Eventually, the reshuffle of the Union Council of Ministers was a far larger exercise than anyone expected. Seven ministers resigned in advance, allowing the leadership of the United Progressive Alliance (UPA) enough space to substantially rework its team in what the prime minister said would likely be the last reshuffle of portfolios before the next general elections. Those hoping for a single, coherent narrative from such a large exercise are likely to be disappointed; as always, the final moves will have been a product of some peculiar combination of political necessity, regional balancing, reward for loyalty and punishment for non-performance.

A mixed bag

Business Standard

The government&rsquo;s initiative to begin the spadework for reforming inter-state trade and commerce by removing unwarranted barriers in the flow of goods and services across the country is a welcome move. The country&rsquo;s internal market for agricultural, industrial and other goods and services has been fragmented by varying systems of taxation and a host of other trade-unfriendly rules and formalities.

Common market dreams

The reshuffle of the Union Council of Ministers cannot, by any means, be considered sufficient to reinvigorate a United Progressive Alliance (UPA) government viewed as either moribund or beset by paralysing inter-ministerial wrangling. The reshuffle, which was unnecessarily and excessively delayed, comes a full six weeks after the government&rsquo;s much-discussed administrative measures &ndash; a slight increase in diesel prices, a cap on the number of cooking gas cylinders supplied for domestic use, and liberalisation of foreign direct investment in retail and civil aviation &ndash; were announced. Those measures were largely welcome, but were too little and too late. Unless the reshuffle is followed by sufficient speedy activity to follow up on the reforms push, neither the October reshuffle nor the September measures are likely to lighten the November gloom.

Is this it? 

The northeastern coast of the United States of America has a long history of hurricane- and storm-related warnings that eventually turn out to be a bit of lightning, a spell of rain &mdash; almost literally damp squibs. The alarmed response to the arrival of Hurricane Sandy &ndash; the New York City subway shutdown, residents&rsquo; crazed stockpiling of essentials, the preventive switching off of some utilities and the cancellation of most international flights to New York &ndash; could be seen as just another in a long line of such warnings. That would be a severe mistake. Indeed, the weather in the US&rsquo; Atlantic seaboard for once deserves the media coverage that it is likely to get in India. For this is already no ordinary hurricane. It has shown patterns and characteristics that no Atlantic storm in recorded meteorological history has.

Yes, it's Frankenstorm 

The Supreme Court&rsquo;s decision to seek views of different stakeholders before considering a 10-year moratorium on field trials of genetically modified (GM) crops, as suggested by the technical committee it had appointed, is welcome. The committee&rsquo;s recommendation had caused widespread disquiet among the scientific community, a section of the seed industry and farmers.

Bans not the answer 

The Reserve Bank of India, in its review of monetary policy for the second quarter of the financial year 2012-13, has resisted calls to cut the policy rate. Instead, it has reduced the cash reserve ratio (CRR) of banks by 0.25 percentage point to 4.25 per cent of their net demand and time liabilities. The action taken as a result of this review is, thus, the same as was taken in mid-September, when the policy rate was held constant but the CRR was cut marginally.

Steady as it goes 

Early last month, as it was trying to contain the fallout from the Assam riots, the government notified a draft framework for social media engagement as part of the National e-Governance Plan (NeGP). This was long overdue and the key word is &ldquo;engagement&rdquo;. The only real way to effectively counter the misuse of social media and SMS/MMS is to respond via the same channels and to do so more credibly and effectively. The draft seems to recognise the need for this shift in perception.

Taming Twitter 

On Friday, the Union ministry of statistics released estimates of gross domestic product for the first quarter of this financial year. Between April and June of 2012, GDP grew 5.5 per cent compared to the equivalent quarter in the previous year, which was better than expected; in the previous quarter, January-March 2012, GDP had grown 5.3 per cent year-on-year, and so the performance was marginally better. This was the first uptick in quarterly growth for a year. However, it is more than clear that there are few grounds for optimism; even those within the government, such as Montek Singh Ahluwalia, have been hesitant to call this a &ldquo;rebound&rdquo;. It is far from clear that growth is poised to recover. Indeed, the signs suggest otherwise. Most visibly, overall growth was not matched by growth in gross fixed capital formation, which grew merely 0.7 per cent between April and June. In the same quarter of last year, gross fixed capital formation had grown 14.9 per cent.

Centre's only choice 

Friday&rsquo;s Supreme Court order against the massive money-raising activity by the Sahara group &ndash; two Sahara group companies have been ordered to repay their investors Rs 17,000 crore plus interest calculated at 15 per cent &ndash; raises questions for both lawmakers and regulators. Most importantly, is India&rsquo;s regulatory framework equipped to consistently detect, halt and penalise such organised efforts? The court&rsquo;s order lays out how two Sahara group companies made &ldquo;a pre-planned attempt&rdquo; to &ldquo;bypass the regulatory and administrative authority&rdquo; of the Securities and Exchange Board of India, or Sebi. In this case, a few Sebi officials relentlessly pursued the case; will similar doggedness be always on display? The regulator should take steps to institutionalise the elements that led to this rare victory in court.

Learning from Sahara

State Bank of India (SBI) Chairman Pratip Chaudhuri has publicly joined issue with the banking regulator, the Reserve Bank of India (RBI). Mr Chaudhuri questioned the central bank&rsquo;s practice of levying a cash reserve ratio, or CRR, by which a portion of bank deposits is impounded by the central bank, thus making credit both dearer and more scarce. This is akin to a schoolboy arguing with the headmaster. While bank chiefs routinely fall in line with what comes out of the RBI, the fact that the SBI chief is akin to the school head boy explains why perhaps only he could dare to go public. Banks, particularly the public sector ones, are looking for every bit of regulatory leeway they can get to make their performance look better. Mr Chaudhuri has said his aim is to raise a debate on an issue over which other bank chiefs hold similar views.

Debating cash reserve ratio

There is no question that the proposed General Anti-Avoidance Rules, or GAAR, need to be reviewed. To the extent that they give excessive discretion to the tax assessment authorities, they are clearly unsuitable for a country like India where the tax department has often been accused of harassing its taxpayers. Compliance with tax requirements is difficult enough currently; allowing more levers for potential harassment to income tax officers is a dangerous step.

Don't delay GAAR

The Prime Minister&rsquo;s Economic Advisory Council (PMEAC) has rightly stressed in its recent Economic Outlook report the need for agricultural reforms and cutting down subsidies on power and water. Because reforms have not been introduced, agricultural growth in India has lagged that of other fast-developing countries. It is noteworthy that China began its journey towards economic transformation with institutional reforms in agriculture, by altering its land tenure system and freeing the prices and marketing of most farm commodities. In contrast, India has focused on industrial, financial and trade sector reforms, leaving agriculture virtually untouched. Even subsequent bids to reform the farm sector have been half-hearted and misguided. Unsurprisingly, the long-term trend rate in the growth of foodgrain production continues to be under three per cent, which compares poorly with that in India&rsquo;s neighbouring countries.

Stagnating agriculture 

The government&rsquo;s coal mining policy is now widely acknowledged as problematic and clearly needs reform. Changes are required both in the short and medium term &ndash; as correctives for the errors in procedure highlighted by the report of the Comptroller and Auditor General (CAG) &ndash; and in the long term, to ensure such problems do not recur. Attention has been focused on whether or not the coal block allocations highlighted by the CAG will be cancelled.

Coal's way forward 

Users of the 28-kilometre-long Delhi-Gurgaon expressway will not be required to pay toll tax for the next fortnight, thanks to an order the Punjab and Haryana High Court issued on Tuesday. The court was evidently annoyed with the failure of Delhi Gurgaon Super Connectivity Limited, which operates the expressway, to devise a more efficient method of toll collection and ease traffic congestion at the toll plazas.

Fixing expressways

The ongoing investigations into wrongdoing in the allocations of coal blocks for captive mining are far from complete. The Central Bureau of Investigation (CBI) has so far filed five FIRs, naming, among others, a Congress member of Parliament, Vijay Darda. Mr Darda and his brother Rajendra Darda, who is education minister in the Congress-Nationalist Congress Party alliance government in Maharashtra, have been named for criminal conspiracy and misrepresentation of facts.

Behind the curve

For the Indian Railways, the chickens are already coming home to roost, even though more than half the financial year still lies ahead. The national carrier has undertaken to cut investment expenditure across the board to make up for a revenue shortfall of over Rs 3,000 crore. This is mainly the result of current Railway Minister Mukul Roy rolling back key fare revisions announced in the Railway Budget. His predecessor, Dinesh Trivedi, had to step down and pay the price for defying his party leader, Mamata Banerjee, by revising fares, which had not been changed in years. In the process his efforts to turn the Railways around were nullified, and his successor has put the Railways firmly back on the path of inexorable decline.

Railways goes downhill again

The European Central Bank closed a landmark meeting on Thursday with its chief, Mario Draghi, saying that &ldquo;the euro is irreversible&rdquo; and that the Bank would prop it up by buying &ldquo;unlimited&rdquo; amounts of bonds from troubled euro zone governments. This is a departure for the conservative ECB &mdash; though it has hedged its support of the besieged euro-zone periphery with conditions.

The world of recession

The sharp reaction from the Prime Minister&rsquo;s Office to a report in The Washington Post last week that said that Prime Minister Manmohan Singh was &ldquo;depressed&rdquo;, &ldquo;silent&rdquo; and a &ldquo;tragic figure&rdquo; is in keeping with its noticeable hypersensitivity to how Dr Singh is portrayed in the foreign press. The report itself was not novel in its content &mdash; indeed, some of the most damning quotes, from historian Ramachandra Guha, had previously appeared in the Delhi-based monthly The Caravan last year &mdash; but it nevertheless made headlines in much of the Indian media. In some ways, therefore, the PMO&rsquo;s reaction was in keeping with that of some others. Several questions are thrown up by this set of circumstances.

Look closer to home  

The visit of External Affairs Minister S M Krishna to Pakistan has produced an agreement to liberalise the visa procedures for travellers between the two countries. While some of the processes will make pilgrimages and visits for tourism easier, much attention has focused, rightly, on the significant easing of restrictions on business travel. It has been reported that business visitors with an income of more than Rs 50 lakh or representing a business with a turnover of over Rs 30 crore will be eligible for a one-year multiple entry visa allowing them to visit up to 10 cities. In addition, the onerous requirement for most visitors, that they report their presence to the local police, has been eased for travellers on business visas. This is an important step forward for economic engagement.

Towards interdependence

The food and consumer affairs ministry has proposed that stockholding limits on pulses and edible oils be retained for another year beyond October. In addition, it wants these curbs extended to rice, too. This is misguided, and will cause more problems than it wants to resolve. Instead of controlling prices, as is intended, these restrictions on trade will instead push them upwards. This is straightforward economic logic; these measures will severely constrain supply. In the shorter run, they will hurt growers of pulses and oilseeds by keeping trade out of the mandis during the post-harvest kharif marketing season that begins from end-October. As it is, these farmers usually don&rsquo;t even receive the minimum support prices for want of reliable arrangements for the procurement of these commodities. On paper, some apex cooperatives are supposed to lend price support to pulses and oilseeds, but they operate only in a few markets and buy only small quantities.

Repeating a mistake

In an important move towards transparency, Prime Minister Manmohan Singh last year reminded his council of ministers to declare their assets, movable and immovable, and said that the declarations would be put up online. Declarations for 2012 are now online and these should be welcome. But they also reveal that many lacunae remain in terms of full and clear disclosure.

Disclosing - and concealing 

Incisive columns and editorial comment by top opinion leaders

Page 611 - Editorial Comment