As the monsoon crosses its mid-way mark, two of the season&rsquo;s four months (June to September) are over, the prospect of this year&rsquo;s south-west monsoon being better than last year&rsquo;s have gone up, despite last month&rsquo;s weak performance. After a lull, the monsoon has seen a spectacular resurgence in the past week or so, with 38 per cent excess rainfall registered in one week. Heavy rains in most parts of the country in the last 10 days have already reduced the annual deficit from a worrisome 16 per cent at June-end, and equally discomforting 14 per cent even till July 21, to a mere 3 per cent by the beginning of August. If the weather office&rsquo;s forecast of copious rainfall in the rest of the season holds true, even this shortfall may be fully made up and the rainfall numbers may turn positive.

So far so good

Business Standard

The current situation in the state of Jammu and Kashmir is a reminder, if such reminders are needed at all, that political initiatives need more than just cleverness to succeed. No one will deny that state chief minister Omar Abdullah and Union Home Minister P Chidambaram are among the cleverest and the most talented of Indian politicians. Yet, the reach of their heart is not as wide as the grasp of their mind. Between Mr Abdullah&rsquo;s nonchalance in office and Mr Chidambaram&rsquo;s penchant for resolute action, a five-year record of relative peace and gradual progress, during the term of UPA-1, has been wasted. Mercifully, in Kashmir, the &ldquo;have-quote-will-shoot&rdquo; Union Home Secretary G K Pillai has not confounded the confusion.

Price of prevarication

So is it the size of Sikkim (just six lakh residents, only a tenth of which live in cities) or the distance from the seat of power (the distance from New Delhi to Gangtok is 1,598 km) that makes it so irrelevant? How else can you explain the judicial system posting Justice P Dinakaran to the Sikkim High Court as its chief justice even while a three-member committee set up by Rajya Sabha Chairman and India&rsquo;s Vice President Hamid Ansari is still finalising a charge sheet against him? The lawyers in the court are so incensed with the step-motherly treatment that they have threatened to boycott his oath-taking ceremony next week. It is true that the charges against Justice Dinakaran have not been proved &mdash; the three members met at the residence of Justice V S Sirpurkar of the Supreme Court earlier in the week and decided that they needed some more time to study the bulky documents.

Caesar's wife

Until a fortnight ago, there were no doubts about the government&rsquo;s ability to meet its target of rolling out the goods and services tax (GST) from April 2011. The broad framework of the proposed GST regime had many flaws, but what gave satisfaction to public finance experts was the fact that at last a basic and workable structure was in place. There were too many exemptions and more than one rate for goods, but the three-year transition period held out the hope that at the end of it, the country would see a single GST rate of 16 per cent at the Centre and the states. This was way above the 12 per cent rate recommended by the 13th Finance Commission, but the big relief was that the Centre had managed a broad consensus among most states on GST and it was even ready to introduce a Constitution amendment Bill in Parliament during the ongoing monsoon session.

Fiscal federalism

Many Indians have continually complained that Indian politics has been destroyed by dynastic rule. This is apparent not only at the Centre but also in the states. In fact, there is an interesting story about an erstwhile state chief minister. Some journalists pointed out to him that all his government&rsquo;s contracts and other largesse go out to his sons only. He, famously quipped that whoever gets it will be somebody&rsquo;s son, so why not his own? Indeed, the advantages and disadvantages of birth are borne by most in India. This is something that has been with us since ancient times &mdash; the caste system. And our modern-day society has added layers of sophistication to the way it plays out. Thus, it has become useful for some to be branded as low caste as was witnessed a couple of years ago in the riots and protests organised by the Gujjars of North India who wanted scheduled-caste status. And, it plays out every day as groups fight to be classified as other backward castes.

Engineering heredity

The Supreme Court&rsquo;s observations on the public distribution system (PDS) which call for exclusion of people living above poverty line (APL); fixing monthly ration on per head rather than per household basis; and using unique identification (UID) cards for targeting PDS supplies have implications that go beyond the PDS. The court has virtually set new parameters even for the proposed food security law since that is also likely to be implemented through the existing PDS. Besides, it can potentially boost the UID programme by making possession of these biometric cards mandatory for the beneficiaries of a mass-based programme like PDS. While the apex court may have some good ideas, it must be pointed out that mandating such policies is not the responsibility of the judiciary in a democracy.

Let them have PDS!

The fact that USA Inc has expressed regret over the resignation of Mark Hurd as the CEO of Hewlett Packard reflects the level of amorality that has afflicted American business over the past decade-and-a-half. The general drift of comment that Mr Hurd has attracted from his fellow IT CEOs is that a hugely successful manager has had to pay the price for what was ultimately a minor infraction. But no one has thought to praise the tough ethical choice that the company made in easing him out. The subtext: HP has sacrificed a high-performing asset on the altar of corporate governance.

HP's moral dilemma

If the measure passed by the United States Senate to virtually double the fees for issuing visas to temporary skilled workers eventually passes into law, it will be harmful to virtually everyone concerned. The first and most obvious section to be hit will be Indian IT firms which have a large exposure to the US market and which temporarily station a section of their engineers to offer near-shore services to their clients. According to one estimate, Indian IT firms can end up paying $200-250 million more per year, which will affect their margins. But this is not all. The move, initiated by senators with an eye to the coming mid-term elections when incumbents will be facing the wrath of the high numbers of unemployed, will harm US interests also. Through the better part of the last two decades, US firms have been able to maintain a global competitive edge by accessing cost-effective information technology delivered in good part by the Indian IT sector.

Visa fee is a tariff barrier

It is hardly surprising that the Reserve Bank of India&rsquo;s (RBI&rsquo;s) decision to revive a plan, first mooted in 2007, to introduce credit default swaps (CDSs) in India has met with considerable apprehension. CDSs along with another set of financial instruments described by a similar acronym, CDOs (credit default obligations), earned a fair share of notoriety during the global financial meltdown of 2008. In fact, the collapse in the markets for these instruments was one of the key factors that brought the western banking to its knees. The Indian central bank&rsquo;s critics would argue that in introducing this instrument, it has chosen to ignore the lessons of the financial crisis, a decision that it is likely to rue later. The counter-argument is that instead of somewhat naively withdrawing into a shell of anti-market dogma, RBI has taken a far more nuanced view of the financial crisis and the lessons it has to offer.

Not faulting default swaps

Prime Minister Manmohan Singh&rsquo;s televised &ldquo;from-the-heart&rdquo; speech to a delegation of leaders from Jammu and Kashmir should be seen both by the government and its intended audience as only the first and necessary, if delayed, step in a long march to normalcy that should now be resumed. The prime minister was right to state, and many Kashmiri leaders have also acknowledged, that between 2003, when former Prime Minister Atal Behari Vajpayee spoke of seeking a solution to the problem of Kashmir &ldquo;within the framework of insaniyat&rdquo;, and 2009, when the state went peacefully through transparently conducted elections, several major milestones had been crossed in the journey towards a final solution of the problem. Dr Singh took many risks and ventured forth when he started a bus service across the line of control (LoC), between Srinagar and Muzaffarabad.

Better late than never

BlackBerry messaging service has hit the headlines. Some governments have threatened to ban this service if they are not given access to the content of messages emanating from or entering their country. These governments seek such access on grounds of national security, to track terrorist and other illegal activities. Research in Motion (RIM), the company owning BlackBerry, has claimed that it is unable to provide this facility as all messages are encrypted in a way that prevents even the company from accessing them. The encryption keys are technology-driven and idiosyncratic to each user. Here is a clear case of private, commercial interest in conflict with what is a social, or public, objective.

Blacklisting BlackBerry

With just 80-odd banks in the country and each bank branch serving as many as 13,400 customers, it is obvious India is woefully under-banked. To that extent, the idea of licensing new private banks is a good one. Whether it is converting existing non-banking financial companies (NBFCs) into commercial banks, or allowing industrial houses into the sector, or whether the minimum levels of equity should be Rs 300 crore or more, the Reserve Bank of India&rsquo;s (RBI&rsquo;s) discussion paper on the subject lists elaborate pros and cons of each move. A very high capital requirement, for instance, is a good thing to the extent that a well-capitalised bank is desirable, but put the limit too high and that could ensure there are few takers for a banking licence.

Fit and proper debate

With the index of industrial production (IIP) for June 2010 out, it is now possible to get a view of industrial production in the first quarter of the current fiscal year. While the general index for June 2010 is 7 per cent higher than that in June 2009, for the quarter-on-quarter estimate, industry shows a growth rate closer to 12 per cent. Of the three broad groups, manufacturing has clocked the best growth at more than 12 per cent on a month-on-month basis with electricity faring the worst at 3.5 per cent, though the quarter-on-quarter growth for electricity is slightly better at 5.6 per cent. Thirteen of the 17 industries at two-digit level of classification show a positive growth rate for the first quarter. The ones that stand out are metal products and parts, jute and vegetable fibres and transport equipment. Among the negatives are leather and wood (and their various products).

Jobless growth?

When Prime Minister Manmohan Singh addresses the nation this morning from the ramparts of the Red Fort, the people of India would want to hear from him what he plans to do in the next four years of his term in office, rather than a list of achievements. Indeed, even more than the government&rsquo;s plans, his television audience across the country and beyond would want to understand Dr Singh&rsquo;s view of the nature of the challenges India is likely to face in the second decade of the 21st century, the kind of opportunities at hand, and what the government and the people of India can do to make use of the opportunities to overcome the likely challenges. Time was when a prime minister like Jawaharlal Nehru spoke extempore, from the heart, and gave a glimpse of his mind to the enthusiastic people of Delhi who stood before him on a humid morning. Today, the prime minister has a global audience.

The message from Red Fort

When it comes to broadcast regulation, the Telecom Regulatory Authority of India (Trai) is perpetually caught between a rock and a hard place. In this case, between a ministry of Information and Broadcasting, which rarely, if ever, listens to the (carriage) regulator&rsquo;s usually sensible recommendations, and a maddeningly fragmented industry that is incapable of lobbying as one. Nothing illustrates this as well as the Trai&rsquo;s latest missive recommending a sunset date (December 31, 2013) for digitisation of analog TV services (read cable) across the country. To hasten the process, it suggests a 10-year tax holiday for companies that achieve it, rationalisation of service and other taxes, increase of FDI limits and licensing the cable business among other things.

Timetable for cable digitisation

It is easy to miss the wood for the trees in an Independence Day speech. While there was nothing &ldquo;new&rdquo; in what Prime Minister Manmohan Singh said from the ramparts of the Red Fort, and mercifully neither a laundry list of programmes implemented nor promises of more to come, the key message of the prime minister&rsquo;s address to the nation should not get lost. It is a message that every Indian should understand, believe and internalise. The message is simple: while free India offers a model of growth and development within the framework of democracy, 63 years after Independence, the Indian people must once again renew their commitment to the principles of a liberal democracy and the policies of inclusive growth. At that monsoon midnight when India&rsquo;s tricolour unfurled in New Delhi, it was hoped this country&rsquo;s journey as a democratic and secular republic would hold promise for millions of poor and unfree people around the world. Indeed it did.

Manmohan Singh's message

The Indian Olympic Association president, Suresh Kalmadi, has been widely pilloried for the overt corruption and missed deadlines that the media has uncovered in a range of Commonwealth Games-related activities and constructions. In that sense, Prime Minister Manmohan Singh was right to sideline him and set up a group of ministers to oversee the remaining Games works in his place. But Mr Kalmadi is not the only villain. All the agencies involved, including the Union urban development and sports ministries, and the Delhi government, have let the Games down. Indeed, Mr Kalmadi&rsquo;s alleged misdemeanours may not be as big as those of others and the incompetence of the urban development ministry and its outfits like the Central Public Works Department (CPWD). So, it is ironic that the final job of oversight of works completion has been given to minister Jaipal Reddy.

Corruption and incompetence

The government&rsquo;s subtle, but significant, move to divest the Genetic Engineering Approval Committee (GEAC) of its job of approving the genetically modified (GM) products and convert it into merely a GM appraisal body has taken the biotechnology sector by surprise. The Gazette notification to this effect replaces the word &ldquo;approval&rdquo; in the committee&rsquo;s nomenclature with &ldquo;appraisal&rdquo;, thus making it the &ldquo;Genetic Engineering Appraisal Committee&rdquo;. One obvious reason for doing so could be to justify, with retrospective effect, the environment ministry&rsquo;s controversial action in February last to overrule the GEAC&rsquo;s decision to clear the launch of the country&rsquo;s first GM edible product, Bt brinjal. Even if it is so, the usurping of authority of clearing products of a sophisticated science like molecular biotechnology by the political bosses is bound to raise questions.

From approval to appraisal

Illegal iron ore mining, which has rocked the Karnataka government for months, has now become a national issue with the Union Cabinet deciding to institute a commission of enquiry, headed by a retired Supreme Court judge, to look into it. While the terms of the commission are yet to be announced, they are likely to cover all instances of illegal mining, not just of iron ore, across the country. Illegal mining has been an issue not just in Karnataka but in several other states like Andhra Pradesh, Chhattisgarh, Orissa and Jharkhand, and as the Congress is in power in only one of them, Andhra Pradesh, the central move can be seen as an attempt to fix those states which do not come out unscathed in the enquiry. Illegal mining has become a particularly sensitive issue with the spread of Maoist violence among tribals in mineral-rich forest areas.

A veritable minefield

Now that US President Barrack Obama has signed into law the new provisions virtually doubling the visa fee for temporary skilled workers, the Indian software industry has to devise a strategy to deal with the impact. It is, however, necessary to first figure out what exactly this impact would be. Estimates that annual expenses of Indian companies could rise by around $250 million are now being contested by informed analysts. Even if the final impact is nowhere near this level, India&rsquo;s software industry must begin to look for domestic market opportunities which may have got neglected because of the low-hanging fruit waiting to be picked in foreign markets. The US has traditionally offered both high volumes and margins. Fortunately for the industry, the US setback comes at a time when the domestic market is picking up sharply.

IT's fightback strategy

Time was when educational institutions expected to be located on large tracts of land. The idea may have its roots in India&rsquo;s &ldquo;gurukul&rdquo; tradition when one went far away into the hills and forests for education. The new &ldquo;temples of modern India&rdquo; &mdash; from the IITs and IIMs to central universities &mdash; got themselves sprawling campuses in the name of nation-building. Not to be left behind, and to create a &ldquo;silicon valley&rdquo; ambience in southern India, the likes of Infosys and Wipro also got themselves large plots of subsidised land allocated to build fairytale campuses. It was only natural, therefore, that when a group of business leaders jetted around India in search of land for the Indian School of Business (ISB), the then chief minister of Andhra Pradesh worsted rivals in other states by offering more and cheaper public land for private education.

Everybody wants land

Incisive columns and editorial comment by top opinion leaders

Page 538 - Editorial Comment