The Union government has brought the protests against the the fuel price increase on itself by opting for a one-time sharp price escalation over gradual and graduated increases in response to global market trends. It is understandable that there would be some amount of public resentment, and that opposition political parties would try to exploit that. However, the government has a strong case, especially for increasing the prices of kerosene, diesel and LPG, so it should educate public opinion, defend itself and stay the course. The Union government should have known that it would be damned if it increased prices and damned if it didn&rsquo;t. India cannot endlessly afford the luxury of subsidising energy, especially imported energy.

Getting prices right

Business Standard

The announcement by the Indian Space Research Organisation (Isro) that the Geosynchronous Satellite Launch Vehicle (GSLV) will launch India&rsquo;s most sophisticated communications satellite, GSAT-14, in 2012 with an indigenous cryogenic engine has been greeted with a mixture of caution and hope. Despite considerable progress in developing indigenous capabilities in the design and launching of satellites, the final frontier &ndash; a reliable capacity to place payloads of at least four tonnes in orbit &ndash; continues to elude Isro. The celebrated launch of the 3.1-tonne GSAT-8 late last month from Arianne&rsquo;s space facility in French Guiana could barely conceal Isro&rsquo;s own lack of confidence to propel payloads of this magnitude through its indigenous launch vehicle, the GSLV.

Financing its flight

The Department of Industrial Policy and Promotion&rsquo;s, or DIPP&rsquo;s, latest proposal on allowing foreign direct investment (FDI) in &ldquo;sensitive&rdquo; sectors represents a classic half-solution to a festering issue. It has suggested that FDI in these sectors &ndash; multi-brand retail being the principal one but also defence and media &ndash; should be allowed via an indirect downstream route. Under this route, ingeniously thought up in Press Notes 2 and 4 of 2009, entities with up to 49 per cent FDI and controlled by Indians can invest in these areas through downstream units. So, if Walmart, for example, wants to set up a chain in India, it only needs to invest in a holding company with an Indian partner who holds 51 per cent which will, in turn, invest in a downstream entity that actually operates the retail chain.

Green signal for FDI

Politics in Karnataka temporarily left its own arena and sought to use the religious space to settle scores, with poor results. Things took a new turn recently when former chief minister and Janata Dal (Secular) leader, H D Kumaraswamy, made a startling allegation that Chief Minister B S Yeddyurappa had sent a personal emissary to him offering truce in return for getting his work done through government expeditiously. Instead of simply refuting the allegation, the chief minister brought the Gods into the conflict by challenging Mr Kumaraswamy to utter his allegation under oath before the presiding deity of Dharmasthala, Lord Manjunatha, while he himself would repeat his denial in the same manner. This is because the customary belief is that anyone uttering falsehood before the deity will come to grief. Things went a bit awry for Mr Yeddyurappa thereafter.

Not fit for the Gods 

The Planning Commission, the ministry of statistics and programme implementation, the Central Statistical Organisation (CSO) and the National Sample Survey Organisation (NSSO) are being overseen by some of the brightest minds in the Indian government for many years now. Both together and individually they have made a travesty of the data being brought out, debated and used for policy making. Thus, whether it is poverty or employment, the figures are so far away from reality that it is unclear whether they should be used even in an indicative manner.

A poverty of statistics

No one can deny that in a country like India, wasting food and ostentatious consumption at social gatherings are a social crime. A social movement espousing moderation in consumption habits would instantly strike a chord with a large number of Indians. Also, few would deny that India&rsquo;s newly rich and upwardly mobile like to indulge in conspicuous consumption to show off to their peers and neighbours that they have arrived. From your neighbourhood get-rich-quick real estate broker to the new billionaires, everyone who has come into wealth likes to show off, especially at family events like a wedding or a birthday party. So, the idea of promoting temperance and moderation, of campaigning against wastage, is well taken. Yet, visible prosperity of the upwardly mobile has the positive social externality of encouraging the less energetic to work harder and be smarter.

Wasting food

For a government that has been busy granting the people of India rights to employment, education and food, the United Progress Alliance has been lackadaisical in protecting the citizens&rsquo; right to privacy. Industrialist Ratan Tata was, therefore, right to seek the protection of the Supreme Court in the matter relating to leaked tapes of telephone tapping undertaken by the Union government&rsquo;s tax authorities.

The right to privacy

Rebellion is not new to the Indian National Congress, nor indeed to party president Sonia Gandhi. Once a famous rebel, Maratha strongman Sharad Pawar is now an ally! So, the Congress party need not be rattled by the revolt of Y S Jagan Mohan Reddy, Congress member of Parliament from Andhra Pradesh, son of former chief minister the late Y S Rajasekhar Reddy, now also a media baron and businessman. The young man is at once gripped by a sense of injustice and vaulting ambition.

The mess in Hyderabad

The gross domestic product (GDP) estimates for the second quarter (July-September) of fiscal 2010-11 were a welcome reassurance that the economic recovery witnessed over the past year is on track. Data released by the Central Statistical Organisation (CSO) estimated that GDP in the second quarter of FY11 at constant prices was 8.9 per cent higher than the corresponding period in FY10. GDP growth rates exceeding 8.5 per cent in successive quarters seems to indicate that the economic momentum gathered over the previous year has solid foundations and the annual target of 9 per cent is imminently achievable. The balanced contribution from various sectors of the economy was even more heartening. Agriculture (including forestry and fishing), the traditional underperformer, registered a year-on-year (y-o-y) growth of 4.4 per cent during the period, due to bountiful rainfall over significant portions of the country, particularly the major food-producing states.

The growth imperative

Now that the unique identity (UID) or Aadhaar rollout has started and is slated to gather steam, a few key decisions need to be taken to derive the best advantage from the technological feat that the project represents. One is to make the UID number adequate proof of identity for the purpose of accessing basic financial services like opening a bank account. The other is to protect the privacy of individuals which can be threatened by wrongful use of the humongous amount of data that the project will collect. The UID authorities are already discussing the former with the banking regulator, the Reserve Bank of India, and the Union finance ministry but it needs to be emphasised that this should be allowed and soon. Currently, banks mostly accept a new customer when she is introduced by an existing customer. It is easy to see how this does not take financial inclusion forward. The problem of getting an introduction gets more acute in the case of a migrant labourer.

Agenda for Aadhaar

While officials of the Reserve Bank of India (RBI) had publicly stated that the central bank was keen on ensuring a cash deficit of Rs 50,000 crore on average in the banking system (forcing banks to borrow from RBI through the repo window), the average shortfall over the past month has been well over Rs 100,000 crore. In its keenness to rein in inflation, has RBI&rsquo;s liquidity squeeze been a case of overkill? What could have contributed to this? There could be several reasons for this. For one, a one percentage point increase in the cash reserve ratio or CRR (the fraction of deposits that banks are mandated to keep with RBI) over the last two years has reduced the amounts of spare cash that banks have. In the process, the so-called money multiplier has declined and the pace of money creation in the economy has slowed.

RBI and cash famine

Edible oil imports have surged to a record 9.24 million tonnes last year and were estimated to be nearly Rs 38,000 crore. They have emerged as the third most important import item, next only to petroleum products and gold. India is now the world&rsquo;s largest importer of cooking fats, meeting more than half of its requirement through overseas supplies. Considering the country&rsquo;s huge and fast-growing demand for cooking oils, such high import dependence should be a cause for concern. This is especially so because palm oil, which accounts for 80 per cent of the imports, is available chiefly in only two countries, Malaysia and Indonesia. Any shortage of supply owing to crop failure or disruption of inflows will cause scarcity in the domestic market. What is even more disquieting is that the gap between domestic demand and supply of vegetable fats is set to widen, since indigenous production of oilseeds is stagnant while the demand continues to grow.

Oiling the oilseeds economy

China: Beijing wants to tighten monetary policy to be more &quot;prudent&quot;. Yet it also pledges more public spending. These contradictory goals may compromise the ruling party's ability to contain inflation, while raised interest rates will put more upward pressure on the yuan.

Dear prudence

The Phonegate transcripts saw the media roundly &mdash; and rightly &mdash; censured for the evidence of collusion with corporate groups and lobbyists that they clearly revealed. But little has been said about the role of the public relations (PR) industry in this controversy. In her sometimes fevered conversations with journalists and others in the transcripts that are in the public domain, Ms Niira Radia of Vaishnavi Communications, with clients like Ratan Tata and Mukesh Ambani, can be said to have done her job efficiently. But as any public relations professional will attest, there is a difference between the practice of lobbying, on the one hand, and advocacy on the other and Ms Radia was certainly talking the thin line between the two. Indeed, if Phonegate revealed anything, it is the urgent need to create the conditions for transparency and accountability in the public relations business.

How about a Lobbying Act?

The construction of extra floor space, violating the sanctioned master plan, may have helped make New Delhi&rsquo;s new airport terminal, T3, among the world&rsquo;s biggest airport terminals, but bad planning seems to have given T3 a new meaning &mdash; &ldquo;terribly tedious terminal&rdquo;! While a cost audit report submitted to the Airports Economic Regulatory Authority has its focus on the escalation of cost of construction as a consequence of the extra floor space built, most passengers using the terminal complain about the long distances that have to be covered in negotiating the terminal, both inside and outside. The distance from the car park to the terminal, the logistics of entry and exit of vehicles and the parallel bays for various categories of vehicles have all irritated visitors to the airport.

Terribly tedious terminal

India has come a long way from the days when a visiting managing director of the International Monetary Fund (IMF) would, on the one hand, be greeted with hostile demonstrations from unions and other opposition parties, and, on the other, go away after sermonising his hosts. The IMF&rsquo;s MD, Dominique Strauss-Kahn, neither faced angry crowds in New Delhi, during his visit last week, nor did he have to lecture his hosts on policy. On the contrary, he paid compliments to India&rsquo;s macroeconomic authorities and commended them for their policies and their record of economic management in difficult times. He went beyond the call of duty when he endorsed the government&rsquo;s views on capital inflows.

Strauss-Kahn and the Fund

The Indian public, used to the notion of the country being the undisputed leader in offshore services, has just learnt with some surprise that in the volume (voice or call centre) segment of the business process outsourcing (BPO) space, it has been outpaced by the Philippines. The Indian IT-BPO industry will not be similarly surprised as it has seen this coming for some time. In fact, it has contributed to the process. 24/7 Customer, the country&rsquo;s leading independent BPO firm, opened its facility in the Philippines in 2005, Wipro in 2007 and TCS a few days ago. The Philippines industry association says the country now has a 350,000 call centre jobs which will earn it $5.7 billion in export revenue, compared to India&rsquo;s 330,000 jobs and projected revenue of $5.5 billion.

Outpaced in offshoring

Having raised the matter of China&rsquo;s intention to build a dam across the Brahmaputra (known in China as Yarlong-Zangmu), New Delhi must insist on securing a proper response so that all those dependent on this mighty river are reassured of China&rsquo;s plans and intentions. That China has been planning to do this as part of its grandiose plan to divert the Brahmaputra waters to the Gobi desert to irrigate the arid northwestern region and to replenish water in the dying Yellow river, which remains dry for most part of the year, has been speculated for a long time. The multi-purpose irrigation-cum-hydropower project being built on the Brahmaputra (Zangmu) at Namcha Barwa on the eastern plateau of Tibet is believed to be part of this massive programme. At least five more dams are said to be either planned or under implementation on this river system at places like Guoduo, Dhongzhong, Ruxi, Linchang and Xiangda.

Dam on Brahmaputra

The visit of French President Nicholas Sarkozy, on the heels of a visit by the US president and on the eve of another by the Chinese premier and the Russian president, weeks before India&rsquo;s assumption of a non-permanent seat on the UN Security Council, draws attention to India&rsquo;s rising global profile. Business expectedly dominated the agenda during Mr Sarkozy&rsquo;s visit. Mr Sarkozy pulled out all the stops to promote French exports, particularly in high technology, which France urgently needs to boost its flagging economy. The mutual interest in energising the economic relationship makes robust sense. Bilateral trade in 2009 at &curren;5.37 billion ($7.1 billion) was 21 per cent lower than the corresponding figure for 2008, a consequence of the economic turmoil in Europe. While France is India&rsquo;s fifth-largest trading partner in Europe, India is even lower on France&rsquo;s radar, ranking 14th as a trading partner.

Vive la difference

The western press in general, and the British press in particular, has reacted with predictable sourness to Russia and Qatar winning the World Cup bids for 2018 and 2022, respectively. Much of the chagrin has to do with the fact that the winners are bit players in the global football scene and have upstaged the claims of more pedigreed footballing nations such as England, Spain and Portugal (jointly), Japan, Australia, South Korea and the US. The ire has been focused on tiny Qatar, the dark horse if there ever was one, since Russian teams participate in the major European leagues and the country has staged an Olympic event to bolster its sporting credentials. Dark hints of corruption and collusion are circulating. These may or may not be true &mdash; Fifa officials cannot be called saints by any means. But even if we account for such shenanigans, it would be hard to criticise the choice of Qatar in terms of Fifa&rsquo;s mandate to develop football globally.

Ball in Asia's court

India&rsquo;s polity may be in a crisis, but the economy is chugging along quite nicely. The Union finance ministry&rsquo;s mid-year analysis of the economy presents an upbeat view, forecasting a national income growth rate of more than 9 per cent this fiscal. The upward revision of Q1 GDP growth to 8.9 per cent implies that GDP growth rate for the half year is a healthy 8.9 per cent. This puts the economy well on course to meet the IMF projection of 8.8 per cent for fiscal 2011. Adding to the euphoria is the balance in the growth story for the year so far. Agricultural growth at over 4 per cent, admittedly aided by a base effect, has not merely helped in boosting overall growth and rural incomes, but is also expected to help mitigate runaway inflation. More to the point, bountiful rains, especially in the major food-growing regions, coupled with only a slightly lower net sowing area augur well for domestic food production during the rest of the year.

Sustaining a good story

Incisive columns and editorial comment by top opinion leaders

Page 503 - Editorial Comment