Six months of investigation, mostly through telephone-tapping, 12 months of analysis of evidence and prosecution, 11 days of deliberation and, finally, a conviction. Galleon Group founder Raj Rajaratnam&rsquo;s journey from being suspected of fraud to being punished and jailed would have taken less than two years by the time the saga ends next month. In Hyderabad, Satyam&rsquo;s founder Ramalinga Raju is still an undertrial and remains in custody for more than two years since he confessed to financial fraud. No one can guarantee how long Mr Raju will remain in jail and when he can expect to get bail.

Trial as punishment

Business Standard

Even as the world grapples with the threat of global warming and climate change, attention must be paid equally to another atmospheric phenomenon &mdash; the damage to the Earth&rsquo;s ozone layer that shields Earth-dwellers from the Sun&rsquo;s harmful ultraviolet radiation. Depletion of the ozone layer has reached an unprecedented level over the Arctic this spring, reports the World Meteorological Organisation (WMO).

The other threat above

Ending a brief spell of pro-incumbency electoral outcomes (Lok Sabha and state Assembly elections in 2009 and Bihar in 2010), the Indian voter returned to the long-standing anti-incumbency posture in four out of the five state Assembly elections last week. For over two decades, the Left Front in West Bengal boasted that it was the only political formation that bucked the national trend. When Bengal finally decided to catch up with the rest of India, the political tsunami that hit the state proved devastating for the Left Front. That Assam stood apart is a tribute to the Tarun Gogoi government and was perhaps also a gift from the people of the state to Prime Minister Manmohan Singh, who has remained loyal to Assam as a member of Parliament. The results of last week&rsquo;s elections reinforce a common message coming from the elections in the past few years that &ldquo;regional&rdquo; or state-level leadership can play a significant role in electoral outcomes.

The return of anti-incumbency

The scene for H-1B visas, issued by the US government to bring in temporary skilled workers to meet the domestic shortage, appears to have undergone a change. This is a matter of importance to India since the visas are a proxy for the demand scenario that Indian software vendors face in their prime market, the US, which, in turn, reflects the performance of the sector. This April, visa applications to be issued for the US financial year beginning October saw a 50 per cent drop over last April. This confirms a two-year downward trend in the number of applications received. Historically, it has been possible to gauge potential demand both by the speed at which the yearly quota is filled and by how many are finally approved. For example, a cap of 65,000 announced in 1990 was not reached till 1997. The cap was raised to a peak of 115,000 in 2000 and 2001, coinciding with the run-up to the technology bubble.

Fewer takers for H-1B 

Union finance minister Pranab Mukherjee was being economical with the truth when he said that last Saturday&rsquo;s petrol price hike decision was entirely that of oil marketing companies (OMCs). True, the government correctly but belatedly deregulated petrol pricing several months ago, but it is clear that despite a sharp increase in global crude oil prices in the past six months, the OMCs restrained themselves from increasing domestic fuel prices owing to political sensitivities on account of elections to state assemblies. To that extent the delayed hike in petrol prices, despite their surge globally, was owing to political interference rather than corporate inertia. Brent crude oil price has in fact come down to less than US$110 per barrel in the past few weeks after the sustained rise from less than US$80 per barrel six months ago to almost US$125 a barrel a month ago.

Price of delay

The industrial output roller-coaster that India has been on, reflected by the volatile index of industrial production (IIP), is still going up and down. Thankfully, though in March 2011 it went up by 7.3 per cent. This compares unfavourably with the 15.5 per cent year-on-year growth registered in March 2010, but offers some cheer. Clearly, Indian manufacturing (that constitutes 80 per cent of the IIP) is facing a structural constraint, with the year-on-year growth at 7.9 per cent in March 2011 compared to 16.4 per cent in March 2010. Corresponding figures for mining and power were 0.2 (12.3 per cent in March 2010) and 7.2 per cent (8.3 per cent in March 2010), respectively.

Manufacturing growth

It is tempting to interpret Reserve Bank of India Governor Duvvuri Subbarao&rsquo;s recent statement questioning the need for setting up an independent debt management office as an early indication of yet another turf war between the monetary policy authority on Mumbai&rsquo;s Mint Road and the fiscal policy authority in Delhi&rsquo;s North Block. The two authorities have not seen eye to eye in the recent past on many other issues including the one that led to the creation of the financial stability and development council or FSDC with the finance minister as its chairperson. The finance ministry under Pranab Mukherjee was keen on setting up the FSDC that would undertake macro-economic supervision of the economy along with co-ordination among all financial sector regulators. However, the RBI had expressed its opposition to the proposal arguing that the new council could undermine its autonomy.

Managing debt

Government scientists and industry experts have joined hands to evolve guidelines for advertisements claiming health benefits for what is called health foods in India and functional foods in the US. The sharp rise in upper class incomes, lifestyle diseases and health consciousness has created a market for such foods, which industry has been quick to step into. Rules are urgently needed because currently there are none. For example, the claim by GlaxoSmithKlein that Horlicks makes children taller, stronger and sharper may have been clinically validated, but the firm would not be breaking any law or guideline if it were not. Current Indian guidelines, supervised by the Food Safety and Standards Authority of India, only require foods to be safe for consumption and unadulterated.

Science versus marketing

The State Bank of India has turned in disastrous results, the likes of which have not been seen in the last 11 years. Net profit for the quarter ended March is down to virtually zero (Rs 21 crore), compared to over Rs 1,867 crore in the corresponding quarter of last year.

SBI comes a cropper

Article 356 of the Indian Constitution has not only been one of the most controversial articles, when it was first formulated, but has remained one of the most abused provisions of the Indian Constitution. India&rsquo;s constitution writers were fully aware of the inherent dangers of giving so much arbitrary power to the Union government and make State governments so vulnerable to Delhi&rsquo;s diktats. Yet, it is understandable that at the time of Independence, when the unity and integrity of India was not yet assured, when the loyalty of provincial politicians to the Republic was itself in doubt, when the overwhelming political tendency was in favour of a strong Centre, the architects of the constitution felt compelled to incorporate the said article.

Doing 420 with 356 

The shareholders of the International Monetary Fund (IMF) have been forced to look for a new managing director earlier than they had been prepared for. It was an open secret that Dominique Strauss-Kahn, who has resigned this week following a sex scandal involving an accusation of rape, was planning to declare his candidature in the French presidential elections sometime this summer, perhaps by July. The IMF would then have had to look for a successor anyway. That process has had to begin sooner than expected with Mr Strauss-Kahn&rsquo;s ignominious exit. Several names have been floated in the media, including that of deputy chairman of India&rsquo;s planning commission Montek Singh Ahluwalia. That this media speculation is only half-informed is clear from the fact that both Mr Ahluwalia and Dr Stanley Fischer, governor of the Bank of Israel and former IMF deputy MD, are above the age limit of 65 that has thus far been adhered to in the selection process.

Managing the Fund

The judiciary in India has become habituated to usurping the role of the executive and seeking to run ministries, government departments, investigation agencies and the police. It seems the armed forces are the only institution that the judiciary has not yet stepped in to berate, instruct and supervise! In recent months, the judiciary has pronounced on matters ranging from euthanasia and caste violence (honour killings) to tax evasion, corruption and even nutrition and food management.

Judicial diktat

Richard Burton, that incredibly handsome British actor, reportedly slept with three different women every week for close to thirty years! That is a tale about power, wealth, fame and sex.

L'affaire Dominique

Remember Gondwana? Addressing the first India-Africa forum summit in New Delhi in 2008, Prime Minister Manmohan Singh referred to Africa as India&rsquo;s &ldquo;mother continent&rdquo;! The waters of the Indian Ocean and the Arabian Sea kept people on both sides connected for centuries and when the Europeans entered these waters in search of India, they reconnected the two continents in new ways. With decolonisation and development, India and the many republics of Africa re-established political and economic links. The long stretch of historical links has meant that close to three million people of Indian origin live on the African continent. India&rsquo;s consistent support for Africa&rsquo;s struggle against apartheid cemented close ties between the two sides. However, as India opened up to the world economy in the 1990s, its attention was diverted away from Africa to Asia to its east and to the West.

Into Africa

Arrest first, investigate later&rdquo; seems to be the motto of many of India&rsquo;s investigating agencies. In the case of a petty crime, when the suspect can be beaten up in detention and a confession can be extracted, the old way of doing things may still help. But while dealing with terrorists on the one hand and white-collar criminals on the other, detention before proper investigation may not yield adequate results. The abysmal quality of investigation is then exposed. It has been recently revealed that at least three men on India&rsquo;s &ldquo;most wanted&rdquo; terrorists list that was sent to the Interpol, with a demand sent to Pakistan on the grounds that 50 of them were living in the neighbouring country, were to be found in Mumbai. Not only has this put the Indian government in an embarrassing position, but it has also meant a slap on India&rsquo;s security and investigating agencies.

Invest in investigation

Speaking at a function to celebrate his second government&rsquo;s second anniversary, the prime minister said the United Progressive Alliance had &ldquo;offered seven years of political stability, social progress, communal harmony, economic growth and increased engagement with nations around the world&rdquo;. Dr Singh also talked of having made growth &ldquo;inclusive&rdquo;, and mentioned the enactment of various &ldquo;rights&rdquo; &mdash; to information, employment, education and soon to food. Among the challenges, the prime minister mentioned fiscal correction, inflation control, energy and food security, environmental sustainability and increased inequalities. Towards the end, Dr Singh brought up the subject on everyone&rsquo;s minds: corruption and governance.

UPA's stock-taking

Ratan Tata appears to be unusually prone to the misfortune of being &ldquo;misquoted&rdquo; or &ldquo;quoted out of context&rdquo;, from being pressured to bribe a minister to British managers and Mukesh Ambani&rsquo;s display of opulence. As it happens, most people will agree wholeheartedly with what he has just been misquoted as saying.

Quote, unquote

India&rsquo;s higher education market has moved from its traditional shortage-based dynamics to excess supply &mdash; linked to uneven quality. Private management institutes and engineering colleges have mushroomed, creating a surge in output &mdash; 400,000 engineering students passing out every year, and the annual B-school throughput capacity going up to an astonishing 300,000. Much of the growth has been in the private (supposedly non-profit) sector, marked by high fees and often poor facilities and teaching. The job market has caught on; the leading information technology (IT) companies have been saying for some time that less than a quarter of engineering graduates is employable. Also, the majority of B-school graduates end up in jobs that do not require a management degree, with salaries that do not justify the large amounts invested in fees.

Time now for quality

Only anecdotal evidence has been available so far to back the assertion that there has been a sharp rise in agricultural wages. Now, field data bear out the trend. Collected by the Shimla-based Labour Bureau, these numbers show a roughly 50 per cent cumulative rise in rural labour wages in the past two years. The increase in Andhra Pradesh has been assessed at over 40 per cent in 2009, and a further 27 per cent in 2010. Even labour-surplus states like Bihar and Orissa have seen a 40 per cent and 43 per cent increase, respectively, in these two years.

The surge in wages

Europe&rsquo;s sovereign debt problems are a reminder that the global financial crisis that the collapse of Lehman Brothers triggered in 2008 is far from over. However, unlike the US, whose financial and fiscal woes have consistently made the headlines, Europe&rsquo;s problems have tended to jump on and off the financial markets&rsquo; radar screens. The latest warning signals come from Greece, which faced a debt crisis in May 2010 and was subsequently bailed out by a consortium of other Eurozone members and the International Monetary Fund (IMF) that also put a long-term assistance package in place. However, like all rescue packages, fund disbursal was made contingent on commitment to extreme austerity and consolidation. Greece appears to have reneged on some of these commitments and its current problems stem from the fact that the consortium could hold back a tranche of &curren;13.4 billion that are due in June.

Europe's unhappy choices

The government&rsquo;s decision last week to sell its equity stake in the loss-making Scooters India represents a significant policy shift. In the seven years of the United Progressive Alliance (UPA), the government has sold equity in several public sector undertakings, mobilising Rs 54,800 crore. Much of that has happened in the last two years, since UPA-II does not need Left support, but none of the divestments has been a strategic sale. Now, the government seems ready to go beyond merely augmenting the flow of disinvestment proceeds; in short, it is willing to try its hand at full-scale privatisation.

Get the land value right

Incisive columns and editorial comment by top opinion leaders

Page 507 - Editorial Comment