It doesn&rsquo;t matter whether the cat is black or white, so long as it catches mice,&rdquo; said Deng Xiaoping as he presided over the Middle Kingdom&rsquo;s plunge into market-led economic policies. In little over three decades starting from 1978, he transformed China into the &lsquo;workshop of the world&rsquo;. While the Communist party and its members controlled the political and cultural affairs of the state, a host of liberal capitalistic practices dominated the economy. China joined the World Trade Organisation &mdash; the sanctum sanctorum for the liberal mercantilist trade order &mdash; in 2001 and agreed to a range of far-reaching market access concessions for goods and services.

D Ravi Kanth: The colour of WTO rules

Business Standard

The long-awaited simplification of the Indian income-tax law has been triggered by the finance minister&rsquo;s introduction of the Direct Taxes Code. The Code is to come into force from April 1, 2010, to aim at unifying all Indian direct taxes, and establishing an economically efficient, effective and equitable direct tax system that facilitates voluntary compliance and minimises litigation.

India transfer pricing: The new era

Though procedure is said to be the &lsquo;handmaiden of justice&rsquo;, sometimes she strangles it.

M J Antony: Defeat in victory

For much of the last year, central bankers, industrial leaders and politicians have been warning us about deflation. Falling prices, they tell us, will create another 1930s-style depression. The only answer is to print money furiously.

A little bit of deflation on my side ...

A study based on satellite imagery, by the US National Aeronautical and Space Administration (Nasa), says that North India&rsquo;s ground water table is dropping by nearly a foot every year. The estimation of total annual water extraction, at around 17.7 billion cubic metres (BCM) in four states (Punjab, Haryana, Rajasthan and Delhi) between 2002 and 2008, is 35 per cent higher than the government&rsquo;s assessment of 13.2 BCM. The study, published in the latest issue of Nature, the peer-reviewed scientific journal, reckons the total water depletion in the region in this period at a staggering 109 cubic km, twice the capacity of the country&rsquo;s largest water reservoir. Since the withdrawal of water is far higher than the recharge, this amounts to mining underground reserves built over thousands of years. The implications for the agriculture-based economy of the region as well as for national food security are obvious.

Dire water warning

Where is the American and global economy headed? Last year, there were two sides to the debate. One camp argued that the recession in the United States would be V-shaped &mdash; short and shallow. It would last only eight months, like the two previous recessions of 1990-1991 and 2001, and the world would decouple from the US contraction.

Nouriel Roubini: A phantom recovery?

Surveys all across the world tell us the job market is back on track. Really? The Chief Executive magazine&rsquo;s CEO index &mdash; America&rsquo;s only monthly CEO Index &mdash; dropped to 63 in July, after having shown a gradual improvement. All components of the index are down, with employment confidence taking the biggest hit.

Shyamal Majumdar: Optimism yes, euphoria no

Renault-Nissan chief Carlos Ghosn said India was the best place to build a low-cost small car and that&rsquo;s why he tied up with Bajaj Auto to do just that. Ratan Tata has proven this with the Nano. And even though the A-Star is not a low-cost small car, Suzuki Motor Corporation has made India its only production centre in the world and exports this car to both European and non-European markets. Hyundai planned to export more than half its 120,000 i20s manufactured in India.

Surajeet Das Gupta: India&#39;s still the low-cost haven

That the share of the services sector in GDP rises as per capita incomes rise is well known, but is the relationship a linear one? Barry Eichengreen and Poonam Gupta study services sector growth across countries and find the relationship progresses in waves. In the first phase, as per capita incomes rise, the share of services to GDP rises faster than the growth in GDP.

Sunil Jain: Servicing growth

Once the US government and the Swiss bank UBS sign their historic deal, under which UBS hands over the account details of around 5,000 suspected US tax evaders, there will be a clamour for similar action from India. The US deal, some accounts say, will give the US government information relating to assets worth $10-15 billion, which are held abroad. And while UBS is just one bank, reports suggest that tax dodgers are responding positively to the government&rsquo;s amnesty scheme which ends on September 23. So why can&rsquo;t India lean on the Swiss to get access to similar information on Indian tax evaders? It is an important question, because the estimates of black money sent abroad each year by Indians ranges from $4.7bn to $22.7 bn.

The citadel isn&#39;t crashing

In addressing the issue of the massive backlog of cases pending disposal in India&rsquo;s courts, the Prime Minister has squarely put the put the ball in the court of the judiciary. Manmohan Singh told a conference of chief ministers and chief justices of High Courts that the apex court should be the catalyst, organiser, mentor and umpire in tackling this issue. This is because it is the judges themselves who are now primarily responsible for appointing judges, and a key reason for the backlog (4 million cases pending before the High Courts and 30 million before the lower courts) is the large number of vacancies in the courts. The underlying problem could be that it is becoming increasingly difficult to find suitable candidates for the Bench, which is no longer held in the same regard as it used to be. There is also the need to &lsquo;catch them young&rsquo; as it becomes difficult for a senior lawyer to leave his practice as, with seniority, it becomes progressively more lucrative.

Clearing the backlog

The government has unveiled an ambitious programme for solar energy development with the goal of 20,000 MW of solar power capacity by 2020. The plan aims at ensuring that by 2020 solar power is cost-competitive.

Nitin Desai: A sunny future

Financial risk is structurally different from other risks that companies are exposed to, since, unlike any business risk, it is not a risk that the company has chosen to carry. Which explains why management is always more nervous about this risk than virtually any other. This extra edginess often leads to excessive board oversight of financial risk management, with the CFO&rsquo;s decision-making routinely second-guessed by the board.

Jamal Mecklai: A gift for the chairman&#39;s wife

The canons of the Direct Tax Code (&ldquo;Code&rdquo;) as asserted by the Hon&rsquo;ble Finance Minister Mr. Pranab Mukherjee are to modulate a stable, equitable and economically efficient tax system. In order to achieve the said objectives, the Code aims to simplify, amend and consolidate the existing direct tax legislation and also proposes to minimize the scope of litigation.

Concept of tax residency redefined

It&rsquo;s amazing what a little sunshine can accomplish. Check out the footnotes to Regions Financial Corp&rsquo;s latest quarterly report, and you&rsquo;ll see a remarkable disclosure. There, in an easy-to-read chart, the company divulged that the loans on its books as of June 30 were worth $22.8 billion less than what its balance sheet said. The Alabama-based bank&rsquo;s shareholder equity, by comparison, was just $18.7 billion.

Jonathan Weil: The next bank bubble

The data put out by the ministry of commerce show a continuing decline in exports for July. This suggests that the worst is not over for the exporting community. Exports have now fallen for the tenth month in a row, compared to the same month last year. At $12.5 billion, July exports were 26 per cent lower than they were in the same period last year. With the fall in imports even greater at 36 per cent, though, the trade deficit for the first four months of the year has improved &mdash; to $6.2 billion, from $9.1 billion in the 2008 period. None of this is unexpected, given what is happening in the global economy. A few facts, however, need to be kept in mind. For one, the decline is getting arrested, almost in sync with the improvement in the world economic tempo. So, exports were $12.7 billion in December 2008 and fell to $10.7 billion by April 2009. They rose to $11 billion in May, to $12.8 billion in June and are slightly lower at $12.5 billion in July.

Arresting the decline

The government&rsquo;s proposal to roll out a plan by the year-end to raise solar power generation capacity to 20,000 mega watts (MW) by 2020 is laudable but could be a case of vaulting ambition, and therefore not very realistic. The Prime Minister&rsquo;s council on climate change has approved the setting up of a national solar mission for this purpose. If this goal is to be met, it would mean generating 10 per cent of the country&rsquo;s total power by tapping sunlight. Such a massive production capacity would be sufficient to meet the electricity needs of three of the country&rsquo;s biggest cities. There is no doubt that the country needs more power, and producing it from clean sources is the way to go when environmental pollution and global warming have become major issues. But the record of tapping solar energy does not inspire much confidence. No more than 500 MW of solar power production capacity has yet been installed.

Betting on the sun

It would have been inconceivable just a year ago that the US government would need to support Fannie Mae and Freddie Mac and become a de-facto majority shareholder in General Motors, AIG, Citibank and Bank of America, and the UK government would hold controlling shares in the Royal Bank of Scotland. The Financial Times was concerned enough to run a series on the &ldquo;Future of Capitalism&rdquo;.

Jaimini Bhagwati: Whither economics and finance?

Earlier this week, auto-rickshaws in Delhi went on a two-day strike because the state government wanted to crack down on vehicles operating without permits, licences and pollution control certificates. A few years ago, their Kolkata counterparts went on strike because the Bengal government wanted to phase out polluting vehicles.

Kanika Datta: Who&#39;s afraid of democracy?

Ahead of cabinet reshuffles in the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government, a group of five used to take all the important decisions: Atal Behari Vajpayee (now virtually bedridden), George Fernandes (ditto), Pramod Mahajan (dead), Jaswant Singh (expelled) and L K Advani.

Aditi Phadnis: Fired and brimstone

The Obama administration is increasingly signalling that the US will not continue to be the world&rsquo;s consumer and importer of last resort. The clearest statements came last month from Larry Summers, White House economics director, in a speech at the Peterson Institute for International Economics and in an interview with the Financial Times.

Fred Bergsten & Arvind Subramanian: Resolving global imbalances

Business Standard brings you expert opinions on various issues

Page 870 - Opinion Specials