The release of the first discussion paper on the introduction of a goods and services tax (GST) is a welcome relief in that the country is now a step closer to the much-needed reform in its indirect tax regime. The 57-page document, produced by the empowered committee of state finance ministers and made public on Tuesday, however, leaves no one in doubt that the government will not be able to meet its target of rolling out GST from April 2010. Several legislative hurdles, at the Centre and in states, have to be cleared and a consensus on the key features of the new taxation system is yet to be reached among all the state finance ministers. For the finance ministry and the empowered committee, therefore, the task of putting in place a GST system has just begun. The tougher part of the battle lies ahead.

Miles to go

Business Standard

The burgeoning demand for graduates as economic growth accelerates has been encouraging Minister for Human Resource Development Kapil Sibal to examine more innovative ways of involving the private sector, especially in higher and technical education. This is sensible in as much as the government lacks the financial wherewithal to focus on this sector when the claims from primary education are much more pressing.

Fixing higher education

While Germany celebrated the 20th anniversary of the end of the Cold War in Europe, symbolised by the fall of the Berlin Wall, some remnants of that inglorious era remain. North and South Korea, the Palestinian problem and, in a manner of speaking, the Af-Pak logjam. All essentially legacies of the Cold War. So, while Europe may pop champagne bottles, Asia will have to wait before it can celebrate the end of the Cold War legacy. But there is a bigger legacy issue waiting to be addressed. That is the intellectual legacy of the Cold War. The idea that one or two or even five Big Powers can run the world. In some ways, the creation of the G-20 has undermined this Cold War legacy, but the G-20 is as yet a talk shop. Unless institutions of power are able to re-adjust themselves to new global power equations of the post-Cold War era, we cannot really say we have put the past behind us.

Cold War and cold warriors

With the Left out of the power equation, it was assumed that it would be only a matter of time before the government revived its disinvestment plans. While the government has announced an ambitious plan to sell off stakes in various public sector undertakings (PSUs), not all political parties in the ruling coalition seem to be willing to give up the political patronage and rents that come with control of PSUs. So, the government must be congratulated for biting the bullet.

Getting PSUs on track

Whether or not you believe the numbers put out by the Central Bureau of Investigation (CBI) on former Jharkhand Chief Minister Madhu Koda&rsquo;s wealth, there is little doubt that the mining lobby has gained enormous financial clout and, through it, political power. If in doubt, look at recent events in Karnataka, where the mining lobby has humbled the sitting chief minister. It is obvious that the miners&rsquo; power flows from the enormous rents that they control once mining rights/licences are handed out to them. Since getting or not getting a lease is the difference between large sums of money and none, it is hardly surprising that these lobbies are liberal when it comes to handing out money to ensure that the present rules continue. That might explain why the government does not take the obvious step of auctioning mineral fields, in preference to the arbitrary selection process that exists today. An auction system will bring transparency into the system.

Auction those mines

After strong protest from civil society organisations, the government has admitted that it is considering amending the Right to Information (RTI) Act. It has, however, assured activists that a transparent and consultative process will be adopted before any action is taken, and the amendments will not be persevered with if activist groups are able to convince the government that they are either unnecessary or counterproductive. These assurances notwithstanding, it is unfortunate that the government should again be contemplating changing a law that stands as one of the first UPA government&rsquo;s main achievements.

It ain't broken

So the Copenhagen summit on climate change has been killed even before it has started. The US and other countries have formally recognised that the summit next month will not achieve its basic objective of working out a post-Kyoto accord on future commitments with regard to the emission of greenhouse gases. The rich countries, aware of their role in bringing about this denouement, have been trying for weeks to pin the blame on China and India, but this attempt is so blatantly at variance with the facts that no one is fooled. The nails began to get hammered into Copenhagen&rsquo;s coffin at the preparatory meeting in Thailand last month, when the rich countries made it clear for the first time that they wanted to dump the Kyoto Protocol of 1997, with its binding commitments on emission reductions, and work on a new slate where basic fairness would not be an operating principle.

The wolf and the lamb

The India-European Union Joint Customs Cooperation Committee has met in New Delhi and failed to resolve the issue over Indian generic drugs being seized when they are in transit through European ports. This may be ascribed to technical reasons, but it has ramifications for international trade and, equally importantly, for public health. The stand-off comes barely weeks after the assurance by EU&rsquo;s trade commissioner, Catherine Ashton, that the EU was committed to finding a solution that works for India. The EU&rsquo;s plea that such seizures are made on suspicion of either violation of intellectual property rights (IPRs), notably patent laws, or of the consignments being of counterfeit drugs, holds no water because there is no evidence to back such a position. All the consignments detained so far have eventually been found to be of genuine, off-patent generic drugs on their way to countries where these are not patented.

Protectionism by another name

A number of recent incidents, many of which pose a threat to social order, highlight the stress that the economy faces in terms of generating jobs for larger numbers of aspiring young people. Between 12 million and 15 million new jobs need to be generated each year to accommodate new entrants into the workforce, beyond the number needed to take care of the backlog of unemployed. Only a small fraction of those numbers is actually available, particularly in the organised sector. The recent demand by the Maharashtra Navnirman Sena (MNS) that the State Bank of India recruit only Marathi-speakers for 1,100 jobs being offered in the state is an acute reflection of the problem &mdash; as is the fact that people with post-graduate management degrees have been applying in large numbers for clerical jobs in banks. As in most large-scale recruitment programmes in the public sector these days, the number of applicants is almost 100 times the number of openings.

Missing: An employment plan

The global arms bazaar is no place for angels. If one is to judge by the plethora of well-documented cases of defence pay-offs around the world, corruption is an endemic part of the business. To some extent, this is understandable &mdash; the orders for defence equipment tend to involve large sums of money, there are only a handful of suppliers for specific items, the buying process is buried deep in technical detail, the purchases are funded out of the public exchequer, and the people acting on behalf of governments are not incorruptible. Suppliers who have invested large sums in research and product development, over many years, are usually willing to go to any lengths to acquire a crucial order which could mean the difference between running or shutting down a production line, between well-paying jobs and large-scale unemployment. Throw all this into the cauldron and it becomes a witch&rsquo;s brew.

Dealing with arms purchases

Barring a four-year interlude in the 1930s, a Tata scion has always headed the 141-year-old Tata group of companies. So Ratan Tata&rsquo;s statement that a non-family professional, even an expatriate, can succeed him has understandably become headline-grabbing news. This is, however, not the first time an Indian business leader is casting his net globally in search of a successor, nor indeed, is it the first time for a Tata company.

Tata&#39;s tata to Tata

When authoritative spokespersons of the government speak in different voices on an issue, what ensues is utter confusion. This is, indeed, the state of affairs regarding the government&rsquo;s (read India&rsquo;s) stand on climate change less than a month prior to the crucial global summit on this subject in Copenhagen. The divergent utterances by environment and forests minister Jairam Ramesh and Prime Minister&rsquo;s special envoy on climate change Shyam Saran have created a good deal of ambiguity within and outside the country over the government&rsquo;s strategy for these talks. Worse still, this confusion has been confounded by the release of a document by Ramesh on Himalayan glaciers which, inter alia, disputes the claim that these glaciers are shrinking fast and that this phenomenon was linked to global warming.

Climate of confusion

No one should be surprised by US President Barrack Obama&rsquo;s genuflections to Chinese power and prosperity. For almost a year now Mr Obama has come to terms with the limits to US power and the reality of China&rsquo;s. So it is not surprising that Mr Obama allowed his visit to China to be circumscribed by Beijing&rsquo;s sensitivities and interests.

China's moment in the sun

The Heckler and Koch sub-machine guns have finally arrived, as have the Colt grenade launchers; 200 bullet-proof vests will eventually land up, as will 19 amphibious vehicles from Canada to help patrol the seas to prevent another sea-borne attack; at some point in the future, you will have CCTVs in each street corner&hellip; The questions, however, are whether this is enough to ensure there is no other attack on Mumbai; and, are other cities in the country, say Delhi, better prepared? NDTV 24x7&rsquo;s Managing Editor Sreenivasan Jain, who spent months meeting the men in uniform, put some of this down to paper for Open magazine, and the account is as frightening as it is riveting. At one level, the story of The Untouchables, as he chooses to title his piece, is the familiar one of shortages of people and equipment. Mumbai has just 40,000 policemen to police a city of 20 million, and Jain recalls the iconic image of constable Jillu Yadav finding his .

If another 26/11 happens

In the past week, this newspaper carried three related news reports on the business and economics of education. First, we reported that public expenditure on education in the Eleventh Plan period was falling short of the set target. This despite the fact that the prime minister dubbed the Eleventh Five Year Plan as the &ldquo;National Education Plan&rdquo;. Second, we reported the findings of the US Institute of International Education that Indian students spent as much as $2.75 billion (Rs 12,500 crore) in the US by way of tuition fees and living expenses during academic year 2008-09. Add to this what Indian students are increasingly willing to pay for education in other English-speaking countries around the world. Third, we reported the decision of the Union human resource development ministry to seek ideas from a group of Indian businessmen on ways in which for-profit private educational institutions can bridge the resources gap in higher education.

The business of education

With half the financial year gone, it is increasingly clear that the global slowdown has speeded up a structural change that has been taking place in the Indian software industry for quite some time now. The medium-sized firms are getting squeezed more and it is the market leaders that are better able to survive. Firms like TCS and Infosys have clocked modest but clear top line growth in the first half, whereas established mid-sized players have in many instances posted a fall in top line in relation to the same period of the previous year. The trend was set with the high profile $1.5-billion BP deal awarded a couple of months ago in which the Indian leaders figured prominently but the total number of vendors was cut down from 40 to just five! This implied the elimination of many mid-sized vendors, in whichever geography they may have been located.

Hard times in software

The 27-member European Union needs more than a President to make its global presence felt. The election of Belgian Prime Minister Herman Van Rompuy as President of the EU and of the EU Trade Commissioner Catherine Ashton as the EU&rsquo;s foreign policy chief does mark an important milestone in EU&rsquo;s evolution as a coherent political group, but how important will depend upon the EU&rsquo;s willingness to play its part in global affairs. For the past few months, the US, China, Russia, India and even Brazil have been grabbing more headlines in global media than the EU. Asia&rsquo;s rise and America&rsquo;s assertiveness had cast a shadow on the EU in the past few years. The global economic crisis and slowdown have, in fact, given the EU an opportunity to raise its profile once again. Germany and France, in particular, have been able to re-assert their global presence through deft political and economic management at home.

Punching below weight

Intimations of the dollar&rsquo;s demise are premature. Prime Minister Manmohan Singh was right to say so and it was a clever way to announce his arrival in Washington DC. Nothing has sent the US capital into a greater spin than nervousness about the dollar&rsquo;s future. Purists may argue that politicians should not be wasting their time speculating about a currency&rsquo;s future. But in talking up the dollar, Manmohan Singh was only stating the obvious. That, as he put it, as far as one can see, right now there is no substitute for the US greenback. In some distant future there may be, but that future is a long time in coming. By stating the obvious, Dr Singh has clearly warmed the cockles of his hosts&rsquo; heart. Nothing worries the US President more than the prospects for the US economy.

Talking up the dollar

With India&rsquo;s defence offset policy finally taking off, Prime Minister Manmohan Singh&rsquo;s call for increased Indo-US collaboration in defence production portends well for offset-based foreign investment. A foreign boost to India&rsquo;s moribund defence industry has been a government priority since 2005, when the Defence Offset Policy first mandated a 30 per cent plough back into the Indian defence industry of every foreign defence sale worth more than Rs 300 crore. That the policy is beginning to yield results is evident from figures released last week by the Ministry of Defence (MoD). Since 2007, when offsets took effect, foreign vendors have tied up production agreements worth Rs 8,000 crore, almost entirely with domestic aerospace manufacturers. But, given that India&rsquo;s foreign defence purchases currently generate an offset liability of about Rs 15,000 crore annually, this is only a beginning.

Offsets take off

Pity poor Shivraj Patil. One year after the dastardly terrorist attack in Mumbai, he is the only government functionary who has been held accountable and punished. Almost everyone else, from the National Security Advisor to Maharashtra&rsquo;s chief minister and home minister, not to mention other officials, has either been left untouched or been rewarded with a better job or more responsibility. So, the first lesson of 26/11 has not even been taught for anyone to have learnt it. That with power comes responsibility, and if that responsibility has not been properly discharged, then power should be withdrawn. Political and government leaderships in New Delhi and Mumbai have not served the nation well by not demanding accountability from more in the national security set-up and the government.

Crisis and opportunity

After crowding up New Delhi&rsquo;s streets (and causing some mayhem in the process), disrupting Parliament&rsquo;s proceedings and hogging the headlines, north India&rsquo;s sugarcane farmers have gone back to their fields. But the issues they have raised and the government&rsquo;s solution will not simply disappear from the public policy space. Clearly, the ordinance promulgated on October 22 amending the Sugarcane (Control) Order, replacing the statutory minimum price (SMP) with a &lsquo;fair and remunerative price&rsquo; (FRP), was aimed at simplifying price determination for levy sugar, but it had several far-reaching and disagreeable ramifications for state governments, the sugar industry and cane growers which the Centre failed to foresee. By putting the onus of paying the difference between the FRP and the state advisory price (SAP) on the state governments, instead of the sugar mills, it upset governments of the states where SAP has come to stay.

A bitter harvest

Incisive columns and editorial comment by top opinion leaders

Page 560 - Editorial Comment