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

Business Standard

The recent decision by the empowered group of ministers (EGoM) to free urea prices and bring urea under the nutrient-based subsidy (NBS) regime should have been taken along with the decontrol of phosphatic and potassic fertilisers in April 2010, if not earlier. In fact, the process of switching over to the well-conceived NBS system has been inconclusive without urea being covered in it. As a result, most of the key objectives of this move have remained unmet. These include promoting balanced application of plant nutrients to preserve soil health, encouraging production of innovative and situation-specific fertiliser products, rationalising fertiliser subsidy and attracting fresh investment in this sector. Surprisingly, though most of the ministries concerned &ndash; including those of agriculture and finance &ndash; favoured extending NBS to urea, the main administrative ministry, the fertiliser ministry, continued to have misgivings about it.

Halfway house

Standard &amp; Poor&rsquo;s (S&amp;P) may have been right to downgrade the United States sovereign credit rating from triple A to double A plus, on the grounds that the political risk of fiscal correction in the US had gone up. But S&amp;P seems to have underestimated the political risk of taking such a bold professional view. It is one thing to downgrade an India or a Russia, or even an Iceland and an Ireland, but how could S&amp;P hold a mirror to the US of A? Unheard of! So, off with his head! Everyone who knows anything about sovereign credit ratings and power politics will recognise that S&amp;P President Deven Sharma&rsquo;s decision to leave the organisation was occasioned by US anger at his forthrightness in downgrading that country&rsquo;s government debt.

Rating the raters

Another day of nerves in the Indian equity market, with a combination of bearishness and volatility, is keeping investors worried about medium-term prospects. While optimists see emerging markets benefiting from the problems of the ageing ones, pessimists argue that India cannot be decoupled from disturbing global trends. Mark Twain once said: &ldquo;Get your facts first, then you can distort them as you please.&rdquo; Marketmen seem to be following this counsel down to the last word. Developed economies are headed for a multi-year slowdown. Japan&rsquo;s downgrade is yet another indication of this. Will emerging economies also go down or will a &ldquo;flight to safety&rdquo; keep the markets in countries like India buoyant? If there were to be another &ldquo;Lehman moment&rdquo; with crisis enveloping the Eurozone, there could be a domino effect on the rest of the world, especially the United States.

Dalal Street blues

Partly in response to India&rsquo;s concerns about a huge trade imbalance in favour of China and partly in pursuit of the Indian middle-class market, Chinese companies have decided to invest in India. Sinovel, China&rsquo;s largest wind turbine manufacturer, and four Chinese automobile majors have announced plans to set up manufacturing units. This follows an earlier announcement by prominent Chinese power equipment manufacturers to do likewise. The motivations for the investments are diverse. In the case of power equipment, the Indian government&rsquo;s stipulation that only companies that manufacture their products domestically are eligible to compete for government-owned power projects effectively poses a barrier to entry for Chinese firms, which to date have been exporting capital equipment.

Enter the dragon

There are victors and vanquished only in a war. In a genuinely political engagement everyone must emerge a winner. That is made possible only through compromise, through &ldquo;give and take&rdquo;. Through his reasonable statement in Parliament, Prime Minister Manmohan Singh has opened the door to an honourable compromise between the government and civil society on the issue of the Lok Pal Bill. Dr Singh only stated the obvious when he said that Mr Hazare&rsquo;s fast had helped place the issue of corruption in public life at the centre of national political discourse. The government has also made several important concessions on substantial matters without conceding the primacy of Parliament in making laws. Mr Hazare and Team Anna should also take a step or two back from their hard-line position and accept that in a parliamentary democracy, Parliament must have the final word. &ldquo;My way or the highway&rdquo; cannot be the basis for negotiations in a democracy.

Voice of silent majority

Alarm bells are ringing in oceans around the globe. Recent studies show a sharper decline in marine biodiversity than earlier forecasts. A good part of precious sea and ocean life may be on the verge of extinction. What is worse, these studies indicate that the potential extinction of species, from tiny corals to large fish, could be comparable to the five great mass extinctions in antiquity during which much of life perished from this planet.

Ocean life adrift

India&rsquo;s biggest lesson to the world has been, and remains, the view that a negotiated compromise is always better than one&rsquo;s victory and another&rsquo;s defeat. Once again the elected representatives of the people in Parliament and a social activist who succeeded in galvanising a sizeable segment of civil society, with help from sections of the media, have ended a political impasse through a negotiated compromise that enables all concerned to declare victory.

Victory for all

There are many good reasons why there has been a global reaction to Apple founder Steven P Jobs&rsquo; decision to step down and call it a day. Apple Inc is regarded as one of the most valuable companies in the world &mdash; in terms of market capitalisation it briefly displaced oil giant Exxon Mobil, whose revenue is almost four times that of Apple, to become numero uno.

Apple without Jobs

The jury is still out on whether the global economy is headed for a &ldquo;double-dip&rdquo; recession or a prolonged period of sustained economic underperformance, wherein gross domestic product in developed economies grows at no more than one or two per cent per year. While available indicators point to the latter scenario, it is unlikely to offer more cheer than dire forecasts about a &ldquo;double dip&rdquo;. Ominously, the developed world seems to have blown its ammunition in terms of policy tools to confront the persisting crisis. Federal Reserve Chairman Ben Bernanke&rsquo;s Jackson Hole speech virtually ruling out a third round of stimulus for now was obviously guided by fears of stoking inflation, which would only make a bad situation worse. Either Mr Bernanke was keeping his policy cards close to his chest, or he has no more aces up his sleeve. The effectiveness of monetary policy in the United States is virtually at an end.

Hobson's choice

There is a remarkable difference in both style and substance of the first 100 days in office between Tamil Nadu Chief Minister J Jayalalithaa and West Bengal Chief Minister Mamata Banerjee. To be sure, the two situations are not comparable apart from the fact that both chief ministers happen to be women. Ms Banerjee swept to power on a tidal wave of high expectations of change and progress after three decades of Left Front rule which had become moribund. Ms Jayalalithaa is dealing with a less dramatic situation. Though both are mercurial in their own ways, Ms Jayalalithaa has proved to be more combative in office than Ms Banerjee, who has so far gone about doing her work in a quiet manner. The Tamil Nadu chief minister has declared war on land grabbing by influential people. This has resulted in scores of arrests, including those of several former ministers of the Dravida Munnettra Kazhagam (DMK) regime.

A tale of two governments 

The Reserve Bank of India (RBI) has made it clear that it would like to ensure only the &ldquo;fit and proper&rdquo; make the grade when it comes to securing licences to set up private banks. The onerous criteria laid down by the central bank do not explicitly bar firms with an interest in other lines of business activity, outside of real estate and capital market, from securing licences. But to do so these firms have to meet more stringent norms than insisted on ever before. The draft also explicitly refers to the need to prevent &ldquo;self-dealing&rdquo; by promoters. Given the mood in the country today, it is just as well that RBI has laid down such tough eligibility criteria. Finally, as in the past, the central bank has said a high-level group will process the applications after due diligence by various regulatory authorities as well as enforcement and investigation agencies.

Banking on licences

The recent commissioning of the INS Satpura, the second of the indigenously constructed guided missile strength frigates, effectively completes two-thirds of Project 17 &mdash; India&rsquo;s ambitious programme to design and construct its own stealth frigates. Following the expected commissioning of the INS Sahyadri sometime in 2012, Mazagaon Dock Limited (MDL) will commence work on the construction of four even more advanced &ldquo;Project 17 A&rdquo; frigates. The navy&rsquo;s strategy to put together the components of what would eventually be three naval battle groups centred around aircraft carriers is far reaching.

Riding the waves

Thirty years is too long a period for any political leader to rule a nation &mdash; dictator or democrat. Egypt&rsquo;s President Hosni Mubarak has clearly over stayed his invitation. Time for him to go. India and Indians cannot remain mute spectators to developments in the Arab world. To be sure, this is very much India&rsquo;s neighbourhood. Far too many Indians live there, the livelihood of millions of Indians is based on peace, stability and prosperity in the Arab world.

Mr Mubarak must go

For all its visible activism, it is not clear why the Union environment ministry has remained slow in activating the National Green Tribunal (NGT) which came into being in October 2010. No appointments have been made to the NGT after Parliament passed the NGT Act last October. The ministry has also not yet framed the rules under the Act. The NGT is mandated to have between 10 and 20 judicial members and 10 to 20 experts on environment and allied sciences.

No-go tribunal

India still has enough green cover left for Union Minister for Environment and Forests Jairam Ramesh to gather fig leaves to hide his shame each time he does a somersault on policy. It would seem Mr Ramesh wants to convince himself more than his critics that he is not changing his mind, but is in fact getting his way. After a series of policy reversals, with ostensible riders that the party concerned says they can ride, Mr Ramesh has now done the big one. A green signal has finally been given to the South Korean steel giant Pohang Iron &amp; Steel Company (Posco) to take the next step to bring the biggest foreign-funded industrial project into India. The 32 new conditions for port development, the 28 new ones for the steel-cum-power plant and the additional one, not yet given, for forest use have all been found acceptable to Posco and the state government.

Sixty-one fig leaves

The outgoing chairman of State Bank of India, O P Bhatt, seems to be defending the indefensible and, in the process, making things worse by committing a second transgression. The first was initiating teaser rates and the second, not only standing by the action but in a manner that appears to be disrespectful of the banking regulator. Teaser rates cannot have more dubious antecedents. They were among the practices that brought upon the US the entire sub-prime crisis &mdash; a bubble built on sanctioning mortgages to those who did not have the means to service them. It is this that eventually snowballed into the financial crisis of 2008, from the adverse consequences of which the global economy is only now recovering. At a time when the property bubble was building up, mortgage initiators in the US induced people to take on obligations that they had no means of sustaining by offering starting interest rates and, therefore, payments that were artificially low.

Banker's balance

Union Minister Kapil Sibal&rsquo;s latest proposal to delink telecom licences from spectrum allocation suggests that he has finally come round to agreeing with the Comptroller and Auditor General&rsquo;s view on revenue losses from underpriced spectrum. To be fair, Mr Sibal&rsquo;s new stance is logical. Spectrum is a scarce resource and should not be given away for commercial purposes at sub-optimal prices, especially by a government struggling to control a ballooning fiscal deficit.

Out of order

The Boston Consulting Group&rsquo;s (BCG&rsquo;s) &ldquo;Global Challengers List&rdquo; for 2011, continues to be dominated by companies from China, India, Brazil, Mexico and Russia, though their collective share has fallen. Africa, with four entries, is a notable entrant in the most recent list. The firms that qualify are predominantly characterised by innovative business models in tune with emerging market realities and the financial puissance to avail of opportunities to buy assets globally and compete with established competitors from developed economies. Twenty Indian companies have made the list, a number exceeded only by China with 33. However, all Indian &ldquo;challengers&rdquo; are privately owned, unlike their Chinese counterparts, where a significant number are state-owned enterprises or have substantial government holding. Six of the 20 Indian firms belong to the Tata Group, while the rest expectedly comprise sector or industry leaders in India.

Global challengers

In the extant virtual lynch mob environment on corruption in high places, there is the risk that the media&rsquo;s herd instinct may force the government to make new mistakes in seeking to correct old ones on the telecom policy. Former Union telecom minister A Raja has finally been arrested after the investigating agency was able to find adequate evidence of wrongdoing and personal aggrandisement on the minister&rsquo;s part.

Raja and praja

So the Cricket Association of Bengal (or CAB) has lost the right to host the India-England match at the Eden Gardens. Work on the stadium, under virtually complete re-construction, is hopelessly incomplete; the ground itself is covered with rubble; and anyone who sees the mess comes to the immediate conclusion that the stadium and ground will not be ready in time for the World Cup. So it may not be just the India-England match, the hallowed Eden Gardens might lose all four World Cup matches.

Not just cricket!

Incisive columns and editorial comment by top opinion leaders

Page 494 - Editorial Comment