Even as reports pour in of a softening of food price futures, the spectre of food price inflation haunts households across the country. But to imagine that the inflation genie can be put back into the bottle through legislative fiat is the height of parliamentary fantasy. The Estimates Committee of the Lok Sabha has recommended just that! It wants new legislation to check price rise of essential commodities by capping the profit margins of trade intermediaries. As if the Essential Commodities Act is not enough, it thinks that more laws means better compliance! The worrisome situation on the food price front deserves all the policy attention it can get, but not through new legislation. The price of food items, including staple cereals, pulses, vegetables, fruit and sugar, are all under pressure for a variety of reasons and demand focused administrative action.

Managing food prices

Business Standard

As the country prepared for a long night of celebration on Sunday after Team India ascended to the top of the ICC Test rankings, it took &ldquo;Captain Cool&rdquo; to put things in perspective. Refusing to go overboard with excitement as the media did, MS Dhoni spoke of short-term goals and said he doesn&rsquo;t lose sleep over the rankings. He was obviously aware that India still has no series-wins in South Africa or Australia and that the No. 1 status is going to be short-lived. Apart from the fact that India is just two points above South Africa in the rankings, the match schedule is such that Team India will play just two Tests in the next six months. In fact, India has no Test series scheduled at home next year, giving rise to the possibility that the glorious trinity of Sachin Tendulkar, Rahul Dravid and VVS Laxman may have played their last Test on home soil together.

Time for the real test

Give Dubya his due. The India-Russia civil nuclear agreement signed during the visit of Prime Minister Manmohan Singh to Moscow would not have been possible without the agreement New Delhi signed up with the Nuclear Suppliers Group (NSG) last year. That NSG exemption came through, in the face of initial opposition from several countries, including China, because US President George Bush did the diplomatic heavy-lifting and hand-holding.

Medvedev harvests Bush crop

Thanks to The Hindu&rsquo;s expose of Maharashtra Chief Minister (CM) Ashok Chavan, the media&rsquo;s dirtiest secret is now out in the open &mdash; the concept of advertisement masquerading as news.

Private and other treaties

The devil for once doesn&rsquo;t lie in the detail. A closer look at the GDP data for the July-September period does not reveal any hidden inconsistencies that could take the shine off the impressive 7.9 per cent growth. Instead, it gives more reason to cheer. For one, growth was not primed by government cash transfers like salary hikes and NREGA payments alone. Gross fixed capital formation (investment in lay terms) picked up sharply in this period compared to the previous quarter. Measured against the same period last year, investments grew by 7.3 per cent in the second quarter of this fiscal year compared to 4.2 per cent in the first. Its share in GDP increased substantially from 31.6 per cent to 34.7 per cent. The up-tick in investments deserves close attention since business cycle recoveries are typically accompanied by a sharp rise in capital spending.

The revival is real

At a time when so much public attention is focused on climate change and global warming, other equally critical environmental issues may be getting off the policy radar and public attention. For most Indians, water pollution is an even more serious threat to life. Urban India is increasingly threatened by noise pollution as well. Toxic wastes, including the dangerous chemical and biomedical wastes, and equally hazardous e-waste (electronic waste), more recently, have emerged as major threats to life on our planet. The ill-effects of such degradation of the earth&rsquo;s life-supporting means have begun to manifest in the form of heightened menace of toxicity-related illnesses and higher incidence of epidemics. Declining natural biodiversity is also a threat to human life.

The other threats

The sudden manner in which the Union government has chosen to address the demand for a separate state of Telangana, carved out of Andhra Pradesh, raises an important question for corporate India regarding the future of Hyderabad. The &ldquo;triplet&rdquo; cities of Hyderabad-Secunderabad-Cyberabad have emerged as a major centre of business. The location of an international airport has further contributed to the globalisation of the city. Apart from the emergent business communities from various parts of Andhra Pradesh, especially coastal Andhra, businesses from across the country and the world have been investing in and around Hyderabad. The future structure of governance in the country&rsquo;s sixth largest metropolis will be a matter of concern for all existing and potential investors. Apart from the impact on land values, there would be an impact on plans for a range of investments in and around the city.

What about Hyderabad?

That the Anil Ambani-owned Reliance Energy Limited (REL) will be affected by the Allahabad High Court&rsquo;s decision on the land acquired by it for its 7,500 Mw Dadri power plant is obvious since the entire process of inviting objections to the acquisition has to be initiated from scratch. So, if the 5,000-odd farmers who have sold their land to REL and signed acceptance agreements (ikraarnaama) are able to return the money paid to them by the company, they can list out their objections. While it is unlikely that all of them will do so, more so since REL has already paid out around Rs 150-160 crore to them, even a handful of farmers doing this will be enough to delay the project. Meanwhile, the Anil Ambani group has been at pains to point out that while it is confident the Dadri land issue will be sorted out, it has no bearing on the case it is fighting in the Supreme Court against the Mukesh Ambani-owned Reliance Industries Limited (RIL).

The cost of land

India&rsquo;s rising forest cover is good news for Copenhagen.

Plenty of cover

The overall Index of Industrial Production (IIP), which includes the three components of manufacturing, mining and electricity, grew at a pace of 10.3 per cent during October. This is lower than what was expected, but higher than the 9.1 per cent for September. With this, the April to October growth rose to 7.1 per cent, up from 6.5 per cent in the April to September period. Manufacturing activity, which makes up almost 80 per cent of the IIP, grew at 10 and 11.1 per cent during September and October, respectively. Thus, there is sustained evidence of a pick-up in industrial activity, with a possibility of it clocking above 9 per cent for the whole year. The passenger vehicle segment recorded an astounding 61 per cent growth in November, albeit on a low base of last year, but spectacular nevertheless. Even two-wheelers grew at 42.4 per cent during November. Apart from vehicles, equipment, machinery and basic chemicals are also showing sharp growth rates.

Industry picks up

Bio-sciences are driven by clever deployment of vast computational power. Breakthroughs involve bewildering combinatorial mathematics as scientists ponder the consequences of DNA strands being arranged in multitudes of different orders. As the associated effects of DNA combinations become better-known, understanding about genetic predispositions increases. Eventually, it will be possible to take a drop of blood from an infant and predict the baby will grow to say, a height of 1.8 metres, be capable of running 100 metres in 10 seconds, have a tendency to put on weight and some susceptibility to diabetes. Genome sequencing is a new technique. It has been demonstrated on a few individuals in the US, South Korea, China, the UK and Canada. India has just joined this club.

Predictive medicine

If Paul Samuelson, who died this weekend at the ripe age of 94, has been described in many obituaries as the greatest economist of the 20th century and the &ldquo;founder of modern economics&rdquo;, even though most professional economists would credit John Maynard Keynes with that title, it is because most students of economics around the world came to the discipline through his textbook. First published in 1948, Samuelson&rsquo;s Economics: An Introductory Analysis ran into 19 editions over 60 years with 4 million copies sold in 40 languages. No student of economics has graduated without reading Samuelson. No policy-maker around the world would have missed one or the other of the scores of columns he wrote for Newsweek. In choosing to write a newspaper column even as he worked in MIT&rsquo;s ivory tower, Samuelson underscored the importance of engaging public opinion in a discipline like economics.

The great synthesiser

Going green, as a series of feature articles in this newspaper have shown, is not just good for the environment, it is good for corporate bottom lines also. If energy costs form a tenth of all costs, for instance, then anything which reduces energy intensity can only be good. The question, of course, is whether the energy-saving devices cost so much that they negate the effect of the annual saving. While most purveyors of energy-saving equipment say payback periods are under four years, the companies featured seem to suggest this is indeed true &mdash; some, like ITC, claim to have delivered extra returns of up to a fourth to shareholders as a result of various environment-friendly measures.

In the green

A full decade ago, Chandrababu Naidu made a point about the quick issuance of driving licences, and easy digital access to land records and house tax calculations &mdash; which he showcased to Bill Clinton when the then US president came visiting. Since then, all of Karnataka has digitised its land records through the Bhoomi project that now has a database on 20 million land holdings. Other states have similar projects. Now the Centre has picked up the thread, with the idea of Service Level Agreements, or SLAs, under which citizens will be guaranteed the delivery of specific services (like the issue of driving licences and ration cards) within a specified time frame. And, as in the case of the Right to Information law, officials who fail to deliver will have to pay personal penalties.

Guaranteeing service delivery

The irony will not have missed newspaper readers, who are informed on one day that the Central government will guarantee service delivery, to give effect to a citizen&rsquo;s charter, while on another day the Maharashtra government announces that no water connections will be given to new high-rise buildings for a couple of years &mdash; even if the buildings have been approved by the civic authorities. Without a water connection, no building gets a completion certificate &mdash; so hundreds, if not thousands, of flats will lie built and unused till the state government feels it can supply water. In 2012, Mumbai hopes to get substantial additional water from the Middle Vaitarana project, but the deadline is not sacrosanct and so the wait could be longer.

Waterless Mumbai

It used to be a quip in the 1970s that estimation of poverty in India is stymied by the poverty of estimation. The other joke was that far too many economists and statisticians had prospered trying to estimate poverty! So, we have yet another estimate of poverty in India. Rural poverty numbers for 2004-05 are up from the earlier estimate of 28.3 per cent to 41.8 per cent &mdash; with no change in the urban poverty estimate of 25.7 per cent, the all-India poverty estimates are up from 27.5 per cent to 37.2 per cent. However, the Planning Commission report on new estimates of poverty in India, prepared by a committee chaired by the renowned economist Suresh Tendulkar, cannot be compared with any previous estimate. This is because the reference basket of goods and services is different. Indian poverty estimates are based on consumption, not income, since the latter is notoriously difficult to measure. Since the early 1960s, Indian poverty numbers have been based on a calorie norm, i.e.

How many mouths to feed?

More than a week after the Union government intervened to get Telangana Rashtra Samiti (TRS) president K Chandrasekhar Rao to break his fast on the assurance that &ldquo;the process of forming the state of Telangana will be initiated, (and) an appropriate resolution will be moved in the state Assembly&rdquo;, no one is any wiser as to what will happen next. The Centre is right to insist that this late night statement of the Union home minister is nothing new and it merely reiterates the sentiment of the state Assembly where legislators cutting across party lines thumped their desks when former state chief minister Rajasekhara Reddy announced, in February 2009, that &ldquo;the state government has no objection to formation of Telangana state in principle&rdquo; and that &ldquo;time has come to move decisively on the matter&rdquo;.

Confusion confounded

Food price inflation has been in double digits for almost a year. Officially this week it is clocking up 20 per cent, the highest in 11 years. Stories of inflation in pulses and vegetables have appeared repeatedly in newspapers all over the country. The minimum support price for wheat has more than doubled in the past three years. The sugarcane farmers invaded the roads of Delhi protesting against the Central government&rsquo;s intervention to cap support prices paid to them. With so much evidence on food inflation, it was surprising that it hadn&rsquo;t become a big issue with the Opposition. This has been attributed to a disunited Opposition bogged down with internal divisions, and being downbeat after the general elections. Two other explanations about the general political disinterest in food inflation was that there were no major elections due till 2011, and the high food prices were benefiting food producers, who constitute a significant rural vote bank.

Battling price rise

The government is set to face disappointment on its expectation that the fertiliser subsidy will go down sharply this year due to a softening of international prices of fertilisers. It now appears almost certain that the total payable subsidy in 2009-10 may be around Rs 70,000 crore, against the budgetary provision of under Rs 50,000 crore. Since the government has made it clear that no additional allocation will be made for fertiliser subsidy, the unpaid subsidy arrears, which were brought down substantially last year by shelling out a whopping Rs 99,500 crore, partly in long-term bonds, are bound to start mounting again. This will, obviously, tell upon the fertiliser industry&rsquo;s already fragile fiscal health and will worsen its liquidity crunch. Such huge annual outgo on fertiliser subsidy seems unsustainable, especially if the fiscal deficit is to be contained within reasonable bounds. Clearly, this is a matter of concern.

Fertilising change

Two months ago, The Times of India reported that the environment minister, Jairam Ramesh, had suggested that India &ldquo;junk the Kyoto Protocol, delink India from the G77&hellip; and take on greenhouse gas emission reduction commitments under a new deal without any counter-guarantee of finances and technology.&rdquo; Mr Ramesh, the newspaper said, argued &ldquo;for a deviation from the Kyoto Protocol under which only the developed countries &mdash; listed in Annexure 1 &mdash; are required to take obligations for emission cuts, saying that it would also help in a better alignment with the US.&rdquo; It quoted the minister as saying, &ldquo;We must welcome initiatives to bring the US into the mainstream, if need be through a special mechanism, without diluting basic Annex 1/non-Annex distinctions.

Shifting the goal-posts

There is a spring in the Indian economy&rsquo;s step. The past month has seen a spate of good news, barring the bad news with respect to food price inflation, and the potential risk of rising inflationary expectations. The last quarter&rsquo;s national income growth came in at 7.9 per cent against the expected 6.5 per cent; the index of industrial production went up by 10.35 per cent in October, from 9.6 per cent in September; and exports reversed a 13-month decline, growing by an impressive 18.3 per cent in November. All of this was reflected in renewed revenue buoyancy. So, it is not surprising that Moody&rsquo;s has revised from &ldquo;stable&rdquo; to &ldquo;positive&rdquo; its local currency rating for India. While this still remains below the even higher ratings of Standard &amp; Poor&rsquo;s and Fitch, the expectations are that India ratings will go northwards. The concern remains inflation, which is mainly supply-induced.

Spring in winter

Incisive columns and editorial comment by top opinion leaders

Page 557 - Editorial Comment