Fifty years after their formation as different states of the Indian Union, Gujarat and Maharashtra have much to be proud of. Both states are among India&rsquo;s developed and industrialised states. Both states have above-average human development indicators and a record of good performance across many sectors. In the world of business and commerce, both states have distinguished themselves. On the occasion of their golden jubilee, the point has been made that at the time of their creation, there was a view that Bombay, now Mumbai, should be made a Union Territory. It is possible to imagine that Gujarat could have had its capital in Baroda and Maharashtra in Pune, and Bombay (Mumbai) could have remained a more cosmopolitan city. Today it is difficult to turn the clock back and there is not much popular support for the idea either in Maharashtra or Gujarat.

Metros and the states

Business Standard

Now that the heads of the country&rsquo;s topmost sports federations, including the Indian Olympic Association (IOA) which has the power to recognise/derecognise these associations, have come out against Sports Minister M S Gill&rsquo;s decision to restrict their tenure, the issue is truly joined, and it remains to be seen who comes up trumps. As widely reported, several politicians have been in charge of sports bodies for decades &mdash; Congress&rsquo; Suresh Kalmadi has headed the IOA for 15 years, BJP&rsquo;s Vijay Kumar Malhotra has headed the archery association for 31 years, Akali Dal&rsquo;s S S Dhindsa has headed the cycling federation for 14 years, and so on.

Giving sports a chance

There was a time when the price of almost every commodity was controlled. It was during the Second World War. When India&rsquo;s post-Independence growth outpaced domestic supply of goods in the 1950s, free India&rsquo;s policymakers drew on the experience of the war years to introduce rationing and price-controls. For half a century after that, price and distribution controls became, on the one hand, the symbol of Indian socialism and, on the other, the weaponry of a corrupt &ldquo;licence-permit Raj&rdquo;. Then came the plea for a &ldquo;bonfire of controls&rdquo; and in that early dawn of liberalisation, price controls on commodities like steel and cement disappeared. Few in today&rsquo;s India can even imagine the control and permit Raj that defined cement sales and pricing barely a generation ago. The only really &ldquo;non-essential&rdquo; commodity to survive the era of liberalisation is sugar.

Sugar free

Even before Justice Sarosh Homi Kapadia takes over as the country&rsquo;s new chief justice next week, he has a crowded calendar. There is the issue of the overwhelming, and rapidly increasing, backlog of cases. In the Supreme Court, it rose from 49,819 last year to 55,971 now; in the high courts, it has risen from 38,34,224 to 40,49,649; and from 264,22,920 to 272,38,782 in the case of district and subordinate courts. While a large part of this is due to the fact that India has a lot less judges than other countries have (India has roughly 12 judges per million population versus 110 in the US), even the sanctioned posts are not being filled.

Heavy caseload

A quick glance at the headline numbers for the fourth quarter (Q4) results suggests that India Inc is back on the fast-growth track, just as the pundits and politicians had forecast. However, the devil &mdash; and one that is likely to keep CEOs awake at night &mdash; is in the detail. Certainly, top-line growth confirms that after a two-quarter hiatus, demand is back with a bang, continuing a trend that began in Q3, especially when automobile companies displayed sales numbers that surprised analysts and themselves. Business Standard Research Bureau calculations show that net sales of 741 manufacturing and services companies that have declared their Q4 results for 2009-2010 so far grew a healthy 40.51 per cent in January to March over the same period in the last fiscal.

The cost of growth

The popular reaction of relief and celebration to the verdict of a special court in Mumbai sentencing Mohammad Ajmal Kasab, the Pakistani national involved in the dastardly terror attack in Mumbai on 26th November 2008, to death is understandable. The people of India have felt helpless in the face of such terrorist attacks and they see in the death penalty justice being done.

Punishment and remorse

The Supreme Court verdict in the dispute between the Ambani brothers and their respective companies offers some comfort for all, with Anil Ambani faring the worst and the government faring the best. The younger Ambani has to renegotiate the memorandum of understanding (MoU) for gas with the older Ambani, though renegotiation is a bit of a misnomer since the price has already been fixed by the government.

The public in PPP

Most tend to focus on the emission intensity of Indian industry in order to see if India will be able to meet its voluntary commitment to reduce this by around a fifth by 2020. This, however, as a recent study by the Centre for Science and Environment (CSE) points out, is probably the least of India&rsquo;s problems. CSE has done a study looking at the highest emitting industries &mdash; steel, aluminium, cement, fertilisers, paper and pulp, and power account for 60 per cent of India&rsquo;s current emissions &mdash; and found that most of them are pretty state-of-the-art when it comes to emissions. Since electricity is very expensive in India, it is easy to understand why they try to conserve as much of it as possible or, in the case of the power industry, extract the maximum out of coal &mdash; the study finds, for instance, that NTPC is the most efficient producer of power in the world, in terms of units of energy produced per unit of energy used in the form of coal.

More Singurs ahead

If India is to carry on with caste-based reservations, the argument goes, what&rsquo;s wrong with the argument for having a caste-based census as demanded by Lalu Prasad and Mulayam Singh Yadav? The current method of figuring out the country&rsquo;s caste composition is based on a five-yearly sample by the National Sample Survey (NSS), and the numbers have varied quite a lot between the last two surveys. Many argue the new numbers are an overstatement &mdash; a census, by this logic, will separate the wheat from the chaff, and you&rsquo;ll know just how many people there are in various caste groups. That may well be the case, those opposed to caste-census like Home Minister P Chidambaram argue that there are huge difficulties associated with a caste-census. For one, there are supposed to be around 18,000-odd caste groups.

Caste in confusion

Most Britons deeply rue the fact that they are headed for a coalition government, with many predicting various dire outcomes like a downward spiral into a Greece-like economic crisis and sundry political disasters. History suggests that they shouldn&rsquo;t be so apprehensive. Since the end of World War II, most of Europe&rsquo;s major economies have been governed by coalitions &mdash; Germany, Spain, Belgium, Italy, France, the Netherlands and Ireland to name a few &mdash; with no noticeable harm in the quality of governance. Yet, even as the British intelligentsia is veering round to acceptance &mdash; and urgently urging government formation to stave off a market crash in the face of a rating downgrade threat &mdash; many Britons view the prospect of a Tory-Liberal Democrat coalition with distaste and alarm. Certainly, given the polarity of outlook between the two parties and personalities concerned, the nightmare of a non-performing government appears strong.

Rue Britannia

Barely a month ago, on the 10th of April to be precise, the cabinet secretary of the Government of India wrote a letter to all the members of the Union Council of Ministers, letting them know that the prime minister would like them not to go beyond their brief in interacting with the media. The letter was quite categorical. The cabinet secretary conveyed &ldquo;the decision of prime minister that in respect of issues considered to be sensitive by him, one ministry/department will be designated as the nodal ministry/department as a single point for interaction with the media and accurate articulation of the actions taken/being contemplated by government as well as the stance adopted by government&rdquo; (underlined in the original).

Loose cannons

Bizarre are the ways of the government when it comes to managing, or mismanaging, the country&rsquo;s food economy. On the one hand, it goes on mopping up bulk of the wheat and rice arriving in the mandis to build up its grain stocks, clearly to prevent foodgrain prices from falling below the minimum support price (MSP) level. On the other hand, it plans to offload 3 million tonnes of wheat and rice, in addition to the normal supplies from the public distribution system (PDS), to slash its overflowing grain stocks and bring down grain prices. This is not only bad management but also bad economics. The empowered group of ministers, which has taken this decision, has pegged the sale price of wheat at Rs 8.42 a kg, nearly half of the actual economic cost (procurement cost plus overheads) of around Rs 16 a kg. Similarly, rice is to be sold at Rs 11.85 a kg, against its effective economic cost of around Rs 19 a kg.

Mismanaging food

The Telecom Regulatory Authority of India (Trai) has stepped in to restore balance to the sharing of the humungous revenue stream flowing from the private marketing of public spectrum, nudging telecom companies to widen their network and tap new customers. The phenomenal growth of value-added services over and above voice telephony has opened the government&rsquo;s eyes to the untapped revenue potential in this vital infrastructure sector. Equally, having witnessed the decline of the public sector, for which the government has no one else but itself to blame, there is now an attempt to get private companies to discharge their social obligations. Trai has made some excellent recommendations while dealing with the benefits that those firms which got licences/spectrum at bargain-basement prices in 2008 stand to make when they sell/transfer these.

Tough call

The index of industrial production (IIP) is still on a winning streak. The index for March 2010, released yesterday, grew by a robust 13.5 per cent over the previous year. While it was a tad lower than the 15 per cent that financial market economists had predicted, there is little reason to question the sustainability of the industrial recovery that set in about eight months ago. The March print takes the growth in the last quarter of 2009-10 to a solid 15.1 per cent and to a respectable 10.4 per cent for the financial year as a whole. With this rate of growth in industry, growth in aggregate GDP seems all set to clock 7.5 per cent for 2009-10. This is a shade higher than the advance estimate of 7.2 that still constitutes the government&rsquo;s official estimate for the year.

Nascent recovery

From one extreme to another. That seems to be the tale of patenting in India. Accussed earlier of not doing its job fast and efficiently enough, the Indian Patent Office (IPO) now seems to be in overdrive. It is being accused of over-speeding patent clearance without adequate scrutiny. This would raise questions about the quality of patents granted. The number of patents granted annually by IPO has risen sharply, while the infrastructure and the staff strength of the patent office has remained more or less the same. The number of patent examiners, whose role is critical in ensuring that only deserving inventions get intellectual property protection, has not increased since the early 2000s. Yet, over 40,000 patents have reportedly been cleared in past three years, against less than 2,000 a year before that. Obviously, approval of frivolous patents cannot be entirely ruled out.

A patent shortage

Credit information bureaus are going to become more important. First, there are now more of them, three new ones are being added to the earlier single bureau. Secondly, after the financial turmoil of the past two years accompanied by sharply rising retail loan defaults, lenders are increasingly seeking to hold the hands of the bureaus in rebuilding portfolios while walking up the slope of another recovery. Thirdly, the bureaus&rsquo; remit is extending to a massive new area as microfinance institutions (MFIs) try to tackle the twin problems of multiple borrowing and calculated default with their help. Thus, since increasingly a large number of customers of industries ranging from consumer durables to housing will be affected by the working of the bureaus, it is in the interest of both business and the lay public that they run well. Against this need, the performance record so far has been distinctly patchy.

Does little credit

Aban Offshore has plunged 16% to Rs 856 after the company's offshore gas rig in Venezuela sunk near the Venezuelan coast.

Aban Offshore slumps as gas platform sinks

Should Asiatic lions remain confined to their last natural habitat in Gir (in Gujarat) or should their roar also be heard in other parts of the country where they roamed till about 150 years ago? The short answer is that it makes sense to create a lion population in at least one other place, especially when the Gir sanctuary is now said to have too many lions. Indeed, way back in 1979, the government had acted on the advice of wildlife conservationists and decided to shift some prides of Asiatic lions (Panthera leo persica) from Gir to a new sanctuary at Kuno Palpur, in adjoining Madhya Pradesh, so as to provide a second homestead to this majestic species of endangered big cats. The problem is that the Gujarat government is not inclined to part with any of its lions. As a result, the Kuno lion sanctuary, developed at a cost of over Rs 34 crore after moving out over 1,500 families living there, is still devoid of lions.

Move the lions

With bids for 3G (third-generation) telecom services crossing Rs 15,000 crore for a pan-India licence, and with the auction process still having legs, the question is whether this is a process that has produced a perverse result: consumers having to pay high tariffs, and companies uncertain about whether business will justify the high price. The matter becomes even more complicated since the Telecom Regulatory Authority of India (Trai) has recommended that firms must pay for their existing spectrum, beyond a floor entitlement of 6.2 MHz, on the basis of the 3G bids. If market leaders like Bharti and Vodafone win in the 3G bidding, they could end up paying Rs 18,000-19,000 crore for 2G and 3G spectrum taken together, on top of which there will be the cost of rolling out the 3G network.

Method in auction madness

Despite sporting the A-team of economic managers, the government continues to fight inflation more with hope than tangible measures. The rabi harvest was expected to do the trick by now, but while some food prices (sugar, lentils, etc.) have fallen, the over-all rate of inflation remains stubbornly high. Now, hope is being placed on a normal monsoon, as forecast by the Met department, but the Met almost always predicts a normal monsoon and, therefore, has a poor record of predicting deviations from the norm. In other words, the forecast does not mean very much. To be sure, headline inflation rates have started dropping, but the &ldquo;core&rdquo; inflation rate (i.e., not counting food and fuel prices) has gone up in the last six months.

Plot still lost on inflation

In spite of targeting a 120-basis-point reduction in the Centre&rsquo;s deficit for 2010-11 to 5.5 per cent of the gross domestic product (GDP), Finance Minister Pranab Mukherjee&rsquo;s Budget in February was notable for one rather optimistic assumption: that the oil subsidy during the current year would be no more than Rs 3,000 crore. Just a month-and-a-half into the fiscal year, the issue has become rather more pressing, although the unexpectedly ambitious bids in the 3G auctions are likely to create an impression that the government&rsquo;s fiscal worries are over, since the extra take on this account alone could be Rs 35,000 crore, or half a percentage point of GDP. However, the negative side more than outweighs this one-time gift, because oil prices have stayed high, and this will come to haunt the Budget&rsquo;s price assumptions.

Fisc slips on oil

Incisive columns and editorial comment by top opinion leaders

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