The parliamentary standing committee on rural development has scrutinised the Centre&rsquo;s Land Acquisition, Rehabilitation and Resettlement Bill, 2011 (the LARR Bill), and suggested several major changes. In particular, the committee thinks it desirable that the government be strictly limited in its acquisition of land &mdash; to projects with a clear infrastructural or social purpose. Further, its definition of such purposes specifically excludes any projects in which private, profit-driven players participate. The minister responsible for the LARR Bill&rsquo;s passage, Rural Development Minister Jairam Ramesh, has rightly rejected these parts of the committee&rsquo;s recommendations, pointing out that &ldquo;industrialisation and urbanisation have become inevitable and desirable&rdquo;.

Public-private purpose

Business Standard

The second UPA government is observing its third anniversary. The second of those three years saw rampant and large-scale corruption emerge as a hot-button issue. The third and latest year has been disastrous for the economy. So the two principal attributes credited to Prime Minister Manmohan Singh &ndash; as a man of probity and as the author of economic reforms &ndash; have ceased to be political assets for the Congress party and the government. Those favourably inclined to the prime minister have been advising him for the past many months to get down to business. Despite the occasional promises made about action being forthcoming, what has been in evidence is more drift. And so the government gives every impression of being rudderless, limp and without energy or ideas, at a time when the Congress faces severe challenges in retaining popular support in key states across the country. The economy meanwhile is in danger of slipping from distress into crisis.

Time for change

The government&rsquo;s approach to controlling India&rsquo;s black money economy, as outlined in the White Paper on the issue tabled in Parliament on Monday, is misguided. Central to the suggestions that are immediately operable is a scheme similar to past voluntary disclosures of income, which the White Paper says can be a &ldquo;one-time option&rdquo; to encourage Indians to bring back illicit money stashed abroad. Of course, as the Paper itself mentions while introducing the possibility, such schemes have often been tried before &mdash; meaning that it is not to be viewed as credibly being a &ldquo;one-time&rdquo; option. This actually sets up perverse incentives for tax evaders. It might help the government manage India&rsquo;s troubled external balances, but it is not a genuine solution to the problem. A related error in judgement is visible in the proposal that tax immunity be extended towards those with gold holdings, if they come forward to make deposits.

Black into white

State Bank of India&rsquo;s results for the last quarter of 2011-12 and the whole financial year have provided a much-needed pick-me-up, no matter how fleeting, to the gloomy mood in the financial sector. On Monday, SBI&rsquo;s share price saw substantial upward movement after major foreign brokerages, including CLSA and Bank of America-Merrill Lynch, upgraded it to a &ldquo;buy&rdquo; rating. This comes after a massive rise in net margin for the quarter from virtually zero a year ago to a respectable 11.9 per cent, explained by the huge provisioning that was made, along with a change of guard at the top, last year. This was necessary to make up for arrears in provisioning, not just in terms of regulatory norms, but also for income tax. On a more comparable basis, net margins have also improved sequentially, in relation to the previous quarter, by 100 basis points. Thus, the results are not a statistical blip; they have substance.

SBI turns around

The rupee cracked 56 against the dollar on Wednesday, following a steady fall over the past few weeks. One of the basic facts about international currency dynamics is that foreign exchange markets first exhibit delayed reactions and then tend to overshoot the true, rational value of the exchange rate. It appears now that the rupee is undervalued &mdash; judging, at least, by various trade-weighted estimates of the real exchange rate.

Currency trouble

The second edition of the United Progressive Alliance, or UPA, may have chosen to celebrate its third anniversary in power with a certain degree of spurious self-congratulation, but it was the dining arrangements at the celebration dinner that should have prompted much greater optimism, at least for the coalition&rsquo;s remaining two years in government. Samajwadi Party Chief Mulayam Singh Yadav&rsquo;s place at the high table and brief but conspicuous conversation with UPA Chairperson Sonia Gandhi suggest that the government may finally be in a position to shake off the policy paralysis inflicted by coalition partners. The renewed Samajwadi Party-Congress bonhomie underlined the truism that politics is the art of the possible, and the numbers that Mr Yadav can deliver in the Lok Sabha could ease the passage of politically tough reforms, much of it glossed over in the &ldquo;report card&rdquo;.

Back to business?

The prices of petroleum products have a capacity to spark a political firestorm that is matched only by those of onions. Indira Gandhi raised fuel prices sharply in the wake of the first oil shock in 1973 and ignited an agitation that blossomed into the JP movement &mdash; which eventually grew enough to challenge the government. Rajiv Gandhi had a honeymoon first year in office, in 1985; but as soon as he raised fuel prices in January 1986, there were howls of protest &mdash; and, made of less stern stuff than his mother, he quickly rolled back prices. This history has been repeated several times since: when oil prices went up at the time of the first Gulf war, V P Singh as prime minister kept dithering over a price hike till the country was on the brink of a foreign exchange crisis.

Right call, wrong handling

When Prime Minister Manmohan Singh arrives in Myanmar on May 28, it will be the first visit by a head of India&rsquo;s government to its neighbour in a quarter of a century. This long gap was an important part of the international effort to exert pressure on the military junta, which has ruled Myanmar for decades, to end its stranglehold over the country&rsquo;s polity and society &mdash; a dominance that, while not over, appears to have slackened in recent years.

Myanmar's moment

On March 29, the Madras High Court issued a &ldquo;John Doe&rdquo; order &mdash; a comprehensive set of protections against unknown potential offenders &mdash; in response to a suit from Chennai-based Copyright Labs. The order named 15 major internet service providers in India, and directed that access be cut off to pirated versions of two recent South Indian movies &mdash; the Tamil-language 3, from RK Productions, and the Telegu-language Dammu.

Torrents of trouble

The leaked contents of a draft report by the Comptroller and Auditor General (CAG) on the public-private partnership between the ministry of civil aviation and GMR for the Indira Gandhi International Airport, and the development and management of its Terminal 3, are likely to make life even more difficult for the United Progressive Alliance government. If, that is, what has been reported is correct; and if the final report bears out what is contained in the draft report.

Undue benefits in aviation

Last week saw the United Progressive Alliance government issue a &ldquo;report card&rdquo; that concealed as much as it claimed. The second instalment of the UPA has consistently failed to deliver on basic reform. However, the week also saw the national executive meeting of the largest opposition party, the Bharatiya Janata Party. The occasion revealed precisely why the BJP has been unable to capitalise on the disarray in the government and continues to struggle to project itself as a credible alternative. What could have been an opportunity to hold the government to account and present a clear set of alternative policies turned instead into a lengthy clash of personalities. Attention was focused on how and why the party&rsquo;s president, Nitin Gadkari, got an unprecedented second three-year term that would ensure he is in charge until after the next general elections.

No alternative

The new consent order guidelines released by the Securities and Exchange Board of India, or Sebi, should address some loopholes in the treatment of serious offences by the market regulator. The new norms list 10 offences, including charges of insider trading, front-running, serious frauds and so on, which can no longer be easily settled via consent. Offenders could be open to more serious penalties including larger fines and disgorgement orders. The consent mechanism can also no longer apply without the completion of a full investigation of the facts in any case. A consent order allows the settlement of a possible violation, by imposing a monetary penalty, which is paid by the defendant without legal admission of guilt. It is designed to avoid putting extra pressure on over-burdened judicial and regulatory processes. Under the old consent order guidelines, Sebi could impose a penalty of up to three times the profit allegedly made through manipulative activity.

Withholding consent

Surely the intellect of a high-level&nbsp;inter-ministerial committee is not required to conclude that the subsidised export of wheat and the disposal of grain at discounted rates at home can help ease the current grain congestion. However, this seems indeed to be the conclusion reached by the high-level panel set up by the prime&nbsp;minister under the chairmanship of his Chief Economic Advisor C Rangarajan to suggest ways to relieve pressure on grain storage. The committee has suggested the export of two million tonnes of wheat through government channels, with an estimated subsidy of Rs 1,500 crore, and an additional million tonnes through private exporters with a subsidy of Rs 150 crore. In addition, it has proposed the distribution of eight million tonnes of wheat to the poor and two million tonnes to the non-poor at reduced prices.

The grain glut

Petroleum Minister Jaipal Reddy, speaking after a ministerial-level meeting on inflation on Monday, said that the government had no immediate plans to raise the administered prices of diesel, kerosene and domestic LPG (liquefied petroleum gas). This comes after oil marketing companies raised the price of petrol last week by Rs 7.50 per litre, an increase of 12 per cent. Mr Reddy&rsquo;s statement was firm: he said a price hike was &ldquo;out of the question&rdquo;.

A burden beyond bearing

The United Progressive Alliance&rsquo;s uber-enthusiasm for collective responsibility appears to have rubbed off on the bureaucracy. How else does one explain the Telecom Commission&rsquo;s decision to leave it to the empowered group of ministers (EGoM) to decide the reserve price of telecom spectrum in the upcoming auctions? The 23-year-old body, set up by an administrative notification, was given a sweeping mandate over the telecom industry; policy formulation is one of its critical functions. And, given the controversies convulsing the issue right now, there is little doubt that pricing telecom spectrum is a critical component of policy-making.

Commission and omissions

On May 27, a special court of the Central Bureau of Investigation (CBI) remanded Y S Jaganmohan Reddy, the leader of the breakaway Congress faction in Andhra Pradesh, into judicial custody for 14 days. The CBI says it believes that a case can be built up against Mr Reddy for disproportionate assets arising from bribery, as well as for violations of various money laundering statutes.

Arrested independence 

The West Bengal government&rsquo;s farcical celebrations of the victory of the Kolkata Knight Riders (KKR) in the Indian Premier League (IPL), and the &ldquo;mild&rdquo; lathi-charge that followed, capped a league season that hit the headlines for all the wrong reasons. Earlier, the Delhi police smashed an illegal betting ring. A spot-fixing sting operation led to five players being suspended. Shah Rukh Khan, KKR&rsquo;s owner, was banned from Wankhede Stadium. Luke Pomersbach of Royal Challengers Bangalore was arrested on molestation charges. Taken together, these incidents, and the airtime they received, may have had a negative impact on the league&rsquo;s image. Brand IPL is now generally estimated to have fallen in value. However, the weakest link in terms of perception, according to marketing experts, is the non-transparent and arbitrary governance standards set by the Board of Control for Cricket in India (BCCI), rather than a focus on the scandals.

Spectacle of itself 

Foreign institutional investors (FIIs) were net sellers of Rs 665.76 crore (provisional) today, according to data released by BSE.

FIIs net sellers of Rs 666 cr in cash mkt today

How much junk is there in junk food, exactly? At first sight, this may be an unreasonable question to ask. After all, when people eat a big bag of potato crisps, or stock up on salted, buttered popcorn at a movie, or finish an entire bowl of crisp bhujia at teatime, they know that what they&rsquo;re eating isn&rsquo;t exactly good for them. However, as behavioural economists have discovered, knowing exactly how bad for you something really is can impact your decision-making process very differently from knowing vaguely that it isn&rsquo;t really the healthy choice. The Centre for Science and Environment&rsquo;s recent two-month survey of packaged snack foods makes claims, thus, that should be of concern to Indian consumers. One of those claims is that companies are getting around labelling laws by printing nutritional information pertaining to serving sizes that are unrealistically small.

The junk in junk food 

Finance minister Pranab Mukherjee made a pragmatic call in exempting participatory notes (P-notes) from taxes, after fears arose that the introduction of anti-avoidance rules would cause foreign institutional investors (FIIs) to go into sell mode. At a time when external accounts are stressed, the government would rather not cope with a large foreign exchange outflow. This is not the first compromise on P-notes. In 2007, when phasing them out was proposed, the government ultimately caved in &mdash; again under threat of a mass FII exodus. However, dealing with P-notes should be about more than expediency. At least two P-note-related issues are central to notions of sovereignty. The first is, of course, a country&rsquo;s right to impose taxes. This right need not, of course, be always exercised.

One more loophole

The New Delhi Declaration adopted at the end of the fourth BRICS summit last week has brought out quite eloquently how the global economic order has remained virtually unreformed since the organisation&rsquo;s first meeting in 2009, and how the economic challenges before its member countries &ndash; Brazil, Russia, India, China and South Africa &ndash; have become even more daunting.

Losing relevance

Incisive columns and editorial comment by top opinion leaders

Page 622 - Editorial Comment