Economic growth continues to trend downwards and trends in corporate earnings have not been encouraging either. For the first time in three years, core revenues for India&rsquo;s top companies grew by single digits in the quarter ended September 2012. Yet the stock market is buoyant, giving out a distinctly different signal. The biggest factor pushing the markets up is that foreign institutional investors (FIIs) continue to buy Indian equities by the bagful. During the year so far, FIIs have invested nearly $21 billion (about Rs 1.14 lakh crore), and many foreign brokerages have revised their growth estimates for India upwards for the next year. Most feel the central bank will cut rates soon, which should help, and that consumption will remain resilient, helping anchor demand. Stock markets are never the best indicators of the real economy but they do provide vital clues about future business conditions.

Green shoots, from afar

Business Standard

The United Nations&rsquo; 18th Conference of the Parties (COP18) on climate change ended its fortnight-long conference in Doha with, as always, minimal and marginal progress. It is easy to view the results of this conference as depressing. Still, there were some minor achievements.

Postponed, again

The latest report from the United Nations&rsquo; AIDS body notes that India has managed to bring down the count of people affected by HIV/AIDS by as much as 57 per cent. That&rsquo;s an encouraging and creditable achievement. But it should not make the authorities overconfident. Slacking off in the campaign for the prevention and treatment of AIDS would quickly erode any gains made so far.

A changing enemy

After eight-and-some years of minimal, marginal and timid reform, the United Progressive Alliance (UPA) suddenly seems to have discovered the possibility of fixing welfare delivery through cash transfers and the Unique ID system, and has pushed for a rapid roll-out of the Aadhaar framework. It is due to be &ldquo;rolled out&rdquo; by January 1 &mdash; more precisely, as Planning Commission Deputy Chairman Montek Singh Ahluwalia told this newspaper, the digitisation of the databases for some schemes in some districts will happen over January. Within six months, the government claims most of the 29 schemes that are part of the initial Aadhaar framework will work in most of the selected 51 districts.

The pressures on Aadhaar 

When Sachin Tendulkar played the Ranji Trophy opener earlier this year, it was considered a momentous event, enough for reports on the sports pages of major dailies. That&rsquo;s because the last time he played in a Ranji match was January 2009. It is significant that Mr Tendulkar&rsquo;s 2012 participation in India&rsquo;s oldest domestic cricket tournament was driven by a need to get into form ahead of the home series against England. Every other Indian cricketing star replicates this rare appearance in domestic tournaments. Once they make it into the national team via the domestic circuit, they are conspicuous by their absence in the tournaments that elevated them. The result is that Indian cricket periodically suffers a drought of cricketers with sufficient international exposure to hone their skills before they enter the big league.

Passing the Test

India&rsquo;s road to free trade with the world has been bumpy and slow. Partly, this is because the Doha round of the World Trade Organisation negotiations, while still technically alive, is pretty much on life support. However, it is also true that bilateral and multilateral negotiations with big trade blocs like the European Union (EU) and the Association of South East Asian Nations (Asean) have faced many hurdles. Some of these are the product of domestic political exigencies that come in the way of attempts to open up trade everywhere. But much of the reason is that, simply put, the Indian state&rsquo;s lack of capacity hampers its ability to move forward speedily with delicate negotiations. That&rsquo;s partly why the agreement with Asean to extend free trade to services and investment took several additional years to be concluded, although the broad principles were largely agreed upon early on.

Not enough minds

The Central Statistics Office has released the quick estimates of industrial production for October this year, and they have startled most observers. The overall index of industrial production, or IIP, has risen 8.2 per cent when compared to October 2011. Of course, October of 2011 was a particularly bad month for the IIP &mdash; it shrank just under five per cent on a particularly poor performance from the capital goods sector.

Don't celebrate yet 

It has never been clearer than during the ongoing commotion about Walmart&rsquo;s lobbying expenses that the Indian polity is yet to reach a certain level of maturity. After losing the debate on foreign direct investment (FDI) in multi-brand retail in Parliament, the Opposition has eagerly seized upon Walmart&rsquo;s disclosure to the US Senate that it has spent $25 million (approximately Rs 135 crore) since 2008 on lobbying (in the US, not in India) for aims including gaining &ldquo;enhanced market access in India&rdquo;. Nancy Powell, the American ambassador to India, pointed out in a television interview that the money was used by Walmart to lobby for 80 issues, of which FDI in Indian retail was just one. Still, the Bharatiya Janata Party has demanded a &ldquo;time-bound judicial probe&rdquo;; others have said a joint parliamentary committee should be set up to investigate.

Bring lobbying overground 

The civil aviation ministry has decided to launch an airfare monitoring cell and push domestic carriers to reduce fares so that the passenger load factor, or PLF, goes up. The argument is that, although this is the busy season, average PLF is declining; a cut in fares will improve it and help the carriers make money. The cell, Civil Aviation Minister Ajit Singh told this newspaper, will &ldquo;monitor fares closely and make them reasonable and transparent&rdquo; and will not regulate fares. Earlier, in August, the finance ministry had asked banks to put pressure on real estate developers to cut prices. And last week the Cabinet approved changes in the National Pharmaceutical Pricing Policy that will reduce the prices of 348 essential medicines and their various combinations. The new prices, which some estimates suggest could be 50 to 70 per cent below current prices, would come into effect by April next year.

Endless interventions

The distance between North Block and Mint Road has been growing for quite some time. The latest evidence of tension is the finance ministry&rsquo;s decision to introduce a clause in the Banking Amendment Bill allowing banks to trade in commodity futures, despite the central bank&rsquo;s reservations on the issue. The ministry has argued that this will enable banks to hedge exposure to agricultural lending arising out of price fluctuations. While it is the ministry&rsquo;s prerogative to submit to Parliament the laws under which regulators like the Reserve Bank of India (RBI) will have to work, it is possible that it has not listened closely enough to the regulator&rsquo;s arguments, as a major stakeholder. The RBI says the Forward Markets Commission still does not have statutory powers for compulsory registration of traders and brokers, which makes it difficult to curb illegal trading and prevent excessive speculation.

A growing distance

One of the consequences of a government that has a paralysingly slow reaction time to major developments is that some issues of importance to the public are not discussed in Parliament through regular debates on government-sponsored legislation, or as part of Question Hour. Towards the end of last week, much attention focused on one such case in the Rajya Sabha, where a Private Member&rsquo;s Bill seeking amendment to the controversial Information Technology Act was debated.

A history of neglect 

The meeting of the Union Cabinet last Thursday was, by the standards of the United Progressive Alliance (UPA) government at least, quite effective. In what Rural Development Minister Jairam Ramesh has called the UPA&rsquo;s &ldquo;slog overs&rdquo;, several policy changes were announced, and proposed laws cleared. Perhaps the most important was the approval of the long-awaited changes to India&rsquo;s colonial-era land acquisition law.

A necessary compromise

It is possible that Bahujan Samaj Party chief Mayawati may have forgotten a famous speech by B R Ambedkar about the &ldquo;grammar of anarchy&rdquo; when, in an outburst last Wednesday, she berated Vice-President and Rajya Sabha Chairman Hamid Ansari. That is ironical since that speech, by a man assiduously commemorated otherwise, referred to constitutional democracy and the need to jettison the politics of the street.

Anarchy in Parliament 

Retail investors shunned the Bharti Infratel initial public offering (IPO). Thirteen blue-blooded investment bankers marketed the issue in India and abroad; while institutions responded overwhelmingly, only 19 per cent of the shares reserved for small investors were bid for. There are several theories to account for this poor response. One blames the promoters&rsquo; track record &mdash; how 10 years ago the Bharti group unceremoniously delisted one of its companies without regard for small investors. Other theories claim poor business prospects for the company and steep pricing. A third set says retail investors lack confidence.

Draining out money

The Union Cabinet has approved what appears to be a major turn towards, in effect, a 21st-century industrial policy. The approval of &ldquo;modified SIPS&rdquo; &ndash; where SIPS stands for Special Incentive Package Scheme &ndash; is expected to cost Rs 20,000 crore in the years to 2017, according to the Department of Electronics and Information Technology&rsquo;s plan.

Picking a winner

The lack of consensus on a new International Telecommunication Regulations (ITRs) treaty at the recent world conference in Dubai centred on key differences in attitudes to internet governance. India was one of about 80 countries that refused to sign the new ITRs, which would have given national governments more control. At present, the internet runs on centralised addressing administered by a California-based NGO, the Internet Corporation for Assigned Names and Numbers, or ICANN. It manages the Domain Name System, assigning DNS names and Internet Protocol (IP) addresses to all websites, and is funded by the US Department of Commerce, a legacy of the internet&rsquo;s origins as a US defence research project in the 1960s. Given the US&rsquo; strong constitutional free speech commitment, it is difficult to prevent content being placed online. The current architecture doesn&rsquo;t merely enable free information exchange.

Keeping the internet free

The Reserve Bank of India (RBI) released its mid-quarter monetary policy review on Tuesday and, as was widely expected, it kept the policy rates unchanged. The repo rate under the liquidity adjustment facility for banks will remain eight per cent, and the cash reserve ratio (CRR) will remain 4.25 per cent of their net demand and time liabilities. Whatever small expectations had been raised following a moderation in wholesale price inflation in November &ndash; which reached its lowest level in months at 7.24 per cent &ndash; were dashed. It is true that consumer price inflation, driven by primary goods prices, remains high at 9.9 per cent, much higher than in comparable economies &mdash; the RBI has shifted emphasis recently from tracking &ldquo;core&rdquo; inflation to tracking consumer prices.

No support

For most of its second term in office, the United Progressive Alliance (UPA) government has been a study in inaction. Its Cabinet has sent out mixed signals on policy; it has been unable to push legislation through Parliament; its decision-making bodies, mainly groups of ministers, have repeatedly been unable to evolve consensus on difficult issues; and even its control over basic administrative matters has been weak and inefficient.

UPA's second wind

The Companies Bill, 2011, cleared by the Lok Sabha on Tuesday, has many forward-looking provisions: the option to set up one-person companies, which will help bring the unorganised sector under the corporate umbrella; penalty for auditors found involved in frauds; class action; protection for whistleblowers; easy exit for minority shareholders if the articles of association are changed; and strengthening of the Serious Fraud Investigation Office.

Still not a finished product

In one of the most anticipated and predicted election results of recent times, Gujarat Chief Minister Narendra Modi has been returned to office for the third successive time, with by all accounts a largely unchanged majority in the state Assembly.

Beyond the fog of spin

If the current government needed one index of how slowly economic reform has progressed in India it need look no further than its doorstep at the bottom of Raisina Hill where a protest, mostly by young men and women, against a brutal gang rape in New Delhi has descended into a pitched battle with the police. For many, the protests are overdone, the argument being that similar crimes occur elsewhere in the country and are rarely highlighted thus. But the intensity of middle-class anger in this instance is instructive; it focuses on repeated crimes against urban professional, working women, emerging from the social purdah that society has long imposed. In a sense, therefore, it represents a voice for their oppressed, silent sisters everywhere in India.

Demonstration effect

Incisive columns and editorial comment by top opinion leaders

Page 605 - Editorial Comment