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

Business Standard

The figures for India&rsquo;s gross domestic product (GDP) growth in the fourth quarter of 2011-12, which were released on Thursday, show that the economy is in crisis. Between January and March this year, GDP grew at 5.3 per cent &mdash; the lowest growth for nine years, since the same quarter in 2003. Even for the full financial year of 2011-12, growth declined to 6.5 per cent, again a nine-year low. Never in the United Progressive Alliance&rsquo;s (UPA&rsquo;s) entire tenure has growth decelerated to such a level. The crisis is visible across sectors &mdash; even services, normally the engine of growth, clocking near double-digit figures even if agriculture and industry are anaemic, grew at only 7.9 per cent. Agriculture grew at a worryingly low 1.7 per cent, which has grave implications for rural demand and farmer distress. But the real kicker was industrial growth, which was only 1.9 per cent in this quarter. India&rsquo;s manufacturing sector is in trouble.

Numbers of crisis

Now that the India Meteorological Department (IMD) has endorsed the fears expressed earlier by foreign weather bureaux about the emergence of the monsoon-unfriendly El Nino in the second half of the season, the government should begin preparing right away for mitigating its adverse impacts on agriculture, water reservoirs and other areas.

El Nino's looming shadow

Bill Gates, the former chief executive officer of Microsoft, was in India recently, and spoke to a group of senior corporate executives in Bangalore. His days, however, of pitching the relationship between the giant company he founded and India&rsquo;s information technology sector are long past. He was in India, as he has been several times a year in the recent past, to try and persuade India&rsquo;s rich to give more of their wealth away. India has long been an anomaly in terms of philanthropy; while among the world&rsquo;s most unequal and stratified societies, its rich have generally shunned the idea that their money should be shared. This is in stark contrast to other capitalist societies. In the United States, since the days of Andrew Carnegie &mdash; who famously gave away all the money he ever made as America&rsquo;s greatest steel baron &mdash; there has been a long history of philanthropy, particularly from owners and senior executives of businesses.

Gates to giving 

India&rsquo;s economic growth over successive quarters of the last financial year, 2011-12, makes for scary reading. In the first quarter, growth in gross domestic product (GDP) was reasonably robust, at eight per cent. A harsh slowdown was visible in the second quarter, when GDP growth was 6.7 per cent; but the government insisted that better times were just around the corner, and the second-quarter results were below trend. Instead, the third-quarter GDP growth was 6.1 per cent. Many in the government insisted that this was the economy &ldquo;bottoming out&rdquo;, that the same policy environment that had created eight-plus per cent growth was still in place. Now that fourth-quarter growth is known to have been 5.3 per cent, that argument has been shown up. Clearly, no merely cosmetic changes will be enough to arrest this precipitous slide. Several major reforms &ndash; such as foreign direct investment (FDI) in retail &ndash; are essential.

At the highest levels

The insurance regulator&rsquo;s draft guidelines on health insurance were necessary, given the segment has been plagued with high loss ratios, low penetration and persistent customer complaints. The draft, which proposes changes in every facet &ndash; product structure, renewability and claims settlement &ndash; is a thoroughly pro-customer document and seeks to plug the various loopholes that have been used to make life difficult for policyholders, resulting in extremely low penetration. Although the Indian healthcare industry is worth Rs 3.30 lakh crore, the health insurance industry is only Rs 17,000 crore of that. One of the most important recommendations is setting an entry limit for health insurance policies at 65 years and doing away with the exit age, which basically means that insurers will have to renew policies without a break. It&rsquo;s a well-known fact that insurers have been denying insurance to people above 55 years due to higher underwriting risks.

What the doctor ordered

The ruling United Progressive Alliance, or UPA, is justly castigated for its policy paralysis. Yet the only thing more farcical than its inability to take a decision is what happens when it, for a moment, ceases to be paralysed. Indeed, UPA-II&rsquo;s policy activity is, in some ways, more worrying for the economy than its paralysis &mdash; for it reveals that this government does not understand the scale of what is needed, nor does it possess the follow-through required for good policy-making.

From policy to farce

Opening up futures trading in commodities to banks, which may well be a precursor to similar access for other financial institutions, seems a measure whose time has not yet come. Futures trading, reintroduced in 2002 after a nearly four-decade hiatus, is still in its infancy in India. The Forward Markets Commission (FMC), the commodity trade regulator, is weak and toothless; it finds it difficult to ensure fair and distortion-free trading through commodity exchanges even at current volumes.

Still for the future

Modern military doctrine sees cyberspace as a fifth theatre of war along with land, air, sea and space. Every nation&rsquo;s infrastructure is vulnerable to cyber-assault. Almost every 21st-century artefact, from children&rsquo;s toys to pacemakers to credit cards to sewage disposal systems and power grids, has an embedded infotech component. Modern military systems are, of course, utterly dependent on information technology (IT). Given that, the widely reported claims in David Sanger&rsquo;s new book, Confront and Conceal: Obama&rsquo;s Secret Wars, seem credible. Mr Sanger says the US and Israel cooperated to create the Stuxnet computer worm that carried out cyber-attacks against Iran&rsquo;s nuclear infrastructure. Since 2010, when Stuxnet escaped into the wild after sabotaging thousands of Iranian centrifuges, programmers have insisted that it was too large and sophisticated to be written by a rogue hacker.

The secret wars

It would appear at first glance that the annual supplement to the Foreign Trade Policy of UPA-II does what is necessary to restore robust export growth. Ballooning oil prices and gold imports during 2011-12 combined to cause a current account deficit that had reached a worrying four per cent of gross domestic product; clearly, India&rsquo;s exports needed a push. However, the agenda unveiled by Commerce Minister Anand Sharma quite comprehensively misses the point.

The stickiness of bad policy

In closing the meeting on Wednesday at which he hoped to give a big push to infrastructure, Prime Minister Manmohan Singh gave a speech in which he mentioned the word &ldquo;bottleneck&rdquo; three times. It is the persistent tragedy of the United Progressive Alliance (UPA) government&rsquo;s leadership that it knows what the problem is and yet seems unable to do much about it. The inter-ministerial meeting that Dr Singh chaired is, at least, an important visible attempt to do something.

Infra target practice 

What sets the report of the Western Ghats Ecology Expert Panel, headed by Professor Madhav Gadgil, apart from most other reports delivered by such government-appointed committees is that it does not view environmental factors in isolation from development imperatives. Nevertheless, its recommendations pay careful attention to the need for protection and preservation of the biological wealth of one of the world&rsquo;s hot spots for biodiversity: the Western Ghats. This mountainous belt, measuring around 1,600 kilometres, spreads across six states &mdash; Kerala, Tamil Nadu, Karnataka, Goa, Maharashtra and Gujarat. Its biodiversity is extraordinary: over 5,000 species of plants, 450 birds, 140 mammals and 260 reptiles, a large number of which are unique to the range. Besides these, the Ghats have more secrets in store &mdash; for example, several new species of frogs have been found in the past decade.

Win-win, not 'go, no-go'

A recent report highlights a broad trend of which businesses are already aware: the mobile internet, or &ldquo;m-net&rdquo;, is growing much quicker than fixed internet, presenting a new set of challenges and opportunities for businesses, surfers and regulators. Mary Meeker, a partner at the venture capital firm Kleiner Perkins Caulfield &amp; Byers, is an iconic analyst of online trends. Her latest report presents startling numbers. Over 10 per cent of May 2012 global internet traffic was mobile, up from one per cent in December 2009. M-net revenues have risen at a cumulative annual growth rate of over 150 per cent between 2008 and 2011. The revenue mix is very different. Apps or application software contribute 71 per cent of m-net revenue, while 29 per cent is from advertising. In contrast, advertisements contribute over 90 per cent of fixed internet revenue. Hardware manufacturers like Intel and Cisco are moving to the m-net by developing new chips and routers.

India's mobile future

The government&rsquo;s aim of increasing the manufacturing sector&rsquo;s share to 25 per cent of gross domestic product (GDP) will likely remain just a dream. That&rsquo;s because, even as the government sets up multiple entities charged with helping the manufacturing sector, it is itself creating a high-cost economy through policy, rules and regulations, and its own salaries. Achieving manufacturing growth will require first putting its own house in order by giving salaries that are in sync with the low productivity levels of its staff.

Salary spiral

The United States defence secretary, Leon Panetta, made some interesting pronouncements on the New Delhi leg of his Asian tour last week, including the offer of much closer defence cooperation (as in joint development of weapons, which India already does with Russia and Israel). His statements suggested an American embrace that goes beyond all previous offers, and tied in with the &ldquo;re-balancing&rdquo; of US forces in Asia: putting 60 per cent of US naval assets in the Asia-Pacific region (as against 50 per cent now). According to some observers, the US now sees India as having the potential to become its most important partner in a developing Asian security scenario that looks increasingly like a China containment policy.

An American embrace

India&rsquo;s laws governing competition are being overhauled currently, with the ministry of corporate affairs spearheading proposed amendments to the Competition Act. At present with a group of ministers (GoM), the amendments reportedly seek to extend the scope of the Competition Commission of India (CCI) across all sectors.

Competing exemptions

One of the major outcomes of the recent meeting of the Bharatiya Janata Party&rsquo;s (BJP&rsquo;s) national executive is the apparent solidification of support for Gujarat Chief Minister Narendra Modi. Although he continues to be an extremely divisive figure beyond the party faithful &ndash; and even the BJP&rsquo;s parent organisation, the Rashtriya Swayamsevak Sangh (RSS), has its doubts about his reliability as a vessel for its ideology &ndash; Mr Modi&rsquo;s chances of emerging as the party&rsquo;s prime ministerial candidate for the next general elections have been substantially enhanced. The BJP&rsquo;s logic has a certain coherence to it. Since the eclipse of Lal Krishna Advani following the 2009 general elections defeat, it has appeared rudderless. Its ambitious Delhi leaders have squandered the advantages provided by the United Progressive Alliance government&rsquo;s loss of credibility, through infighting and populism.

BJP's asset, and liability

The index of industrial production, which was negative in March, was positive in April &mdash; but just barely. It rose by 0.1 per cent, according to figures released on Tuesday, compared to 5.3 per cent a year ago. Manufacturing output grew at only 0.1 per cent as well. Mining contracted by 3.1 per cent, intermediate goods by 1.4 per cent, and capital goods by 16.3 per cent, revealing that the backbone of the manufacturing economy is weakened.

The RBI needs to act

In Punjab, the declared killer of a former state chief minister is honoured by those speaking in the name of a whole community. In Tamil Nadu, Andimuthu Raja returns to his home state as a conquering hero, after having had to resign as communications minister and then spending 15 months in jail. In the first case, the killer is awaiting execution, while in the second the trial is still to get under way. In that sense, the two are on different planes. But it is necessary to ask whether the Dravida Munnetra Kazhagam (DMK) is no better than some of the Akali factions when they cock a defiant snook at the law.

Lionising the indicted 

Close on the heels of recent needless interventions and rollbacks on cotton exports, from which exporters and farmers are yet to fully recover, the government has now come out with a draft cotton trade regulation Bill to further hassle the sector.

Spinning disaster

The latest attempts to relax the rules for Special Economic Zones (SEZs) are a good example of all that is wrong with India&rsquo;s economic policy. SEZs were conceived in 2005 as a means of providing exporters with China-style tax-free enclaves outside the purview of the country&rsquo;s restrictive labour laws, the idea being to stoke exports and employment. It is an open secret that far from achieving these objectives, SEZs have degenerated into real estate plays, or means for infotech companies to extend tax breaks they lost under the Software Technology Parks of India (STPI) scheme (a large proportion of approved SEZs are in the IT sector). By Commerce Minister Anand Sharma&rsquo;s own admission to Parliament, only about a fourth (154) of the 587 SEZs that the government approved under the 2005 Act are operational. That&rsquo;s less than half the 380 that have been notified.

Admission of failure

Incisive columns and editorial comment by top opinion leaders

Page 618 - Editorial Comment