Most people would agree that the correct response to the Maoist challenge in West Bengal&rsquo;s Lalgarh was to crush the rebels and to re-establish the government&rsquo;s authority in the area, a task which has been done after an unconscionable delay of several months. Whatever the reasons for the disaffection of the local population, the government cannot afford to cede its authority.

Lalgarh lessons

Business Standard

Just as there are many ways to define poverty, there is now an a la carte menu of poverty estimates to choose from. Arjun Sengupta, the economist and member of the Rajya Sabha, declared a few years ago that an overwhelming 836 million people in India lived on a per capita consumption of less than Rs 20 a day (or Rs 600 in a month). This startling figure, which meant that 77 per cent of the country was below the poverty line, has been much loved by the Left after it appeared in a report on the Conditions of Work and Promotion of Livelihood in the Unorganised Sector.

Poverty of thought

Even as controversy rages over the transgenic Bt-brinjal, Indian scientists have developed a genetically modified (GM) fish, which could be the first genetically engineered animal to get into the human food chain. The Hyderabad-based Centre for Cellular and Molecular Biology is reported to have altered the genes of the popular Rohu (or carp), to boost its production. The modified Rohu is claimed to have a synthesised gene which stimulates the production of a growth hormone that makes the fish bigger and grow faster. The scientists who have developed this fish maintain that they have not used any alien gene; instead, they have inserted a gene into the Rohu genome which is a mashed cocktail of its own genome. This makes it auto-transgenic, and not the usual transgenic product which gets a gene from an alien species inserted into its DNA.

Now, GM fish!

The annual Economic Survey is traditionally tabled in Parliament a couple of days before the Budget is presented. This year, the attention being paid to budgetary prospects is particularly high; consequently, the Survey has come under the spotlight far more than in a more &lsquo;normal&rsquo; year. That said, the utility of the Survey as an assessment of the state of the economy has dwindled over the years, as the frequency with which economic data is released has increased (monthly fiscal deficit numbers, quarterly GDP assessments, regular tax revenue updates, et al), and as the number of institutions putting out similar reports has multiplied. In such a context, there is very little that the Survey can disclose regarding macroeconomic conditions that is not already known.

Reaching for the stars

Petroleum product prices usually get hiked shortly before the Budget is presented, and the government has been true to form in announcing the hard decisions ahead of the big day, so that the finance minister can be considerate when it comes to taxation. The price hike this time is larger than usual, but leaves out what are considered the more politically sensitive segments, kerosene and cooking gas; these of course happen to be responsible for the bulk of the petroleum sector&rsquo;s subsidies.

Oil slick

Designer Suneet Varma came out in the open about his sexuality at a young age. Though that did not stop him from being accepted by society, Mr Varma was ecstatic when the Delhi High Court ruled on Tuesday that treating as a crime consensual sex between adults of the same gender was a violation of the fundamental rights protected under the Constitution. &ldquo;We&rsquo;re free at last&rdquo;, Mr Varma said in a televised interview.

'You can't legislate love'

A good deal of interest in the Budget that will be presented to Parliament later today, will be focused on what exactly the finance minister says with regard to the implementation of the goods and services tax (GST). P Chidambaram, when he was finance minister, had promised that the new, integrated tax would be introduced by April 1, 2010&mdash;a deadline that faces many challenges because of inadequate preparatory work.

The best vs the good

If Lalu Prasad had a Shakespearean bent, he might have been tempted to recall Mark Anthony&rsquo;s funeral speech for Julius Caesar (&ldquo;The evil that men do lives after them, the good is oft interred with their bones&rdquo;) as he listened to his successor present the Railway Budget for 2009-10. Over the course of his five-year term, Mr Prasad received enormous praise for taking the system from virtual bankruptcy to a considerable degree of financial stability. Of course, there were many things remaining as far as investment in capacity and safety was concerned, not to mention the quality of services; but the steady decline in the operating ratio (or, equivalently, increase in operating margins) was on its way to providing the railways the financial cushion to begin addressing these as well. The slowdown during 2008-09 put some hurdles in the way, though.

Too good to last

The only explanation for the broad calculation underlying the Budget is that the government is more nervous about the state of the economy than it lets on. A fiscal deficit of 6.8 per cent of GDP, up from 5.5 per cent postulated in February&rsquo;s Interim Budget, means an additional stimulus of nearly Rs 80,000 crore. No government, already saddled with a big public debt overhang, undertakes such spending unless it feels compelled by the circumstances.

Counter-productive stimulus?

A day later, it is not clear if Finance Minister Pranab Mukherjee has budgeted conservatively, or aggressively, or whether a combination of the two cancels out. For starters, the assumption of nominal (ie real plus inflation) GDP growth of 10.1 per cent for 2009-10 seems on the low side if it is assumed, as Mr Mukherjee said, that the worst of the financial crisis is over. Against this backdrop, the assumption of poor tax buoyancy in 2009-10 is confusing.

Squaring the circle

A country is often judged by the way it treats its minorities. By that yardstick, China, the rising star of the world economy, can be considered a signal failure. Beijing&rsquo;s crackdown in the remote and backward Xinjiang province has served as a stark reminder of this shortcoming.

Minor chords, major discords

The big issue thrown up by the Budget for 2009-10 is the extent of government borrowing planned for the year. At close to Rs 400,000 crore of market borrowings, it is about four times what was initially planned for the last fiscal year. This is a stupendous figure when seen in another context as well, the size of India&rsquo;s banking sector. The last financial year saw an increase in total bank deposits of well over 20 per cent, or about Rs 650,000 crore. If the government were to swallow Rs 400,000 crore (or 60 per cent of such a figure) this year, it would leave precious little for anyone else. Bear in mind that the government&rsquo;s Budget is equal to only 17 per cent of the GDP figure, and that the statutory requirement for banks is to hold government and other approved paper (including state government paper) of just 25 per cent. Pre-empting 60 per cent of bank resources for just the Centre would be therefore an extraordinary situation.

Feeding the government

It is a pity that the Delhi government&rsquo;s move to ensure safe disposal of mercury generated by the healthcare sector and compact fluorescent lamps (CFL) remains in limbo, because of glitches in collecting discarded material. The Swedish firm roped in by the government for setting up a high-tech mercury recycling unit is reported to have developed cold feet as it may not get enough waste to process.

Mercury poisoning

A part of the raison d&rsquo;etre of the Unique Identification Card (UID) project, given to Nandan Nilekani to implement, is to facilitate a more effective delivery of government services (through more accurate identification of the intended beneficiaries), or paying the equivalent value in cash hand-outs. Given the vast budgets for the programmes that would benefit, and the scale of leakages that is widely believed to exist, the UID project would (or should) help the government to save tens of thousands of crores of rupees. Once enough UID had been issued to attain critical mass, the government would (or could) transfer funds to these smart-cards, using technology that already exists. At one stroke, as it were, the government would save on the vast overheads involved in service delivery and supervision, as well as the leakages.

NREGA vs Nilekani

That a sun-soaked country like India should invest in solar energy is a no-brainer. That it should build green, energy-efficient buildings while conserving scarce water resources is also an obvious thing to do. It should also invest in afforestation and practise sustainable agriculture. These are some of the initiatives that form the National Action Plan on Climate Change, or NAPCC. What is called an action plan is in fact a wish-list of desirable objectives; still, it is a smart way to focus energies on doing what officials term as &ldquo;no-regret&rdquo; measures while putting the country on a higher moral ground at the climate change negotiating table.

Betting on the sun

The G-8 summit in Italy has turned out to be more eventful than most meetings of this group. There is some movement forward on the two live global issues that have been the subjects of protracted negotiations (climate change since the late 1990s, and the Doha Round of trade talks from early in this decade), and a setback for India in the nuclear field. The broader message is that the need to enlarge the G-8, broadly recognised by most countries, has become more obvious than ever. The main topics discussed at the G-8 cannot be brought to any meaningful conclusion without the involvement of the G-5. After all, at least two economies in the G-5 (China and Brazil) are bigger than some who are in the G-8, and India is not far behind. China, Brazil and India also happen to be among the five most populous countries, and among the seven geographically largest.

Time for a G-11

IIP points to beginnings of a narrow-based recovery.

Gaining ground

Budget merely repeats last year&rsquo;s changes.

Old urea in new packing

India&rsquo;s urban population is projected to go up by around 100 million in the next 12 years; that means urban space and facilities equivalent to at least seven Mumbais will have to be created. The challenge is making governments at the Centre and in the states start focusing on the needs of towns and cities, in part because more voters live in them than before. In the latest Budget, for instance, the finance minister has introduced a low-cost housing programme (named inevitably after Rajiv Gandhi) that is grandly intended to abolish slums in five years. The likelihood of this happening can be gauged from the fate of that flagship programme, the Jawaharlal Nehru National Urban Renewal Mission, which has used only a third of the funds made available during four out of its seven years.

Daunting urban challenge

Accidents happen in large construction projects, and too much should not be read into isolated episodes. Also, the Delhi Metro Rail Corporation (DMRC) has been one of the more successful infrastructure projects in not just the capital but the whole country&mdash;work of a high quality done on schedule, within cost, and until recently with a good safety record.

Off the rails

The debate on the economic condition of the US has most recently focused on the effectiveness, or lack of it, of the fiscal stimulus package that the Obama administration initiated very early into its term. There is a growing body of opinion that says the $787 billion boost is simply not large enough. Although there has been much talk of green shoots in the past few weeks, as indicators like consumer confidence and housing starts have begun to stabilise, the one persistent source of concern has been unemployment. In June, the economy lost a further 467,000 jobs, less than the 700,000 job losses per month in the first quarter but still symptomatic of severe recession. This raised the unemployment rate to 9.5 per cent, a level not seen since the recession of the early 1980s.

Withering shoots?

Incisive columns and editorial comment by top opinion leaders

Page 568 - Editorial Comment