Even as the indifferent monsoon is threatening to affect crop sowing in the current season, the recent spike in the prices of some fertilisers and related developments in the fertiliser sector are adding to disquiet over kharif production prospects.

Soil imbalance

Business Standard

On Tuesday, Pranab Mukherjee resigned as finance minister in order to stand as the ruling United Progressive Alliance&rsquo;s (UPA&rsquo;s) candidate for the post of president. It is expected that the finance ministry will be handled for some time by Prime Minister Manmohan Singh. This has given rise to expectations that pending reform will be speeded up, and the problematic recent drift towards control and confusion in policy making reversed.

Top 10 list

The recent announcement that the Indian Space Research Organisation (Isro) may outsource the manufacture of communications satellites and launch vehicles marks a paradigm shift. The space agency needs to focus on research to meet ambitious targets like its planned Mars Mission, Chandrayaan II, developing higher-powered satellites and so on.

Closer to Nasa

This is the age of the political freelancer. Parties across the country are abandoning the constraining comfort of coalition discipline for free-floating, shifting and temporary alliances. The political manoeuvring around the presidential election makes this particularly clear. In the past, it might have been a straightforward contest between clear-cut alliances: one led by the Congress, one led by the Bharatiya Janata Party (BJP), perhaps with a candidate backed by the Left parties thrown into the mix. This presidential election, however, has seen the candidates split the coalitions wide open. Pranab Mukherjee is the Congress&rsquo; candidate, but it is quite clear that some of its coalition partners are not on board. On the other hand, the BJP-led National Democratic Alliance is unable to oppose Mr Mukherjee&rsquo;s candidature as a unit, with the Shiv Sena, for example, making its support for his presidential run apparent.

The political freelancer

The government&rsquo;s continued dithering over the key question of raising import duty on power equipment shows policy paralysis has not spared even a critical infrastructure sector like power generation. Almost two years ago, a committee chaired by Planning Commission Member Arun Maira concluded that there was a need for a level playing field for Indian power equipment manufacturers, who were getting edged out of the Indian market as a result of a surge in imports, in particular from China. Significantly enough, the committee had not recommended a blanket ban on imports of power equipment from China or any other country. Instead, it had made a sensible recommendation to levy a 10 to 14 per cent import duty on such power-generating machinery.

Level the playing field

IKEA, the euro 25-billion Scandinavian retailer, wants some alterations in the guidelines for foreign investment in single-brand retail before it invests in India. Under current guidelines, any foreign retailer that invests more than 51 per cent in an Indian venture must source 30 per cent of its stock from Indian small enterprises. IKEA, in its 37-page application of June 22, has said that the 30 per cent sourcing criterion should be computed over a period of 10 years and not every year, and that there should be flexibility in the definition of small enterprises. Instead of junking the demands as another attempt by a multinational corporation to subvert national policy, the government must consider them on merit. IKEA has said that it is ready to source from small enterprises, but these enterprises may not remain small all their lives. At the moment, such enterprises are defined as those with an annual turnover of about Rs 5 crore or less.

From small to medium

An Empowered Group of Ministers (EGoM) on Saturday chose not to reopen the question of what Reliance Power should do with the excess coal from its Sasan ultra-mega power plant (UMPP) in Madhya Pradesh. The EGoM had, in 2008, used its discretion to allow Reliance Power to divert coal produced from Sasan&rsquo;s captive mines to another power project it owned in the same state, Chitrangi.

Releasing the captive

The launch by Ranbaxy last week of Synriam, a new drug to treat malaria, is an important milestone. Having made its name by manufacturing generic (off patent) drugs cheaply, India&rsquo;s pharmaceutical industry has struggled to achieve original drug discovery since the Uruguay Round of trade negotiations signalled the onset of product patents in India. It began to be realised, in time, that there was more to drug discovery than low-cost science graduates and PhDs.

Ranbaxy's finest hour

What Prime Minister Manmohan Singh said at the inauguration of the nine-million-tonne Guru Gobind Singh Refinery at Bathinda last week provides further proof, if any were needed, that the United Progressive Alliance (UPA) government continues to suffer from policy paralysis.

Get real on reforms

The government&rsquo;s flip-flops on cotton exports have turned full circle, but have not yet, perhaps, fully ceased. In a span of a few weeks, the government has switched positions from a total ban on cotton exports, to a partial easing of the curbs allowing the shipment of cotton already registered for export, to suspension of fresh registrations, and finally to revoking the bar on exports as well as on fresh export registrations.

Flip-flops on cotton 

For more than 40 years, ever since he took over The Sun, Australian-American businessman Rupert Murdoch&rsquo;s media empire has expanded almost unchecked. To all appearances, he is the quintessential modern media mogul, who can make and break governments, set the public agenda, and buy storied newspapers almost at a whim.

The setting Sun

Hindustan Unilever, the country&rsquo;s largest fast-moving consumer goods (FMCG) company, has reported 20.4 per cent growth in its consolidated sales for the quarter ended March 31. Of this, 9.6 per cent came from volume growth, and the rest from price increases. For Dabur, which gets 70 per cent of its business from India and the rest from exports, consolidated sales for the quarter were up 23 per cent; more than half of that, 12.4 per cent, came from higher volumes.

They're still spending

In April, the S&amp;P 500, a capitalisation-weighted index of the largest companies listed on the New York Stock Exchange and on Nasdaq, registered its first monthly decline this year. This comes after it posted a four-year high earlier that month, at the height of optimism that the global economy was recovering. Since then, observers and investors have been battered by bad news and gloomy data. The US government released data that personal spending rose only 0.3 per cent in March, lower than expected; another widely scrutinised index, of manufacturing activity in the Midwest, fell in April from the previous month. All eyes are on Friday&rsquo;s report on the number of new US jobs created last month; March saw a significant slowdown from the high numbers posted between December and February.

The North Atlantic crisis

Consider these unsavoury facts. Nearly half of all deaths due to measles occur in India. While overall mortality due to this scourge fell between 2000 and 2010 by 74 per cent worldwide, the decline in India was a mere 26 per cent. While, globally, 85 per cent children received protection against measles through routine vaccination, in India this coverage has been far lower, at less than 75 per cent. Overall, India&rsquo;s record in measles control is poorer than Africa&rsquo;s. Given that these are the findings of a research study carried out by the World Health Organisation (WHO) in collaboration with a couple of health-related think tanks and published in the foremost medical journal,&nbsp;The Lancet, they merit serious attention. On the whole, this is a sad expos&eacute; of the state of India&rsquo;s public health services, especially the Universal Immunisation Programme.

Delaying vaccination

Twenty years ago, India was rocked by the first great post-liberalisation scandal. The questioning of Harshad Mehta in April 1992, and his arrest in November that year, had two major effects: it held back the development of India&rsquo;s bond market, and it pushed India towards major regulatory reform. Harshad Mehta and his associates were working an ingeniously simple scheme; they would siphon off funds from the inter-bank bond market to the stock market, where chosen shares would find their values being pushed up. He would sell high, and then the money that had inflated the share&rsquo;s value would be returned to the lending banks. However, the moment the shares stopped increasing in value, banks were left holding receipts that had sharply lost value.

Twenty years on 

Once again, poverty estimations are creating a needless debate over what is a modest measurement problem. For many years since 1973, the government had followed a simple formula: if a household could not afford to buy a minimal number of calories and clothing for its members, it was deemed as a household below the Planning Commission poverty line. But there was one problem: survey respondents tend to systematically under-report their expenditure.

Estimating poverty properly

The increasing concern among policy makers about climate change is evident from the pre-Budget Economic Survey for 2011-12, read together with the report of the Planning Commission&rsquo;s sub-group for climate change in the 12th Plan, and the earlier National Action Plan for Climate Change. The 12th Plan (2012-17) will have to pay heed to the challenges thrown out by climate change in charting sustainable development. The sooner India faces up to them, the less the damage will be &mdash; although the costs will be substantial in any case. The Indian government already spends 2.8 per cent of GDP on programmes that have mitigation and adaptation relevance. Taken together, various climate change-related missions will cost well over Rs 2.5 lakh crore over the 12th Plan period and beyond.

Policy heats up

It has become clear that many things were wrong with the taxation proposals made in the 2012-13 Budget. In attempting to fix the fiscal deficit, the government decided it was necessary to increase the tax base. However, it made the elementary mistake of assigning excessive discretion to tax assessment authorities across the board; it seemed the Budget had not been drafted with any opinions but those of tax bureaucrats in mind.

Beginning the clean-up

In a future India, urban neighbourhoods might well be racked by internecine battles over water. The main reason to fear this dystopia is the astonishing rates at which groundwater is being sucked up from below the earth in this country. Groundwater finds a home in natural aquifers, layers of rock, clay and sand far underground. For thousands of years, Indians have harvested these reservoirs and replenished them. That has now stopped, and with tragic consequences. Satellite images provided by the National Aeronautics and Space Administration a few years ago showed how bad the problem was: Punjab, Rajasthan and Haryana showed a-foot-a-year decline between 2002 and 2008, double the capacity of India&rsquo;s largest surface water reservoir. The World Bank has said that 60 per cent of the country&rsquo;s aquifers will be in &ldquo;critical&rdquo; condition by 2025; 29 per cent are already &ldquo;semi-critical&rdquo;.

India's vanishing aquifers

The government&rsquo;s notice sent last week to Reliance Industries Ltd (RIL), disallowing it cost recovery of about $1 billion (Rs 5,300 crore) for the company&rsquo;s investment in the KG-D6 offshore gas field it operates, will in all probability set off a prolonged legal dispute. The government&rsquo;s argument is that RIL should not be allowed to recover a part of its investment from its overall revenue as it has not drilled the committed number of wells, resulting in a decline in the gas field&rsquo;s output. Both the government and the Comptroller and Auditor General see this as a violation of RIL&rsquo;s contractual obligations, especially given gas production from the field is falling. The government has also gone strictly by the production sharing contract (PSC) in conjunction with the field development plan. RIL has disputed this argument. Even as early as November 2011, it anticipated the government move and filed an arbitration notice.

Interpreting the law

Results this weekend from electoral contests in Europe are likely to reshape the European Union&rsquo;s approach to the crisis in which it finds itself. In France, 17 years of rightist domination ended; Fran&ccedil;ois Hollande will be the first Socialist occupant of the Elysee Palace since Francois Mitterand. And, Greece&rsquo;s austerity-hit electorate handed out a confused and angry mandate. Greece&rsquo;s mainstream parties, which had agreed on a sensible set of proposals, had their share of votes reduced by two-thirds; extremists of the left and the right have benefited on the back of ugly anti-German and anti-immigrant rhetoric. It looks more likely than ever that Greece will be forced to leave the single currency, even though an overwhelming majority of Greeks want to stay in it.

Rebalancing strategy

Incisive columns and editorial comment by top opinion leaders

Page 620 - Editorial Comment