Finance Minister Pranab Mukherjee has reason to feel satisfied with the outcome of the meeting of finance ministers and central bank governors of the G20 countries, in London last week. India's role in breaking the deadlock over the Doha round of trade talks came in for appreciation as the gathered ministers renewed their call for an end to all forms of protectionism and an early conclusion of the ongoing multilateral trade negotiations.

Outlook for Pittsburgh

Business Standard

The New Delhi Municipal Committee&rsquo;s reported plan to tie up with a private company to get electronic waste (e-waste) recycled and disposed of safely seems a well-conceived move aimed at tackling the health and environmental hazards posed by discarded modern gadgets. Almost unheard of till a couple of decades back, e-waste now constitutes a sizeable chunk of urban waste. In the absence of appropriate arrangements for its safe disposal, much of this hazardous junk either lands in the usual garbage landfills or is recycled in a crude and highly unsafe manner by the unorganised sector. The electronic and electrical equipment commonly used in homes, offices and factories, including computers, mobile phones, TVs, refrigerators and air-conditioners, contain highly toxic substances like lead, cadmium, mercury, hexavalent chromium, arsenic and others which can cause nervous and respiratory ailments, muscular weakness and dreaded diseases like cancer.

Tackling e-waste

The recent Japanese elections have dislodged the Liberal Democratic Party (LDP), which had been in power for almost a half-century, in favour of the Democratic Party of Japan (DPJ). The DPJ has won 308 of the 480 seats in the House of Representatives and, in coalition with a couple of smaller parties, can reach the two-thirds mark of 320&mdash;which would give it legislative dominance, despite the lack of a majority in the House of Councillors, which has some veto powers. International commentary on the policy platforms of the two parties has focused on the apparent lack of significant differences between them, raising doubts about whether the change in regime, in and of itself, will help Japan deal with the significant economic challenges it faces with respect to an extremely sluggish economy and a rapidly aging population.

Japan in transition

The Global Competitiveness Report of the World Economic Forum has become a ready reckoner for policymakers to know where their country stands and what measures are needed to improve matters. Over 100 tables measuring various attributes are grouped under 12 &lsquo;pillars&rsquo; on which a country&rsquo;s competitiveness edifice rests. The scores coming under the pillars make up the global competitiveness index and help determine the rank of a country. The report uses both hard data available from multilateral agency sources and the findings of the Forum&rsquo;s own global executive opinion survey. The latest report for 2009-10 has assimilated 13,000 responses from high-level executives in 133 countries.

Get the basics right

The numbers for the Index of Industrial Production (IIP) for July 2009 reinforce the perception that the economic recovery is gaining a firm foothold. Although the 6.8 per cent growth recorded over July 2008 was somewhat lower than in the previous month, both June and July indicate a sharp break from the sluggishness visible over previous months as the index veered from negative to marginally positive growth rates. Concerns about sustainability in the face of a weak monsoon persist. However, given the fact that July was a rather bad month as far as rainfall was concerned, the impact is apparently yet to be felt. Many forecasters expect the growth numbers to moderate a bit as the effect of the sub-normal monsoon sets in, but they support a relatively optimistic view of the economy. The most striking feature of the numbers is the fact that the manufacturing sector, which accounts for almost 80 per cent of the Index, is more or less keeping pace with the overall index.

Reassuring numbers

The economic future of West Bengal has received a second major blow with the state government cancelling a major information technology project that was to come up on the outskirts of Kolkata, one in which anchor investors like Infosys and Wipro had been allotted land. This comes after the cancellation of the Nano project of Tata Motors, which ended the state&rsquo;s attempt to emerge as an automobile hub. Both the projects have come to grief for the same reason &mdash; farmers&rsquo; disaffection over losing their land to proposed new projects. In the case of the Nano project at Singur, Trinamool Congress leader Mamata Banerjee led a successful agitation against state acquisition of fertile agricultural land.

Land dilemmas

Pranab Mukherjee should be complimented for emphasising the need for restraint while ministers spend public money, and indeed even their own money. Some of his colleagues have gone overboard and promised to travel in the cargo hold, while others have argued that such &ldquo;austerity&rdquo; (as if flying in an aircraft is an austere activity) does not achieve much economy in total government expenditure. Of course, but what about the message that goes out to citizens? Yet others argue that more money will be saved by addressing inefficiency and corruption. Perhaps, but why does that have to be a choice? These reactions quite simply miss the point.

Restraint, not austerity

The world owes a huge debt to Norman E Borlaug, who passed away at 95 in Texas on Saturday. Dr Borlaug, as is well known, was the agricultural scientist who triggered what came to be called the Green Revolution in several countries, by breeding high-yielding wheat seeds. But he was more than that, for he was first a humanist who campaigned relentlessly for eradicating world hunger. He gave up a promising career in DuPont to take up an assignment with the Rockefeller Foundation in Mexico, to conceive strategies for combating hunger in that country. It was this challenge that made him realise the need for raising crop yields through better seeds and production technologies. His natural instinct as a person born and brought up in the early part of his life on a farm stood him in good stead in evolving dwarf wheat strains that could give high yields when combined with fertiliser and irrigation.

A humanist first

To many, the collapse of Lehman Brothers was the defining moment in the trajectory of the Great Recession. At one level, it demonstrated the malignant force of excessive risk-taking. At another, though, it persuaded a great many people that an economic crisis was at hand and there was no time to lose in initiating a massive response. One year later, there is little question that the bottom of the trough has been reached and a slow crawl out is under way. Massive infusions of liquidity, the shoring up of the balance sheets of fragile financial institutions and, in some cases, fast-acting public spending combined to arrest and eventually reverse the post-Lehman slide. Now, the focus has begun to shift to exit strategies.

A year after Lehman

The resurgence of the monsoon in September, when it should normally have been on its way out, has lessened the concern about drought. But these rains have come so late in the season that wiping out the anticipated deficit in kharif output needs well-considered measures for this purpose. The strategy mooted by the National Rainfed Area Authority (NRAA), therefore, needs to be implemented meticulously. The plan involves maximising the yields of standing crops, especially in areas which have received good rainfall, and compensatory crop production in the pre-rabi and rabi seasons to make up for the kharif shortfall. More importantly, it envisages measures for conserving rainwater for subsequent use in irrigation and other purposes. The underlying objective, obviously, is to convert the challenge of mitigating the adverse impact of erratic rainfall into an opportunity to boost overall farm production, besides putting in place the infrastructure for rainwater harvesting.

Drought-proofing agriculture

Now that the Jet Airways pilots&rsquo; strike is over and the airline&rsquo;s services are back to normal, it is tempting to forget about the episode as yet another example of an industrial dispute getting resolved quite quickly after it boiled over. The strike, however, raises several questions which need to be addressed. For one, Jet&rsquo;s handling of the situation suggests that the airline needs serious lessons in human resource management. The pilots had given a month&rsquo;s notice to the management, during which nothing happened. Then, Jet sacked two pilots for forming a union, and then sacked two more, which forced the other pilots to stand by their colleagues. It would seem that the Jet management has not learnt anything from the fallout of its mass sacking of cabin crew last year, namely that people have to be dealt with, with understanding and sensitivity.

Lessons from Jet

Price controls have rarely been known to solve problems caused by supply-demand mismatch, without provoking attendant aberrations or unwanted consequences. Yet the power regulator has gone ahead and notified a price cap on short-term power trades. According to an order of the Central Electricity Regulatory Commission (CERC), issued on Friday, there will be a price cap of Rs 8 per unit on inter-state day-ahead power transactions. This is said to be a transient measure for a limited period of 45 days, triggered by the high price volatility observed in this segment of the market. The move is ostensibly to protect the interests of consumers while balancing the regulator&rsquo;s statutory obligation to ensure &ldquo;reasonable&rdquo; return for the investor. These investors are said to be comfortable with a selling price of no more than Rs 7-8 per unit.

No price caps, please

The new Goods and Services Tax (GST) is broadly as announced by Pranab Mukherjee in his Budget speech in July, and will comprise two parallel systems. The central government&rsquo;s system will replace the existing central excise framework and service tax structure, while also encompassing some other taxes that are currently not offset. The more difficult part of the transition is on the part of the states, which will have to extend the intra-state Value Added Tax (VAT) that was implemented in 2005 with an inter-state GST. This means that state-level taxes paid on inputs (goods and services) procured from State A will be deductible for the procurer located in State B. This is an enormous administrative challenge but, even before that hurdle is reached, some basic principles for harmonising tax rates and procedures have to be accepted and given effect to.

The best vs the good

After the head of the Commonwealth Games Federation, Michael Fennell, held out the veiled threat of taking away the Games from India (due to be held in October next year), the government has been in a tizzy. Central ministers Suresh Kalmadi and MS Gill and Delhi Chief Minister Sheila Dikshit have quickly gone on record to say that things will fall into place well in time. That is, of course, a lot better than earlier ministerial statements, which likened the Games to an Indian wedding where everything remains fluid till all the pieces fall into place at the last minute. This is an odd way to explain away delays of several months, and is in fact a way of escaping a proper debate on what has gone wrong and why. It is a sorry thought that the government&rsquo;s ability to deliver has not improved in the 27 years since the Asian Games of 1982. Then too, preparations were behind schedule, and the situation was saved only after the government tasked Jagmohan with getting things in order.

The Fennell effect

It seems odd at first glance, when the annual World Investment Report has more than half its pages devoted to (of all things) a special focus on foreign investment in agriculture.

Trends in agriculture

The real story about the Krishna-Godavari basin is not the spat between the Ambani brothers and the companies that they run, but what the gas discoveries there mean for the country&rsquo;s energy scenario. This is a question that goes beyond the initial question of improving energy security by raising the level of energy self-sufficiency. The director-general of hydrocarbons, VK Sibal, has been reported as saying that the gas output from the field, being managed off the coast of Andhra Pradesh by Reliance Industries, could be nearly four times the levels committed by the company so far, namely 80 million metric standard cubic metres per day (mmscmd); the current level of production is about 36 mmscmd. If indeed it is true that output could nearly quadruple, to about 300 mmscmd, the enormous significance of that figure needs to be understood.

Bettering Bombay High

The real question with regard to the border with China is not whether there have been Chinese intrusions, and whether (as government spokesmen have said) they have been no more than last year (in which case, was last year&rsquo;s level of intrusions acceptable?). The real question is, what if Chinese troops do decide to come over the border? The vital issue when it comes to defence is not immediate intent or action, but capability.

Not quiet on the border

The Reserve Bank contention that mergers and acquisitions among banks should to left to it, and not the newly functional Competition Commission, is valid and the necessary changes in the law or rules should be made. Banks are different from other businesses. After last year&rsquo;s financial crisis, it has become even clearer than before that once financial institutions get too big, they cannot be allowed to fail.

RBI or Competition Comm?

If Kaushik Basu of Cornell University is chosen as the next chief economic advisor in the finance ministry, and Subir Gokarn of Standard and Poor&rsquo;s as deputy governor in the Reserve Bank of India, the government would have made a significant departure from the convention of filling such top-level positions with economists who have prior experience of working within the government system.

Too few good men

The third G-20 summit begins on Thursday amidst a general sense of relief about the state of the global economy. The group will take credit for having appreciated the severity of the crisis last November and evoking very strong policy responses from its member countries, which have clearly proved to be effective.

The wisdom of restraint

Whatever the Collegium of Supreme Court judges decides on the Karnataka High Court Chief Justice PD Dinakaran case, it is unlikely that it will be the end of the matter. If it decides against his elevation to the Supreme Court, it will be accepting the validity of the allegations against him and this will throw up the obvious question as to how he became the Chief Justice of the Karnataka High Court in the first place and what, if any, is the mechanism to check corruption in the higher judiciary. If however the Collegium dismisses the allegations as untrue, it will have to face wrath of a bar association that includes some of the most respected lawyers in the country, who are convinced the allegations have a basis in fact. This is not the first time the judiciary has been put in the dock.

Judges, judge thyselves

Incisive columns and editorial comment by top opinion leaders

Page 564 - Editorial Comment