Despite all the rhetoric about shared economic interests, the summit meeting of leaders of Brazil, Russia, India, China and South Africa (Brics), at Sanya in China last week, stood out for the shared concern of these countries about the &lsquo;new assertiveness&rsquo; of western Europe and the United States, as witnessed in West Asia and North Africa. The Libyan intervention and talk about a &lsquo;new great game&rsquo; in Africa and the fear of rising oil prices (not shared by Russia) seem to have created enough chemistry between the Brics heads of government. The Brics statement on Doha also papers over internal differences between Brics members on what they hope to achieve from the round (here again Russia is an outlier since it is not yet a member of the World Trade Organization).

Brick by brick

Business Standard

When the full Planning Commission meets later this week, its chairman &ndash; the prime minister &ndash; is likely to be presented with two scenarios for India&rsquo;s 12th five-year plan (2012-17). The first scenario is based on a percentage point improvement in the overall growth rate of the economy in the 12th plan compared to the 11th five-year plan (2007-12). Against the performance of 8.1 per cent in the 11th plan period, the first scenario would seek a 9 per cent growth rate in the 12th plan. The second scenario would be more ambitious and seek a 10 per cent growth rate. However, attaining either target will require considerable homework by the Indian government and business. It has been found during the 11th plan period that whenever economic growth accelerates beyond 8 per cent, inflationary pressures seem to develop owing to a variety of supply-side constraints.

Credibility of planning

For all those who seek a new institution as an answer to the corruption of existing ones, here is an invaluable reminder from a learned judge: it is people who make and unmake institutions. Delivering the fifth M C Setalvad Memorial Lecture, the Chief Justice of India (CJI), Justice S H Kapadia, offered fellow judges some valuable homilies on how they should conduct themselves in public and private, on the bench and off it. He reminded the Indian judiciary of the limits of its constitutional role. In defining the role of the judiciary and its relationship with the executive and the legislature and in stating baldly some dos and don&rsquo;ts, Justice Kapadia has elevated the status of the CJI and of the judiciary as a whole. One man has restored to the highest court of the land dignity and prestige that had been robbed by another man.

The CJI's mirror 

Indian industry should welcome the implementation from June 1 of the new merger and acquisition (M&amp;A) norms under sections 5 and 6 of the Competition Act, 2002. Union Minister of Corporate Affairs Murli Deora has assured India Inc that its opinions will be taken on board before the Competition Commission of India (CCI) frames the regulations. But for most businesses, the very fact that most M&amp;As will be subject to CCI approval is cause for concern. To be sure, the government has set limits, but these are hardly reassuring. Corporations with turnovers above Rs 1,500 crore will have to inform the CCI before merging with another firm. Currently, about a third of the country&rsquo;s 1,000 largest listed companies would qualify for this threshold if they opted for an M&amp;A. Also, CCI will vet only those M&amp;As that have combined assets of Rs 1,000 crore or more or combined turnover of Rs 3,000 crore or more.

Hobbled by regulation

The recent meeting of G20 finance ministers in Washington agreed to set up a surveillance system to monitor the economic performance of countries with the greatest potential for &ldquo;spillover effects&rdquo; &mdash; the economic impact that extended beyond their boundaries. The list is expected to include the US, China, Japan, Germany, Britain, France and India. The surveillance system will eventually be extended to all G20 members. The criterion for deciding the composition of the first list was economic size. All seven countries contribute at least 5 per cent to G20&rsquo;s total output. The economic indicators that will be continually monitored include fiscal deficits, public debt, trade imbalances and net investment incomes and flows. A set of statistical methods and structural approaches has been devised to provide warning signals if one or more indicators are at or above danger levels. This is a well-intentioned exercise, which is designed to be pre-emptive in nature.

Monitoring the monitors

India&rsquo;s exports have done exceptionally well in 2010-11, up 37.8 per cent in US dollar terms over the previous year (2009-10). Even if we discount the base effect, given low growth last year, and compare the latest figures with those of 2008-09, which was a more normal one, growth works out to a very respectable 33 per cent. What is more, the trade deficit was down in 2010-11 to 6 per cent of GDP, which is the lowest in the last five years. Additionally, the average nominal value of the rupee has marginally appreciated in the first nine months of the current year. All these facts together may be pointing to a structural shift that is taking place in the global competitiveness of the Indian economy along with a rebalancing of economic forces between the developed and emerging economies.

New trade winds

Credit rating agency Standard and Poor&rsquo;s (S&amp;P&rsquo;s) decision to shift the long-term credit outlook for the United States from stable to negative is yet another reminder that the aftershocks of the global financial crisis of 2008 are yet to dissipate.

America's political deficit

Even as the Planning Commission says that India&rsquo;s desire to hit double-digit economic growth is being constrained, among other things, by the inability of the farm sector to grow at an annual average rate of 4 per cent a year, largely semi-arid Gujarat, with poor agro-ecological endowments, has reported an average growth rate of close to 9 per cent per annum over the past decade.

Mr Modi's miracle

The International Monetary Fund (IMF) has been recanting past doctrines ever since the trans-Atlantic financial crisis dissolved the &ldquo;Washington consensus&rdquo;. In a recent report, the IMF has given up an old shibboleth on cross-border capital flows. With emerging markets and developed ones worried about &ldquo;hot money&rdquo; flows and their impact on exchange rates, inflation and asset bubbles, the IMF&rsquo;s neo-conservatism has found new converts. The document has understandably created fissures in the international community, with developing countries feeling the document has not gone far enough in attempting to control capital flows. Developed countries, on the other hand, have been hinting at the dangers of setting a precedent in curbing the free flow of capital. While the truth may lie somewhere in between, the immediate responsibility for restoring a semblance of order in the international financial system rests squarely with the developed economies.

The Fund recants

While it is still early days to get an accurate picture of the monsoon rains India is likely to get this year, the initial consensus view based on the monsoon model developed by Indian scientists and statisticians suggests that a normal monsoon is to be expected. It would take a very foolhardy and risk-prone analyst to try and offer any other kind of prediction at this stage.

Chasing the monsoon

Nullum est iam dictum quod non dictum est prius&rdquo; (nothing is said now that hasn&rsquo;t been said before). That is all that can be said about the &ldquo;new initiatives&rdquo; for 2011-12, presented by the Securities and Exchange Board of India (Sebi) to its board last month. By including everything, Sebi has not focused on anything. The initiatives have avowed goals like having a &ldquo;special focus in 2011-12 on investor awareness and education, surveillance of markets and building HR capability&rdquo;, &ldquo;spreading financial literacy in schools&rdquo;, &ldquo;holding workshops for target groups&rdquo;, demystifying securities markets, &ldquo;developing and deepening markets&rdquo;. One would have imagined that these hardly need a &ldquo;special focus&rdquo; in any one year. An organisation charged with the responsibility to ensure investor protection, market regulation and development is expected to be doing that in any case.

Deja vu at Sebi

The war against disease-causing pathogens is a never-ending one. Even as one battle is won, another looms large as new threats emerge. Humans and all living beings are constantly battling germs. The latest threat, feared as being more dreaded than most in recent years, has come from a new resilient gene found in bacteria that makes them resistant to almost all known antibiotics. Hence the nomenclature &ldquo;superbug&rdquo;. The most worrisome aspect of this gene, controversially named by its British discoverers as &ldquo;New Delhi metallo-beta-lactamase - 1&rdquo; or NDM-1, is that it is unaffected by even the most potent class of antibiotics called carbapenems, normally used in the intensive care units of hospitals, or in the case of cancer patients undergoing chemotherapy, to ward off post-surgical and other infections. Equally dreadful is the fear that this superbug will render even common ailments like dysentery and cholera incapable of being treated with available drugs.

Bugged by superbug 

When the scientific advisor to the Government of India, Suri Bhagavantam, chose to devote his life in the service of an as yet upcoming &ldquo;Godman&rdquo; and &ldquo;magician&rdquo;, as rationalists dubbed him, many eyebrows were raised in India&rsquo;s scientific community. This was more than four decades ago. From being a locally known self-proclaimed reincarnation of Sai Baba of Shirdi, the healer and Godman who had &ndash; and continues to have &ndash; a following cutting across religious boundaries, Sathya Sai Baba of Puttaparthi in Andhra Pradesh became a global guru with a worldwide following that includes heads of government and celebrities who would fly down in their private jets for Baba&rsquo;s darshan. For a man who inspired and gave solace to millions around the world, Sathya Sai Baba remained an enigma to most.

More than a Godman

There is a dissonance between the quarterly results of India&rsquo;s top two software companies, TCS and Infosys Technologies, and the response it evoked in stock markets. The latter apparently did not like the results as they beat down the stocks. While Infosys was faulted for not living up to the expectations of the analysts and suffered a greater fall, TCS produced very good numbers but still saw its stock decline. There can be many reasons for a stock&rsquo;s rise and fall.

The big two ride high

In the past couple of years, the Reserve Bank of India (RBI) has enjoyed goodwill among a wide range of stakeholders and policy makers at home and abroad for two important reasons. First, for the maturity and quiet confidence it showed, under the able leadership of Governor Duvvuri Subbarao, in responding to the post-Lehman situation in global financial markets.

The moment of truth for RBI

The Union government has done well to approve the creation of a new national regulatory institution for nuclear power in India. The proposed Nuclear Regulatory Authority of India should be independent of the Department of Atomic Energy (DAE), its authority should cover all nuclear power plants and it should be answerable only to Parliament. For far too long, India&rsquo;s DAE has kept itself away from the glare of public and transparent scrutiny in the name of national security. Now that the Indian nuclear programme is above board and has come of age, thanks to the civil nuclear energy cooperation agreements that India has entered into with members of the Nuclear Suppliers Group and the International Atomic Energy Agency, an independent regulator will inspire confidence both at home and abroad. The importance of professional scrutiny of standards has been re-emphasised worldwide following the recent disaster in Japan.

Nuclear renaissance

An Indian army official keeping an eye on the India-Pakistan border says that over a 100 trucks cross the border every month at the point where he stands. This is just a small part of the unaccounted cross-border trade between the neighbours. Add to this the trade going through third ports like Dubai and Singapore and the total India-Pakistan &ldquo;unofficial&rdquo; trade is several times the lowly official estimate of $2 billion. So, when the commerce secretaries of both countries agree to improve the bilateral trade relationship, they are partly helping legitimise the existing trade. This is good. Hopefully, the trade talks will also focus on issues like granting India the most favoured nation status, increasing service-sector exports to Pakistan, allowing the transit of Indian goods to Central Asia, while also addressing Pakistan&rsquo;s concerns about what it perceives as non-tariff barriers imposed by India on its exports.

Fuelling bilateral trade

Is there any other point to which you would wish to draw my attention, the inspector asked Sherlock Holmes. &ldquo;To the curious incident of the dog in the night-time,&rdquo; said Mr Holmes. &ldquo;The dog did nothing in the night-time,&rdquo; said the inspector. &ldquo;That was the curious incident,&rdquo; replied Mr Holmes. That about sums up the approach of the chairman of Parliament&rsquo;s Public Accounts Committee (PAC) &ndash; Bharatiya Janata Party (BJP) leader Murli Manohar Joshi &ndash; in naming the prime minister and his office in its draft report on the Comptroller and Auditor General&rsquo;s (CAG&rsquo;s) report on 2G telecom licences. If this had been the unequivocal opinion of the PAC as a whole, it would have amounted to substantial criticism of the government and the prime minister. But even that would not have implied culpability, much less guilt. That the dog did not bark does not implicate the dog in the crime.

Mr Joshi's draft

With a sizeable part of India&rsquo;s coastline being only marginally higher than the mean sea level, vast tracts of coastal India remain vulnerable to any abnormal fury of the seas. That is why the tsunami of December 2004 took its toll in many parts of coastal India. The ferocious tsunami that hit Japan recently is a reminder of the continued vulnerability of coastal India, including major urban centres like Mumbai, Chennai, Kochi, Surat, Mangalore, Panaji, Vizag and so on, to nature&rsquo;s fury. It is, therefore, only appropriate that the Union environment ministry has begun mapping and demarcating coastal areas that run a major risk of devastation owing to tides, cyclones and even the feared rise in the sea level owing to climate change. After delineating such susceptible areas with the help of stereo digital aerial photography, land markers are proposed to be put up to indicate the flood lines.

Securing the coastline

Apart from his invocation to Lord Indra and Goddess Lakshmi, Union finance minister Pranab Mukherjee should also have prayed to Lord Vinayaka, for good luck and Godspeed! His fiscal strategy is based on brave assumptions about robust economic growth, better tax compliance, stricter expenditure management and the world continuing to view India favourably.

On a wing and a prayer

Calibrated globalisation used to be the Bharatiya Janata Party&rsquo;s buzz word for doing it differently. Accusing the Congress Party of opening up too fast to external flows, of goods and capital, echoing the worries of the now forgotten &ldquo;Bombay Club&rdquo; and mindful of the internal critics like the Swadeshi Jagran Manch, the BJP used to claim that its own model was one of opening up step by step. It is an art that the Congress Party and the government led by it has perfected.

Calibrated globalisation

Incisive columns and editorial comment by top opinion leaders

Page 512 - Editorial Comment