Is it more important that inflation in primary articles has risen 16 per cent in the latest week (compared to the corresponding week a year earlier), or that the index, at 306 in June, was 4.5 per cent higher than what it was in March? Private consumption in the fourth quarter of 2009-10 rose in relation to the fourth quarter of 2008-09, but fell relative to the third quarter of 2009-10; which base period is more relevant for comparison, if one is to understand the latest trends? Questions such as these get repeated each time the official statistical machinery releases any set of data.

Statistical challenges

Business Standard

The stand-off between the four state-run insurance firms and leading hospital chains like Apollo, Escorts/Fortis and Max, is inconvenient for patients. But the decision by insurance companies to withdraw their cashless payment facility was inevitable, given the evidence of vastly inflated bills from these hospitals. In effect, the insured patient now has to pay the bills presented by the hospital, and the insurance company will decide later as to the amount that it considers reasonable and will reimburse. Indeed, there are also reports of the insurance firms engaging detectives and super-speciality consultants to examine bills in detail.

Stop doctoring bills

Those looking for signs of real progress at the many international conclaves that are on national leaders&rsquo; agendas, will be disappointed. The Doha Round of trade talks is stuck in the mud; the negotiations to hammer out a successor to the Kyoto Protocol are getting nowhere, the Copenhagen fudge notwithstanding; even the G20, hailed a short year ago as the harbinger of the new world order, does not seem to be achieving anything. Instead, all the talk is of the undeniable change of power relationships &mdash; the US is in relative decline, while China is on the ascendant &mdash; without sufficient focus on how a changing world&rsquo;s affairs might be reordered.

Coalitions of the unwilling

The two-day Centre-state meet on revamping the public distribution system (PDS), with an eye to the likely enactment of the National Food Security Law, has harped on the same measures that have been talked about for long. These include the computerisation of PDS operations, timely delivery of stocks to PDS outlets, and proper identification of the beneficiaries, especially those entitled to the below-poverty-line (BPL) cards, based on the latest poverty and population counts. The only new development at the meet was the formal launch of the &ldquo;smart card&rdquo; project on a pilot basis in Haryana, to curb leakages and corruption in the &ldquo;targeted PDS&rdquo; programme. However, even this initiative has taken over two years to materialise, as it was announced in the 2008-09 Budget speech by the then finance minister, P Chidambaram. Nevertheless, its launch is a potential precursor to the much bigger initiative mooted by the Unique Identification Authority of India (UIDAI).

Plugging the leaks

The Supreme Court&rsquo;s decision to allow Tamil Nadu and Karnataka a one-year extension to continue with their policies of reservation for Scheduled Castes/Scheduled Tribes/Other Backward Classes beyond 50 per cent could end up being the thin end of the wedge. Till now, the accepted position, after a Constitution bench of the Court gave its verdict in the Indra Sawhney case in 1992, was that reservations could not exceed 50 per cent. With the Court now saying that this limit could be exceeded if the Backward Commissions in these states accepted the logic for the hike, it is reasonable to assume that other states will look for similar logic to increase their own reservation limits.

Breaching the line

The mainstream projections about India&rsquo;s economic trajectory talk of how the country&rsquo;s GDP will exceed that of Japan (whose economy today is more than thrice India&rsquo;s size) by 2020. A large part of this sustained growth, it is assumed, will come from what is called the demographic dividend. India&rsquo;s young and growing workforce, the standard argument goes, will ensure that the country&rsquo;s wage rates keep it competitive for a long time, even as the dependency ratio (the number of people depending on active workers) drops while it climbs in most other countries. The growing workforce will also ensure a steady source of demand and, therefore, underpin investment. According to the government&rsquo;s latest report, there will be enough employment for 570 million people in another five years, enough to absorb the 10-11 million people joining the workforce each year.

Wages of neglect

Some residents of Hyderabad have initiated a campaign to assert their &lsquo;right to walk&rsquo;. The campaign is led by a middle-aged lady who finds it offensive to have to walk past patches where men relieve themselves &mdash; and these in turn will point to the extreme scarcity of public conveniences. The point is that when public money is spent to improve public thoroughfares, no thought is given to the right of citizens to walk comfortably and safely along those roads. All too often, carriageways are widened by eating into pavements, placing the needs and demands of those using motorised transport over those of walkers. A similar public protest movement has gained momentum in Bangalore, in which the affected residents of particular areas and prominent citizens who empathise with them have banded together to protest against counter-productive road-widening work.

Bottom-up urban planning

When the Reddy brothers, accused of illegal mining, demonstrate their grip over a state government, most people will rightly bemoan the role that corruption plays in public life. However, vital as it is to tackle the issue, it is also important to view it in perspective. Most people would not have realised, for instance, that India has been improving on at least one corruption score. Transparency International, the Berlin-based body, has been surveying international businessmen on their perceptions of corruption in different countries since 1995. In the latest ranking, for 2009, India occupied the 84th spot in a list of 180 countries, with an absolute index of 3.4 (any score under 5 is considered a poor show). But five years earlier, in 2004, India scored 90th in a smaller list of 146 countries, with an absolute index of 2.8. On both absolute and relative scales, perceptions about the levels of corruption in India have improved.

Worse, but also better

The government has said that it is willing to relax some controls on the sugar industry, which, however, has given a guarded response, leaving the canvas obscure. What seems clear is that neither the government nor the industry is prepared for total deregulation. So, even as the Food and Agriculture Minister, Sharad Pawar, announced that the government would consider decontrolling sugar, he made it clear that the right to fix sugarcane prices would remain with state governments. If that is so, the proposed decontrol would involve only one or two things: ending the sugar release mechanism and perhaps also scrapping or reducing the levy on sugar. In effect, the fate of both cane farmers and the sugar industry would remain in the hands of governments.

Limited partnership

The surest sign that the global economy, particularly the developed countries, is far from getting back to normal lies in the results of India&rsquo;s software leaders, TCS and Infosys, for the first quarter of the current financial year. It is not as if the storm of the last year is still there and the hatches remain battened down, but it is not calm seas and sunny sailing yet. The good news is that a certain amount of discretionary spending is back, the not-so-good news is that prices are either stable or under pressure, depending on who you are, and the bad news is that the inexorable need to recruit in order to deliver growth and volumes has resulted in higher attrition even as wage bills have gone up.

Software struggles on

A few weeks ago, the Bharatiya Janata Party (BJP) looked like it was finally emerging as a meaningful opposition party, seeking to forge an alliance with the Left on &ldquo;secular&rdquo; and national issues of concern to the common man like inflation and national security. Today the party is scrambling for cover on its biggest planks, corruption and terror. Just one television channel broadcasting news of the involvement of Hindu groups in terror attacks got RSS goons to vandalise the television station, making it clear that the Sangh Parivar remains as closed to any form of scrutiny on the issue of Hindu groups being involved in such terror &mdash; and the issues of encounter killings and the Best Bakery in Gujarat are waiting to erupt. As for corruption, the party had to face the ignominy of the Lokayukta, Justice Santosh Hegde, resigning due to the Karnataka government&rsquo;s refusal to act on his report last year on the mining scandal that continues to rock the state.

Mining corruption

The report of the Takeover Regulations Advisory Committee (TRAC) deserves to be commended on several counts. First, it is an endeavour to deal with the complex subject of acquisition of shares for substantial control and takeovers on a much more mature footing than the regulations currently in place do.

Gentlemen at the gate

The Government of India&rsquo;s initiative to focus on agricultural development in the eastern states, as represented by the meeting that the Union ministers for finance and agriculture attended in Kolkata last week, is welcome if belated. Some may see this as a pre-election gimmick with an eye to elections in Bihar and Bengal. But there is no gainsaying the fact that the region&rsquo;s agricultural economy needs a productivity boost. Among the ideas mooted, a task force is to be set up to ensure speedy popularisation of hybrid rice in the same way as has been done in China where over 60 per cent of the total land under rice now grows hybrid rice. While the talk of a &ldquo;second green revolution&rdquo; in eastern India has been heard for a long time, the recent spike in food prices, due largely to supply-side constraints, seems to have stirred activity in New Delhi.

Hybrid hopes

With the government readying to introduce a Bill in Parliament to modify the powers of the Comptroller and Auditor General of India (CAG) to include public-private partnership (PPP) projects, many project managers are close to gagging. The main reason behind why the public sector has not performed, they argue along with several in government, is the fear of the 3Cs &mdash; the CBI, the CVC and the CAG. Since almost every decision taken is questioned by these bodies, and can result in inquiries and prosecution, the argument goes, this ensures buck-passing instead of decision-making. PPPs were a way out of this since, apart from easing the burden on government as far as financing is concerned, they are out of the purview of the 3Cs.

Accountability and efficiency

A horrific train accident on Monday, in which over 60 people have been killed, coming close on the heels of the one in May in which around 150 people died, has torn to shreds the accident record of the Indian Railways which had been improving dramatically over the last five years. The number of train accidents fell steadily from 2004-05 to 2008-09, bringing down the accident per million train kilometre ratio from 0.29 to 0.20. However, casualties and accident numbers are not directly correlated, with a collision being far more lethal in human terms than a derailment.

Accidents multiply

Is New Delhi&rsquo;s North Block on an ego trip? Nothing else explains the determination with which its officials seem to be pushing a bad idea even after substantial doubts have been raised. This newspaper has already raised questions about the manner of issuance and the intent behind the ordinance issued by the President of India on June 18, 2010 on jurisdictional issues pertaining to unit-linked insurance plans (BS, 29 June 2010). In dealing with questions of regulatory overlap, the Union finance ministry has given itself new powers over financial sector regulators, including the nation&rsquo;s central bank, the Reserve Bank of India (RBI). The wise thing to do for the government would be to listen to learned comments and the genuine doubts expressed, send the draft Bill to the Parliamentary Standing Committee for Finance and suitably address the core issue of central bank authority and autonomy.

Bury a bad idea

The recent incident of the removal of the managing director of the National Agriculture Cooperative Marketing Federation (Nafed) by its board and the government&rsquo;s insistence on his reinstatement is not an isolated case of blatant official interference in the functioning of a cooperative. Such instances are countless. Regardless of the merits and demerits of this particular case, such diktats from the government need to be viewed in the broader perspective of functional freedom of cooperatives. The Centre and the state governments have been treating cooperatives as governmental appendages, which they are not; nor should they be. Marketing cooperatives are essentially organisations of borrowers, farmers, small entrepreneurs and others who come together to collectively take advantage of economies of scale in marketing their produce. To be successful, these cooperatives need to function democratically and efficiently as they are accountable to their members.

Cooperation by fiat

Exxon Mobil, Royal Dutch Shell and two other oil companies will spend $1 billion to research and build a containment system to handle deep-water oil spills in the Gulf of Mexico.

Exxon, Shell plan $1-bn oil-capture system

The country&rsquo;s external affairs minister publicly disagreeing with the Union&rsquo;s home minister, or at least his ministry? There is nothing new about it. From the days of Prime Minister Jawaharlal Nehru the Union cabinet has seen robust internal debate and public expression of difference of opinion by members of the Union council of ministers. The differences between Pandit Nehru and the then Union home minister, the greatest home minister of India, Sardar Vallabhbhai Patel, are legendary and the stuff of many books. Sardar Patel was highly skeptical of Pandit Nehru&rsquo;s view of China and made bold to pen down his views. The differences between today&rsquo;s home ministry and external affairs ministry are not as serious. Forget the clash of the titans. Even lesser mortals have had public spats on policy issues. Sharp ideological differences have of course been part of the Indian National Congress tradition.

Limits to ministerial dissonance

Public finance experts will understandably find many flaws in the three-year plan that Finance Minister Pranab Mukherjee unveiled last week for moving to a single-rate goods and services tax (GST) regime of 16 per cent for the Centre as well as the states. The proposed rate at the end of three years is much higher than the 12 per cent recommended by the 13th Finance Commission as a feasible and revenue-neutral rate under the new taxation regime.

Crossing the GST hurdle

Regulatory issues kept on the boil for a long time usually turn into frustrations which then tend to boil over and overwhelmingly influence the regulatory architecture, and may even pull it down. The Sebi-Irda dispute on the Ulip matter resulting in the issuance of an ordinance by the government is a classic example. The recent court case between the MCX and Sebi is another. The third one, which is still on the boil, is the contradictory and contumacious stand taken by Sebi and the mutual funds on the load structure.

Frustrations boil over

Incisive columns and editorial comment by top opinion leaders

Page 541 - Editorial Comment