one thing seems for sure: statisticians have been unkind to him and his record. If it is indeed true, as stray newspaper reports suggest, that GDP growth for 2011-12 is about to be revised upwards from 6.2 per cent to seven per cent, and for 2012-13 from five per cent to 5.5 per cent, that puts a gloss on the second Singh government's record that has been absent so far. For, if one takes the five-year period since the onset of the financial crisis that hit world markets in 2008-09, India's annual average GDP growth will stand revised to 7.44 per cent - well above the benchmark of seven per cent that is customarily used to categorise rapidly-growing economies. Even if you include the current year, which may end up with no more than five per cent economic growth, the average growth during this troubled six-year period will top the seven per cent mark. For the

T N Ninan: Revisionist history

As the election season approaches, bad ideas seem to gain currency. Perhaps there ought to be a Raspberry Award at every election

T N Ninan: The Raspberry Award

The prime minister said nothing new during Friday's press conference, except the obvious (that he was not looking for a third term); he also made some deliberately aggressive remarks about Narendra Modi. However, there was a flaw as well as a curious inconsistency in the logic that he adopted. When asked about the scams that took place on his watch, he offered the argument that both the spectrum and coal mine scandals belonged to the first government of the United Progressive Alliance (UPA); the people had voted after that, and rewarded the UPA with a fresh mandate. But Manmohan Singh failed to apply the same logic to Narendra Modi. In asserting that someone who had presided over the massacre of innocents could not or should not be prime minister, he seemed to forget that Mr Modi had thrice won the mandate of the people of Gujarat after that pogrom. Indeed, Mr Modi did better than the Congress by winning thumping majorities. If sins of commission and omission were washed away by such e

T N Ninan: PM as politician

As the Aam Aadmi Party's first government gets ready to be sworn in later today in Delhi, by way of a year-end thought it is worth reminding ourselves of what we sometimes forget: how regenerative and re-energising an election is. There is a new approach to old issues, fresh ideas get tried and tested, and new faces replace tired ones. At the national level, the elections of 1991, 1998 and 2004 all brought about welcome change. At some point, hubris takes control of those in power, and voters need the chance to bring them down to earth. For those old enough to remember, P V Narasimha Rao was all-powerful in the run-up to the 1996 elections, and reduced to nothing immediately afterwards. The BJP was increasingly arrogant in 2004 as it headed for what it thought was certain victory, but it came a cropper. Today, the Congress has woken up to the thought that it faces a potentially severe judgment for five years of misrule. So who could argue that elections are not a form of catharsis for

T N Ninan: The opportunity for renewal

Reading The Blood Telegram, Gary Bass' riveting account of the run-up to the Bangladesh war, amidst the din over the arrest of an Indian diplomat in New York, provides some interesting comparisons. In 1971, as Mr Bass reports, Indira Gandhi and Indians in general were abused constantly in private conversations by a viscerally anti-Indian Richard Nixon and a dangerously cynical but arse-licking Henry Kissinger (whose Nobel Peace Prize should be a lasting shame for the Norwegian Nobel Committee). Kissinger lied repeatedly to India in bilateral meetings, and secretly egged the Chinese on to attack this country; in one incredible sequence, he was even willing to risk nuclear war. Recalling the atmosphere of the time underlines the massive transformation in the bilateral relationship, and why it is important to not throw it all away amidst the legitimate outrage over flouting of the relevant Vienna Convention and violation of a woman diplomat's personal dignity.It is as well to recognise th

T N Ninan: Diplomacy, then & now

Rahul Gandhi had two closed-door meetings shortly before the Assembly elections, one with businessmen and the other with bankers

T N Ninan: Which one?

In Ruminations last weekend, I had concluded that there was room for only a modest cut in the cost of power in Delhi, unless it was established that the electricity distribution companies (discoms) were exaggerating the cost of power that they bought for onward selling to the capital's consumers. In response, I have got various estimates of what it costs to buy power. One reader pointed out that Maharashtra's state-owned distribution company buys power for much less than what one of Delhi's discoms says it is doing ('2.15 to '3.50 per unit in Maharashtra, compared to '5.37 in Delhi). Meanwhile, the average price at which the National Thermal Power Corporation sells power is '2.92 per unit.The price trends are also telling. In 2008-09, when NTPC's power selling rate was '2.12, the discom bought power at '2.68, a gap of 56 paise that could be justified by transmission costs, wheeling charges and taxes. Last year, however, NTPC's rate was '2.96 while the discom purchase price had soared t

T N Ninan: Try introducing competition

The Aam Aadmi Party has promised a 50 per cent cut in Delhi's electricity tariff. The Bharatiya Janata Party has promised a 30 per cent reduction. But the electricity distribution companies in the capital say they are losing money. If we are to figure out whom to believe, some simple numbers are unavoidable.Back in 2002-03, when electricity distribution in the city was privatised, the cost of power that the distribution companies, or discoms, bought from suppliers was Rs 1.42 (all numbers have been taken from one of the discoms). Add overheads of Rs 2.33 per unit (including losses from massive power theft), and the total cost per unit was Rs 3.75 - against which the average tariff given to the discom was Rs 3.96 per unit. Result: a surplus of 21 paise per unit. Eight years later, the bulk purchase cost had virtually trebled to Rs 4.20, while overheads per unit had dropped by over 40 per cent to Rs 1.34 (showing a dramatic improvement in efficiency). The total cost to the discom was the

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