No modern corporation would take a decision on the appointment of its chief executive a few days before the announcement is due and be apologetic about it, saying that further delay was not possible given the exigencies of the situation. That is precisely what the Union government has done in giving Reserve Bank of India Governor Duvvuri Subbarao a two-year extension 22 days before his term expires. Union Finance Minister Pranab Mukherjee claimed that there was no reason why any decision was required to be taken at this point in time since &ldquo;there was time till September&rdquo;! True, when Dr Subbarao was appointed RBI governor in September 2008, his appointment was announced five days before the end of the five-year term of Dr Y V Reddy, the then RBI governor.

Eleventh-hour wisdom

Business Standard

Mumbaikars in particular and Indians in general should be grateful that what they got after a Panama-registered tanker ran aground last weekend were tarballs of oil and gunk on Juhu beach. The environmental crisis, grave as it certainly is, could easily have been overshadowed by another 26/11. Given the time it took before the Coast Guard and anyone in authority thought fit to act, M V Palit could well have disgorged AK 47-wielding terrorists on to one of India&rsquo;s most crowded beaches instead. After all, that was the chosen mode of entry for 10 heavily armed men who held Mumbai hostage for 60 hours in 2008. Or the ship may have been packed with explosives that could have killed many hundreds of curious onlookers who thronged the beach until the police belatedly decided to clear it. The inaction over M V Palit was inexplicable and worrying for several reasons.

Waves of insecurity

The best, or perfect (depending on the translator), said Voltaire, is the enemy of the good. That is precisely what activist Anna Hazare and his so-called &ldquo;Team Anna&rdquo; have converted their version of the anti-corruption ombudsman &ndash; the Lok Pal &ndash; into. Mr Hazare&rsquo;s fivesome want a &ldquo;Mr India&rdquo; kind of all-powerful destroyer of malfeasance, which, they imagine, will wipe out corruption from India&rsquo;s body politic. The United Progressive Alliance government has gone out of its way to give the four gentlemen and lady a patient and understanding hearing and, based on wider inputs, has framed what the government regards a &ldquo;good&rdquo; Bill. It is now up to Parliament to decide if it is happy with the &ldquo;good&rdquo; or wishes to make it &ldquo;better&rdquo;. At the end of the day, whatever Parliament does is unlikely to satisfy those who seek the &ldquo;perfect&rdquo;. So be it.

Good versus perfect

Can India escape the consequences of a transatlantic economic slowdown? While global commodity prices may soften and offer some comfort, international trade may be hurt. For much of the last year, exports were hurtling along at more than 30 per cent year-on-year, buoyed by new markets in Africa and Latin America. Exports for the financial year 2010-11 were a record $245 billion, while imports were of the order of $350 billion. Importantly, exports grew faster than imports, leading to a lower trade deficit than in the previous year. However, the recent statement by Union Commerce Secretary Rahul Khullar indicating a slowdown in exports during the July-September quarter is sobering. The projected decline is owing to a combination of a statistical base effect (it is virtually impossible to grow at 30 per cent year-on-year indefinitely) and the lack of depth in the new export geographies.

Readying for the storm

This is neither a postcard nor a form, just an editorial to indicate precisely what we mean to say. Yours sincerely and yours forever more. India still needs you, India still feeds you, even at sixty-four (with apologies to Paul McCartney and John Lennon)! The tri-colour is on sale again at crossroads around the country. Young ill-clad kids trying to appeal to every vehicle driver&rsquo;s patriotism to make an extra buck. No harm in it.

When I'm sixty-four!

Two very different speeches in New Delhi last week, on the eve of India&rsquo;s 64th Independence Day, drew attention to the strategic role of industrial policy. Harvard economist Dani Rodrik, renowned for his influential work on industrial policy and a source of inspiration for India&rsquo;s National Manufacturing Competitiveness Council, told a Confederation of Indian Industry audience that &ldquo;strategic collaboration and co-ordination between the private sector and the government&rdquo; could help uncover the bottlenecks in industrial growth and encourage investments in &ldquo;non-traditional&rdquo; areas. &ldquo;Industrial policy is a process of discovery rather than a list of policy instruments,&rdquo; said Professor Rodrik.

Defending development

Everyone expects a China, even an Iran and an Egypt, to censor the Internet, ban posts on social networking sites, block websites in their entirety, and attempt other such anti-democratic acts. But when countries like India (the world&rsquo;s largest democracy), the United States (most powerful democracy) and Britain (oldest democracy) start exploring ways to censor the Internet and monitor online posts by users, it&rsquo;s time to sit up and think. Last week, the Indian government announced its intent to monitor conversations on social networking sites like Twitter and Facebook for &ldquo;security&rdquo; reasons, and British Prime Minister David Cameron highlighted concern over the use of social media tools such as Facebook and Twitter by anti-social rioters. Mr Cameron said he would explore &ldquo;whether it would be right to stop people communicating via these websites and services when we know they are plotting violence, disorder and criminality&rdquo;.

Tweetering state

Given his falling personal popularity ratings, the inability of the ruling United Progressive Alliance (UPA) government to regain political initiative from a divided Opposition and faced with an unfriendly media that remains enamoured of non-governmental activists, it is not surprising that Prime Minister Manmohan Singh chose to use his eighth Independence Day address from the ramparts of the Red Fort both as a report card and a reality check. The fact is that Dr Singh has much to be proud of as prime minister. Not only has he given India seven years of unprecedented economic growth, with its ups and downs, but he has also made the growth process more inclusive, financing major programmes for rural development and employment, health and education. His claim that the UPA has prevented communal conflict in the face of provocations from terrorists is well founded.

A reassuring address

China&rsquo;s efforts to move away from an economic structure where economic growth was driven by high investment and export demand in favour of domestic consumption-led growth may come up against hurdles in days to come. China&rsquo;s strategy to boost domestic consumption had three major components: increasing the size and scope of credit markets, abolishing agricultural taxes and allowing a gradual appreciation of the renminbi. Of the three, the expansion of credit markets was scaled down considerably after fears that it was leading to the creation of asset bubbles, particularly in the housing market. The agricultural tax rebate has had little impact, because returns from the land are rapidly diminishing, leading to large-scale migration to urban areas, despite China&rsquo;s oppressive hukou (residential permit system).

Chinese takeaway

The government&rsquo;s move to allow an additional 0.5 million tonnes of sugar exports on top of one million tonnes permitted earlier is well intended. However, the total permissible exports are still not enough to adequately slash unsustainable inventories and improve the economic health of the sugar industry so that it can clear the mounting cane price dues.

Sugar, sugar

The controversy surrounding the arrest of Anna Hazare and his team has generated more heat than light about the issues at stake.

Steam Anna

One of the mantras of the era of globalisation has been that while all economics is global, all politics is local. The problem for the member countries of the European Union (EU) is that they have yet to find a regional solution to this conundrum. Caught between the global implications of the national and regional economic plans that have so far come up to deal with the Eurozone&rsquo;s debt crisis and local politics that hold back governments from administering the bitter medicine of fiscal adjustment, EU has failed to come up with a regional solution to its economic and financial crises. It is, therefore, not surprising that German Chancellor Angela Merkel and French President Nicolas Sarkozy have once again failed to come up with an acceptable region-wide solution to the problems of Portugal, Italy, Greece and Spain (PIGS). Consequently, the euro has taken a hit, many European banks have come under increased pressure and the markets are in a tizzy.

European disunion

State Bank of India (SBI) has turned in another quarter of poor performance with its net profit for the period ended June 30 registering a fall of 45.6 per cent year-on-year. This is not the end of the pain; there is more to come by way of catching up on provisioning mandated by the Reserve Bank of India (RBI). Though the provisioning coverage ratio is up at 67.25 per cent, it remains short of the 70 per cent that the banking regulator requires. The bank has also been affected &ndash; this is not specific to it &ndash; by rising interest rates, which has required provisioning for depreciation in the value of investments. Treasury operations have resulted in a net deficit of Rs 840 crore, compared to a surplus of Rs 675 crore in the corresponding period. This alone accounts for Rs 1,515 crore when net profit has shrunk by Rs 1,313 crore.

SBI's clean-up

The news of a meeting of minds between the Union finance ministry and the Reserve Bank of India (RBI) on the government&rsquo;s policy on issuing licences to new private sector banks has been widely welcomed. India needs new banks and a transparent and robust policy framework will boost public confidence in the licensing process. Given the heightened public concern about transparent licensing procedures, it is most unlikely that the government and the central bank would do anything to invite criticism. Although the final policy framework will be made public next week, information suggests that the minimum capital requirement for a new bank would be Rs 1,000 crore, of which the promoters&rsquo; contribution is expected to be fixed at 40 per cent, to be brought down over a 10-year period to half that.

Trust the gatekeeper

The United States federal government and the country&rsquo;s generic (out of patent) drug industry are reportedly close to an agreement under which the latter will pay $300 million in annual fees for the Food and Drug Administration (FDA) to inspect at least once in two years overseas plants from where active pharmaceutical ingredients (APIs) for generic drugs sold in the US are imported. This is important for two reasons. One, 75 per cent of all prescription medicines sold in the US are generics and 80 per cent of the APIs used in all medicines are imported, mostly from India and China. Two, the cost-cutting healthcare reforms that the Obama administration has initiated would entail greater use of generic drugs. The new funding mechanism should speed up the approval process for marketing new products. The new fees are part of a package that also covers branded drugs and medical devices.

Pay to be policed

Hurling charges against political opponents is par for the course in democratic politics. No one can object too much to political name calling, such as, &ldquo;so and so is a fascist&rdquo; or &ldquo;so and so is communal&rdquo;, and such like. Politicians routinely hurl such invective at each other. Less excusable is innuendo, but there is a lot of that too in politics around the world.

Uncivil society

The Planning Commission has finally set a growth target of nine per cent per annum for the 12th Five-Year Plan (2012-17). When the same target was set for the 11th Plan (2007-12), not only was there great optimism that the target would be attained, but it was also felt that India would be poised by the end of the 11th Plan for a double-digit growth target in the 12th Plan. The optimism of 2007 was based on the impressive nine per cent growth performance during the period 2003-07 and a sanguine view of the global environment. Prime Minister Manmohan Singh had then said famously, &ldquo;The world wants India to do well, our challenges are mainly at home.

Nine is necessary

Members of the Upper House of Parliament, the Rajya Sabha, stood tall last week as they held a member of the judiciary accountable for his actions. Opposition leaders Arun Jaitley and Sitaram Yechury spoke well &mdash; and so did the judge in the dock and ministers of the government. Though the impeachment of Justice Soumitra Sen of the Calcutta High Court will have to await the vote in the Lok Sabha, the impressive parliamentary proceedings do raise the question whether the country has to be subjected to such elaborate proceedings before a judge can be expected to step down after being found guilty of wrongdoing by a panel of eminent jurists. The long gap between Justice Sen&rsquo;s acts of commission that warranted this action and the final impeachment does point to the need for speedier procedure in the dismissal of judges as well as their appointment.

Judge and jury

While social activist Anna Hazare&rsquo;s Team Anna has captured popular imagination and prime-time news with the campaign for its version of the Lok Pal Bill, the popularity of its cause and the large following it has been able to attract &ndash; especially in New Delhi and Mumbai &ndash; should not detract from the fact that it has but one voice in an ocean of many voices. By definition, any representative of civil society reflects one viewpoint and there are many other contending viewpoints on any given issue. There is no measure, including the size of a rally or a gathering or the ability to bring large parts of a city to a halt, that can be used to assert that this alone is the &ldquo;voice of the people&rdquo; or the voice of the majority. Nothing less than parliamentary majority matters when it comes to making laws. Currently, only the Manmohan Singh government enjoys that privilege.

Anna vs Aruna

The Union finance ministry has reportedly asked all nationalised banks and financial institutions to make payments electronically and not by cheque. The groups identified are banks&rsquo; customers, employees, vendors and beneficiaries of social sector projects. The scope for corruption and delay in making payments by cheque is lessened when the electronic transfer mode is used. This is fine but it does not take things substantially forward. A key department under the same ministry that continues to make payments by cheque for all but very small amounts to individuals is the income tax department. Apart from that, banks must be making most of their payments to their own customers and employees electronically. The scope for electronic payments can be extended a little more by making it mandatory for vendors &mdash; not large at all in the overall scheme of things.

Not by fiat alone

With all the domestic preoccupations this week, few in India are paying attention to momentous developments in West Asia and North Africa (WANA). With the siege of Tripoli by rebel forces, aided by European powers, the bell tolls for Libyan leader Muammar Gaddafi. In Syria, the India-Brazil-South Africa (IBSA) initiative to prevent a Libya-like attack and secure political change through peaceful means is now facing new obstacles. Having ensured a change of regime in Libya, after Egypt, the West may well focus on Syria. India has had long-standing good relations with Libya and Syria, but neither is of great strategic importance to India today. Rather, the Arab nations of the Gulf, including Saudi Arabia, the United Arab Emirates (UAE) and other Gulf states, matter more for India from a purely economic (oil and remittances) as well as a strategic perspective. This part of the Arab world remains relatively stable for now.

West side story

Incisive columns and editorial comment by top opinion leaders

Page 493 - Editorial Comment