That the government has shown a determination to widen the tax net is commendable. Reform of certain aspects of the Direct Taxes Code is overdue. Often, lack of clarity in the law allows companies to cling to debatable interpretations that cause the intent of the legislation to remain unfulfilled. Many of the current requirements are incapable of dealing with a vastly more complex, globalised economy. In addition, there is a climate abroad against widespread tax evasion.

Taxman's joy 

Business Standard

Last week&rsquo;s Budget came at a time when higher government borrowing had already seriously hurt corporate investment and thus growth. Unable to sufficiently minimise the Centre&rsquo;s borrowing next year, the government has tried to open up various routes by which foreign money can help plug the gap for Indian companies. Qualified foreign investors are, for example, to be allowed to participate in the corporate bond market, though that, in the absence of a vibrant secondary market, is unlikely to be enough to invigorate the corporate debt market. It has also opened up a route for borrowing working capital overseas. Airlines will be allowed to borrow up to $1 billion worth of working capital strictly within the time frame of 2012-13. It is questionable if companies with balance sheets as damaged as those of Air India and Kingfisher Airlines will find overseas lenders even if they agreed to huge premiums. However, there could be serious long-term implications of this relaxation.

Banking on hot money

Back when the India growth story was unblemished and the ruling United Progressive Alliance (UPA) had emerged unscathed from the bruising nuclear deal confirmation and the elections that followed, there was an almost palpable sense that India had arrived as a major global player. It demanded as its right a larger share of responsibilities at international fora such as the International Monetary Fund (IMF) and the Group of Twenty.

Retreating India

The Lok Sabha was adjourned for a short duration on Wednesday following an uproar over the government&rsquo;s latest figures for poverty. This follows widespread public outrage at those figures. A dispassionate observer of this discussion may be led to conclude that either poverty has risen dramatically or the government has somehow fudged the figures inexcusably and obviously. Elsewhere perhaps, but not in India. That neither of those statements is even close to being the truth reveals much about the economic illiteracy that cripples public debate in India. What can be said about the quality of the public sphere in a nation where the largest and fastest fall of poverty in its history is met with such widespread anger? A strange coalition of the political Opposition and professional poverty boosters has served to obscure the details of this achievement.

Facts, not outrage

The first-ever Agricultural Survey tabled in Parliament, emulating the presentation of the Economic Survey, seems a well-meaning exercise in candid analysis of the factors that have constrained the sector&rsquo;s growth. Being an inaugural report card, it has done well not to confine itself to developments during 2011-12. The long-term trends do, indeed, provide the answers to some of the key questions as to why the green revolution, which peaked in the 1980s, flagged subsequently; and why the prices of farm commodities, other than staple cereals, have soared despite a substantial increase in their production.

Bedrock for reform

Replying on Thursday to the debate on the Railway Budget in the Lok Sabha, the new railway minister, Mukul Roy, rolled back most of his predecessor&rsquo;s suggested reforms. Dinesh Trivedi had made a start towards repairing the Indian Railways&rsquo; straitened finances, by raising passenger fares for the first time in eight years. In addition, he had recognised the urgent need to make improvements to the Railways&rsquo; safety infrastructure, which could not happen without the financial reform he had in mind. There was structural reform that Mr Trivedi correctly decided was necessary too. Among those were changes in the Railway Board to bring in those responsible for the Railways&rsquo; financial health and its safety aspects, and making a start on taking politics out of fare-setting &mdash; by examining the possibility of an independent authority to regulate tariffs. Such measures, though limited, were nevertheless overdue.

Off track on reform

On January 7, 2009, Ramalinga Raju of Satyam Computers confessed in a letter to the Bombay Stock Exchange that he had been overstating (that is, fudging) his company&rsquo;s profits for six years. Four days later, the government appointed a caretaker board to find a buyer. Four months later, the company was owned by Tech Mahindra, the highest bidder, and the Satyam crisis was over. Compare this with Kingfisher Airlines&rsquo; crisis, even though many would argue that a comparison between the two cases is not entirely apt. In November last year, the airline announced that flights would be curtailed owing to &ldquo;aircraft reconfiguration&rdquo;; two months later the excuse was changed to &ldquo;bird hits&rdquo;. Meanwhile, Kingfisher&rsquo;s dues to government oil companies stood at Rs 600 crore.

The Air India effect

The fiery defender of the aam admi and scourge of reformists, Trinamool Congress chief Mamata Banerjee, had a good week. She got rid of her nominee as railway minister, Dinesh Trivedi, and replaced him with someone whom the Congress wished to avoid having in the Union cabinet, Mukul Roy.

Realist and populist 

The leaked draft report of the Comptroller and Auditor General (CAG), published in several newspapers, may or may not eventually be very different from the final report to be tabled in Parliament next month. But, even in its current version, the draft report has correctly focused attention on the severe errors in the government&rsquo;s coal policy. While it may be logically fallacious to claim vast amounts of loss to the state&rsquo;s exchequer based on the output from blocks that Coal India may not have been planning to exploit anyway, there are other serious questions that should be asked. After all, India&rsquo;s power crisis has gone from bad to worse &mdash; and a large part of the problem is coal shortage. India&rsquo;s annual coal production is about 530 million tonnes; this falls short of requirements by 80 million tonnes, and the shortfall is only growing as power demand rises.

Captive of delays

China&rsquo;s leadership is caught in turmoil which it would have greatly preferred to keep under wraps. The high-level succession later this year was to be smooth and rule-based &mdash; the latter for the first time. Instead, internecine conflicts have come out in the open in the most embarrassing way. A senior regional official &ndash; the police chief of Chongqing province, Wang Lijun &ndash; took temporary refuge in a nearby US consulate, fearing for his life after he told the state&rsquo;s party secretary, Bo Xilai, that some of his own family members were being investigated for corruption. Mr Bo himself, now demoted, has conducted a high-decibel campaign against corruption, resulting in several executions. He is a &ldquo;princeling&rdquo;, the son of one of China&rsquo;s revolutionary heroes and his Western-style open courtship of public opinion was considered distasteful by the technocratic, low-key current leadership.

Changing China 

The rural development ministry recently proposed &ldquo;independent, real-time evaluation&rdquo; of the government&rsquo;s flagship social welfare and development programmes, a suggestion that deserves attention not just for its pros, but also for its cons. It is true that given the explosive growth in social sector spending, effective monitoring and evaluation are ever more important. The constant hum of charges that extra money is being misspent or stolen serves to politically discredit these social sector schemes, and they need proper investigation. Yet, the ministry&rsquo;s proposed mechanism looks less like a method for genuine, independent investigation than a way to increase, even further, government employment opportunities for programme evaluation experts. The ministry has suggested a &ldquo;concurrent evaluation network&rdquo;, to be controlled by another new body, the &ldquo;independent evaluation office&rdquo;, or IEO.

Jobs for evaluators

The decision by US President Barack Obama to nominate Jim Yong Kim as the American candidate for the top job at the World Bank came as a surprise. Various names, most of them with a higher profile than the president of Dartmouth College, were being thrown about &mdash; senior White House advisor Larry Summers, Secretary of State Hillary Clinton and economist Jeffrey Sachs. Any of these nominations would have been considered business as usual.

Decoding Dr Kim

In the two decades that disinvestment has been on the government&rsquo;s agenda, its purpose has been distorted. When the idea that the central government&rsquo;s stake in public sector undertakings (PSUs) be diluted was first suggested and implemented, the main motivation was to improve their efficiency. Disinvestment would lead to greater operational discipline, it was argued. Listing a PSU meant that it would be subject to the rules of the market, with the government turning from the command centre of the economy to just another shareholder, albeit one with control. This has not happened; and now disinvestment seems to be seen as just another way to raise resources for a cash-strapped exchequer. In the process, the companies themselves have suffered. They still follow government directives on their day-to-day operations that are supposedly in the economy&rsquo;s interest, not in their own. Yet little has been done to change that &mdash; till now.

Disciplining PSUs

The breather from the Greek debt crisis might prove all too short-lived as another Club Med country appears to be in danger of catching the financial contagion: Spain. As Prime Minister Mariano Rajoy gets ready to present a deficit-cutting Budget on March 30, labour unions are preparing for a strike to protest against laws that make it easier to fire workers and cut wages. All this takes place against the backdrop of a meeting of euro zone finance ministers in Copenhagen on Friday to strengthen the region&rsquo;s &ldquo;financial firewall&rdquo; by raising the ceiling on bailout funding. Much of this is contingent on how far Spain is ready to bite the bullet of austerity. And the country is clearly struggling. Last month, it informed the European Union (EU) that it would miss its 2011 deficit reduction target of six per cent of gross domestic product (GDP) by as much as 250 basis points, in spite of an austerity plan.

Now, Spanish flu

Tension between India&rsquo;s civilian and military leadership has steadily increased over the past few months and now appears to be at the highest it has been in decades. In his latest fusillade, the chief of army staff, General V K Singh, has said that he was offered a Rs 14 crore bribe by a retired army officer in order to clear the purchase of a set of armoured vehicles. He reported the incident to Defence Minister A K Antony; Mr Antony, speaking in Parliament, said that he was indeed told of the incident &ldquo;more than a year ago&rdquo;, but that the General did not wish to proceed further by himself, nor did he submit a written complaint for the ministry to act on. This drills a hole in the implication that General Singh had conveyed in his many communications to the media on the subject &mdash; that the civilian leadership was unconcerned about rampant corruption in defence procurement.

No ceasefire in sight 

The deadline for the enforcement of new electronic waste (e-waste) management norms is just a month or so away. And yet, most of the sector&rsquo;s stakeholders seem quite unprepared. The E-waste (Management and Handling) Rules, 2011, notified almost a year ago as coming into effect from May 1 this year, require producers of electronic and white goods to take back their products at the end of their working life and arrange for their safe disposal or recycling. Going a step further, these mandatory rules, issued under the Environment Protection Act, also fix the responsibilities of other players in this field, including dealers, consumers and recyclers, in ensuring appropriate destruction of these items, which usually contain several hazardous substances. Manufacturers will now be obliged to send periodic progress reports to state pollution control boards.

Rules for recycling 

The tropical shrub jatropha curcas, touted a decade ago as a commercially feasible source of biofuel to alleviate the global energy crisis, seems to have let its proponents down quite comprehensively. Millions of hectares of land in the arid areas of India and in many other Asian and African countries were turned into jatropha plantations in the expectation that the oil derived from its seeds would provide an alternative to diesel. However, this dream seems to have turned sour; evidence is growing that although the seeds are rich in bio-oil, the plant is neither as hardy and drought-tolerant as earlier presumed nor productive enough to be commercially viable without adequate water, fertiliser and careful management. India, apparently taken in by the global euphoria over the plant, had developed plans to turn about 13 million hectares of wasteland into jatropha plantations. Several financial incentives, including the free supply of jatropha seedlings, were offered.

Don't rush into biofuel 

It is called &ldquo;shoulder-surfing&rdquo;, and it is getting increasingly common. Applicants at job interviews are being asked, at some point in the proceedings, to either hand over their passwords to social networking sites like Facebook so that the interviewers can have a quick look, or log in there and then so the interview panel can, quite literally, look over their shoulders.

Your password, please

The new year will show whether anti-corruption, the primary issue of 2011, will be but a footnote in history.

The triumph of politics?

The best-tended gardens hide unnoticed weeds; even arid zones can sprout winter flowers. As the country hopes, half-fearfully, for a better 2012 than the year gone by, are there trees that one can&rsquo;t see for the wood? Consider the stock market, which saw the market value of its leading stocks drop by a staggering 25 per cent last year. Amid the carnage, are there positive trends that have not attracted attention? What about understanding the kind of companies that stand tall even now? The list of 25 most valuable listed companies makes for an instructive read. As many as 10 are state-owned, a testament to how much the government still dominates large sectors of business activity &mdash; energy (coal, oil, gas and electricity), banking, natural resources. A goodly number in the Top 25 did not exist in 1991 or were inconsequential at the time &mdash; tech companies like TCS and Infosys, private banks like HDFC Bank, telecom service providers like Bharti Airtel.

India Inc's winter flowers

As India marks two decades of reform, the year just past, 2011, may well go down as the one year in these decades in which the macro management of India's economy showed the greatest signs of strain. All the major indicators are in the red. Consider, first, the fiscal deficit. The Budget declared it would be at 4.6 per cent of gross domestic product (GDP), which was hailed at the time as a sign that the finance ministry wished to strike a blow for fiscal prudence.

Little hope for 2012

Incisive columns and editorial comment by top opinion leaders

Page 627 - Editorial Comment