The market regulator, the Securities and Exchange Board of India, or Sebi, has a key role to play in ensuring that a larger proportion of household savings are channelled into investments. Yet Sebi has taken only tentative steps in this regard. Household savings account for over 23 per cent of GDP and over 72 per cent of all national savings. But only five per cent of household savings (about 1.2 per cent of GDP) are in shares and debentures. And most of this is parked in low-yield assets like bank deposits, insurance and post office savings. Even at the bull market peak of 2007-08, households never held more than seven per cent of savings in equity. This must change if future growth and investment projections are to be met.

Wasted efforts

Business Standard

By successfully putting two foreign satellites into orbit on its 100th mission, the Indian Space Research Organisation, or Isro, may have shown its cost-effectiveness as a commercial satellite launcher &mdash; but has also revealed how far it must yet go to pose a real challenge to its competitors. Isro&rsquo;s satellite-launching cost per kg of satellite weight is reportedly around $20,000 (approximately Rs 11 lakh), on the low side of global average costs for commercial launches &mdash; which are between Rs 11 lakh and Rs 28 lakh a kg depending on the orbit location and other parameters. However, cost is just one of the many criteria for success in the multi-billion dollar international commercial space market. That market is dominated by launchers capable of handling satellites that are much heavier than the ones carried by Isro&rsquo;s Polar Satellite Launch Vehicle PSLV-C21 on this 100th flight.

Premature congratulations?

The Supreme Court has ruled that if publishing news concerning a trial creates &ldquo;a real and substantial risk of prejudice to the proper administration of justice or to the fairness of trial&rdquo;, the court could allow a postponement of its publication through an appropriate order.

Tilting the balance

Estimates for July 2012&rsquo;s industrial production are out and have disappointed even low expectations. The index of industrial production, or IIP, grew 0.1 per cent compared to July 2011. It shrank 1.8 per cent year-on-year in June 2012; thus, altogether, the growth in industrial production between April and July 2012 as compared to the previous year is also 0.1 per cent. Essentially, industry is stagnating.

No policy space?

The telecom industry has lurched from crisis to crisis in 2012. The latest shock is the apparent loss of subscribers in July and August. However, the drop in numbers may actually be a sign of sanity. It is a rational response to changes in the spectrum allocation policy. The&nbsp;mass cancellation of 122 2G licences in February was followed by the announcement of auctions with much higher reserve prices.

Telecom's coming changes

Four years ago, Lehman Brothers fell, sending shock waves through the financial system. Credit and lending dried up, many major financial institutions looked vulnerable, and the world economy slipped into a crisis from which it has not yet recovered. Indeed, the fire-fighting that was needed at that time led to a stressing of government balance sheets and build-up of debt that is the root cause of the second dip of what many now call the Great Recession.

The Lehman recession

Across wide swathes of Tamil Nadu, a surreal sight: abandoned farms with packs of angry, hungry emus. According to the state government, over 12,500 of the great Australian flightless birds &mdash; the world&rsquo;s second-largest, after the ostrich &mdash; have been abandoned by the plantation&rsquo;s promoters, who were fleeing angry investors. Perhaps as many as 40,000 people invested heavily in the plantations, lured by promises of fantastic returns. Emu meat, they were told, is one step away from being on plates all over the nation and in Japan; the feathers could be used in clothing; and even the birds&rsquo; skin was used in handbags or shoes. Investors who put in Rs 1 lakh would double their money in a few years. It sounded too good to be true; and, like all things that sound too good to be true, it wasn&rsquo;t true.

These birds haven't flown 

The series of reforms announced at the end of last week have been widely welcomed as a way of, primarily, lifting the India growth story out of the gloom to which it had been consigned by the United Progressive Alliance&rsquo;s (UPA&rsquo;s) bumbling inaction for the past year and more. Reactions from the foreign press and some foreign investors have overstated the measures&rsquo; impact, but also show that they might have served their purpose in averting a catastrophic loss of confidence and a ratings downgrade. However, a closer study of the exact nature and extent of the reforms shows that not only are they essentially minimalist and incremental in nature rather than the &ldquo;big bang&rdquo; that they are being sold as, but they are also poorly designed in some important ways.

UPA-II wakes up

It is customary for most organisations that map future scenarios to offer a high-growth, a business-as-usual and a low-growth scenario. This is something that the Planning Commission has now done, in offering three scenarios for the 2012-17 quinquennium; the figures are 8.2 per cent, 6-6.5 per cent, and five per cent. Mercifully, the 9-9.5 per cent growth target mentioned last year in the Approach to the 12th Five-Year Plan has been dropped.

A political growth target

Of all the decisions that the United Progressive Alliance government took last week to end a long period of policy paralysis, the one that has caused the least provocation to opposition political parties is the annual capping of the supply of subsidised cooking gas cylinders. This is surprising, as its net effect on a householder&rsquo;s annual budget will likely be substantial. After consuming six cylinders in a year under the administered pricing regime, a householder&rsquo;s cost of acquiring every additional cylinder during the year will be 88 per cent more than the subsidised price. For a householder consuming an average of 12 gas cylinders in a year, therefore, the annual outgo on cooking gas would be higher by 44 per cent once the new system is put in place. This is much higher than the 12 per cent increase in diesel prices.

Reform by transparency 

The Reserve Bank of India, in its mid-quarter review of monetary policy on Monday, cut the cash reserve ratio by 25 basis points to 4.5 per cent, while leaving the policy rate unchanged at 8 per cent. The immediate impact of the cut in CRR is likely to be increased pressure on banks to use the extra liquidity to cut lending rates &mdash; pressure that will be reinforced, no doubt, by a finance ministry anxious to see quick results.

RBI does minimum 

Delhi is the latest among the dozen-odd states that have clamped a welcome ban on the production, sale and consumption of gutka and other flavoured, chewable tobacco-based products. These bans aren&rsquo;t precisely successful anywhere; these products continue to be readily available under the counter at most places. In other words, their purpose is not being served &mdash; but states have had to forgo revenue accruing from the Rs 20,000-crore gutka industry anyway. Chewable tobacco and other ingredients in gutka and its variants, such as pan masala, khaini and zarda, can cause cancer of the oral cavity, throat and oesophagus &mdash; besides hypertension, peptic ulcers and even heart trouble. Their consumption is linked, also, with stomach problems, appetite loss, restlessness and insomnia.

More than it can chew

India&rsquo;s annual disinvestment circus is all set to hit the road, with the Union Cabinet clearing the sale of shares in four more public sector undertakings as part of its Friday package. Some important factors provide an opportunity for the government to go for a clean and win-win disinvestment this year. First, of course, its target this year is not as stiff as in previous years. In each of the past two years, the government targeted Rs 40,000 crore and fell short by a mile.

Win-win disinvestment

Fifty years ago, on September 20, 1962, the first shots were fired at Thag La. Yesterday, the army chief, General Bikram Singh, vowed that there would never be a replay of 1962, when an ill-prepared Indian Army was militarily humiliated in a carefully choreographed offensive by China&rsquo;s People&rsquo;s Liberation Army (PLA). Those brave words need to be backed by preparation. In terms of military build-up along the McMahon Line, the Indian army, despite recent efforts, is far from matching its opponent.

Roads to readiness 

Mamata Banerjee, the head of the Trinamool Congress and the chief minister of West Bengal, should earn no plaudits for her decision to walk out on the United Progressive Alliance (UPA). First of all, it is not over straightforward policy differences, as she would have the people of this country believe; the repeated references to West Bengal&rsquo;s debt and the three-day delay in her ministers&rsquo; resignations make that quite clear. She is now, essentially, bargaining over the scope of reforms &mdash; 6-, 12-, or 24-cylinder caps and so on. Her objections to rising prices have not, in any case, stopped her from raising milk, power, and public transport prices in her own state, due to straitened finances. Apparently it&rsquo;s only &ldquo;anti-poor&rdquo; if the Centre does it. Ms Banerjee&rsquo;s reputation as a difficult ally will only be strengthened; in the long term, it is difficult to see what her state or party will gain.

Meeting Mamata's challenge 

The Centre is reportedly considering imposing an urban transport tax and a congestion tax on private cars to control gridlock on urban roads. Growth has increased incomes and car ownership &mdash; but not road space. The idea is to levy a one-time tax either at the time of registering a new car or when a car&rsquo;s insurance is renewed.

Declogging the roads

The initial euphoria following the United States Federal Reserve&rsquo;s announcement that it would buy bonds worth $40 billion every month &ndash; what is generally being called the third round of the Fed&rsquo;s quantitative easing, or QE3 &ndash; has largely dissipated. European stock markets are back to worrying about the euro, and all benchmark indices in the United States responded negatively to bad data about the state of US manufacturing.

A double-edged sword

Air India&rsquo;s low service standards are so legendary that no one will be surprised to discover that first-class passengers have complained about its cabin crew. But the circular that the airline&rsquo;s management has sent to its staff is instructive for more than one reason. It abjures cabin crew not to consume passenger&rsquo;s meals, eat in front of passengers or laugh and joke loudly among themselves in the aisles. This, again, is likely to invoke amusement rather than surprise; little, after all, can be expected from employees of a government-owned institution where jobs enjoy cast-iron protection. The fact that the management has chosen this moment to issue instructions on etiquette or lack thereof for behaviour that has been par for the course in Air India&rsquo;s inflight service for ages stems from a purely commercial consideration.

Teaching India to behave 

Unlike the Kyoto accord on climate change, which is set to expire this year without delivering much, the Montreal Protocol on safeguarding the earth&rsquo;s protective ozone layer stands out as a spectacular success. This agreement, which celebrated its 25th anniversary on September 16, helped phase out over 98 per cent of the world&rsquo;s ozone-depleting substances &mdash; notably chlorofluorocarbons (CFCs) and hydro-chlorofluorocarbons (HCFCs), used in refrigeration equipment, hairsprays, foams, fire extinguishers, etc. It has not only averted further damage to the ozone layer, but has also put it on the path to recovery. The ozone layer, a dense band of ozone found in the second-highest layer of the atmosphere, shields the earth from the sun&rsquo;s harmful ultraviolet radiation &mdash; which could otherwise cause skin cancer and cataract, besides weakening the immune system.

Learning from success

If cheers have attended the United Progressive Alliance government&rsquo;s apparent new lease of life over the past fortnight, that is only because it had pretty much played dead for the years preceding that time. The economic measures announced were not earth-shattering reform; they were more the bare minimum needed to stave off crisis.

Road map for reform

Many questions remain to be answered about how the government&rsquo;s recent notification of foreign direct investment (FDI) in retail is to be worked out. Some of these, presumably, will be answered as the new dispensation is put into operation. Others, however, deserve immediate comment.

Not a common market

Incisive columns and editorial comment by top opinion leaders

Page 612 - Editorial Comment