The Reserve Bank of India&rsquo;s (RBI&rsquo;s) regulations for microfinance institutions (MFIs) registered with it as non-banking finance companies &ndash; these make up most of the MFI space &ndash; have been largely welcomed by the sector. There are several reasons for this. One, there are now at least some rules to go by, good or bad &mdash; one of the main problems earlier was the absence of such rules. Two, the sector finds the regulations to be a considerable improvement on the Malegam committee&rsquo;s original proposal. This indicates that the regulator is willing to listen to the practitioners, thereby adding meaning to the interactions that took place after the committee&rsquo;s report was released. It also implies that the issues on which the sector continues to have doubts are likely to be addressed once the guidelines are put in place and the consequences become apparent.

Back on the rails

Business Standard

While sharp political differences between the two main national political parties, the Indian National Congress and the Bharatiya Janata Party (BJP), are understandable and quite natural, both are obliged to ensure that India&rsquo;s federal structure is not weakened and day-to-day governance is not harmed by their political rivalry and the egos of their leadership. The BJP&rsquo;s anger against the Congress, as reflected in the proceedings of the BJP chief ministers&rsquo; conclave this week, should not cross the point where the relationship between the Centre and the states of the Union is damaged. As India&rsquo;s two major national parties, which are also leaders of the two contending coalitions, the United Progressive Alliance and the National Democratic Alliance, both the Congress and the BJP owe it to the nation that they learn to manage their differences in a reasonable manner.

Non-cooperative federalism

The recent arrangement reached by India and Iran, under which India would pay for oil imports from Iran in rupees, concludes the effort to find an alternative mode of payment, following the termination of the mechanism using the Asian Clearing Union as a conduit late last year, following pressure from the United States. Subsequent efforts to route payments through German banks and the United Arab Emirates also did not fructify for much the same reason. It would be interesting to see how durable the present arrangement is, given the United States&rsquo; determination to bring Iran to its knees, by choking off its main source of revenue &mdash; petroleum exports. The oil-for-rupee deal struck by the two countries is reminiscent of a similar arrangement between India and the erstwhile Soviet Union, which allowed India to pay for Soviet imports (mostly defence equipment and crude oil) in rupees, an arrangement that continued until the collapse of the Soviet Union in the early 1990s.

Unusual business

In the mid-1970s I spent a few years working on sub-Saharan African (SSA) countries and concluded in a review paper (World Development, February 1981) that their prospects for robust economic development were problematic. Thirty years later, is there any reason to change that judgement? The overwhelming majority of non-African observers (and many Africans) would say no. After all, median real income in SSA has changed little since the mid-1970s.

Shankar Acharya: Africa rising

Developing countries are worried that the focus of the Doha Round is once again shifting from development to market access in favour of the developed world.

T S Vishwanath: Development vs market access

The past few decades have seen the share of agriculture decline in the Indian economy to be overtaken by services. Over the last six decades, the share of the service sector has increased from one-third of GDP in 1950-51 to more than half in the last decade, rising steadily over the years, with a marked acceleration in growth in the eighties and nineties.

Indicus Analytics: Doing growth a service

The global economic crisis of 2008-09 has triggered much soul searching in the economics profession. How come only a few economists saw it coming? Was it because the profession was blind to the very possibility of catastrophic failures in a market economy, as Nobel laureate Paul Krugman put it? Such thoughts naturally warrant a more relevant theory. Or was it largely a predictive failure? The response here has been to work towards improving the measurement of the build-up of systemic risk so that decision makers can fashion a timely policy response.

N Chandra Mohan: What is risk topography?

The subdued response to the merger and acquisitions (M&amp;A) rules notified on Wednesday shows that the Competition Commission of India (CCI) has paid some regard to India Inc and the legal fraternity&rsquo;s concerns. By softening the rules from the somewhat stringent guidelines issued earlier this year, the CCI has clearly acted within the parameters of extant political economy and sent clear signals to the domestic and international investing community that the M&amp;A regulation regime would, on the whole, be relatively benign. For example, the exemption of M&amp;As that take place before June 1 from the purview of the new rules has calmed investor anxieties considerably, especially for Vedanta, which is struggling with a raft of other issues over its acquisition of Cairn India. By slashing filing fees from a steep Rs 40 lakh to a nominal Rs 50,000, the CCI has certainly lowered transaction costs.

Flexible on mergers

Six months of investigation, mostly through telephone-tapping, 12 months of analysis of evidence and prosecution, 11 days of deliberation and, finally, a conviction. Galleon Group founder Raj Rajaratnam&rsquo;s journey from being suspected of fraud to being punished and jailed would have taken less than two years by the time the saga ends next month. In Hyderabad, Satyam&rsquo;s founder Ramalinga Raju is still an undertrial and remains in custody for more than two years since he confessed to financial fraud. No one can guarantee how long Mr Raju will remain in jail and when he can expect to get bail.

Trial as punishment

Getting China right is one of the most important calls investors have to make. The importance of China is driven by its impact on global growth, incremental consumption of commodities and its emergence as the second-largest economy in the world. If the economic boom in China persists, global economic growth will continue, emerging markets should continue to outperform and global commodity prices will be robust.

Akash Prakash: The China debate

The topic much in debate these days is what will happen to Hero Honda now that Honda is out of the venture. Will the Munjals, patriarch Brijmohan Lall and sons Pawan Kant and Sunil, hold on to their dominance of the motorcycle market? Or is this just what the opening rivals like Bajaj Auto, Suzuki and TVS were looking for? Whatever be the outcome, one thing is certain &mdash; new realities in the motorcycle market will unravel over the next quarters and years.

Bhupesh Bhandari: Hero's long drive

My daughter these days says, &ldquo;What should I do with my life, Dad?&rdquo; after three years of being driven to college in silence because she didn&rsquo;t want me to bug her about her post-grad choices, or career. Five years and an expensive education later, my son, too, is back home for interviews that will happen &ldquo;when they happen, just chill, Dad&rdquo;. Meanwhile, the house is full of youngsters who high-five us and pass off their time cadging free food and drinks however and wherever they can manage it. We&rsquo;re never quite sure how many people &ldquo;crash in the pad&rdquo; or how many wake up, but I do know that several of them are out-of-towners because of the baggage we keep tripping over. My wife, who loves doing the laundry, has taken to protesting about having to wash clothes that, she says, could not possibly belong to members of our household.

Kishore Singh: Open house for odd jobs

India&rsquo;s experience with elections began in 1920. It saw full-fledged democracy (every person, one vote) only after 1947. It stopped being a dominion in 1950 &mdash; when it ended its ties with George VI as &ldquo;King of India&rdquo;, and gave itself a Constitution that defined the nature of the new republic. Being a republic means more than getting rid of a monarchy; it means a state defined by the rule of law, with strong institutions checking the arbitrary power of those elected to executive office by popular mandate.

T N Ninan: Democracy and Republic

Why are wines so expensive in India?&rdquo; is a frequent moan.

Taxes and other grouse

An Apple a day keeps old age away, at least in the new world.

A for Apple

A familiar issue is how to gain an edge over volatile international financial markets to obviate or minimise future global financial doldrums.

Parthasarathi Shome: Financial market behaviour

Politicians make a habit of fishing in troubled waters, and so, Rahul Gandhi&rsquo;s dramatic visit to the troubled villages of Greater Noida was more than a condolence visit. It was a heartfelt attempt to bolster his party&rsquo;s image in the state elections due in Uttar Pradesh next year. Before his 24 hours were up in the village of Bhatta Parsaul, leaders of every party were tailing him in their common quest to wrest the political advantage in Uttar Pradesh. Toppling Mayawati is the name of an old game in New Delhi but should you speak to estate agents who operate in the greater Delhi region, she is often referred to as north India&rsquo;s biggest property dealer. Her land-hungry government, in an earlier avatar, was stymied by the Supreme Court from building shopping malls on the river embankment opposite the Taj Mahal.

Sunil Sethi: Why property is hot, and dirty

On September 11, 2001, my daughter Ritu and I were flying over the Atlantic Ocean. We had been out of London a little over two hours when I noticed the Air India plane taking a wide right turn. I asked the air hostess the reason for changing course. The cabin steward whispered in my ear, &ldquo;Sir, we are returning to London. There have been explosions in New York. The John F Kennedy airport is closed, and so are many other airports. We are not announcing it to avoid panic.&rdquo; So we were back at Heathrow airport amid some chaos and confusion. Dozens of flights had returned from the mid-Atlantic region. The airport authorities were, like the rest of us, surprised and not prepared to have thousands of passengers on their hands. It took us sometime to reach our hotel. Once we reached, we saw on TV the twin towers being reduced to rubble. I had lived in New York when these were being constructed.

K Natwar Singh: The terror trail

Is art really outpriced? For everyone who claims that the best artists are unaffordable for even the upper middle class, there have always been works that are more reasonably priced on an investment-value scale that is escalatory, but which tend to be overlooked in the (wrong) belief that a lithograph or an etching is not an original work of art.

Print run

Why has news of Rajasthan Chief Minister Ashok Gehlot being involved in scams surfaced suddenly? On the face of it, the allegations look serious. The Rajasthan government stands accused of giving contracts and assets worth Rs 11,000 crore to firms with financial links to Gehlot&rsquo;s immediate family: his daughter Sonia and son-in-law Gautam; and son Vaibhav and daughter-in-law Himanshi. One of the companies in question has bought space in newspapers to rebut the allegations. But this clarification has gained little traction with the Congress high command, which summoned Gehlot last week to ask him what was going on.

Aditi Phadnis: Gehlot needs a makeover

The major takeaway from the credit policy is that we are taking a chance on growth to bring down inflation. Friedman has triumphed over Keynes and markets know what to expect.

Madan Sabnavis: Will rate hikes work?

Business Standard brings you expert opinions on various issues

Page 655 - Opinion Specials