If there is anything in common between the record-breaking heatwave in the US, the wettest-ever April-to-June period in the UK and an unusually dry June and floods in Assam of an intensity rare so early in the monsoon season, it is that all these are the likely consequences of climate change. Weather scientists, till recently, were hesitant to connect such divergent events, happening far apart, with a common global cause. That is no longer true. A report released a few days ago by the UK Met Office and the US National Oceanic and Atmospheric Administration concluded that the extreme weather events in recent months could be linked with global warming.

Time to adapt

Business Standard

Prime Minister Manmohan Singh&rsquo;s decision to set up a committee to look into the implementation of the General Anti-Avoidance Rules (GAAR), framed by the last Union Budget to check tax evasion, is welcome.

Rules for reform

West Bengal Chief Minister Mamata Banerjee&rsquo;s last-minute support for the UPA&rsquo;s presidential candidate, Pranab Mukherjee is a major defeat for her and the Trinamool Congress she leads. Ms Banerjee&rsquo;s strategy for over a year has been negative: to oppose virtually every important move by the Congress, even while remaining within the alliance it leads. This confrontation from within has resulted in everybody being worse off. Most importantly, perhaps, the strategy, while high-profile, has failed to win West Bengal the special financial concessions from the Centre critical for the Trinamool-led government&rsquo;s ability to deliver its populist agenda. It has merely reinforced the idea that Ms Banerjee is excessively intransigent, which will negatively impact how investors view West Bengal as an option. The failure of her attempt at a national role, by appearing a king- (or president-) maker, indicates that other strong regional leaders do not find her a useful ally.

The president-maker fails

It is a matter of legitimate concern that the Krishna-Godavari natural gas fields in the Bay of Bengal do not appear to be yielding the gas output that, at one point, they were expected to. Whatever the cause for this phenomenon &mdash; a matter not entirely irrelevant, as that cause is what's, in effect, being disputed &mdash; its consequences are worrying.

Gas: Stand firm, but move on

India&rsquo;s overall unemployment rate last year was 3.8 per cent, according to the Chandigarh-based Labour Bureau, an office of the Union ministry of labour and employment. This number emerged from a survey of 1,28,000 households, and was first reported in this newspaper last week. While addressing reporters later, the director-general of the bureau said that India&rsquo;s rate compared &ldquo;favourably&rdquo; with other major economies, in many of which unemployment is in double digits. This is so comprehensive a misunderstanding of the nature of unemployment in India that it is surprising it should be repeated by such a senior researcher.

Joblessness, a luxury

The word &ldquo;balancing&rdquo; seems to be a favourite of Reserve Bank of India Governor D Subbarao. Consider the number of times he has used the expression &ldquo;balancing&rdquo; growth with inflation management in his monetary policy speeches. So it wasn&rsquo;t a surprise when, last week, he sought to once again &ldquo;balance&rdquo; his views about the finance ministry&rsquo;s equations with the central bank.

Pushing the RBI

The lockout at the Manesar plant of India&rsquo;s largest automobile manufacturer, Maruti Suzuki India Limited (MSIL), is an inevitable consequence of the breakdown in management-worker relations that climaxed in the death of a senior executive &ndash; Awanish Kumar Dev, the plant&rsquo;s human-resources manager &ndash; in mob violence on Wednesday. Almost 100 other people, largely from management, were injured and the plant suffered extensive damage from arson.

The lessons of Manesar

The measures suggested by the Securities and Exchange Board of India&rsquo;s (Sebi&rsquo;s) Mutual Funds Advisory Committee to help revive the mutual fund industry may be misdirected. Unquestionably, the Indian mutual fund industry is in the doldrums. Penetration is concentrated &mdash; about 73 per cent of assets under management (AUM) are located in the five metros and 87 per cent in the top 15 cities. AUM has fallen over the past three fiscal years. It was roughly 6.5 per cent lower in June 2012, compared to March 2010. The RBI data suggest mutual fund investments as a percentage of household savings have been negative since 2010-11, implying lower household allocations and capital losses. The Sebi committee suggests that a more liberal expense ratio, especially for operations outside the top 15 cities, may help asset management companies (AMCs) increase penetration.

Learn to perform

When an economy or industry is in trouble, it makes sense for lenders to show a bit of forbearance. In practice this means debt restructuring, which has a clear benefit for banks: they can present a picture of themselves more healthy than reality. The regulator will implicitly endorse this de facto deception, so long as its rules are followed. But this cannot go on forever. The global financial crisis of 2008 had prompted the Reserve Bank of India to ease both norms for restructuring and the way the institutions present their own accounts. But the Indian economy isn&rsquo;t looking up, and growth is slowing further. Equally worrying is the realisation that the health of the country&rsquo;s financial institutions may be far worse than it appears. The institutions&rsquo; own data, when studied carefully, reveal the problems. Currently the value of restructured assets exceeds the value of gross non-performing assets of the banking sector.

End the fudging

The United Progressive Alliance&rsquo;s second term in office has been troubled, above all, by the consequences of indulgence of its allies &mdash; including in its first term. The accusations of corruption around 2G licensing, which have put it permanently on the back foot, came from an excessively distant approach to what one member of the alliance &mdash; in this case the Dravida Munnetra Kazagham &mdash; was doing in areas that it had come to think of as its own preserve.

The perils of indulgence

Once again, the department of petrochemicals has suggested that the law that requires foodgrain and sugar to be packed exclusively in jute bags be modified or repealed. This move, while a sad reflection of how government departments can turn into lobbyists for their industry (in this case, plastic bags), nevertheless deserves a closer look. Similar attempts in the past led to the requirement being eased somewhat, allowing a small part of the industries&rsquo; product to be packed in other kinds of bags. Such relaxations have invariably been rolled back on political pressure. The outcome of the present move may not be vastly different, given that West Bengal Chief Minister Mamata Banerjee appears to disapprove it strongly &mdash; unsurprising, given most of India&rsquo;s jute industry is in that state.

Sacking jute

The era of bank secrecy is over,&rdquo; declared a 2009 G20 communique &mdash; except it isn&rsquo;t, apparently. While black money worldwide has likely decreased following amnesty schemes and stepped-up enforcement in the last three years, it is clear that it has not gone far enough.

Attacking tax havens

The decontrol of phosphatic (P) and potassic (K) fertilisers through the introduction of a nutrient-based subsidy (NBS) regime in April 2010 was considered a significant stride towards reform. Similar measures were promised for urea, the most-consumed nitrogenous (N) fertiliser. The euphoria over these changes has now waned; their intended objectives have not been met.

Time to fix fertiliser policy

As the Reserve Bank of India meets to determine what it will do in the first-quarter review of monetary policy, due on July 31, it should keep a few things in mind. First, that India&rsquo;s growth has collapsed due to sinking investment is beyond doubt. Much of the reason is weak business sentiment, and while the primary responsibility for changing the mood belongs to the Union government in New Delhi; the management of expectations is also the province of the monetary authority.

Worries over growth

The Indian financial markets will undergo a tectonic shift after being a comfortable quasi-monopoly for many years. For over a decade, the National Stock Exchange (NSE) held overwhelming market share in cash equity transactions and in equity derivatives. The Bombay Stock Exchange (BSE) was a distant second and the regional stock exchanges nowhere. This is set to change. The regulator has allowed the MCX Stock Exchange (MCX-SX) to offer equity and equity derivatives contracts.

Sebi's new challenge

It has now been a month since Pranab Mukherjee resigned as finance minister in order to become the ruling United Progressive Alliance&rsquo;s candidate for president. At the time, this newspaper had cautioned against over-reaction: it did not seem likely that Mr Mukherjee&rsquo;s departure would necessarily cause a sudden breakout of active reform all over North Block.

The end of euphoria

Every four years, as the Indian contingent heads to the latest venue of the summer Olympics, the media is awash with tremulous speculation. It&rsquo;s a familiar narrative. India&rsquo;s contingent is always better trained and the government has spent larger sums of money on it than ever before. Ergo, India should come away with more medals than before.

Poor economics and golds

Hindustan Unilever&rsquo;s stock hit a record high last week after the company, India&rsquo;s largest in the fast-moving consumer goods (FMCG) category, announced its results for the quarter ended June 30. Its sales were up 20 per cent, driven by higher volumes as well as better prices. Dabur, the biggest home-grown player in the sector, reported an increase of 21.37 per cent in sales, and Nestle, the country&rsquo;s largest food company, said its sales were up 12.8 per cent. The latter two companies, too, said it was because of better volumes and higher prices. Indeed, the last two quarters have been a dream run for the FMCG sector. Demand was buoyant, and all price increases were absorbed by customers. As a result, pricing power had returned to the FMCG companies. There was no evidence of down-trading, a situation in which consumers opt for lower-priced brands.

Strategies for survival

Assam is not new to sectarian strife, but &ndash; going by the happenings of the last 10 days &ndash; few lessons have been learnt on how to prevent violence from feeding on itself and escalating. Migration from Bangladesh has long been one of the central emotive issues in Assam, and by the early 1980s, violence on an unprecedented scale engulfed the state. In that conflict, the protagonists were the Assamese and Bengali-speaking Muslims; the opponents in the next phase of strife were the Assamese and the Bodos &mdash; plains tribals, and the people originally indigenous to Assam. The Bodos waged a two-decade long movement for autonomy that culminated in the creation of the Bodoland Territorial Council in 2002, which encompassed four districts. The latest conflict is between the Bodos and Bengali-speaking Muslims &mdash; and, again, questions are being raised and allegations are being made about illegal migration from what is now Bangladesh.

Assam boils over again

Almost unnoticed, the price of a barrel of Brent crude has crept back up past $105. A few weeks ago, it had dipped below $80. Since then, it has risen with hopes about the global economy.

The overdue diesel hike

Almost a third of India&rsquo;s organised labour force is on contract. This is an inevitable consequence of archaic labour laws that make it impossible for India Inc to disengage permanent workers even if they can&rsquo;t afford them, don&rsquo;t need them or they don&rsquo;t perform. Companies such as Maruti Suzuki India have thus used contract workers liberally &mdash; almost half the workers at the company&rsquo;s Manesar plant have that status.

Unfair contract

Incisive columns and editorial comment by top opinion leaders

Page 617 - Editorial Comment