The many organisers of the 2010 Commonwealth Games have received a well deserved rap on the knuckles for the state of India's (lack of) preparedness to host the Games a year from now. While the Commonwealth Games Federation has shied away from selecting an alternative venue, it has not left anyone in doubt that New Delhi has to work extra hard in the next 11 months to deliver what it has promised. All the media spin that the organisers had done, to suggest that the work done so far has been appreciated, has been exposed as hogwash. To make its displeasure clear, the Federation has said that an external oversight committee will henceforth supervise the remaining work to be done.

Deserved rap on knuckles

Business Standard

The recent terrorist attack on the Indian embassy in Kabul has once again drawn attention to the high risks associated with India&rsquo;s developmental role in Afghanistan. As Indian Ambassador Jayant Prasad told this newspaper, anti-Indian elements in the region have never been able to come to terms with India&rsquo;s ground-level popularity among the Afghan people. It is a testimony to India&rsquo;s commitment to the Afghan people that so many Indians choose to work for Afghanistan&rsquo;s reconstruction and development, against such odds. Rather than ask the question &lsquo;What is India doing here&rsquo;, as an American general did the other day, the US must ask &lsquo;What can we all do together&rsquo; to find a lasting solution to Afghanistan&rsquo;s problems. Neither India nor the US would want India to get involved militarily in fighting the extremist forces in the region.

The stakes in Afghanistan

The freedom that bank customers have been enjoying since April, in using any bank&rsquo;s automatic teller machine, to withdraw cash without incurring any charge is about to end. Banks will now be free to levy a charge for withdrawals beyond five per month and also impose a ceiling of Rs 10,000 on individual withdrawals. Banks are, however, free to continue with the current regime and at least one bank has decided to do so, seeing a competitive business advantage in making the offer. So long as the reimposed restrictions are not excessive, they will not be irksome and may even be considered as useful in imposing some discipline among customers. The new rules are in response to banks&rsquo; complaint that customers were using the free third-party facility excessively (too many withdrawals in small amounts), thus imposing a not insignificant cost on banks.

ATMs should be stand-alone

Swati Piramal&rsquo;s appointment as the first woman president of an industry chamber marks a giant leap for women in India Inc. in more ways than one. Although Assocham ranks No. 3 in the chamber hierarchy (CII and Ficci preceding it in size and influence), it deserves praise because Ms Piramal&rsquo;s appointment was not the result of affirmative gender action &mdash; a practice much in vogue &mdash; or her family connections (she is the wife of industrialist Ajay Piramal), but because she is a business person in her own right. As Nicholas Piramal&rsquo;s chief scientific officer and director of strategic alliances and communication, she sets the company&rsquo;s R&amp;D agenda, a critical role in any pharma company.

Gender bends

Even six months back, few would have predicted the strong rally in the Indian stock market that has seen the BSE Sensex rise 112 per cent from its low point of March 2009. Analysts in India usually look for the domestic drivers of such dramatic swings (improved corporate performance, sharp industrial recovery, etc). While these are relevant and indeed important, it should not be lost sight of that markets across the globe have recovered from the sharp fall last year that followed the breakout of the global financial crisis; last week the Dow crossed the 10,000 mark. The rebound in markets around the world has been driven primarily by the liquidity that central banks have been pumping into their respective economies.

The return of optimism

Suresh Kalmadi is proving a national embarrassment. As the head of the Organising Committee of the Commonwealth Games 2010, he has been in charge of getting the show organised. Till date, the Committee (which came into existence in early 2005) has a plethora of missed deadlines to show for its labours. The Commonwealth Games Federation has raised one warning flag after another, culminating last week in the demand for more comprehensive oversight by international experts. Relations between the Committee and the Federation have since reached a nadir, with Mr Kalmadi rejecting the Federation&rsquo;s diktat and asking publicly for the removal of the Federation&rsquo;s man on the spot; that gent&rsquo;s response at a press conference was halted abruptly by the intervention of people who appear to have been acting on Mr Kalmadi&rsquo;s behalf.

Needed: action, not words

In his public pronouncements in recent weeks, Reserve Bank of India (RBI) Governor Duvvuri Subba Rao has started sounding a note of caution on inflation amidst news of a better-than-expected recovery in the real economy. He has indicated that India may need to reverse the current expansionary stance sooner than other major economies. To be sure, he has not suggested that this would have to happen this month. There are some expectations that a change in policy stance may be further encouraged by the strong showing in the industrial sector. Apart from an increase in the index of wholesale prices, consumer price inflation has been inordinately high for several months now, mainly on account of the persistent rise in food prices. However, despite these concerns, there are several arguments in favour of maintaining the status quo.

Case for status quo

The Union ministry for environment and forests and the Indian Space Research Organisation have come up with a typically Indian response to the debate on climate change. Build a new institute! New research does not always need a new institution. There is a good case for investing in indigenous research on issues relating to climate change and global warming. But capacity building should not be confused with building capacity. Instead of pouring money into a new campus, new buildings and related infrastructure, the ministry would do well to fund existing institutions and create the critical mass of research manpower necessary to take existing knowledge forward. There is no doubt that some of the research conducted in western institutions is driven by western development agendas. There is no denying that we must have domestic research capability so that we can examine issues pertaining to climate change from our own developmental perspective.

Change climate for research

Corporate results for the second quarter (July-September) are being announced this month. They will either confirm or cast doubt on the generally upbeat tone of other economic indicators and are, therefore, being watched with keen attention. The BS Research Bureau&rsquo;s analysis of 139 early announcers&rsquo; numbers, while admittedly a small sample, provides some important indications of how the corporate sector is performing. The analysis throws up a rather mixed picture.

Topline vs. bottomline

Last week's decision by Minister of Human Resource Development Kapil Sibal to allow the Indian Institutes of Management (IIMs) to go global is a good idea, provided it does not draw on the manpower and financial resources of IIMs in India. The concept generated heated debate two years ago when Sibal&rsquo;s predecessor Arjun Singh turned down IIM, Bangalore&rsquo;s proposal to set up a campus in Singapore at the suggestion of that country's government. Singh&rsquo;s argument then was that the IIMs should first concentrate on meeting domestic demand. Sibal has since reversed that stand, saying the IIMs would be free to go abroad provided they amended their memoranda of association. Rather than set up foreign campuses, IIMs should look at the franchise option to build their brand globally.

IIMs&#39; glo-cal dilemma

The agricultural sector is both an emitter of greenhouse gases and a victim of global warming. Technological change, water utilisation and cropping pattern in agriculture have implications both for emission reduction and adaptation. While hydrocarbons and raw material-based industries contribute to global warming, their productivity is not necessarily affected by the phenomenon, as is the case in agriculture. Agricultural production impacts climate change and, in turn, is impacted by it. Hence, technology and investment decisions in agriculture can help mitigate the impact of climate change. That will need investment in appropriate technologies and in cleaner and greener farming systems. It is, therefore, surprising that agriculture is not on the agenda in the on-going global negotiations on climate change.

Farming greenhouse gases

The bad times for India&rsquo;s export oriented software leaders appear to have troughed out, going by the second quarter results of market leaders TCS and Infosys, and also the sentiments expressed by their chief executives. According to the sequential quarter-on-quarter figures which help identify inflection points, TCS&rsquo;s consolidated topline growth rate has risen very marginally after falling over two consecutive quarters.

IT breathes again

After the celebrations must come sobriety. The Congress Party and its ally in Maharashtra, the Nationalist Congress Party, have good reasons to celebrate a clear victory, in two states. In Haryana it has been a close call. The verdict is as much an endorsement for the Congress Party as it is a comment on the state of the Opposition. In Maharashtra, in particular, the poor showing of the Bharatiya Janata Party (BJP), is yet another wake up call to a party that has still not got its act together. It is now so clear that without a change of leadership at the very top, and without capturing the imagination of a new India, the BJP will not be able to pose a challenge to the Congress at the national level, even though it is the case that it is in government in more states than the Congress.

A stabilising verdict

The benchmark prime lending rates that banks use to offer a signpost to their lending rate structures have lost much of their significance and utility, thus prompting a study by the Reserve Bank of India (RBI) of what has been happening and inviting public discussion on proposals for a new system of base rates. The benchmark rates, which should reflect changes in the policy rates of RBI, have ceased to do so. Besides, sub-benchmark rates now abound, despite benchmark rates being based on the logic of prime lending rates which only the best customers of banks get. A key fallout from the present system is that retail customers of banks borrowing on floating rates, linked to benchmark rates, often do not see a positive impact on their rates of the RBI signalling a downward movement in interest rates.

Rational, not administered

The proposed move by the India Meteorological Department (IMD) to issue only monthly rainfall predictions, instead of the long-range monsoon forecast for the entire four-month (June to September) monsoon season, will disappoint many monsoon watchers, even though it makes sense for several reasons. Given the track record of seasonal monsoon projections, despite the growing sophistication of the data collection and data processing technology, not offering a misleading forecast may be a good idea.

Not chasing the monsoon

How best can the Union government use the window of political opportunity that has been opened up by the verdict of the recent assembly elections? Since the ruling Congress party has been strengthened by the poll result and there are no important elections due for the next year, the opportunity to push for better governance should not be missed.

Governance and the fisc

The recent controversy over the nature of visas issued to Chinese workers working on projects in India should not be viewed as just another source of tension between India and the Middle Kingdom. It also reflects a rank failure on the part of the Indian government to develop a sufficient skill-base among India&rsquo;s own blue-collar workforce. The fact that Indian companies, including government-owned ones, are compelled to import blue-collar labour that is skilled enough to handle high-tech tasks required in, say, metro rail construction and telecom projects is testimony to this. In that context, the inauguration of the National Skills Development Corporation (NSDC) earlier last week could be viewed as a positive development.

Bridging the skill gap

Prime Ministers Manmohan Singh and Wen Jiao Bao have restored the much-needed sobriety to the India-China relationship through the tone of their meeting on the sidelines of the Fourth East Asia Summit in Thailand over the weekend. In the past few months, a war of words through the media has disrupted peace and tranquility between the neighbours. While the Indian media is free and does not necessarily reflect government opinion, no one could believe the same of China&rsquo;s officially controlled media. The media hysteria was aggravated by unhelpful statements from China regarding the prime minister&rsquo;s visit to Arunachal Pradesh. Coming on top of China&rsquo;s official objections to Indian project proposals at the Asian Development Bank and followed by objections to the Dalai Lama&rsquo;s visit to Arunachal, these events gave the impression that both governments were hurtling towards a confrontation.

From tantrums to tranquility

While the government debates the issue of whether or not there was a scandal in the manner in which scarce radio spectrum was granted to firms like Swan and Unitech &mdash; with the prime minister appearing to let the telecom minister off the hook even as the CBI raids his ministry &mdash; it is becoming increasingly clear that a quick solution needs to be found to allotting spectrum to telecom companies.

Speed up 3G

The monetary policy stance articulated in yesterday&rsquo;s quarterly announcement broadly lived up to expectations. The main policy instruments &mdash; the repo and reverse repo rates and the cash reserve ratio &mdash; were not changed. This was consistent with the Reserve Bank of India&rsquo;s (RBI) view that, while the recovery was under way, it had not quite consolidated. Among other points of fragility is the agricultural situation, where this year&rsquo;s output is expected to drop appreciably from last year&rsquo;s. Consequently, the RBI has maintained its baseline GDP growth forecast for 2009-10 at 6 per cent, somewhat more conservative than those of the Ministry of Finance and the Prime Minister&rsquo;s Economic Advisory Council. Since both those bodies, despite their greater optimism about growth, had already voiced their preference for the status quo, the RBI&rsquo;s forecast provided an even stronger justification.

More micro than macro

Facts often become a casualty when politics starts dominating policy debates. A case in point is the ongoing wrangle over whether the West Bengal government should have let off some tribal women to obtain the release of one of its police officers, abducted by the Maoists operating in that region. Odious comparisons have been drawn between this incident and the release of hard-core terrorists in return of passengers of the Indian Airlines plane hijacked to Kandahar in Afghanistan about a decade ago. The reality is somewhat different. No proclaimed terrorists or convicted criminals have been released to obtain the freedom of the West Bengal police officer. The tribal women released by the government are neither members of the Maoist groups nor have they on their own indulged in terrorist activities. They were only mobilised by the Maoist groups in support of the latter&rsquo;s cause.

Not by force alone

Incisive columns and editorial comment by top opinion leaders

Page 562 - Editorial Comment