For months it was expected that the Democratic Party in the United States would fare poorly in this week&rsquo;s elections to the US Congress. Indeed, it has been long remarked that President Barack Obama timed his travel to Asian democracies to, in fact, get away from the expected bad news. It is also clear that with these elections in mind, and given the complete focus at home on domestic economic issues, President Obama has been demanding that emerging economies like China and India ought to do more for the US and be willing to take a knock from reduced outsourcing of jobs. All this is well taken. The silver lining is, of course, that the democrats have actually done better than expected. They have managed to retain control of the US Senate. If Mr Obama is able to touch American hearts, and not just win minds, he can still comeback for a second term. The results will, however, keep him focused on the domestic economic situation.

Yes, he still can

Business Standard

Business Standard wishes all its readers a happy and healthy Diwali, or Deepavali. Hopefully, this year fewer of our readers have had bronchial and asthma attacks, chest congestion, cough and throat irritation and red and watery eyes! A colourful festival of lights has become an evening of fumes with a morning after of smog in many parts of the country. Deepavali has always been associated with not just lights but also sound, since bursting crackers is part of the fun and the tradition of celebrating the victory of good over evil and the warding off of evil spirits. The bursting of crackers has always left a trail of smoke. However, over the years this trail has become a cloud of injurious smoke. In the nation&rsquo;s capital, with the usual winter smog, people report high incidence of asthmatic and bronchial attacks and throat and eye problems.

Happy and healthy Diwali

The President of the United States, Barack Obama, pressed all the right buttons on his first day in India. His statements on the bilateral relationship, on terrorism, on business opportunities and on the relations between the peoples of both countries struck all the right chords. The meat, however, was in a series of announcements made regarding lifting of export controls on high-technology equipment exports and the removal of three important institutions in the field of strategic industries and high-tech research and development from the &ldquo;entities list&rdquo; that bars trade between US companies and these institutions, namely the Indian Space Research Organisation, the Defence Research and Development Organisation and Bharat Dynamics. Taken together, these decisions will lay the foundation for real defence and strategic cooperation between Indian and American companies.

Deals, words and gestures

The agreement that was recently concluded at the 10th Conference of the Parties (COP-10) to the Convention on Biological Diversity (CBD) at Nagoya in Japan will go down in history as the second most important global initiative, after the CBD itself, in protecting the Earth&rsquo;s fast-depleting biodiversity. This is vital for sustaining life on the planet. The ball was set rolling way back in 1992 with the adoption of the CBD at the Earth Summit in Rio de Janeiro. It set three broad goals &mdash; conservation of biodiversity; its sustainable use; and fair and equitable sharing of the benefits from its use with rightful owners of genetic resources. However, the credit for concretising these goals, by fixing time-bound targets and ensuring funding for safeguarding genetic resources will truly go to the Nagoya accord arrived at after 15 days of bitter haggling by environment ministers of 193 countries.

Nagoya is a step forward

Stock exchanges must be the only place in the country where no one minds the role of a &ldquo;foreign hand&rdquo;. The reasons are obvious: foreign institutional investors (FIIs) played a stellar role in driving the markets to a new high by pumping in over Rs 130,000 crore, the highest ever, in Samvat 2066. With uncertainties high in most key global economies, FIIs had fewer options to choose from and rushed money to robust emerging markets like India which had a strong domestic growth story. While it&rsquo;s anybody&rsquo;s guess how long this horsepower of money supply would last, the near-consensus is that the party will continue well into the new year. There are several reasons for this.

Waiting for retail investors

The Medical Council of India (MCI), the regulatory body that supervises medical education and ethics in India, has hauled up the Indian Medical Association (IMA), the body that represents private medical practitioners, for endorsing plain consumer products and earning a sizeable sum in the process. The particular instance, according to a news report, of IMA&rsquo;s endorsement &mdash; two products of PepsiCo, Tropicana fruit juice and Quaker Oats, for Rs 2.25 crore &mdash; is not the first. In the past IMA has endorsed a range of brands like Dettol, Lizol and Pampers. Why a doctors&rsquo; association should endorse consumer brands when doctors themselves cannot do so, particularly when no proper study has been undertaken to determine the efficacy or quality of those brands vis-&agrave;-vis their competitors, is beyond comprehension.

Endorsement for a fee

It all began as the &ldquo;next steps to strategic partnership&rdquo; (NSSP) after former Prime Minister Atal Behari Vajpayee called the United States of America and India &ldquo;natural allies&rdquo; whose relations &ldquo;constitute the key element in the architecture of tomorrow&rsquo;s democratised world order&rdquo;. That tomorrow is here, said President Barack Obama on his visit to India this week, dubbing the relations between the two countries as the &ldquo;defining partnership of the 21st century&rdquo;. The foundation for the success of the Obama visit to New Delhi was laid by his immediate predecessor, President George Bush, and his Indian interlocutor, Prime Minister Manmohan Singh. The significance of the visit&rsquo;s final outcome, as expressed in the joint statement issued by both leaders and, equally importantly, President Obama&rsquo;s address to the Indian Parliament, lies in the forward-looking nature of these statements.

Next steps to next level

The second round of quantitative easing (QE2) of 600 billion dollars announced by the US Federal Reserve last Thursday did not exceed expectations. Exchange rates should, in theory, be the first to capture the impact of policy-induced changes in liquidity. Currency movements across the board, however, remained muted in the wake of the announcement, reflecting the fact that it was almost exactly on anticipated lines. The sharp appreciation against the dollar in almost all currencies over the last two months thus seems to have factored in this shape and size of QE. The rupee, for instance, has remained virtually flat and the euro that tends to trade as the &ldquo;anti-dollar&rdquo; currency has actually lost against the greenback after QE2 was announced. Besides, despite the commitment to this massive monetary expansion, US longer-tenor bond yields either stayed flat or rose a tad. After a brief spell of post-announcement euphoria, equity markets also seem to have stabilised.

Wages of a cheap dollar

Prithviraj Chavan is a Congressman of exceptional integrity, with good administrative experience and sound understanding of how Maharashtra and the Congress party work. He can make a success of his job. Maharashtra desperately needs a good government, a competent government, an effective government and a government that can turn a state on the decline around. After Mr Sharad Pawar&rsquo;s brief tenure in the mid-1990s, India&rsquo;s richest state has not had a decent government worth the name. Over a decade of incompetent rule has hurt the state enormously. On his first visit to the state in 2004, Prime Minister Manmohan Singh expressed the hope that Mumbai would become India&rsquo;s Shanghai. Today no one would even dare make such a statement for fear of being regarded a fool. Mumbai&rsquo;s decline is not the only price the state has had to pay for the quality of governance it chose for itself.

The better Chavan

The draft report of the committee on ethanol pricing, chaired by a member of the planning commission, Saumitra Chaudhuri, has made some sensible suggestions and focused on important issues pertaining to ethanol pricing. The committee has very correctly questioned the rationale of a group of ministers (GoM) fixing a price of Rs 27 per litre for ethanol meant for petrol doping by oil marketing companies. How can any GoM resort to such arbitrary price fixing? Interestingly, at some meeting of the GoM when a minister concerned was absent, his place was taken not by a junior from the same ministry but by a colleague from the same political party, drawing attention to the blatantly political manner in which vested interests used the GoM for price fixing. Fortunately, the Saumitra Chaudhuri committee has brought economic rationale back into commodity pricing. The committee has also recommended that the quantum of ethanol made available for biofuels be capped at 400 to 500 million litres.

GoM Raj in ethanol

The government of the United Progressive Alliance (UPA) is in desperate need of a good bath in the Holy Ganga. Even this may not cleanse the government of its many sins (see editorial) of omission and commission, but nothing short of ritualistic purification combined with a wholesale reshuffle of the Union council of ministers can revive the fortunes and reputation of the second Manmohan Singh government.

Can Ganga clean government?

Few will take very seriously the undertaking given by the government in the Supreme Court that River Ganga will be pure and free of pollution by 2020. Similar commitments were made to the public 25 years ago when, in 1985, the Ganga Action Plan (GAP) to clean this most treasured of the sub-continent&rsquo;s rivers was launched. Even after spending several thousand crores of rupees on the project, the Ganga is today more polluted than ever before &mdash; a truth recently conceded by the knowledgeable Union minister for environment and forests in Parliament. Ironically, this is the state of affairs even though the Central Ganga Authority, rechristened as National Ganga River Basin Authority, came into existence years ago under the chairmanship of the prime minister to oversee the implementation of the Action Plan. The declaration of Ganga as a National River in 2008 seems to have made little difference.

Can government clean Ganga?

The Man of Peace Award does not attract anywhere near the same level of publicity as the Nobel Peace Prize. It was created in 1999 on the initiative of Mikhail Gorbachev as a sort of prize-winners&rsquo; prize and is bestowed annually by Nobel Peace Prize laureates at their annual summit. The reason this one is more noteworthy than most is that it involves a person from the unlikely field of football: Roberto Baggio, former Italian international and 1993 Fifa Player of the Year.

A very sporting gesture

Look at the photographs of Prime Minister Manmohan Singh when he is at a G20 summit. Look at him sitting in Parliament. The pictures tell all. The world wants India to do well, Dr Singh once famously said, our problems are at home. It is a thought that must have crossed his mind as he flew back from Seoul on Friday night. At the G20, his ideas and proposals were the toast of the summit. India comfortably occupied its favourite place at such summits &mdash; the middle ground &mdash; lecturing China on &ldquo;exchange rate flexibility&rdquo; and the United States on the special responsibilities of reserve currency countries. The prime minister&rsquo;s proposals for dealing with global imbalances by getting long-term funds into infrastructure development in the developing world was a smart idea well received.

Local stumps global

A high-level working group of the Government of India has approved the idea of outbound foreign direct investment by Indians in the production of pulses and oilseeds aimed at meeting domestic demand. This is not a new idea. Since arable land in India is fast shrinking and efforts to lift the output of pulses and oilseeds, besides some other essential commodities, are not bearing fruit, investing in land elsewhere for captive cultivation of these crops can be a good way of augmenting domestic supplies. But this may be an idea whose time has come and gone. Most other commodities-starved but cash-rich countries have already grabbed large chunks of available cultivable land in land-surplus countries. India, as usual, has arrived late. Moreover, popular and governmental resistance to such land acquisition in host countries, where this trend is seen as a return to the era of &ldquo;banana republics&rdquo;, has already made this option less attractive.

Farmland outsourcing

The decision of the Dravida Munnetra Kazhagam (DMK) to ask its minister in the government of the United Progressive Alliance (UPA), A Raja, to step down should be welcomed. The UPA and the DMK may not have come to this pass if in May 2009 they had respected the opinion of Prime Minister Manmohan Singh and kept Mr Raja out of the Union Council of Ministers. The very fact that the prime minister did not want T R Baalu and Mr Raja in his reconstituted Council of ministers in May 2009 should have been warning enough both to the DMK and the UPA that the PM knew a thing or two about their record in office in the first UPA government. By blackmailing the UPA with the threat of remaining outside the government, the DMK managed to exert enough pressure on the prime minister, directly and indirectly, to get him to soften his stance and admit Mr Raja in.

Too many Rajas

Indian automobile makers predictably, and the German ambassador somewhat unpredictably, have taken exception to environment minister Jairam Ramesh&rsquo;s objection to the owners of costly, large and heavy private cars, called SUVs (sport utility vehicles), benefiting from the subsidy given to diesel. German sentiments need to be placated first. Mr Ramesh is unlikely to have sought to criticise German automobile technology per se as polluting. In all likelihood, he mentioned brands like Mercedes and BMW because they have become synonymous with luxury cars, a space in which not only have the US auto majors lost out, but even fine names like Volvo and Jaguar are not top of the mind. In fact, Mr Ramesh should use another occasion soon to acknowledge what European and Japanese auto makers have done for compact, fuel-efficient cars &mdash; a segment that excludes SUVs.

Socially useless vehicles

Ratan Tata is, without doubt, one of the most respected business leaders in India. When he says that he was advised to bribe a minister of the Union government a sum of Rs 15 crore to get governmental approval to start a private airline company, everyone concerned must sit up and take note. This is no casual remark. However, and very regretfully, this is no example of &ldquo;whistle-blowing&rdquo; either, as some in the media seem to think. It would have been if Mr Tata had named the minister and made public his demands at that time. Even now, Mr Tata is blowing no whistle, he is merely whining and seeking to occupy high moral ground. It would do him enormous credit, and boost the morale of smaller businessmen and ordinary citizens who face similar situations all the time, if he were to name and shame the minister concerned. Mr Tata also had a different kind of brush with a minister of the present government and on that occasion too, he chose not to go public with his complaint.

Name and shame, Mr Tata

Myanmar&rsquo;s great patriot and democracy activist Aung Sang Suu Kyi&rsquo;s latest bout of freedom &mdash; an event far more globally publicised than her previous releases &mdash; could provide the Manmohan Singh government with a unique opportunity to demonstrate the effectiveness of its &ldquo;Look East&rdquo; policy. The delicate balancing act South Block has played in realistically maintaining relations with Myanmar&rsquo;s China-leaning military junta and in securing Suu Kyi&rsquo;s release (the product of considerable, if unacknowledged, back-room activity) means India can transcend the standard, cliched appeals for democracy to establish itself as a constructive counterweight to China&rsquo;s aggressive expansion in the region. It is uncertain how much Dr Singh&rsquo;s unscripted lecture to General Than Shwe on democracy in 2004 influenced the Myanmarese dictator.

Flowers of freedom

The office of the Comptroller and Auditor General (CAG) of India could not have timed the celebration of its 150th anniversary better. On the day the president and the prime minister of India paid tributes to CAG&rsquo;s long record of service to the country, Parliament and the nation were pouring over every line and para of a report that has clearly indicted former Union Minister for Telecommunications A Raja. If there was any doubt in anyone&rsquo;s mind regarding the fairness of Prime Minister Manmohan Singh&rsquo;s demand for Mr Raja&rsquo;s resignation, then all such lingering doubts were rubbished by the CAG report. It is a pity that the prime minister was unable to take this action earlier. The earlier plea of some in the ruling coalition, including in the Congress party, that dismissing Mr Raja would destabilise the government was a spurious argument. The Karunanidhi government remains in office in Chennai at the sufferance of the Congress party.

Indictment of Minister Raja

The Food Corporation of India (FCI) should feel relieved that the private sector has stepped in to create additional foodgrain storage capacity, bridging the extant gap. However, it is difficult to fathom why much of the new warehousing capacity is sought to be put in place in grain-surplus states (production centres) &mdash; notably Punjab and Haryana, besides some others like Andhra Pradesh, Tamil Nadu and Maharashtra &mdash; rather than in grain-deficit states (consumption centres) where the procured grains are actually meant to be distributed. Though it can be argued that most of the grain-starved areas lack grain distribution networks, obviating the need for keeping large stocks there, this plea is not well-founded.

A grains policy in silos

Incisive columns and editorial comment by top opinion leaders

Page 407 - Editorial Comment