The Supreme Court decision banning both mining and movement of ore in Bellary district in Karnataka, following the Lok Ayukta report, is excessive. The blanket ban penalises even those who did nothing wrong. While the outrage over the illegal profiteering of over Rs 12,000 crore by a politician-operator-bureaucrat combine is understandable, applying the brakes on all mining and related activity in the district is an undifferentiated response.

Too sweeping a ruling

Business Standard

India&rsquo;s decision to route payments for oil imports from Iran through Turkey&rsquo;s Halk Bankasi (Halkbank) ends seven months of an impasse between the two countries following the Reserve Bank of India&rsquo;s decision (under US pressure) to terminate the Asian Clearing Union as a conduit for payment. Under the latest agreement, Indian refineries which import directly from Iran will make rupee payments to the Union Bank of India, which will in turn route payments in euros to Iran through Halkbank. While this avoids the use of the dollar, it remains to be seen how sustainable this arrangement is, given the United States&rsquo; implacable opposition to any large-scale commercial dealings with Iran.

Tehran via Ankara

This newspaper wishes the chairperson of the United Progressive Alliance and president of the Indian National Congress Sonia Gandhi good health, long life and a speedy recovery from her illness and surgery. However, we reject the view of the spokesperson of the Congress Party that information pertaining to Ms Gandhi&rsquo;s health is a &ldquo;personal matter&rdquo; and that the people of India should &ldquo;respect&rdquo; her family&rsquo;s request for &ldquo;privacy&rdquo;.

Right to information

History was made last week when Standard &amp; Poor&rsquo;s (S&amp;P) downgraded the United States sovereign credit rating, reportedly for the first time since 1917, from triple A to double A plus. Even as the Barack Obama administration avoided the ignominy of a first-ever payment default last weekend, the uneasy and unconvincing compromise sent market sentiment down before the week was out.

West and the rest

The Indian corporate sector reported robust revenue and net profit growth in the previous quarter. The analysis by the Business Standard Research Bureau of available data from 900-odd companies that have announced their first-quarter (April to June 2011) results shows that their aggregate revenue grew by 27.09 per cent and net profit by 16.93 per cent over the same period last year.

A mixed quarter

With all the bad news coming from the United States in the past few days, one must not forget Europe. The news from the European Union (EU) is bad &ndash; could get worse &ndash; and at present even in theory Europe does not have some of the exit options that the US still has, like a government and a central bank that can bail the economy out. So watch out for news from Europe.

Watch out for Europe

Cognizant&rsquo;s race past information technology major Wipro marks an inflection point in the evolution of India&rsquo;s software industry. The entire industry may have been hit by global trends since 2008, but it is the way each company has responded to external challenges that has separated the front runners from the rest. Wipro has been affected by three factors. One, despite establishing itself as the world&rsquo;s largest design services house, it has not made a mark in serving the global financial services sector, the main customers of India&rsquo;s leading software companies. When the global economy, particularly the battered financial services industry, began to recover, software firms that were first to come to the latter&rsquo;s aid and help finance companies reduce costs were the quickest to recover. Two, Wipro cut costs drastically during the recession by reducing the sales and marketing staff.

Cognisant of Cognizant  

Just as correlation does not establish causation, asking questions does not amount to passing judgements. The Comptroller and Auditor General of India (CAG) is an important constitutional office that has a role to play in improving governance. However, going beyond one&rsquo;s brief can always harm an institution in the long run and be counterproductive. An auditor&rsquo;s dharma is to see if spending has been correctly accounted for and to check if there has been any avoidable and wasteful spending. However, auditors cannot arrogate to themselves the role of policy makers and managers. Every good manager knows concrete decisions are taken under concrete conditions. An auditor often seeks to know why ideal decisions were not taken under ideal conditions.

Auditing the auditors

It is a pity that Union Finance Minister Pranab Mukherjee has had to withdraw his statement in Parliament that the government would consider the suggestion to end the subsidy on diesel used in passenger cars. Three days after he had made the statement, he said no such plan was in the works, nor was there a proposal to change the present structure of duties in this regard. Meanwhile, his first pronouncement sent the stocks of auto companies down &mdash; the firms are already apprehensive about an impending economic slowdown in sales. Surprisingly, Mr Mukherjee, a veteran with innumerable years spent in important economic portfolios, is not given to shooting his mouth off. What prompted him to say something that he had to retract later is a matter of speculation. However, the episode provides an opportunity to restate certain well-known realities.

The FM's welcome slip

No modern corporation would take a decision on the appointment of its chief executive a few days before the announcement is due and be apologetic about it, saying that further delay was not possible given the exigencies of the situation. That is precisely what the Union government has done in giving Reserve Bank of India Governor Duvvuri Subbarao a two-year extension 22 days before his term expires. Union Finance Minister Pranab Mukherjee claimed that there was no reason why any decision was required to be taken at this point in time since &ldquo;there was time till September&rdquo;! True, when Dr Subbarao was appointed RBI governor in September 2008, his appointment was announced five days before the end of the five-year term of Dr Y V Reddy, the then RBI governor.

Eleventh-hour wisdom

Mumbaikars in particular and Indians in general should be grateful that what they got after a Panama-registered tanker ran aground last weekend were tarballs of oil and gunk on Juhu beach. The environmental crisis, grave as it certainly is, could easily have been overshadowed by another 26/11. Given the time it took before the Coast Guard and anyone in authority thought fit to act, M V Palit could well have disgorged AK 47-wielding terrorists on to one of India&rsquo;s most crowded beaches instead. After all, that was the chosen mode of entry for 10 heavily armed men who held Mumbai hostage for 60 hours in 2008. Or the ship may have been packed with explosives that could have killed many hundreds of curious onlookers who thronged the beach until the police belatedly decided to clear it. The inaction over M V Palit was inexplicable and worrying for several reasons.

Waves of insecurity

The best, or perfect (depending on the translator), said Voltaire, is the enemy of the good. That is precisely what activist Anna Hazare and his so-called &ldquo;Team Anna&rdquo; have converted their version of the anti-corruption ombudsman &ndash; the Lok Pal &ndash; into. Mr Hazare&rsquo;s fivesome want a &ldquo;Mr India&rdquo; kind of all-powerful destroyer of malfeasance, which, they imagine, will wipe out corruption from India&rsquo;s body politic. The United Progressive Alliance government has gone out of its way to give the four gentlemen and lady a patient and understanding hearing and, based on wider inputs, has framed what the government regards a &ldquo;good&rdquo; Bill. It is now up to Parliament to decide if it is happy with the &ldquo;good&rdquo; or wishes to make it &ldquo;better&rdquo;. At the end of the day, whatever Parliament does is unlikely to satisfy those who seek the &ldquo;perfect&rdquo;. So be it.

Good versus perfect

Can India escape the consequences of a transatlantic economic slowdown? While global commodity prices may soften and offer some comfort, international trade may be hurt. For much of the last year, exports were hurtling along at more than 30 per cent year-on-year, buoyed by new markets in Africa and Latin America. Exports for the financial year 2010-11 were a record $245 billion, while imports were of the order of $350 billion. Importantly, exports grew faster than imports, leading to a lower trade deficit than in the previous year. However, the recent statement by Union Commerce Secretary Rahul Khullar indicating a slowdown in exports during the July-September quarter is sobering. The projected decline is owing to a combination of a statistical base effect (it is virtually impossible to grow at 30 per cent year-on-year indefinitely) and the lack of depth in the new export geographies.

Readying for the storm

This is neither a postcard nor a form, just an editorial to indicate precisely what we mean to say. Yours sincerely and yours forever more. India still needs you, India still feeds you, even at sixty-four (with apologies to Paul McCartney and John Lennon)! The tri-colour is on sale again at crossroads around the country. Young ill-clad kids trying to appeal to every vehicle driver&rsquo;s patriotism to make an extra buck. No harm in it.

When I'm sixty-four!

Two very different speeches in New Delhi last week, on the eve of India&rsquo;s 64th Independence Day, drew attention to the strategic role of industrial policy. Harvard economist Dani Rodrik, renowned for his influential work on industrial policy and a source of inspiration for India&rsquo;s National Manufacturing Competitiveness Council, told a Confederation of Indian Industry audience that &ldquo;strategic collaboration and co-ordination between the private sector and the government&rdquo; could help uncover the bottlenecks in industrial growth and encourage investments in &ldquo;non-traditional&rdquo; areas. &ldquo;Industrial policy is a process of discovery rather than a list of policy instruments,&rdquo; said Professor Rodrik.

Defending development

Everyone expects a China, even an Iran and an Egypt, to censor the Internet, ban posts on social networking sites, block websites in their entirety, and attempt other such anti-democratic acts. But when countries like India (the world&rsquo;s largest democracy), the United States (most powerful democracy) and Britain (oldest democracy) start exploring ways to censor the Internet and monitor online posts by users, it&rsquo;s time to sit up and think. Last week, the Indian government announced its intent to monitor conversations on social networking sites like Twitter and Facebook for &ldquo;security&rdquo; reasons, and British Prime Minister David Cameron highlighted concern over the use of social media tools such as Facebook and Twitter by anti-social rioters. Mr Cameron said he would explore &ldquo;whether it would be right to stop people communicating via these websites and services when we know they are plotting violence, disorder and criminality&rdquo;.

Tweetering state

Given his falling personal popularity ratings, the inability of the ruling United Progressive Alliance (UPA) government to regain political initiative from a divided Opposition and faced with an unfriendly media that remains enamoured of non-governmental activists, it is not surprising that Prime Minister Manmohan Singh chose to use his eighth Independence Day address from the ramparts of the Red Fort both as a report card and a reality check. The fact is that Dr Singh has much to be proud of as prime minister. Not only has he given India seven years of unprecedented economic growth, with its ups and downs, but he has also made the growth process more inclusive, financing major programmes for rural development and employment, health and education. His claim that the UPA has prevented communal conflict in the face of provocations from terrorists is well founded.

A reassuring address

China&rsquo;s efforts to move away from an economic structure where economic growth was driven by high investment and export demand in favour of domestic consumption-led growth may come up against hurdles in days to come. China&rsquo;s strategy to boost domestic consumption had three major components: increasing the size and scope of credit markets, abolishing agricultural taxes and allowing a gradual appreciation of the renminbi. Of the three, the expansion of credit markets was scaled down considerably after fears that it was leading to the creation of asset bubbles, particularly in the housing market. The agricultural tax rebate has had little impact, because returns from the land are rapidly diminishing, leading to large-scale migration to urban areas, despite China&rsquo;s oppressive hukou (residential permit system).

Chinese takeaway

The government&rsquo;s move to allow an additional 0.5 million tonnes of sugar exports on top of one million tonnes permitted earlier is well intended. However, the total permissible exports are still not enough to adequately slash unsustainable inventories and improve the economic health of the sugar industry so that it can clear the mounting cane price dues.

Sugar, sugar

The controversy surrounding the arrest of Anna Hazare and his team has generated more heat than light about the issues at stake.

Steam Anna

One of the mantras of the era of globalisation has been that while all economics is global, all politics is local. The problem for the member countries of the European Union (EU) is that they have yet to find a regional solution to this conundrum. Caught between the global implications of the national and regional economic plans that have so far come up to deal with the Eurozone&rsquo;s debt crisis and local politics that hold back governments from administering the bitter medicine of fiscal adjustment, EU has failed to come up with a regional solution to its economic and financial crises. It is, therefore, not surprising that German Chancellor Angela Merkel and French President Nicolas Sarkozy have once again failed to come up with an acceptable region-wide solution to the problems of Portugal, Italy, Greece and Spain (PIGS). Consequently, the euro has taken a hit, many European banks have come under increased pressure and the markets are in a tizzy.

European disunion

Incisive columns and editorial comment by top opinion leaders

Page 391 - Editorial Comment