Story#0 of 50



Story#0 of 50

Title: Left To Review Govt Support After Polls

Author: Simon Denyer

Source: Reuters

Date: April 10, 2006

URL:

CPI-M general secretary Prakash Karat said his party hoped success in state elections this month would give it more influence on the foreign and economic policies of the Congress party-led coalition.

Karat said the government had "shot itself in the foot" by agreeing a landmark civil nuclear deal with the United States, which he said was likely to come with many strings attached.

"It means that Americans expect you to have a quid pro quo on other issues, not just nuclear power," Karat told Reuters in an interview in his spartan office.

"We are apprehensive that this agreement will become the basis for a wider strategic alliance and, you will have to fall in line with the United States on many key issues."

The deal has yet to be ratified by the U.S. Congress where it has been the subject of fierce debate this week, particularly over India's ties with historic ally Iran.

Under the pact, energy-hungry India would receive American nuclear technology - including reactors - while nuclear-armed India will have to separate its military and civil nuclear facilities and open up civil plants to international inspections.

Karat said he was very disappointed that India had voted to refer Iran to the United Nations Security Council over its nuclear programme in February, and he said it was in "in our vital interest" to have a strategic partnership with Tehran.

But he refused to say if the communists would withdraw their support for the coalition over the issue.

"After these assembly elections, we will have another look at the whole political situation," the grey-haired and bespectacled politician said. "We will look at the situation afresh."

KEY SUPPORT

The CPI-M has 44 lawmakers in the 545-seat Lok Sabha and, along with 17 lawmakers from smaller left parties, gives the minority government crucial support from outside the coalition.

The party and its left allies are fighting the Congress Party in three out of five states going to polls this month, with high hopes of regaining power in West Bengal for the seventh straight time and of taking power in Kerala from Congress.

Karat expressed concern over economic reforms enacted or proposed by the government of Prime Minister Manmohan Singh, and said communist wins in West Bengal and Kerala would be used to increase the left's leverage over the government.

"Victory in these states will hopefully strengthen our intervention at the national level," Karat, a Master of Political Science from the University of Edinburgh, said.

Karat, in his mid-50s, is usually seen as a hardline ideologue. But he said the communist party had changed its attitude towards foreign investment and welcomed it in specific areas, such as information technology and agro-processing.

While opposing the sales of government stakes in successful public sector companies, he said he was in favour of a "leaner" and more efficient public sector.

"You have to streamline or restructure the public sector," he said. "You may make it leaner, you could shed some of the enterprises."

The communist-led government in West Bengal has been wooing foreign investors, particularly IT firms, to Kolkata in recent years, and has shut down some public sector enterprises it considered unviable.

These policies have formed a cornerstone of its re-election campaign this year and stand in stark contrast to its earlier anti-business stand that saw the flight of capital and business from the eastern city in the 1970s and 1980s.

****End of Story# 0 of 50

****Story#1 of 50

Title: Left To Review Govt Support After Polls

Author: Simon Denyer

Source: Reuters

Date: April 08, 2006

URL:

The Communist Party of India (Marxist) (CPI-M) on Friday said it would review its support for the government after state elections are out of the way next month.

CPI-M general secretary Prakash Karat said his party hoped success in state elections this month would give it more influence on the foreign and economic policies of the Congress party-led coalition.

Karat said the government had "shot itself in the foot" by agreeing a landmark civil nuclear deal with the United States, which he said was likely to come with many strings attached.

"It means that Americans expect you to have a quid pro quo on other issues, not just nuclear power," Karat told Reuters in an interview in his spartan office.

"We are apprehensive that this agreement will become the basis for a wider strategic alliance and, you will have to fall in line with the United States on many key issues."

The deal has yet to be ratified by the U.S. Congress where it has been the subject of fierce debate this week, particularly over India's ties with historic ally Iran.

Under the pact, energy-hungry India would receive American nuclear technology - including reactors - while nuclear-armed India will have to separate its military and civil nuclear facilities and open up civil plants to international inspections.

Karat said he was very disappointed that India had voted to refer Iran to the United Nations Security Council over its nuclear programme in February, and he said it was in "in our vital interest" to have a strategic partnership with Tehran.

But he refused to say if the communists would withdraw their support for the coalition over the issue.

"After these assembly elections, we will have another look at the whole political situation," the grey-haired and bespectacled politician said. "We will look at the situation afresh."

KEY SUPPORT

The CPI-M has 44 lawmakers in the 545-seat Lok Sabha and, along with 17 lawmakers from smaller left parties, gives the minority government crucial support from outside the coalition.

The party and its left allies are fighting the Congress Party in three out of five states going to polls this month, with high hopes of regaining power in West Bengal for the seventh straight time and of taking power in Kerala from Congress.

Karat expressed concern over economic reforms enacted or proposed by the government of Prime Minister Manmohan Singh, and said communist wins in West Bengal and Kerala would be used to increase the left's leverage over the government.

"Victory in these states will hopefully strengthen our intervention at the national level," Karat, a Master of Political Science from the University of Edinburgh, said.

Karat, in his mid-50s, is usually seen as a hardline ideologue. But he said the communist party had changed its attitude towards foreign investment and welcomed it in specific areas, such as information technology and agro-processing.

While opposing the sales of government stakes in successful public sector companies, he said he was in favour of a "leaner" and more efficient public sector.

"You have to streamline or restructure the public sector," he said. "You may make it leaner, you could shed some of the enterprises."

The communist-led government in West Bengal has been wooing foreign investors, particularly IT firms, to Kolkata in recent years, and has shut down some public sector enterprises it considered unviable.

These policies have formed a cornerstone of its re-election campaign this year and stand in stark contrast to its earlier anti-business stand that saw the flight of capital and business from the eastern city in the 1970s and 1980s.

****End of Story# 1 of 50

****Story#2 of 50

Title: A Case For Cementing Reforms

Author: JAIDEEP MISHRA

Source: The Economic Times

Date: April 03, 2006

URL:

Reality is a staircase going neither up nor down, muses the bard. And adds: “Today is today, always is today!” Perhaps that’s the reason why we have let an important landmark in public policy reform go past wholly unnoticed. Make no mistake, it’s the silver jubilee anniversary of the first whiff of pan-India economic reforms.

It was back in circa 1980-81 that the process of junking the ancien regime of comprehensive licensing and debilitating controls got going.

Mind you, it was precisely in that year that “automatic growth” was mercifully allowed in the ‘registered’ or ‘licensed’ industrial capacity. Such expansion could be no more than “5% per annum or 25% for a five-year period”! Still, it meant progress in an era characterised by a panoply of mindless controls and endless red tape.

Now, it was certainly the case that installed capacities far, far in excess of registered capacities were quite okay for one or two corporates, no doubt after due consideration. But a general exemption was first allowed, then. Also, a complete tax holiday was granted to export-oriented units set up in what were then called Free Trade Zones

****End of Story# 2 of 50

****Story#3 of 50

Title: Affirmative Action Not At The Pvt Sector’S Cost

Author: Anant R Koppar

Source: Deccan Herald

Date: April 30, 2006

URL:

"In Malaysia of 1970s, locals were given education and brought on par with Chinese & Indian immigrants"

Elections are interesting times all over the world. It is the time when emotive, not always rational, and often divisive but sometimes visionary and path breaking issues are mooted by politicians to woo the electorate. In recent memory are BJP’s mandir, V P Singh’s Mandal and the outsourcing and healthcare issues in US presidential elections. Most recently when Human Resource Development Minister Arjun Singh proposed reservation in the IITs and IIMs it was viewed as a populist pre-election announcement.

The image of Manmohan Singh is that of a free market liberal and architect of Indian economic reforms. These very reforms are credited with the Indian economic miracle of today, having moved us to an impressive growth rate of more than 6.5 per cent, unprecedented and large forex reserves and an economically assertive nation being wooed by all the major power blocs of the world.

When Manmohan Singh opened the debate of reservation in the private sector during his address to the leaders of the private sector in Mumbai, the industry was shocked and attributed it to politico-electoral compulsions. But, since then, we have seen him persist with the idea and this has sparked off a countrywide debate and furore.

The raison d’être for reservations, positive discrimination and affirmative action is that in a highly stratified and unequal society it is necessary to level the playing field for the weaker sections. This is done by the state’s assistance to enable the weaker sections to compete with those who have a social and educational advantage.

Sixty years after Independence — many land reforms-tenancy acts and 80 per cent reservation in government and public sector later — we still have a sizeable population economically and socially disadvantaged. Hence there is nothing wrong in the state continuously exploring new means to correct the historical wrongs and bring parity in the society. However, the private sector reservation as a solution is highly debatable.

Let’s look at some of the most obvious implications and concerns of this move. The fundamental issue is with the definition of beneficiaries. Reservation should be based on economic criteria rather than caste because it is broad based and will cover the needy cutting across all castes and creeds. Whereas caste reservation is based on the fundamental premise that all in a particular caste need help irrespective of their economic status. This is not entirely correct because five decades of reservation in the government and education sector have greatly benefited certain sections and they no longer merit any assistance. Social disadvantage has been reduced to a great extent and is today a lesser constraint than the economic factor.

Secondly, the caste system has lost its relevance in public life except in politics. The only way to abolish the caste system is not to recognise castes and reservation in the name of castes will only enhance this evil in the society.

Thirdly, Darwin’s survival of the fittest applies more than ever to businesses today because of the globalised environment. Liberalisation allowed Indian companies to compete in other markets, reduced or eliminated local protectionist barriers and permitted foreign companies into the Indian markets. Private sector enterprises compete, succeed, and thrive because they are built on the general premise of meritocracy and have the freedom to hire the most suitable talent. Reservation will dilute this fundamental ingredient responsible for their success and may increasingly make them inefficient.

For historical precedents we have Malaysia which faced a similar situation in the mid 1970s when the local majority Malays were less educated and hence had lesser opportunities as compared to the immigrant Chinese and Indians. While it must have been very tempting to introduce job reservations for Malays in the private sector, the Malaysian government adopted a harder but more sustainable visionary approach. They increased the education attainment of Malays and brought them on par with the others while simultaneously introducing job reservations in the public sector. The results are there for us to see.

So what are prudent short and long term affirmative action policies for us?

Credible systems for identification of economically backward classes; Full financial support for those from the economically backward class until postgraduation; Financial incentives for corporations who employ economically backward classes; Create entrepreneurship in economically backward classes by distributing to them from the government monopoly powers like broadcasting licenses etc and Finally, it is important that the affirmative action be exercised with a great deal of patience, creativity and caution since on one hand we have the private sector that is contributing significantly to India’s growth and success and on the other we have this divide that is widening by the day and it is not mandatory that a solution for the second will have to come at the expense of direct interference with the first.

It was Nicolo Machiavelli who in famous treatise, The Prince said: “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things, for in opposition are all those who are in power and have flourished under the old order at best in support are those who hope to do well under the new scheme of things.”

****End of Story# 3 of 50

****Story#4 of 50

Title: Bangla Biman

Author: Editorial, Statesman

Source: Statesman

Date: April 03, 2006

URL:

With amazing alacrity, the Communist Party of India (Marxist) has achieved a change of guard that must appear still more crucial as it comes barely three weeks before the elections. The succession has been remarkably smooth, reflecting Jyoti Basu’s assertion on the day after Anil Biswas passed away that the matter would be settled within a minute. Such resilience has traditionally set the CPI-M apart from the other parties in the spectrum and must still be one of its greatest assets. Any doubts over the succession issue must have stemmed from the fact that Biman Bose, though one of the most senior post-1964 second generation leaders and mentored by the late Promode Das Gupta along with Biswas and Buddhadeb Bhattacharjee, has often been an embarrassment to the party because of his acerbic personality and intemperate outbursts. The Chief Minister was probably never in the running as the Politburo was acutely aware that combining the office of party head and head of government would benefit neither the party nor the government. The other probable, Nirupam Sen, with an enormous clout over the party machine, quite obviously couldn’t be drafted for party work as he has been no less crucial for the government; as commerce and industry minister he has been the Chief Minister’s closest aide in his effort to bring about a Resurgent Bengal. Bose’s election was a fairly settled fact and the only element of surprise must be that the announcement that he would take over as the next state secretary was made by Bhattacharjee and not by the party general secretary, Prakash Karat, as expected in the fitness of things.

Any indication of the shape of things to come in party affairs and the conduct of governance must await a statement from Bose. He was much too emotionally moved at Friday’s condolence meeting to spell out his ideas. But the probable subtext of the proceedings and the manner of the announcement is that the party secretary and the Chief Minister will now strive to work in tandem. Bhattacharjee’s major asset was that he was sure of Biswas’s support in his relentless and sincere pursuit of economic reforms and education policy. And this effectively neutralised the rumblings of dissent within the party over such critical issues as foreign investment, conversion of agricultural land to industrial and curbs on trade union activity. Bose is known to be assertive in buttressing the party line. He has on occasions been profoundly contemptuous of sophisticated technology — “What is this IT? Is it something to be eaten or put on the head”? — and is unlikely to share the contemporary wisdom of the Chief Minister’s inner circle that the trade union movement has become irrelevant. The party is widely expected to win the election. A still more crucial test perhaps must be its success in setting up a halfway house between a hard-boiled ideologue and a global market-savvy Chief Minister.

****End of Story# 4 of 50

****Story#5 of 50

Title: Blending Socialist Ideals With Market Imperatives

Author: G. Srinivasan

Source: Business Line

Date: April 28, 2006

URL:

China concedes that FDI has had the most favourable impact on the development of its economy in the opening up process.

Reports doing the rounds suggest that the UPA Government is all set to unveil a raft of economic policy reforms once the the Assembly elections are over, a couple of weeks from now, with the Planning Commission preparing a dossier on such issues as permitting 100 per cent FDI in insurance and as also in retail trade.

These on-again-off-again signals are a reflection of the way the reform-resolve wavers in the face of protests from the parties supporting the Government, dampening the fervour of investors, domestic and foreign. In fact, in the run-up to the Assembly elections, particularly in Kerala and West Bengal, the CPI(M) General Secretary, Mr Prakash Karat, has made it clear that his party's interventions in the policy matrix would be more than perfunctory after the Assembly polls.

Such constant tensions may limit the policy options of the coalition Government, but one can only marvel at how China has managed to marry Socialist principles with market norms to give its economy a novel orientation; China has now become a byword for innovative thinking buttressed with the characteristic pragmatism.

The Left parties may be well-advised to take a look at the recent, first trade policy review of China by the World Trade Organisation (WTO); the policy statement China forwarded to the WTO is a real eye-opener.

China's expenditure control

The WTO says China is a moderately taxed country with total tax revenues accounting for a little over 15 per cent of GDP in 2004. The overall fiscal situation is seemingly sound with rapid growth of tax revenues and tight control over expenditure, bringing the overall budget deficit down to around 1.3 per cent of GDP and keeping the public debt stable at around 20 per cent of GDP.

China has also used its tax system to encourage investments, especially by foreign companies, which enjoy lower tax rates (15 per cent and 24 per cent) than domestic companies (33 per cent) and enjoy tax holidays if they invest in targeted sectors or regions.

In their submission to the WTO, the Chinese authorities have stated that in insurance services, there were 82 companies by the end of 2005, 40 of them being foreign-invested firms.

The premium revenues of foreign-invested insurance companies have expanded rapidly, 29 times faster than that of domestic insurance companies.

For the first 10 months of 2005, the premium revenues of foreign property insurance companies increased by 28 per cent over the corresponding previous period, while that of foreign life insurance companies rose 356.1 per cent.

Market development

In distribution (retail) services, the Chinese government has implemented a market opening for foreign-invested enterprises by eliminating the restrictions on the number of business units, geographical location and foreign ownership. Since 1992, China has cumulatively approved 1,341 foreign-invested distribution enterprises, which have opened 5,657 retail shops.

Last year alone, newly established foreign-invested distribution enterprises outnumbered the total approvals from 1992 to 2004. The market-share of large foreign-invested supermarket chains in the China continued to expand. By 2005, they accounted for more than a quarter, even over 50 per cent in a few cities!

In a bid to promote domestic consumption, China launched an initiative last year, "Market Development Project Covering Thousands of Villages and Towns". This is designed to gradually popularise chain-store operations in the rural areas; standardised farmer shops cover 50 per cent of the villages and 70 per cent of the towns across the country within three years; building a modern retail distribution network in the rural areas thus making shops in the urban areas play a leading role, and those in the villages play a fundamental role. There are 1,150 retail and wholesale enterprises, which have started pilot projects in 777 cities and counties nationwide; 71,000 standardised farmer shops were established and renovated within the year.

Beneficial FDI

China has said its accession to the WTO in December 2001 marked a new era of the opening up of its economy. After joining the WTO, the regional opening up approach was replaced by a nationwide open policy; the coverage extended from traditional trade in goods to trade in services; the level of market access further increased, and access conditions were codified into laws and regulations with greater transparency.

China concedes that foreign direct investment has had a most favourable impact on the development of its economy in the opening up process. In 2004, industrial value added by foreign invested enterprise accounted for 28 per cent of national industrial added value. The former's exports accounted for 57 per cent of total national exports. Foreign-invested enterprises employed 24 million people, accounting for 10 per cent of the non-rural workforce!

Spurred by these encouraging trends, Chinese authorities told the WTO that they will continue efforts to make it attractive for multinational enterprises to move their manufacturing processes involving high technology and high value-added products, as well as their research and development, to China.

The Government would, they said, also promote cooperation between domestic and foreign enterprises on technology, R&D, resource procurement and market development.

Thus, China's economic reforms, although gradual, have distinctly increased its market orientation, making it one of the fastest growing economies in the world by a deft blending of Communist ideals with market imperatives!

It is time the UPA Government persuaded its supporting allies of the Left to be pro-poor and pro-growth by pushing for more reforms instead of less, and to be partners in the country's quest to become an attractive investor destination.

****End of Story# 5 of 50

****Story#6 of 50

Title: Boom Time For Medicare

Author: G. ANANTHAKRISHNAN

Source: Hindu

Date: April 30, 2006

URL:

India's tertiary healthcare sector is on the road to global fame.

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DESTINATION INDIA: From top: the First Lady of Guyana with patients from her country at Frontier Lifeline Hospital, Chennai; Iraqi children with Dr. K.M.Cherian and Noor Fatima at Narayana Hrudayalaya, Bangalore. PHOTOS: K. PICHUMANI, VINO JOHN AND V. SREENIVASA MURTHY

IT is an ironic outcome of neo-liberal economic reforms that in spite of fundamental policy failures in public health, India is increasingly seen as an attractive international healthcare destination.

National weaknesses start with one of the lowest rates of expenditure on public health, as a percentage of the Gross Domestic Product. Millions suffer from debilitating malnutrition, often from childhood. Basic requirements for good health such as sanitation, clean air and safe water remain unavailable to a vast population. Newer vaccines, expensive investigations and advanced drugs are beyond the reach of remote poverty-ridden communities.

Global fame

Yet, India's tertiary healthcare sector is on the road to global fame. A growing number of spotlessly clean private hospitals are on the threshold of a boom in medical tourism, positioning themselves as the best destinations for procedures ranging from coronary bypasses to orthopaedic surgery at the most affordable costs. These hospitals offer high-quality care for international patients, whose numbers are reportedly rising 15 per cent annually; the prices that they charge are a fraction of what prevails in the developed world. India's corporate hospitals are fully equipped, up market and efficient. With their toll-free helplines, interactive websites, online quotes and time-bound treatment access, they appear to be a world apart from the overburdened, often badly managed and poorly funded public health system.

Just three major corporate hospital groups, Fortis Healthcare, Wockhardt and Apollo Hospitals run 26 hospitals in the subcontinent and that number is growing. They are forming partnerships with international insurance and tourism companies that will send both insured and uninsured patients for low cost treatment.

With some friendly policies from the Government, some analysts think, the private healthcare sector can transform the potential of medical tourism into a very profitable reality. One oft-cited report that endorses this optimistic outlook is "Healthcare in India: The Road Ahead", produced by the Confederation of Indian Industry and McKinsey and Company. It puts a number to the promise: tertiary hospitals, with a 25 per cent growth rate in revenues from foreign patients (comparable to institutions such as Bumrungrad in Thailand), could generate additional earnings of Rs. 5,000 crore to Rs. 10,000 crore by 2012. That potential is based, in part, on the low cost of care in international price terms, competent medical personnel and absence of long waiting times for procedures, says the report.

Stories of foreign nationals undergoing complicated surgery in the country are frequently featured in the media. Those who come now are not just from other developing countries (the first lady of Guyana brought a group of 15 patients for cardiac treatment to Frontier Lifeline hospital in Chennai), but also from the United Kingdom, Europe and North America. Tanzania and Iraq have a Memorandum of Understanding with the Madras Medical Mission.

Many opt to undergo surgery in India for reasons that range from long waiting times in the U.K., high costs or lack of insurance cover in the U.S., to plain lack of expertise in many Asian, African and West Asian countries.

The CII-McKinsey report says that the allopathic system can offer treatment in specialities such as cardiac, liver, renal and orthopaedic procedures, while Indian systems of medicine could attract patients from even the developed world to treat "lifestyle diseases" such as stress and rheumatism. Many visitors who come for such de-stressing and health-building treatment may also choose to visit tourist spots. Such tourism potential holds the key to Kerala's plans. The Ayurveda State has declared 2006 the year of medical tourism and is actively supporting its well-known traditional medicine and tourism sectors, as they reach out to more potential visitors.

Elsewhere, development plans, both State-led and in the private sector are being pursued actively: Karnataka, which gets about 8,000 patients a year and forecasts an annual growth rate of 25 per cent, will promote a massive health park near a new international airport in Bangalore; non-resident Indians have formed a medical tourism company in Vadodara and international property developers are venturing into the healthcare sector to participate in the construction boom. In Maharashtra, the State Government is part of the Medical Tourism Council that has members from Association of Hospitals and FICCI.

In New Delhi, Naresh Trehan, executive director of the Escorts Heart Institute and Research Centre has proposed a Medicity on the outskirts of the capital to develop a 1,500-bed healthcare centre of international standards with 20 super specialities. It will incorporate traditional medicine too and have such facilities as hotels, serviced apartments, clinical and biotechnology laboratories.

Ventures such as these draw encouragement from the National Health Policy 2002, which endorses provision of health services "on a payment basis to service seekers from overseas". The corporate healthcare sector views such support as critical, considering that it is competing with Thailand, Singapore, Malaysia and South Korea for a bigger share of Asia's medical tourism market. "Medical tourism can be a much bigger business, if we have infrastructure and networking among hospitals, hotels and tourism agencies. The Central and State governments must extend tax and other concessions, on the lines available to IT and BPO sectors," says K. Ravindranath, managing director, Global Hospitals, Hyderabad. He readily favours cross subsidy for domestic patients from revenues flowing out of medical tourism.

Private hospitals in Hyderabad, some of which get 10 per cent of their patients from abroad, are planning to open separate wards or wings for foreigners. The Apollo Hospitals already has a ward and wants to upgrade it to an international multi-speciality block while the Asian Institute of Gastroenterology plans to create a separate wing for foreigners.

The key to a significant increase in patient arrivals, however, lies in becoming globally accredited. Corporate hospitals have begun factoring this requirement into their medical tourism plans.

Steady increase

Joint Commission International, a benchmarking body lists Indraprastha Apollo, New Delhi, and Wockhardt, Mumbai, as accredited hospitals. Accreditation apparently brings immediate benefits. "There has been a steady increase in the number of patients over the last six to eight months, particularly from the U.K. and U.S. The numbers have been increasing after accreditation, particularly from the U.S.," says Vishal Bali, chief executive officer of Wockhardt.

It is also important to have systems that meet the criteria of insurance companies. Says cardiac surgeon V.V. Bashi of MIOT Hospital, Chennai: "Our medical standards are world class, but if we have to get more patients from the U.S. and other developed countries, we must match their hospital documentation standards. This is really important because the insurance companies must cover all the risks in the event of an adverse treatment outcome."

Wockhardt's hospital in Bangalore, which has a Harvard Medical International tie-up, gets half of its foreign patients (about 900), from the U.K. The media reported the story of one such patient with coronary heart disease, 73-year old George Marshall last year. This violin repairer from Bradford was operated upon at the hospital for a quarter of what he would have paid for private care in the UK, including the airfare.

When he arrived in India, he was initially shocked by the traffic chaos and urban squalor, but it appeared to be a better decision than having to suffer a long delay for bypass surgery in a state-supported National Health Service hospital or fork out GBP £19,000 for immediate private care in his home country.

Another 35 per cent of Wockhardt's patients come to Bangalore from the U.S. and the rest from the European Union and South East Asia. Another heart care institution in Bangalore, Narayana Hrudayalaya, has a record of 15,000 surgeries performed on patients from 25 foreign countries, half of them children.

The biggest disincentive to medical tourism, the hospitals say, is the insensitive handling of visa issuance to those who come for treatment. While people-to-people relations are strengthened when a patient from Pakistan, Iraq or Afghanistan gets operated upon in India, the requirement that visitors must report to designated officials periodically is viewed as avoidable harassment. "The patients get dejected, though they are grateful to the doctor, hospital and host country for saving their lives," says Dr. Bashi.

Strong emotional bonds can indeed be built by treating patients from other nations, says urologist Sunil Shroff of Sri Ramachandra Medical College and Research Institute, who has led a campaign for ethical transplants and altruistic organ donation in India through the MOHAN Foundation. "Medical tourism needs a national task force that will bring hospitals and the government together. We must ensure that a health divide is not created within the country and yet use this huge opportunity," he says.

Upgrading facilities

The corporate hospitals have not failed to recognise the opportunity. Many of them are upgrading to offer the latest medical diagnostic facilities to medical tourists, which may also be packaged with vacations in a tie-up with airline companies. Says Anil Maini, president, corporate development, Indraprastha Apollo, "We have 64 slice CT scans, PET CT and 3 TELSA MRI machines which most hospitals abroad cannot boast of."

But as corporate hospitals open their doors to a greater number of medical tourists, some analysts believe that the impact of this phenomenon on national healthcare needs careful study. Some observers fear an exodus of highly skilled doctors from the atrophied public health system to high paying private hospitals. "Many States are not even ready to fill vacancies in government medical service, compounding the problem," says a surgeon in Chennai's Government General Hospital, the apex public health institution in Tamil Nadu.

(With inputs from Aarti Dhar in New Delhi, Prachi Pinglay in Mumbai, Sahana Charan in Bangalore and Y. Mallikarjun in Hyderabad)

On the road to global fame

THE size of the Indian medical tourism sector is thought to be about 1,00,000 to 1,50,000 patients a year. The Indian Healthcare Federation, a consortium of non-governmental hospitals, diagnostic centres, medical equipment manufacturers and pharmaceutical industries says about 1,00,000 foreign patients are coming to the country, up from 10,000 five years ago.

The CII-McKinsey report estimates that the annualised growth of the medical tourism market was about 30 per cent in 2000, up from 15 per cent in the five previous years. The growth has been limited, the study says, since foreign patients represent only a fraction of total patients handled by individual hospitals.

Figures for patient arrivals from abroad are available from individual states and hospitals: The Karnataka Tourism Department says it has been receiving about 8,000 patients annually, mostly for cardiac and orthopaedic procedures. Manipal gets 3,000 foreign patients a year, some of them for dental care; Wockhardt Hospital and Heart Foundation in Bangalore gets 900 patients a year.

CII-McKinsey forecasts upmarket private care in India to be worth anywhere from Rs.15,000 crore to Rs.30,000 crore by 2012 and medical tourism can potentially raise that by Rs.5,000 crore to Rs.10,000 crore. Medical tourism represents 25 per cent of revenues of private up market care in this estimate and three to five per cent of the total delivery market.

With increased activity to build hospitals in the corporate sector, foreign patient arrivals are expected to rise significantly.

****End of Story# 6 of 50

****Story#7 of 50

Title: Business With Berlin

Author: Editorial, The Tribune

Source: Tribune

Date: April 26, 2006

URL:

Germany expressing its desire for greater cooperation with India in areas like fighting terrorism, energy security and reforms in the UN Security Council is a welcome development. It is heartening that the two countries have decided to set up a joint energy forum for taking care of their energy-related problems. However, India needs German assistance for faster growth in three key areas: infrastructure development, manufacturing and high technology. German business presence in India has increased considerably after the introduction of economic reforms. Berlin is today the fourth largest investor in India. But, sadly, small and medium enterprises are missing in this picture. There is need to change the situation, as Prime Minister Manmohan Singh pointed out on Monday while addressing the Indo-German Business Summit’s inaugural session in Hannover.

Cooperation between the two countries can be taken to greater heights if Germany realises the pressing need to liberalise its visa regime for Indians. This was pointed out to German Chancellor Angela Merkel when Dr Manmohan Singh had discussions with her in Hannover, but she avoided making any such commitment. Germany, perhaps, requires more persuasion to change its unhelpful attitude in the grant of visa, which has been coming in the way of business and trade expansion, as also migration of information technology professionals from India. As a result, both countries have been the sufferers.

No one can deny that there have been cases of visa misuse by Indians. The unscrupulous elements must be given exemplary punishment. But this is no excuse for having a rigid visa regime. In fact, India has to take up all such problems with other European countries, too, with a view to increasing business interaction with that continent. Germany as the current head of the European Union can help a lot in this regard. But, first of all, it will have to review its visa policy vis-à-vis India.

****End of Story# 7 of 50

****Story#8 of 50

Title: Components Of A Miracle That Is Attainable

Author: JAYANTA ROY

Source: The Financial Express

Date: May 04, 2006

URL:

India is in the news everywhere. The world, belatedly, is recognising our real economic strengths. The Indian economy has also performed superbly in the past few years. In IT and ITeS, India is now a recognised world leader. All multilateral institutions are showering continuous praise on us. All of it is well deserved.

Unlike the Chinese, we Indians have unfortunately started blowing our own trumpets. Political and business leaders are talking about India becoming a developed nation in the not-too-distant future. In every vision statement, the goal of India achieving developed country status soon is highlighted. But hard economic data tell a completely different story.

India’s per capita income in terms of the official exchange rate is only $620, putting India as a low-income country. Per capita incomes of the average lower middle income country, average upper middle income country, and average developed country are $1,580, $5,000, and $32,000, respectively. Even if India is able to sustain a GDP growth of 10% a year and is able to bring down its annual population growth from 1.4% to 1.2%, it would still take 11 years for it to reach lower middle income, 25 years to attain upper middle income, and a whopping 47 years to reach the developed country status. This is the reality. This underscores the necessity of attaining and maintaining a growth rate of 10%.

But then, why is India singled out as a major economic powerhouse by top international consulting firms? It is because in absolute GDP terms, India is indeed a power to be reckoned with. India’s GDP, at $675 billion, is the 10th highest in the world, and third after China and Mexico among the developing countries. A steady annual growth rate of 10% will enable India to jump several places. The absolute numbers ignore how the pie is divided. India’s staggering population results in its low per capita income. India is ranked 159th in per capita income terms. This is the story of lopsided development, regional disparities, problems of poverty and income distribution. This explains why a small segment of the population, where the bulk of the wealth and power is concentrated, feels that India has indeed arrived.

The majority of people—we have 250 million living below the poverty line— gaze at life as portrayed in television channels as a dreamland to which only a chosen few have access. This makes present India a study in contrast. It is precisely the reason why the previous government’s ‘India Shining’ campaign misfired and resulted in the UPA advocating a Common Minimum Pro-gramme. But giving out doles to the underprivileged cannot solve the problem. Steady high growth is a must.

• Another 25 years of annual 10% growth for upper middle income status

• The absolute numbers ignore the huge disparities within India

• Let’s focus on the needed reforms to attain upper middle status

The story is more favourable if we take the data in purchasing power parity (PPP) terms. India’s GDP, at $3,347 billion, is then ranked fourth in the world behind the US, China and Japan. India’s per capita income improves to $3,100, but it still ranks 145th. Even then, it would take India six years to be an upper middle income country and 28 years to be a developed country, with the GDP growing at a steady 10% a year.

What are the lessons from this? Let us be humble; we are still far from being an upper middle income country. Let us be bold and ambitious—we definitely need a sustained 10% annual GDP growth, which will come only if we undertake bolder economic reforms. Let us not delay implementing these needed reforms. Let us focus on actions and not postpone decisions by setting up committees.

The immediate focus should be on removal of transaction costs by making administrative procedures transparent, simple and fully reliant on technology, thus avoiding face-to-face contacts, stamping out corruption, developing world class infrastructure with public-private partnership, making agriculture internationally competitive and contribute to India’s exports, and diversifying the service sector to reap the benefits from India’s vast comparative advantage beyond IT in education, healthcare, tourism and other areas.

Perhaps, the guiding principle of the Eleventh Five Year Plan should be to attain a per capita income of $5,000 in PPP terms. The focus, then, should be on implementation of the key reforms necessary to reach that goal. Let us have a Plan document that just draws that roadmap.

****End of Story# 8 of 50

****Story#9 of 50

Title: Congress And Coalition Realpolitik

Author: Venkitesh Ramakrishnan

Source: Hindu

Date: April 11, 2006

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COALITION POLITICS, in terms of its organisational dynamics, is dictated by two seemingly contradictory parameters. One is accommodation and adjustment between coalition partners on ideological, political, and electoral questions — what is termed coalition dharma. The other is realpolitik, characterised by the efforts of the partners to enhance their individual space within the coalition. The leading party of any coalition, obviously, plays the major role in advancing either of these parameters in any given context.

As it faces elections to four State Assemblies and the Union Territory of Pondicherry, the realpolitik factor seems to be getting heavier on the shoulders of the Congress, the leader of the ruling United Progressive Alliance (UPA) at the Centre. This is the most significant dimension of the Assembly elections in a larger, national, sense. Right from the basic line-up of electoral forces in the five States to the nuances in terms of power play among UPA partners, realpolitik is dominant.

To start with, the line-up. In all the earlier Assembly elections during the UPA Government's two-year tenure, the primary competitor of the Congress was the principal opposition at the Centre: the Bharatiya Janata Party-led National Democratic Alliance (NDA). But this time round, the primary adversaries in all the five elections are either UPA associates or possible allies who have ideological compatibility with the Congress at various levels.

In two States, Kerala and West Bengal, the Congress is engaged in a bitter contest with the Left parties led by the Communist Party of India (Marxist), on whose support from outside the Central Government is dependent for survival. In the other two States and Pondicherry too, the main rivals are regional parties — the Asom Gana Parishad (AGP) in Assam and the All India Anna Dravida Munnetra Kazhagam (AIADMK) in Tamil Nadu and Pondicherry — who are opposing both the Congress as well as the NDA.

The realpolitik concerns do not end here. Key UPA partners have joined hands with rivals of the Congress in many States. The Nationalist Congress Party (NCP), led by Union Agriculture Minister Sharad Pawar, has an understanding with the Left parties in both West Bengal and Kerala as well with the AGP in Assam. Another ally, the Rashtriya Janata Dal (RJD), led by Railway Minister Lalu Prasad, also has an understanding with the Left parties in West Bengal. RJD and NCP leaders including Mr. Pawar and Mr. Prasad are expected to campaign against their own coalition leader in these States.

The implications of all this as well as the developing election scenario are indeed serious for the Congress. Particularly, in the context of the differences that have come to the fore between the Congress and the Left in recent times. The two have major differences in key areas such as economic and foreign policy. The Left parties perceive many economic policy initiatives like Foreign Direct Investment (FDI) in the retail sector and disinvestment of profit making Public Sector Units (PSUs) as blatant violation of the National Common Minimum Programme (NCMP), the basic agreement deed for governance. They have also opposed a "pro-United States" tilt in foreign policy as manifested in the vote against Iran in the International Atomic Energy Agency (IAEA).

On their part, sections of the Central Government including Prime Minister Manmohan Singh and Finance Minister P. Chidambaram have indicated that they are not able to impart greater speed to economic reforms on account of the repeated objections from the Left. The campaigns of various political parties in the five States are not centred round this debate but are focussed mainly on State level issues and the governance record of respective State Governments. However, the performance of the Central Government, with special references to those of Congress Ministers, does come up from time to time. This has aggravated the realpolitik connotations of the electoral battle.

A number of senior Congress leaders expect a status quo result in all the States will help the party. This means the Congress will have to get its governments re-elected in Assam, Kerala, and Pondicherry. Though these are the three smaller Assemblies of the five, the party could highlight a victory in them as a reaffirmation of people's faith in its governance and policies. Status quo in Tamil Nadu with a return to power of the AIADMK is also perceived as a positive. Essentially because it will reduce the bargaining power of the Dravida Munnetra Kazhagam (DMK), the major UPA partner from Tamil Nadu, in the Central Government. It is also felt that a Left victory in West Bengal will help in terms of realpolitik. A repeat victory in West Bengal, it is assessed, will keep the Left parties contented.

Early trends from the election scenario, however, do not bolster these expectations. The Congress' hope of retaining power seems to be suffering setbacks in Assam and Kerala. The internal problems in the CPI (M) had briefly raised the hopes of a repeat victory in the Congress-led United Democratic Front (UDF) in Kerala. But the Left party's central leadership resorted to timely course correction and ended the organisational crisis. In Assam too, the AGP's campaign aided by like-minded regional forces such as the Samajwadi Party (SP) and the Telugu Desam Party (TDP) posed a serious challenge to the Congress.

Moves for a `national alternative'

The leadership of the SP and the TDP has launched another initiative that could accentuate the problems of the Congress at the national level. This has come in the form of the announcement of a "national alternative" along with the AGP, the AIADMK, and the National Conference (NC). The likelihood of the AGP and the AIADMK emerging as possible gainers from Assam and Tamil Nadu has undoubtedly bolstered this initiative. The leadership of the new "national alternative" has said it would follow the line adopted by Left parties in the realm of economic and foreign policies.

The contribution of the UPA partners — the NCP and the RJD — to these "election-time trials" through their participation in anti-Congress, pro-Left alliances may not be ideology driven, but that will not minimise the damage potential. By all indications, these smaller parties in the UPA perceive the West Bengal and Kerala elections as payback time. The dominant perception in these parties is that when the NCP led an anti-NDA Assembly election campaign in Maharashtra and the RJD did the same in Bihar, the Congress leadership was interested more in embarrassing these parties to make small time gains for their State units.

The Congress, the leadership of these parties feel, had no empathy for the concept of coalition dharma at that point of time. The RJD had time and again indicated that it was the Congress' February 2005 line of aligning with opposing camps — the RJD as well as the Ram Vilas Paswan-led Lok Janshakti Party — that ultimately led to the defeat of the UPA in Bihar.

Sections of the NDA, particularly the BJP, have been predicting for long that the 2006 Assembly polls would spell doom for the UPA Government. Do all these developments point towards such a possibility? Answers from the leadership of Left parties, which seems to be riding on a wave of confidence in West Bengal and Kerala, negate such doomsday predictions. According to them, the Left parties will continue to support the Congress and the UPA as long as Hindutva communalism represented by the BJP and the sangh parivar remains a threat to national unity and communal harmony. The leaders of the new "national alternative" have also ruled out an alliance with the BJP and this too should come as an assurance about the longevity of the Congress-led Government. Especially because no new government is possible within the existing Lok Sabha without the support of the Congress or the BJP-led NDA.

But in the words of a Central Committee member of the CPI (M), the central message of these Assembly polls would not be assurance on longevity to the UPA Government but the rising popular resentment against Congress policies and style of functioning, and the growing political alignments against it. The leader hoped the election results would be such that they make the Congress leadership take a closer and sensitive look at the fundamental questions of life faced by the majority of Indian people. "In such a perspective," he added, "lies the well being of the people as well as the Congress-led Government at the Centre."

****End of Story# 9 of 50

****Story#10 of 50

Title: Courier Services

Author: Editorial, The Pioneer

Source: Pioneer

Date: April 22, 2006

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The Government's move to amend the Indian Post Office Act, 1896, to ban courier service companies from carrying letters weighing less than 300 grams, is anti-people, regressive and against the spirit of the economic reforms which seeks to eliminate administrative flab and expenditure and encourage private enterprise. It would mean the end of courier service companies, which now draw 65 per cent of their Rs 5,000-crore annual revenue by carrying precisely such letters.

This, in turn, would mean loss of job for the hundreds and thousands of people who are now employed by courier service companies. It is remarkable that a Government that flaunts its concern for common people on its sleeve, has absolutely no hesitation to do something that would blight the lives of such a vast number of people. The Government's defence that it needs the money diverted to it from the courier sector to be able to fund cheap postal services to remote areas, is engaging but thoroughly specious. It already has the infrastructure to do that. The latter has remained unutilised because of the disinclination of postal employees to work in remote areas, and put in an honest day's work. There is no reason why it should be any different now, except that politicians and senior babus of the postal department would benefit from the patronage enjoyed by those appointing vast numbers, and the bulk of the latter would quickly gravitate to urban areas with the help of sarkari trade union mafia.

The victims will be the public, which has horrible memories of the inefficiency and worse of postal employees when there was no courier service. Letters moved at snails pace and, sometimes, were not delivered at all and left on roadsides by postal employees who should have delivered these to the homes of addressees. But then this is only a part of the story. It is common knowledge that money orders were almost routinely not delivered in rural areas unless the recipient paid a part of the amount as bribe. Equally, envelopes containing cheques sent by registered post were frequently not handed over to addressees without bribes being extracted. It is the arrogant, extortionate, and inefficient ways of the postal employees that explains the remarkable success of the courier service companies and the growing unwillingness of the people to use the post. If the Government wants to raise its revenue to extend the postal services to remote areas, it will do well to improve the integrity and efficiency of the postal services to the point where the people gladly come back to it and not resort to regressive and anti-people legislation.

****End of Story# 10 of 50

****Story#11 of 50

Title: Debating On The Future

Author: Ashis Chakrabarti

Source: Telegraph

Date: April 20, 2006

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As in Bengal, the election campaign of the CPI(M) in Kerala shows the deep rifts within the party on economic reforms, writes Ashis Chakrabarti

Achuthanandan: still going strong

Something extraordinary happened in the Kerala unit of the Communist Party of India (Marxist) on the eve of the forthcoming elections in the state. Faced with street protests and an abusive campaign against the secretary of the party’s state unit, Pinarayi Vijayan, the CPI(M) politburo retracted its earlier decision and agreed to field 83-year-old V.S. Achuthanandan as a candidate.

This is not the first time that factionalism within the Kerala unit of the party has been out in the open. Two camps, one led by Vijayan and the other by Achuthanandan, have been fighting for the control of the party in Kerala for several years now. In fact, the current phase of inner-party rivalries in the state goes back to the Kozhikode conference of the unit in 1991. Vijayan had, however, won the recent round. The politburo’s first decision not to field Achuthanandan was seen by his supporters as the handiwork of the state party secretary. The reversal of that decision could, therefore, be seen as a defeat for Vijayan.

It is almost certain that the issue will be intensely debated within the CPI(M) long after the elections. There would be theoretical hair-splitting on what the politburo’s rethink on Achuthanandan means for the Leninist principle of “democratic centralism”, by which every communist party swears. During a recent visit to Kerala, I found some party leaders wondering aloud if this would be the course for the party’s future. It was good, they argued, that the politburo changed its earlier decision in deference to the popular demand for Achuthanandan’s nomination. There were others, of course, who argued that the agenda of a party, least of all a communist party, cannot be set by street fights.

For someone from Bengal, the Achuthanandan episode was interesting for a very different reason. As in Bengal, the CPI(M) in Kerala has been debating its responses to the demands of a new economic age. Vijayan has come to be known as the reformist face of the Kerala unit of the CPI(M) — some even see in him a mirror image of Buddhadeb Bhattacharjee. Vijayan’s reforms brigade has prominent comrades such as Paloli Muhammed Kutty, convener of the Left Democratic Front, M.A. Baby and Thomas Issac (of the People’s Plan fame), just as Bhattacharjee has important pro-reforms lieutenants in ministers like Nirupam Sen, Manab Mukherjee and Ashok Bhattacharyya.

Achuthanandan, on the other hand, is known to be more orthodox. He is Kerala’s tallest peasant leader and he enjoys the support of E. Balanandan, the boss of the party’s labour wing, the Centre of Indian Trade Unions. Together they make a formidable force that can make things really difficult for the reformists.

So, would a victory for Achuthanandan in the CPI(M)’s internal struggle mean a defeat for Vijayan’s reforms agenda? The party’s official response is predictable. The last party congress in New Delhi has made clear its position vis-à-vis economic reforms, the Kerala leaders told me, and the party line applies as much to Bengal as to Kerala.

But in the run-up to the elections, Achuthanandan and his supporters seem to stress a more orthodox, “pro-people” economic policy over a reformist approach. The LDF manifesto for these elections clearly tries to strike a balance between the two lines. That is why it talks of reviving agriculture and traditional industries such as coir and, at the same time, promises to set up 25 “digital towns” and to secure private investment in education.

The Vijayan camp, which has a majority in the state committee, argues that it would be suicidal for the party not to project a pro-change face in these times of reforms. When in January this year, Vijayan undertook a march in Kerala, his slogan was “Comprehensive development based on social justice”. It is another matter that the Congress-led United Democratic Front now has much the same slogan for its election campaign.

The catch lies in Achuthanandan’s campaign. Two major economic issues illustrate his approach to economic reforms. One is the controversy over the UDF’s acceptance of a loan from the Asian Development Bank for “modernizing government programmes”. Four out of five municipal corporations in Kerala, all run by the CPI(M), have accepted the loans. Only the corporation in Kochi, led by the Communist Party of India, has refused to take it.

Achuthanandan opposed the ADB loans on the ground that these would interfere with the government’s — and the corporations’ — financial autonomy. Interestingly, the first proposal for the ADB loans came during the tenure of the LDF government in the late Nineties. The LDF regime had then sought the loans in its desperation to tide over the state’s financial bankruptcy. Vijayan has no problem with the loans; but Achuthanandan would have none of these.

The other example was the controversy over a proposal to build a 517-kilometre-long expressway connecting the north of the state to the south. The Achuthanandan camp argues that such a project would require large tracts of land and, therefore, create major displacements of people. In its view, this cannot do much good to the people in a state where land is scarce.

Achuthanandan accepts that Kerala needs a better infrastructure for faster, modern vehicular traffic, but thinks that improving the current infrastructure of both the roads and the railway system is the right approach. His critics say that he is actually not in favour of the foreign investment that would be required for such a major project.

Similar debates rage within the party in Kerala on how to develop its information technology sector. The party is one in accepting that foreign investment is welcome in the IT sector. The last LDF regime had actually begun the work for the state’s first IT hub near Thiruvananthapuram. But the Smart City project in Kochi had brought to the surface the differences between not only the LDF and the UDF, but also within the CPI(M).

So, is the difference within the party over economic development a tussle between the orthodoxy of the old guard and the modernism of the younger generation? Or is it, as many independent analysts seem to think, an octogenarian’s last-ditch battle for power, for chief ministership?

I travelled six sultry hours one day last month — from Thiruvananthapuram to Thrissur — in search of an answer from one of the leading left intellectuals of Kerala. Thrissur, by the way, is the most historic of places in Kerala. The town of Kodungallur in Thrissur district is said to be the place where St Thomas landed in the first century in order to spread the gospel; it is famous for its ancient Hindu temples, which attract thousands of devotees, especially during the religious festivals; and it boasts the oldest mosque in the subcontinent — the Cheraman Masjid.

I travelled to Thrissur, though not for its history, but to meet another Vijayan. M.N. Vijayan had been an academic and a leading light of Marxist intellectuals in Kerala. “Development, progress are capitalist words,” the 80-year-old Marxist said, “And in these days of globalization, there are ways in which finance capital can influence the party and the government.” He made no attempt to conceal his anger at the CPI(M)-run civic corporations accepting the ADB loans, “Modern Kerala wasn’t built with ADB, World Bank loans; it was built with remittances from Keralites living abroad.”

There is a large section in the CPI(M) in Kerala who think like him. Vijayan, the party secretary, will probably win the economic argument eventually. The real challenge — for both him and Achuthanandan — will, however, come when the LDF comes to power. Given the current political trends in the state, that test may well be only a few weeks away.

****End of Story# 11 of 50

****Story#12 of 50

Title: Economy On A Roll

Author: K R Sudhaman

Source: Daily Excelsior

Date: April 06, 2006

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Sceptics have been critical of the UPA Government that it has been unable to push economic reforms because of compulsions of coalition politics. But none can deny the fact that the economy is on a roll clocking high growth for three successive years with strong macro-economic fundamentals.

Inflation has been moderate despite surging global oil prices, interest rates are by and large stable inspite of the upward pressure, foreign exchange reserves are comfortable, exports are booming and expected to touch 100 billion dollars for the first time this year, revenue growth is buoyant, investment both domestic and foreign are increasing 150 special economic zones have been cleared with an investment of Rs 100,000 crore.

Surely all this could not be possible without the budgets in the last three years providing necessary impetus. One thing has been clearly established by the UPA Government's budgets. Keep the taxes moderate and stable, the rest would follow. Despite lowering of tax rates, bringing in more services into the tax net and introduction of controversial Fringe Benefit Tax, Bank Cash Transaction Tax and Securities Transaction tax, revenue collections have been buoyant. The total revenue collections have been increasing by about whopping Rs 50,000 crore annually in the last three years.

This implies that to keep up the growth momentum, one needs to do very little to find more money for developmental activities. Government has announced a number of social sector schemes besides ambitious Rs 1,74,000 crore Bharat Nirmal Programme and the Rs 60,000 crore urban renewal mission besides massive investments in roads, airports, railways and ports.

Where would the money come from without rising fresh taxes. In fact the Government has shown the way that all one need to do is clean up the tax system, remove exemptions in phased manner and improve tax administration, the revenue will automatically flow if the growth rate improves and tax rates are mderate and stable.

It does not mean there is no room for further tax reforms and toning up the tax administration. Well this is a continuous process. But when the Government is achieving 20 per cent revenue growth on an average in the last two or three years, Government could afford to carry forward tax reforms in a gradual manner. As the saying goes the state should tax the people like the bee extracts nector (honey) from flowers. In other words people should be taxed without they feeling the pinch.

Prime Minister Manmohan Singh was right in saying that the UPA Government believes that the taxes should not be confiscatory. This makes it clear that Government did not subscribe to the view that taxes should extract more money from the corporates and introduced archaic taxes like inheritance tax, capital gains tax and the like.

Of the Rs 4,03,000 crore of direct and indirect taxes to be collected in 2006-07, a majority of them came from the corporates, be it corporation tax, excise or customs duties. Though Service sector accounted for 54 per cent of GDP, the service tax is projected to net only Rs 34,500 crore, which accounted for less than 10 per cent of the total revenue collections. Agriculture accounted for 26 per cent of GDP but farm income do not contribute any thing to the tax kitty as Constitution did not provide for taxing agriculture income. Industrial Sector which accounted for nearly 25 per cent of GDP contributed nearly 70 per cent of the total taxes collected.

Finance Minister P Chidambaram is justified when he said in Parliament while replying to Finance Bill how much more can you squeeze the industry. The taxes should nt be taken to such a level that they disincentivise the corporate sector to invest further. In fact the country is on road to becoming a global manufacturing hub expecially in the production of small cars, textiles, food processing, handicrafts, leather and many more sector. These sectors had potential to create million of jobs as well in the country thereby bringing more people into the Income Tax net.

If savings rate has to be stepped from the present level of 29 per cent of GDP to 34 per cent to push up investment from the present level of 31 per cent of GDP to a much higher level, then taxes needed to be kept at a level that is not burdensome to taxpayers to stunt growth and demand for goods, which is a driver for investment.

More than increasing the tax rates, what is more important is to widen the tax net so that more people pay taxes and remove tax exemption in a phased manner as tax exemption alone cost the exchequer Rs 1,58,000 crore annually, nearly size of the annual plam expenditure, pegged at Rs 1,72,000 crore for 2006-07.

There no point having a tax rate of 30 per cent but keep the real tax rate as low as 20 because of large number of exemption. Taxes should be simple, easy to administer and should be without exemptions so that all pay. There is also a strong case for taxing rich farmers. How can there be equity when a whole lot of farmers are not taxed eventhough they earn much more than an average urban middle class. Also there is no case for exempting rendered by lawyers and doctors and whole lot of other services. Their services beyond certain threshold should also come into the tax net.

If these are done as part of tax reforms, taxes will grow even while keeping the rates moderate so that none feels the pinch while at the same time mobilise much required resources for infrastructure and social sector development. The budget a surely a step in the right direction but more would have to be done in future.

The decision to have a single Goods and Services Tax from April one, 2010 was a welcome announcement. After the implementation of state-level value added tax, there is uniformity in taxes of states, rates moderate, checked large scale evasion and improved revenue. Every state that has implemented VAT is happy as evasion has gone down and revenue collections have improved and administration has become easy. Likewise goods and services tax when introduced, will improve indirect tax collections and make its administration easy and virtually bring all services barring a few and all goods into the tax net without any arbitrariness or exemptions. This would have far-reaching impact in improving revenue while uniformly lowering the tax rates.

****End of Story# 12 of 50

****Story#13 of 50

Title: Engaging India’S States, The Stanford Way

Author: NK SINGH

Source: The Financial Express

Date: April 01, 2006

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Six years ago, the Stanford Centre for International Development, with the support of the Indian diaspora in the Silicon Valley, began hosting an annual conference on India’s economic reforms, which brought together a range of American and Indian scholars, policymakers, TiE entrepreneurs and corporates. However, three years ago, it became evident that the next generation of reforms must engage the state governments. The big agenda of reforms by the Centre on trade, industry, tax policies, telecom were substantially over. On the daunting unfinished agenda, like foreign investment, banking and finance, labour or subsidies, securing political consensus would be time-consuming. State reforms, however, in agriculture, education, health and infrastructure hold the key to our growth strategy.

Therefore, a process called the ‘Stanford Mirror Conference’ was initiated to engage state-level political, official functionaries and others in a dialogue on their economic challenges. Such conferences have been held in West Bengal, Punjab, Kerala, Andhra Pradesh, Maha-rashtra and Karnataka. In the current series, these mirror conferences have re-engaged Punjab and come to Rajasthan.

The Jaipur conference brought academics from Stanford to interact with senior political functionaries of the state, academic institutions in Rajasthan, senior officials and students of some universities. Drawing credence from the recent World Bank report entitled, Rajasthan—closing the development gap, Vasundhara Raje highlighted achievements and medium-term policy initiatives that can improve on the momentum of the 1980s and 1990s and approximate a growth rate of 8%.

The paradox of a decline in growth of per capita income to 2.2% per year compared to 3.4% in the 1990s, and poverty rates of 15%, far below the national average, cannot be explained merely by lower incidence of income inequality and more egalitarian distribution of land-holdings. At any rate, the path forward must involve revival of agricultural growth by reducing the sector’s vulnerability to drought and diversifying cropping patterns, making it less water-dependent and cereal-dominated, coupled with improving infrastructure and regulatory reforms to improve the investment climate and increased reliance on innovation for further progress in the human development index. Rajasthan, to its credit, has left behind its image and stagnation associated with the Bimaru states, but will have to reinvigorate its efforts to join the ranks of the faster-growing western parts of India.

TN Srinivasan, broadly endorsing the World Bank report on Rajasthan, focused on Centre-state relations. The federal system with strong unitary features had become somewhat dysfunctional, given the heterogeneity of political parties in office across various states. In the broad scheme of devolution, the constitutionally mandated Finance Commission has the core function of recommending sharing of central taxes and in fairness endeavoured to combine considerations of equity with efficiency, but suffers the handicap of a five-year horizon. The Planning Commission, which he described as ‘an extra-constitutional body’ set up by a resolution of the central Cabinet in 1950, makes grants to the states in support of Five-year and annual plans of states. These were not wholly free from discretionary transfers. This was even truer of devolutions from central ministries on centrally sponsored schemes.

• States have a huge task, but inadequate financial and decision-making powers

• Heterogeneity of govts and regional parties is a hurdle in reasoned debate

• A fresh initiative by the PM can trigger awareness on the need to rethink

The process of design, selection and initiatives on new schemes, whose consequences are borne by the states, suffer inadequate consultation. In fact, according to Prof Roger Noll, since money creation was an exclusive privilege of the central government—including the benefits accruing from seignorage and with the nationalisation of insurance companies and commercial banks and the Reserve Bank determining the Cash Reserve Ratio and the Liquidity Ratio, “the Centre had a large (almost disproportionate) say on how financial resources should get allocated among levels of government and the private sector.” In short, states have been burdened with enormous responsibility but handicapped with inadequate financial power and participation in key economic decisions.

If TN Srinivasan’s logic were to be fully accepted, it would involve substantial rewriting of the Constitution, for which there is neither appetite nor consensus. This does not mean that the issues he raised are not relevant. Incremental progress can be the best outcome. This means strengthening the consultative mechanism for vastly improved interaction with the states, particularly on policies that affect their economy. It is well recognised that neither the National Development Council nor the Inter-State Council are effective consultative bodies.

The Special Empowered Committees on Vat is a one off example with a mixed experience. Heterogeneity of governments and regional parties do not enable convergence of opinion. Too often, debates acquire a Centre versus state character and are scarcely viewed in a bipartisan spirit. We need to get out of this cycle and constituting another commission may not be the answer. Recommend-ations of such commissions are never well received by successor governments and the cycle of setting up another commission begins all over again!

While such complex issues do not have easy answers, the Prime Minister, given his experience and stature, can convene a special meeting of the National Development Council and follow it up with a special discussion in Parliament. Unfortunately, political parties remain distracted and Parliament does not foster debates on issues of far-reaching importance. A fresh initiative by the Prime Minister can trigger enhanced awareness on the need to rethink on the accepted paradigms. Engaging state governments in a dialogue on emerging development dynamics is critical to forge consensus. The ‘Stanford Way’ is a credible step in this direction.

****End of Story# 13 of 50

****Story#14 of 50

Title: Fdi Can Step Up Growth

Author: C.L. Singla

Source: Tribune

Date: May 03, 2006

URL:

PRIME Minister Manmohan Singh, while inaugurating the Hannover Trade Fair in Germany on April 24 said that “India is in tune with new realities of the global economic order…and it is at the cusp of a historic transformation”. Having emphasised India’s role in opening up more sectors of its economy to foreign direct investment (FDI), particularly, in the core sector, he invited FDI of about $150 billion over the next decade.

Its immense merits notwithstanding, the Left parties in India say that FDI invades our sovereignty, rob off our culture and traditions and cripple our economic prospects. Some empirical studies have also challenged and refuted the positive role of FDI in economic growth.

It is said that the rapid growth of FDI throughout the world has brought in a pronounced quantitative and qualitative changes in its sectoral composition, from the primary sector and resource-based manufacturing towards services and technology-intensive manufacturing. Thus, it has helped industrialisation and overall economic development of South and South-East Asian countries.

The success stories of Japan, Indonesia, Malaysia, Korea Republic, Philippines and Thailand owe much of their economic success to their ability to restructure their manufacturing from labour-intensive industries and activities towards capital–and-technology intensive ones. Nothing illustrates this better than electronics and communication industry.

Though there are negative effects such as the displacement of local entrepreneurs, market domination and socio-cultural impacts, the general impetus that FDI gave to industrialisation and economic development has led some observers to conclude that it has resulted in the dynamic growth of Asian region. This is called the “Asian Miracle” with Japan in the lead. The newly industrialised countries of Hong Kong, Korea Republic, Singapore and Taiwan Province of China are in the second rank. ASEAN countries comprising Indonesia, Malaysia, Philippines and Thailand are third. And China, Vietnam and most recently India, Pakistan and Sri Lanka are in the fourth.

It is feared that FDI will have a negative impact on employment. While there is little evidence of job displacement caused by the introduction of improved technologies, the overall impact is likely to be positive if new techniques are used for new and additional type of work. A study by Kosak Maja finds “the new jobs are created with higher skills and incomes since new products and services of higher quality and efficiency can be developed.”

In Asian developing countries, the increased use of computers in banking, insurance, airlines, travel, tourism, hotel operations and other financial services have now become a necessity. Several studies, including some by international trade union organisations, have recognised the need for various levels of automation to ensure competitive production capability.

Various world investment reports show that FDI is attracted more towards consumer goods than infrastructure or core sectors. The developing countries need drinking water, not Coca Cola or Pepsi; they need food for people below poverty line, not Cadbury’s chocolates, McDonalds, Uncle Chips, shampoos and soaps.

The wage goods sector is a picture of total neglect. FDI does not cater to the needs of the masses. Consumerism has developed sophistication in consumption and consumers increasingly want the best and the cheapest products, no matter where they come from. FDI remains attracted towards a number of industries producing consumer goods such as processed food, cigarettes, toiletries and cosmetics because of high profitability and ownership advantages in the form of well-known international brand names. The consumer goods sector offers maximum scope for increasing job opportunities. And if the FDI flows are allowed in the small sector, it might create more unemployment and pollution in the developing countries.

In some Least Developed Countries like Bangladesh, Nepal and Maldives and low income countries in Asia, the positive impact is somewhat weak and insignificant because of their inward-looking policies, labour indiscipline, small market size, terrorism, political hostility and instability, poor infrastructure and poor response by the governments of host countries. In case of India, FDI inflows, in rupee terms, have witnessed a sharp increase of about 325 times during 1991-2006 because of a relatively stable and hospitable investment climate, open door policy framework and the size of market with rapidly growing income and wants have boosted consumerism in the country.

A series of economic reforms and non-discriminatory policy towards FDI have encouraged the foreign investors in India. India’s highway plan, currently nearing completion, is one of the world’s largest and Indian railway system, already one of the world’s largest, is being modernised with new technology. Ports and airports are witnessing renewed activity as the private-public sector partnership in investment and operation are being encouraged.

On the whole, FDI inflows to developing countries have increased markedly but the country-wise distribution is highly skewed and the FDI boom is concentrated in the most dynamic markets of South and South-East Asia and regions where the most intensive reforms have been initiated.

The governments of developing countries should ensure that their environment is not polluted and their culture is not robbed off. In such circumstances, the role of the state has become more important today than earlier.

The writer is Director, Graphic Era Institute of Technology, Dehradun

****End of Story# 14 of 50

****Story#15 of 50

Title: Governance From Bad To Worse

Author: VINOD VYASULU

Source: Deccan Herald

Date: May 02, 2006

URL:

Lack of transparency in mega projects creates suspicion about vested interests

The recent Supreme Court judgment on the Bangalore-Mysore Infrastructure Corridor serves to highlight the decline in governance in Karnataka in recent years. Politicians have begun to defend themselves. Not one has offered to resign (if in office) or to apologise, if not in office. The fact that the Government of Karnataka (GoK) has to pay a fine of Rs five lakh hardly gets discussed.

The BMIC has been in the news for many reasons. There has been a vehement protest by environmental groups. There has been protest by a former Prime Minister. Industry by and large has been backing the project. Clearly, the process has been so mishandled that the Supreme Court had to take the GoK to task for a frivolous appeal! Certainly this qualifies as not bad but as ‘worse governance’!

The intention here is not to go into the merits of this large project. That debate continues because of the penchant in the GoK to design and decide upon large projects, financed by tax-payers’ funds, with no discussion at all with the stakeholders of the projects. It can happen that such projects are ‘good’ in some larger sense. But the lack of transparency in the decision-making process leaves doubts in people’s minds that vested interests are at work. They cynically believe that large sums will be siphoned off.

Lokayukta jurisdiction

The fact that politicians and senior officials do not come under the jurisdiction of the Lokayukta, who has no powers to prosecute offenders he catches suggests that corruption at this level is not addressed. And that means that implementation will suffer, as objections will continue throughout the process. The final project will cost much more than the estimated amount — and the helpless taxpayer has to foot the bill.

There are other such projects in the air. In Bangalore there is the Greater Bangalore Water Supply and Sanitation Project that has galvanized many NGOs into protests. The process by which decisions on the Metro rail, the international airport etc have been taken all have this unilateral quality. There is an ‘on-again, off-again quality’ about the decision- making that is, to an outsider, quite hilarious. All involve huge charges on the taxpayer. None are democratically debated. None go through a proper project evaluation process where the need is clearly defined and alternative ways of meeting that need are assessed on the basis of social cost benefit (CB) analysis. Instead, one hears that the project decided upon has a positive CB ratio — whatever that means.

Crying need

If mass transportation is the crying need for Bangalore, then could not alternative solutions to this need be formulated and the merits of each debated openly? For example, alternatives to the metro rail are monorail, and a system of dedicated bus lanes that has been so successful in countries like Brazil. Why cannot such alternatives, with the cost of each to the taxpayer, be formulated and discussed? How does the choice fall in favour of the metro rail without any such debate? Could not a referendum on this issue, where voters choose among alternatives, be held to make the choice? What stops us from such democratic practices? The economic reforms of the 1990s were accompanied by governance reforms in the 73rd and 74th constitutional amendments, meant to create local governments and a deeper democracy. That is still a far cry from reality. If one looks at the organisation chart of the Municipal Administration Department in Karnataka, it has no place for the elected representatives who constitute the local self-government bodies.

Gone are the days when ministers would have resigned in the face of such strictures from the Supreme Court. Unfortunately, the taxpayer will have to pay a high price for this bad governance s/he gets in return for her vote. The practice of democracy must be brought in line with constitutional provisions in Karnataka. That may reduce the incidence of worse governance, and make possible good governance. But we are a long way from that goal in Karnataka.

****End of Story# 15 of 50

****Story#16 of 50

Title: He, She And Them

Author: Manini Chatterjee

Source: Indian Express

Date: April 27, 2006

URL:

Two summers ago when it unexpectedly emerged as the single largest party in the 14th Lok Sabha, India’s Grand Old Party was brought face to face with a set of challenges unprecedented in its 120-year-old history. For the first time, it was set to head a full-fledged coalition of mostly regional parties at the Centre. Indira Gandhi may have got the backing of the CPI for a while in the 1970s, but it was for the first time that a Congress government would be dependent on the critical — in more ways than one — support of the non-Dangeite, traditionally anti-Congress Left. And after a very long time, the leadership of the party and of the government was not going to be vested in one and the same personality.

That is why Sonia Gandhi’s dramatic “renunication” of high office and anointment of Manmohan Singh as prime minister created so much upheaval in the Congress party. But if the first two elements of the new situation — coalition government and Left support — clearly fell in the “problem” category, the third was redolent with hope and promise.

Despite the BJP’s carping about Sonia’s “super PM” role, the “dual powers” experiment was largely positive. For one, her “sacrifice” had generated enormous goodwill among the usually hostile urban middle classes. Second, Manmohan Singh enjoyed high ratings for his “integrity” and “professionalism”. But most important, the division of powers between Party and Government could prove an ideal arrangement — allowing the PM to pursue governance, unfettered by the pulls and pressures of party politics, and giving the party president ample opportunity to revive the party organisation which could then be effectively used as the interface between government and the voting public.

That last imperative is particularly crucial in the post-economic reforms era when the biggest challenge facing ruling parties is to combine a market economy with a state’s regulatory role; to balance economic growth with equity. The Narasimha Rao government failed to return to power because, among other things, the Congress party — shorn of both its “secular” and “socialist” tags — was reduced to a shell of its old self. The NDA too faced the same fate, its “India Shining” rhetoric boomeranging at the hustings.

The UPA did not want to tread the same path. The Congress leadership was clear that there would be no going back on economic reforms. But it was equally aware, that having come to power by promising to do right by the “aam aadmi”, the government-party combine would have to do much more — and seen to be doing much more — for the masses untouched by the Sensex.

To be fair, both Sonia and Singh have tried hard to stick to that script. If the government has kept the economy on track, the National Advisory Council headed by Sonia Gandhi has taken upon itself to give a “human face” to the reforms by pursuing flagship schemes such as the NREGP and RTI Act.

Why is it, then, that all does not seem well with the Congress or the UPA? As the Manmohan Singh government approaches its second anniversary, the teething troubles of coalition rule seem to have become a permanent toothache that may require — after the assembly poll results in mid-May — some complex dental surgery.

More disturbing, though, are the discordant voices being raised by Congress leaders themselves which fall in an entirely different category than the Left’s critique of government policy. HRD minister Arjun Singh’s unilateral announcement of OBC quotas in educational institutions, Natwar Singh’s public attack against the government’s Nepal policy, Saifuddin Soz’s take on Narmada dam and disgruntled whispers of Congressmen down the line may not amount to a concerted challenge to the leadership but reflect a disquieting dissonance at the heart of the UPA.

Contrary to frequently expressed fears two years ago, Sonia Gandhi and Manmohan Singh continue to share an excellent rapport. Ironically, it is the abiding trust between the Big Two that is, at least partly, responsible for the present tensions within the Congress. The prime minister’s men are dismissive of any threat to his position or attacks on his policies since they reckon, correctly, that as long as he enjoys Sonia Gandhi’s confidence, no one can touch him. Sonia Gandhi, on the other hand, seems happy enough that her NAC agenda is being implemented and feels no need to broad-base her consultations within the party.

In the process, the Congress party remains out of the loop. In the last two years, there has been little effort to re-establish the institutional mechanisms that the Congress was once famed for — and indeed gifted to the entire political system. In the absence of an institutional framework, personalised politics and ad hocism come to the fore. No one knows how decisions are taken or who takes them.

Unlike the BJP or the Left parties which hold regular meetings of party office-bearers and committees to discuss — for better or worse — both strategy and day-to-day tactics, CWC and CPP meetings are infrequently held and seldom provide a platform for genuine debate and discussion. There is little coordination between the PM’s media managers and the AICC media committee, which is usually clueless about leadership’s thinking on most issues. In the absence of democratic discussions, Congress leaders and even senior ministers are often unaware of the government’s position on, say, quotas in private sector or the Narmada controversy. The absence of clear-cut and democratically arrived policy formulations only help disgruntled ministers give vent to what an AICC member described as “frustrology” in the guise of ideology.

The discord within the party may only get heightened once the Left ups the ante and smaller parties revive the spectre of a Third Front in the months to come. A flurry of UPA-Left coordination committee meetings and attempts to appease the allies will certainly take place. But the Congress needs to look beyond and look within for only a vibrant intra-party, intra-government and party-government discourse can ensure the Manmohan Singh government’s effectiveness and longevity. The “unique” Sonia-PM rapport is simply not enough.

****End of Story# 16 of 50

****Story#17 of 50

Title: How To Enhance Growth And Competitiveness

Author: Pradeep S. Mehta

Source: Business Line

Date: April 12, 2006

URL:

The Prime Minister, Dr Manmohan Singh, has lately been talking about the goal of his Government to raise the GDP growth to 9-10 per cent. In spite of his doubts about the difficulty of reforms in a coalition Government, the Planning Commission chief, Mr Montek Singh Ahluwalia, has echoed the goal of achieving a higher growth rate in the Eleventh Plan (2007-12), but has hedged that we can think of something between 8 per cent and 10 per cent.

But to do this, it is not sufficient to focus on the "hardware" component of economic management (that is, development of infrastructure), but equal emphasis must be given to "software" (policies and practices of the government which shape the general economic environment). Alas, the latter is most often ignored.

Despite the several wide-ranging economic measures from the early 1990s, the economic trends reveal a not-so-rosy picture. The economy has grown at a rate well below its potential. Even the Tenth Plan targeted growth rate of 8 per cent per cent is going to be missed. The contribution of manufacturing to national income has remained stagnant, in spite of its potential to have the greatest impact on the economy. Expressing concern over the low share of manufacturing in the country's GDP, the Prime Minister called for increasing this share.

An exercise was undertaken by the National Manufacturing Competitiveness Council to address this conundrum. However, the national strategy paper that it produced was more of "do-what" nature rather than "do-how" and lacked analytical rigour. As a result, it did not even produce any debate.

Lessons from abroad

Faced with a similar situation, the UK and the European Community had brought out white papers on competitiveness in 1994. Both emphasised the need to ensure fair competition in the market as an essential ingredient for enhancement and maintenance of competitiveness. These prescriptions apply to India as well.

To derive the full benefits of its economic reform agenda and ensure the development of a competitive economy, Australia framed a National Competition Policy in 1995 comprising a set of policy reforms adopted by the federal and provincial governments. The objective was to ensure that the same competition principles applied throughout the economy. Not surprisingly, studies have shown that the Australian economy has garnered an annual gain in real GDP of about 5.5 per cent.

In the case of India, even after liberalisation, government policies continue to be framed and implemented such that more often than not they thwart the market process and competition. There are several examples of such policy-induced anti-competitive outcomes.

For instance, despite trade liberalisation, certain elements of trade policy measures are anti-competitive in nature, such as anti-dumping that favours domestic firms; inverted duty structure that is, higher import duty on raw materials/intermediates vis-à-vis that on finished products, which affects domestic manufacturers of finished products and encourages suppliers of raw materials/intermediates, denting value addition in the industries concerned.

Hurting market process

Several rules and regulations of the government hinder the proper functioning of the market process. One example is from the coal sector: Although pricing freedom has been given to the coal producing companies, distribution of coal is still controlled by government agencies, and only they are allowed to sell coal directly to consumers.

In several instances the government has fallen short of taking adequate measures to ensure fair market process and competition. The highly desired competitive neutrality is missing. Recently, the Railways opened up container transport to private operators, who will have to compete with Concor, a wholly-owned subsidiary of the Railways, and be dependent on the Railways to access tracks and engines to keep their rolling stock moving. This calls for a transparent and non-discriminatory access regime to ensure that the Railways does not squeeze out the private competition. But this framework is missing from the Railway Minister's announcement!

In the telecom sector, for instance, interconnection for private telecom operators into the BSNL network is problematic. This has led to inter-network congestion and poor quality of service to consumers.

Not right instruments

Often, policies that deviate from competition principles are framed to address some socio-economic concerns. However, the instruments used to achieve what are otherwise laudable objectives are not the best ones.

Currently, the food subsidy policy uses the MSP-PDS operations to serve the "conflicting" objectives of ensuring remunerative price to farmers and providing the foodgrains so procured to the poor at affordable prices. By implication, this entails a huge gap between the purchase and the issue price, and consequently a larger subsidy bill. The need of the hour is to separate the procurement of foodgrains through MSP mechanism from the PDS operations. Procurement of foodgrains for distribution to poor through PDS could be done through competitive bidding, which would minimise the cost of procurement.

Systemic distortions

The Union Cabinet has, instead, taken the decision to hike the issue price of foodgrains and reduce the quantity of foodgrains offtake through the ration shops. The systemic distortions in the operation of food subsidy policy continue to remain unaddressed.

Thus, most of the time, as policy outcomes are sought to be generated, it is a practice in India to do so without bearing in mind that policies need to be framed and implemented in harmony with the market process and not in a manner that stalls it. There is a lack of coherence in various government policies, highlighting the state of `policy vacuum'.

What is required is the need to acknowledge the institution of the market. It is, therefore, time the Government adopted a National Competition Policy as the mantra for implementing economic reforms in the country.

It would help rationalise the role of the Government so that its intervention facilitates the functioning of markets and leads to higher levels of growth. Only then will a 10 per cent growth be possible.

****End of Story# 17 of 50

****Story#18 of 50

Title: India Inc., Liberalisation, And Social Responsibility

Author: Sushma Ramchandran

Source: Hindu

Date: April 25, 2006

URL:

Domestic industry cannot divorce itself from the social environment within the country. However, it may be counter-productive for the Government to lay down the law in the sensitive area of human resource for the private sector.

CORPORATE INDIA is disturbed over the latest remarks by Prime Minister Manmohan Singh at one of industry's annual conclaves. The first worrying comment for India Inc. was the suggestion that the care of environment and rehabilitation of the dispossessed should be taken up on a priority basis by industry. The second and even more startling statement was the need to "broad base employment" and move towards "affirmative action" to include backward sections of society in recruitment by the private sector.

The immediate response to these suggestions has been sharp with Wipro chief Azim Premji insisting that high quality of human resources is essential to meet global demand for services in the infotech sector. Similarly, the new chief of the Confederation of Indian Industry, R. Seshasayee, has firmly opposed the concept of "mandatory reservation" for backward classes. Even so, despite the vocal opposition to the idea, the chamber has decided to set up a committee headed by Tata veteran J.J. Irani to consider the quota issue.

While the Prime Minister has virtually set the cat among the pigeons in the corporate world on the reservation issue, the other aspect of environment and rehabilitation of displaced workers due to industrial projects will also assume grave proportions in the days to come. With the Narmada Bachao Andolan having gathered greater strength in recent weeks, the voices of the dispossessed are being heard more loudly even in the normally apathetic corridors of power. The report of the United Progressive Alliance Government's Group of Ministers on the tardy progress in rehabilitating those displaced by the Sardar Sarovar dam has come as an eye opener. Chief Ministers are now seeking to deny that the situation is as bad as has been portrayed in the report.

There is no doubt, however, that the report and the NBA's agitation to prevent the height of the dam being raised have served as a wake-up call even for those who are pro-economic reforms and view the dam as a vital infrastructure project needed by several States. The complete inability of the State Governments concerned to provide rehabilitation in time to those affected by submergence is surprising, given the considerable lead time available. The question that must be asked is whether State Governments are prepared to care for the dispossessed within their boundaries or whether the interests of weaker sections must always be subservient to infrastructure projects.

The Prime Minister has sought to put the onus for rehabilitation issues on private industry as well since it is involved in many giant projects. The executive alone, he has indicated, can no longer carry this burden and industry must take environmental issues into account while planning investments. The concerns of those displaced by large industrial projects will also have to be the responsibility of those implementing them, be they in the public or private domains.

The other key question is whether those affected by the Sardar Sarovar dam have tasted the fruits of the country's higher economic growth. Is it possible for an eight per cent growth rate to completely bypass huge segments of the population, and provide benefits only to the urban middle class, is an issue we must all ponder. It is here that the issue of providing support to the displaced links up with the other proposal for providing reservation in private sector jobs for backward segments of society.

The contentious quota issue is really part of a wider problem of the growing divide between rich and the poor in this country. The gap has always been wider here than in other Asian countries such as China. The rapid improvement in income levels in urban areas has further extended this divide leading to social unrest, expressed in many areas as naxalism or other forms of extremist movements. The progress in uplifting those below the poverty line seems to be moving far more slowly than the rapid impact of reforms in urban areas. The growth of affluence has been palpable in the metropolitan areas of the country. The rise in employment as a result of the call centre boom is certainly a positive development to meet the needs of millions who graduate as potential educated unemployed from the country's schools and universities. At the same time, there has not been a matching rise in employment opportunities in rural areas. The net result is the current widening chasm between the rich and the poor.

Whether quotas for backward classes in the private sector will help bridge the gap is an issue that needs to be debated and discussed for some more time. The proposal for introducing a quota for OBCs in premier educational institutions such as the Indian Institutes of Technology or the Indian Institutes of Management has already begun agitating young people. A suggestion to extend such quotas to private sector recruitment is bound to create more unrest. It is, however, only a logical extension of a policy that already exists both in the government and the public sector. There has so far been no agitation over the existence of such quotas for employment in these segments of the economy and these have always been accepted unquestioningly. Neither has the government nor the public sector ever been faulted on efficiency issues because there are quotas for the Scheduled Castes and the Scheduled Tribes. The reasons for inefficiencies and failures of performance in the government have been attributed to the lifetime employment policy, which gives prospects of complete job security without any matching performance requirements. Similarly, the ills of the public sector enterprises have been mainly due to lack of autonomy rather than the special job quotas.

It may thus be advisable for private industry to approach the issue as the Prime Minister has suggested, in terms of "affirmative action," rather than to view it as "mandatory reservation." The principle of affirmative action has been accepted all over the world. Even in the U.S., such special measures to increase recruitment based on gender as well as race are adopted in most educational institutions as well as corporates. It may well be argued that the quota percentages in this country are too high and need to reconsidered. At the same time, domestic industry cannot divorce itself from the social environment within the country. The centuries of discrimination against certain sections of society have affected both their economic and social status. Even the private sector will have to play its role in making an effort to redress these societal imbalances.

Strengthening basic education

It may be counter-productive, however, for the Government to think in terms of laying down the law, literally, in the sensitive area of human resources for the private sector. As a leader in the information technology industry Mr. Premji has candidly pointed out, it has been possible for India to meet global demand by providing an international level of employees to implement projects. A rigid mechanism of job reservation may adversely affect industries that need to be at the cutting edge of technology in order to maintain global standards. In fact, the government really needs to look at the other end of the spectrum to provide better educational opportunities for backward segments of society. A beginning has to be made in primary and secondary education where even now large numbers are dropping out of schools. The lacunae in the mid-day meal schemes are well known by now and it has been widely recognised that better implementation of these schemes will ensure much lower dropout levels in elementary education.

Unless basic educational facilities are sound for those at the fringes of society, it will not be possible for them to make it up the ladder to reach institutes of excellence such as the IITs. Even quotas may not suffice, as the recent turmoil over Human Resource Development Minister Arjun Singh's proposal for OBC reservation in higher education has thrown up stories of cases where students taken in through quotas have not been able to finish the course. For some reason, HRD ministerial incumbents have a penchant for looking more closely at higher education issues rather than elementary and secondary education. This is an area where much more work needs to be done to provide simply the most basic of education facilities for children both in rural and urban areas. While Indian Ministers may like to speak more about the IITs and the IIMs, the former Singapore Prime Minister, Goh Chok Tong, on a visit here several years ago, pointed out that China was far ahead of India in terms of providing primary education to its people. He had then observed that this was where the focus was needed for India rather than on its admittedly excellent institutes of higher education.

In any case, the comments by Dr. Manmohan Singh clearly indicate a recognition that private industry has now reached a stage where it needs to take on more social responsibility. In the past, it was the public sector that was given this onerous role and most public sector units had a very specific "social role" to be included as part of their mandate. With the liberalisation of the economy, this mantle has to be donned by the private sector since it has been freed from controls. As always, freedom has to be dealt with maturely and, in this case, it means taking on the burden of social responsibility.

****End of Story# 18 of 50

****Story#19 of 50

Title: India Seeks Trade Pacts With China, Japan, South Korea

Author: Surojit Gupta

Source: Reuters

Date: May 06, 2006

URL:

India is working on free trade agreements with China, Japan and South Korea as part of a concerted effort to strengthen its regional ties, Prime Minister Manmohan Singh said on Friday.

India's "Look East" policy is aimed at boosting manufacturing in Asia's third-largest economy, raising its share of global trade and creating much-needed jobs for its billion-plus people.

"India has a vital stake in the prosperity and stability of Asia," Singh told the annual meeting of the Asian Development Bank (ADB) in Hyderabad.

Trade pacts with China, Japan and Korea would come on top of existing deals with Singapore, Thailand and in South Asia, and Singh envisaged that one day a free trade area would cover all major Asian economies, and possibly Australia and New Zealand.

Singh, seen as the father of India's economic reforms because he was finance minister when its economy opened in the 1990s, sees more trade with its neighbours as a way to raise the share of manufacturing in India's GDP from just one-seventh now.

More people are moving off farms to seek work and Singh wants the production lines to soak up this surplus labour as well as the 12 million Indians who join the workforce each year.

Japanese Finance Minister Sadakazu Tanigaki later told the ADB meeting that Tokyo was committed to boosting its solidarity with Asia and helping to tackle its development challenges.

But protesters blame the ADB itself for some of Asia's troubles. A few thousand from People's Forum Against ADB marched through Hyderabad under the baking sun, denouncing the bank for imposing tough loan conditions on governments and overriding the rights of the poor.

"ADB leave India, leave Asia, leave the world," the members of more than 100 groups chanted as vendors did a roaring trade in cool drinks and a small contingent of police looked on.

"It's a development model that is committed to making the world safe for corporate investment," said Shalmali Guttal of Focus on the Global South.

"We're not against people borrowing to do projects, but not under these conditions and not in this form and not with this serious lack of accountability."

IMBALANCING ACT

Singh, addressing the ADB meeting's hottest issue so far, called for a coordinated effort to correct global imbalances and urged global financial institutions to play an active role in the effort to prevent a sudden worldwide economic downturn.

"The present level of global imbalance cannot be sustained forever. It therefore calls for action both from countries which have current account surpluses and those having current account deficits," he said.

"Large disparities raise concerns about unsustainability and provoke the fear of hard landings."

China said on Thursday it would push yuan reform, as part of its long-term efforts to rebalance its economy by raising domestic demand, but would not take orders from other countries.

Some economists say the United States is responsible for China's booming exports, that it consumes too much and bears unsustainable current account and fiscal deficits, but others charge that China keeps its exchange rate unfairly cheap.

Tim Adams, U.S. Treasury undersecretary for international affairs, told reporters on Thursday that all the Group of Seven rich countries had backed a call for China to change its ways.

"All too often this is pitted as this bilateral trans-Pacific food fight," Adams said. "When in fact it's the world talking to China about what it should do to help minimise the risk of disruptions and dislocations."

(Additional reporting by John O'Callaghan and Yoko Nishikawa)

****End of Story# 19 of 50

****Story#20 of 50

Title: India’S Left, Congress In State Poll Standoff

Author: Correspondent or Reporter

Source: Daily Times

Date: April 17, 2006

URL: \04\17\story_17-4-2006_pg4_1#9

Millions of people will vote in India’s West Bengal on Monday as part of elections in five states whose results could further strain ties between India’s left and the national ruling coalition it backs.

The communists are fighting the Congress party, which heads the federal government, in three states including West Bengal in the east of the country where they are expected to win power for the seventh straight time since 1977.

In the south, the left parties are hoping to take power from a Congress government in Kerala, while in the remote northeastern state of Assam, the left is the junior partner to a regional party which is trying to oust a Congress administration.

Left leaders and analysts say victories in Kerala and West Bengal would be used by the communists to wield more influence on the economic and foreign policies of the Congress-led United Progressive Alliance (UPA) government in New Delhi.

“We have been pursuing a course of action where we can intervene with the UPA government,” Prakash Karat, the head of the Communist Party of India (Marxist) (CPI-M), India’s biggest communist party, told Reuters in an interview this month.

“With an endorsement from Kerala and West Bengal, we can argue our case better and our arguments will have more weight.”

He warned that his party would look at reviewing its support to the UPA after the elections.

All the polls are being held in several stages with counting due on May 11. Voting in Assam is already over.

The CPI(M) and smaller left parties have 61 lawmakers in the 545-member lower house of parliament and shore up the minority UPA government. But they have clashed with Prime Minister Manmohan Singh as he pursues economic reforms and a US-friendly foreign policy.

Analysts say reforms to further open up India’s economy – particularly in the insurance, pension and retail sectors – could suffer if the left does well and the Congress poorly.

“The elections are extremely important in the context of national politics as the left with success in West Bengal and most likely Kerala will exert considerable pressure on the Congress government,” political analyst Mahesh Rangarajan said.

The left is particularly upset with Singh’s push for closer ties with the United States, particularly a landmark civil nuclear deal with Washington agreed last month.

Double standards? Karat slammed the deal, saying the government had “shot itself in the foot” as it had opened New Delhi up to American pressure on a range of other issues.

But while communists oppose the government’s economic reforms and pro-American foreign policy tilt in New Delhi, their government in West Bengal is going to the polls highlighting economic development with the help of foreign investment, including that by US firms. reuters

****End of Story# 20 of 50

****Story#21 of 50

Title: Indo-Thai Economic Ties To Get A Boost

Author: Manoj Kumar

Source: Tribune

Date: May 04, 2006

URL:

THE economic and political ties between India and Thailand is likely to gain strength as the political uncertainty in Thailand is receding after Prime Minister Thaksin Shinawatra’s resignation early last month.

The business community in India, which heavily invested in Thailand, after the free trade agreement (FTA) in 2003 was worried over the protests demanding Prime Minister’s resignation over alleged corruption and abuse of power.

The FTA between the two countries has paved way for the success of India’s Look East Policy leading to annual bilateral trade to around $ 2 billion between the two countries.

“After reaping early harvest of FTA, both the governments are now geared up to double bilateral trade to $ 4 billion in next two years as more and more Thai and Indian companies are looking for joint ventures and business opportunities,” says Chirasak Thanesnant, Thailand Ambassador in India.

Cumulative Indian investment in Thailand from 1991 to date is close to about $1 billion. At present, there are 26 joint venture projects producing chemicals, steel wires and rods, fibre, drugs and pharmaceutical. The major Indian groups in Thailand include Aditya Birla Group, Ranbaxy Laboratories, Tatas, Lupin Laboratories, Indo-Rama and Usha Martin.

After signing the Comprehensive Economic Cooperation Agreement (CECA) with Singapore, Prime Minister Manmohan Singh is reportedly taking personal interest in making FTA with Thailand a success as part of India’s strategy to strengthen economic and political ties with the ASEAN countries.

Despite reservations expressed by certain quarters in industrial circles, the government is certain that FTA with Thailand, under which the list of commodities is expected to go up to 5,000 from a initial list of 82 items, will help the small and medium enterprises here to improve their competitiveness.

India has much to learn, believe business community, from Thailand especially in tourism and infrastructure sector. The country has made much progress in exporting light manufacturing goods like auto components electric and plastic equipment, food processing products. It is showing keen interest in Indian pharmaceutical, IT and auto sector. Despite a small size, its global trade was worth about $212 billion in 2004-05, almost comparable to India.

In fact, its early economic reforms, strong push to exports coupled with increased consumption and investment spending have helped push GDP growth up to 6 per cent in recent years.

After Malaysia and Singapore, Thailand is the third largest investor in India from the ASEAN region. “Enthused by the opening of FDI in construction and food processing sectors, many Thai companies are expected to invest in these sectors,” feels Pramon Sutivong, Chairman, Board of Trade of Thailand and Thai Chamber of Commerce.

He is currently on a visit to India with a large contingent of business delegates looking for business opportunities in food processing, petrochemical, steel, auto and IT sectors.

With a population of about 6.5 crore and per capita income of $ 2540 which is about five times that of India, Thailand is today one of the best performers in East Asia.

Over the recent decades, the ties between India and Thailand have improved as both countries are facing threat of terrorism.

After tying knots of FTA, both countries are expected to join hands at other forums like Indian Ocean Rim, BIMSTEC and Ganga-Mekong project. An international highway from India to Thailand via Myanmar over the next few years is likely to open new routes of cooperation between the people of two countries which have a history of common culture and friendship.

****End of Story# 21 of 50

****Story#22 of 50

Title: Indo-Us N Deal Has Serious Implications

Author: Correspondent or Reporter

Source: Pakistan Observer

Date: April 06, 2006

URL: N deal has serious implications

Prime Minister Shaukat Aziz Wednesday said Pakistan is against increase in the permanent members of the Security Council and in favour of enhancing only non-permanent members to make the organization more representative and equitable. Addressing World Leaders Forum at Columbia University, the Prime Minister said increase in the number of permanent members with veto power would not help the world in any way and added that the Security Council should have more representation. Replying to a question, the Prime Minister said Pakistan has been non-member of Security Council on so many occasions and contributed positively in the proceedings of the Council.

On a question about the opportunity of Direct Foreign Investment, the Prime Minister said due to successful economic reforms, Pakistan will have three billion dollars investment this year, which will be the highest in the history of the country. To another question, he said government has given priority to technical training to bridge the skill gap for meeting the need of technical staff for the growing economy. The Prime Minister, to a question said that reconstruction work in the quake-hit areas of AJK and NWFP has been started and more than 1.5 million houses would be buildt for those who lost their houses in the quake.

Referring to Pak-India Composite Dialogue Process, the Prime Minister said it would sustain and expressed the hope that it will resolve the Kashmir issue.

He said he clearly see a bright and prosperous future of South Asia.

Stating that the Indo-US nuclear deal would have “serious implications” for security in South Asia, Prime Minister called for rectifying the situation.

“A major opportunity could be lost, and there is still time to rectify the situation,” he told a large gathering of Columbia university Tuesday afternoon.

The controversial India-US nuclear deal is before US Congress where opposition is building up over concerns that it would lead to nuclear proliferation. Under the accord, the United States will supply civilian nuclear technology to India apparently to meet the country’s energy needs.

The Prime Minister said a “selective and discriminatory approach will have serious implications for the security environment in South Asia as well as for international non-proliferation efforts”.

The Prime Minister said that a package approach, on part of the United States, for the two nuclear-armed countries would help prevent a nuclear arms race in the region and promote restraints while ensuring that the legitimate needs of both countries for civilian power generation were met. Pakistan, he added, qualifies for similar arrangement as made with India.

In his wide-ranging address, noted for its depth and sweep, Shaukat Aziz assessed international and regional situation, covering such subjects as Indo-Pakistan peace process, Afghanistan, the Middle East, Iran, Iraq and the economic progress achieved by Pakistan. At the end of his 30-minute address, he answered a number of questions.

On Kashmir, the Prime Minister said Pakistan weanted peace with India while emphasizing the need for a settlement of this “core dispute.” “We must now move from dispute management to dispute resolution” so as to achieve durable peace. “Pakistan recognises that a Kashmir solution must be acceptable to all three parties— Pakistan, India and above all the Kashmiris,” he said. “We have demonstrated flexibility, courage and passion to resolve this issue, propsoing ideas such as self-governance, demilitarization and joint management,” as he urged India to respond.

“As part of our effort to promote international security, Pakistan has offered a Strategic Restraint Regime to India aimed at stabilizing nuclear deterrance in South Asia and avoiding an arms race in strategic and conventional weapons.”

Discussing Pakistan’s role in the nuclear non-proliferation efforts, Shaukat Aziz said Pakistan was determined to prevent terrorists and esxtremists from acquiring weapons of mass destruction materials or know-how. He also referred to the dismantling of the A.Q. Khan network which helped curb the international nuclear black market. An effective command and control mechanism has been established to strengthen physical control of our nuclear assets.

Pakistan’s capacity to help promote international peace and security has been enhanced by some of it’s strategic patnership with some of the major world powers. “Pakistan and China have maintained extremely close and freiendly relations,” he said.

Referring to President George W. Bush’s visit to Pakistan, he said that a “new depth and dimension” had been imparted to US-Pak cooperation, which now extended beyond the war on terror.

Referring to the crisis over Iran’s nuclear programme, the Prime Minister said it should be resolved through dialogue and compromise. “A resort to force will aggravate an already disturbed situation,” he said, adding, “Pakistan will continue to do its part to facilitate a peaceful resolution of this issue.” On the Palestinian question, the Prime Minister said the verdict of the Palestinian people must be respected.”We believe that a durable settlement of the (Palestinian) issue can be achieved by the attainment of homeland by the Palestinian people.”

On Iraq, he called for a credible exit strategy, which would bring the conflict to an end. He also called for preserving the sovereignty and territorial integrity of Iraq while ensuring against ethnic and sectarian violence as well as acts of terrorism.

The Prime Minister dwelt at length on Pakistan’s successes in different fields, challenges for the country and the issues concerning the international community.

Shaukat Aziz said Pakistan is deeply conscious of the contribution that it can make to promote a just international order. It is ready to cooperate with all like-minded nations that seek to promote international peace and security and prosperity of present and succeeding generations.

The Prime Minister noted that it is imperative to have sound domestic foundations on which to build the edifice for an effective external environment of peace and security. He said over the last six years, the Government pursued a comprehensive and carefully calibrated policy for national reform based on six elements of stable political process, economic sovereignty, good governance, internal security, credible defence and effective diplomacy.

Shaukat Aziz said multi-sectoral structural reforms have ensured the revitalization and repositioning of Pakistan on the world map and added that now Pakistan was able to play more important role to ensure peace in the region and the world. The Prime Minister told the audience that Pakistan is creating a four-pillar architecture to promote international peace and security. This includes peaceful settlement of conflicts and disputes that breed terrorism and violence, strategic restraint to avoid an arms race, strengthen global and regional institutions for economic cooperation, and evolve more coherent and effective coordination between donors and multilateral agencies to remove poverty and promote development. He said Pakistan condemns terrorism in all its forms and manifestations. At the same time, it believes that it is essential to resolve the root-causes of terrorism. The causes exist as a result of the sense of deprivation, frustration and anger among people in the Middle East and other areas. He emphasized that terrorism should not be linked to Islam and it abhors violence and condemns killing of innocent people. The Prime Minister said President Musharraf has put forward the concept of enlightened moderation calling upon the Muslim societies to reform and the West to help resolve disputes that cause suffering among Muslims. He said it is necessary to respect the religious sentiments of all people instead of misusing the freedom of expression to ridicule any belief or faith. Regarding Afghanistan, the Prime Minister said Pakistan wants a stable and secure Afghanistan as it is in the strategic interest of Islamabad. He urged the world community to deliver on the promises to assist in the rehabilitation of Afghanistan and help it eradicate the drug trade.

He said Pakistan is doing its utmost to contain the porous border with Afghanistan and much more needs to be done on the other side as well to control cross-border movements.

The Prime Minister said growing religious tensions threatened a clash of civilization. He said Pakistan as a responsible member of the international community is deeply conscious of the contribution that it can and must make to promote a just international order to ensure peace in the world.

The Prime Minister said, “Pakistan is ready and willing to cooperate with all like-minded nations that seek to promote international peace and security as well as prosperity for the present and succeeding generations”.—

****End of Story# 22 of 50

****Story#23 of 50

Title: Is It End Of The Road For Community-Based Banking?

Author: R. Vaidyanathan

Source: Business Line

Date: April 06, 2006

URL:

Nagamma has been a flower vendor for more than 20 years in my neighbourhood in Bangalore. She has joined several informal `chits' at various times to save some money and generate loans. But many a time the persons running the `chit' have fled with the collections.

As a finance professor, I thought, I should do some practical finance and advised her to open an account with a commercial bank for saving her hard earned money and perhaps use that to get a loan some time later. The branch manager, a pleasant woman, has known the flower vendor for many years. But alas not the Core Banking Solutions (CBS) with its central server located in Davos or Basel. It will just not recognise Nagamma. The branch manager quite helplessly pointed out that the system decided about accepting new customers under the `Know Your Customer' (KYC) model.

IGNORED BY SYSTEM

So it is not enough that the manager knows the customer. The `system' should also recognise her using the Multi-Factor Discriminant Model of Non-linear Credit Rating. Nagamma was asked photos, proof of address, PAN number, proof of date of birth, references and also given exotic choices of using debit card and net based banking. It is sad that banks have moved away from the community-based recognition of new customers and particularly the small entrepreneurial class. Someone suggested no-frills banking for which forms are being organised to generate more thrills.

The phenomenal growth rate witnessed in the last few decades has been facilitated by the significant rise in the savings rate and much of this is by the household sector. Table 1 provides the share of savings by households (it includes proprietorship and partnership firms), the government and the private corporate sector. We find that more than 80 per cent of the saving comes from the household sector and if we look at the composition, at least one-third is held in the form of bank deposits.

We know that the service sector has been the engine of our economic growth. Four sectors — trade, transport (other than Railways), construction, and hotels and restaurant — constitute dominant portions of the service sector other than business and professional services. Actually, trade constitutes the third largest chunk of the economy (with a share of around 14 per cent after agriculture — 26 per cent; and manufacturing — 16 per cent). This trade is conducted mainly by Proprietorship and Partnership (P&P) type of organisations (non-corporates) with active involvement of members of family and community.

DISTORTIONS IN CREDIT DELIVERY

The share of the household sector in outstanding bank credit has come down to 47 per cent from 58 per cent between 1990 and 2004 during which period the household sector's presence in trade, transport, construction, restaurants, and other business services has been growing at more that 8 per cent CAGR (compounded annual growth rate). Here, households include agricultural households and to that extent the fall is very significant. Hence, the growth rate of the economy in the 1990s is neither related to economic reforms of the Central government nor to the credit mechanisms of the banking sector. It is not only lazy banking but also banking with significant structural distortions. The share of the private corporate sector in the National Income is 12-15 per cent but it takes away nearly 40 per cent of the credit provided by the banking sector. The fastest growing non-corporate sector gets lesser share of bank credit, which reveals that the non-banking financial sector is playing an increasingly important role in the credit delivery mechanisms of the growth of the economy.

Of course, Finance Ministers often meet the bankers and "impress upon" them the need to enhance credit to the "unorganised" sector. There is an implicit belief among planners that the banks will meet what is called "Social Obligation" through directed lending if only more seminars are held. Table 2 provides the outstanding credit of small borrowers — that is, loan accounts up to Rs 25,000 (till June 1983 it was Rs 10,000) — from scheduled commercial banks .

It also shows that the number of accounts has dramatically declined in the late-1990s and the share of this segment has come down to around 4 per cent in 2004 from a high of 22 per cent in 1992. Actually, till 1992 it was a rising trend. Even the absolute amount outstanding for these accounts has come down from Rs 41,000 crore in 1998 to Rs 38,500 crore in 2004.

There is something really problematic with the banking sector particularly in providing credit to sections that not only require them most, but also are the fastest growing.

SHARES, REAL-ESTATE PREFERRED

On the other hand, the banking sector has increased its lending against shares, and to real-estate and commodities, called "sensitive" sectors, from around Rs 24,000 crore as at the end of March 2003 to Rs 59,000 crore in 2005; a rise of 144 per cent in two years (Source: ibid). Private sector banks have a much larger exposure to the share market and public sector banks to real-estate. The word "sensitive" might have been understood as critical and the words "socially relevant" are not any more relevant perhaps. The hapless Nagammas, who are the entrepreneurial class of this country, are classified "unorganised" or "residual" and left to the vagaries of unregulated, open market borrowing and lending. Due to the absurd regulatory framework, organised entities in `chits' and other non-banking activities are leaving the field making it more difficult for the Nagammas of our country to access credit.

The local community based banking need not be given a complete go by. Software solutions can complement, and not replace, human decisions. The spirit of entrepreneurship, which is the basis of our growth, need not be snuffed out by half-baked policies and distorted priorities formulated by the metropolitan elite who have more knowledge of Wall Street than our own Ranganathan Streets, Brigade Roads, or Ajmal Khan Roads.

****End of Story# 23 of 50

****Story#24 of 50

Title: It’S Official

Author: Editorial, The Tribune

Source: Tribune

Date: April 24, 2006

URL:

Prime Minister Manmohan Singh could not have found a better occasion than the first Civil Services Day function on Friday to exhort members of the bureaucracy to rise above their traditional role of administrators. The time has come for them to prepare themselves for playing a much larger role in view of the fast-changing society and economy. They have to learn to manage the system in a way that every section of society is able to share the cake of economic growth. This is contrary to what is happening today when a vast majority is being consigned to the margins. The Indian growth story, talked about as a result of the economic reforms, has no meaning for these marginalised sections. The Prime Minister rightly pointed out that bureaucrats have to realise that they also have a responsibility to society, which they can fulfil only when they learn to function as managers of socio-economic change.

Dr Manmohan Singh has off and on been talking about how to free the bureaucracy from the various ills that plague its functioning. He has spoken of having a system which holds them accountable for whatever they do, with rewards for performers. Some time ago there was a move to change the present practice of recruitment, which has some inbuilt infirmities. But so far he has not been able to do as much as he wishes to because of the strange hold of the bureaucracy on the system. The bureaucracy has developed a stake in the status quo and hence its resistance to new ideas. This must be brought to an end in the interest of the people and the country as a whole.

Many of the problems people face can disappear once we have an efficient delivery of public services as the Prime Minister wants. But transparency in functioning is equally important, because corruption clogs the system in the absence of this factor. Then there is the perennial problem of the bureaucracy remaining under the influence of the political class, at least at the state level. Very few IAS or IPS officers would like to be on the wrong side of the powers that be. The Prime Minister has to do something to change this situation if he wants babudom to function as a corporate entity and, at the same time, discharge its social responsibilities.

****End of Story# 24 of 50

****Story#25 of 50

Title: Job Creation Critical To India’S Development

Author: Editorial, Financial Express

Source: The Financial Express

Date: May 02, 2006

URL:

India’s economic reforms have transformed it from a plodding economic behemoth into a rising nation. In the past three years, growth has averaged more than 8%. The reforms are improving the lives of millions of Indians. But to spread the country’s success, the economy must create more and better jobs. Else, the sustainability of growth will be undermined as inequalities trigger political and social responses that turn economic policymaking into a zero-sum game.

Despite per capita GDP growth of around 5% through most of the 1990s, a growing number of employed Indians are working on daily or periodic contracts. Employment growth in the organised sector—where the ‘good’ jobs are—has been excruciatingly slow, if not negative, in recent years. While average wages have increased, it is the larger pay packets for the small sliver at the top end of the income scale that have been the main driver.

These trends are not limited to India. As a new book, Labor Markets in Asia: Issues and Perspectives points out, unemployment rates are higher today in many countries in East and Southeast Asia than before the 1997 Asian financial crisis. Even an economic powerhouse like China is affected. In the 1980s, a 3% growth rate of output in China induced a 1% increase in employment. In the 1990s, it took 8% growth to create the same increase.

In India, spreading opportunity will require focusing of public investment on the rural sector, home to about 75% of the labour force. Much work in this sector is characterised by very low productivity and meagre earnings. For rural living standards to improve, farm productivity must rise and jobs created in higher productivity non-farm production. This will only happen if public investments in rural infrastructure rise and delivery of agriculture extension services, credit and various producer services for farm and non-farm enterprises improves.

Many observers have blamed rigid labour laws for slow job creation in the formal sector. Some aspects of India’s labour laws need to be reconsidered, as markets are increasingly relied on to allocate resou-rces. An example is Chapter VB of the Industrial Disputes Act that requires units with over 100 workers to seek government permission before laying off workers.

But whether labour laws are the main drag on private sector job growth is open to debate. There are signs that Indian firms have learned how to cope with the more difficult aspects of labour laws, for example, through voluntary retirement schemes and other negotiated solutions with workers. If labour laws are not the main drag, policymakers would likely get better and faster results by focusing their attention and political capital on reforms in other areas of the economy. First, the woeful state of power and transportation infrastructure needs urgent action. Establishing an appropriate regulatory and pricing framework is essential to attract private investment in these areas.

• Employment growth in the organised sector has been excruciatingly slow

• Rigid labour laws often blamed for slow job creation in the formal sector

• To spread job opportunity in rural areas, public investment is needed

Second, reform is still required in areas including regulations on land, insolvency laws, and continuing reservations for small enterprises in certain labour-intensive product lines. The red tape that slows business in India must be reduced.

Finally, the government needs to be proactive in enabling producers to restructure and diversify into new economic activities. This is crucial for job creation, given that the adoption of modern technologies allows goods to be produced with fewer workers. The public and private sectors need to work together to find productive activities that create large numbers of new jobs. This approach must also apply to the development of non-traditional activities in agriculture or services.

Take food processing. Compared with other Asian countries, only a small fraction of India’s fruit and vegetable production is processed. This industry has the potential to expand. So far, it has been constrained by factors ranging from cultivation of traditional varieties of fruit and vegetables unsuitable for processing to the weak infrastructure for post-harvest preservation, lack of modern storage, etc. Coordination failures abound. Overcoming these problems will require effective public-private partnership.

India has shown it can change. The government is focused on improving the lives of the poor. A structured and integrated nationwide approach to job creation is the country’s best option for ensuring all its people benefit from strong growth and that growth is sustained.

****End of Story# 25 of 50

****Story#26 of 50

Title: Karunanidhi's Arithmetic Versus Jayalalithaa's Chemistry

Author: V. Jayanth

Source: Hindu

Date: April 06, 2006

URL:

There can be no permanent friends or foes in politics," goes the adage. And political parties in Tamil Nadu only seem to be reinforcing it, changing alliances for almost every election.

Earlier, the Congress was always part of the alliance led by the All-India Anna Dravida Munnetra Kazhagam (AIADMK). But the two parties parted company soon after the 2001 elections and are still in opposite camps. The Bharatiya Janata Party went with the AIADMK in 1998, switched over to the Dravida Munnetra Kazhagam (DMK) camp in 1999, came back to the AIADMK for the 2004 Parliamentary polls, and will go it alone in the 2006 Assembly elections.

Among the State parties, the Pattali Makkal Katchi (PMK) was in the DMK front for the 1999 Lok Sabha polls. It crossed over to the AIADMK front for the 2001 Assembly elections, rejoined the DMK for the 2004 Parliamentary elections, and is continuing with the tie-up now.

In keeping with the trend, the Marumalarchi Dravida Munnetra Kazhagam (MDMK), which fought the 2001 Assembly elections on its own, joined the DMK-led Democratic Progressive Alliance for the 2004 Lok Sabha polls, but has now moved to the AIADMK camp. It had earlier allied with the AIADMK in 1999. The strange feature of the MDMK's 12-year-old poll history is that it has never been with the DMK for an Assembly election. But what was surprising this time was the timing of the switchover.

New alliance

Even as the DMK was preparing for its conference in Tiruchi on March 5 to announce the sharing of seats, MDMK leader Vaiko met Chief Minister Jayalalithaa on March 4 to cement an alliance.

Under pressure from party functionaries and "unable to digest the humiliation by the DMK," Mr. Vaiko said he was aligning with Ms. Jayalalithaa.

The Dalit Panthers of India, a pro-Tamil Dalit group led by Thol. Thirumavalavan, also moved over to the AIADMK after failing to get the nod from DMK chief M. Karunadhi for an "honourable alliance."

The Democratic Progressive Alliance (DPA), formed by the DMK for the 2004 Lok Sabha elections, remains intact, except for the exit of the MDMK. In its absence, the DPA constituents found it easier to share the 234 seats. The DPA is now a six-party front, comprising the DMK, the Congress, the PMK, the CPI(M), the CPI and the Indian Union Muslim League (IUML). The DMK has allowed smaller groups, including the IUML, to contest on its symbol.

In 2001, when the Congress and the two Left parties aligned with the AIADMK, they polled between 43 and 52 per cent in various segments. It was a landslide victory, though the Congress and the AIADMK parted ways soon after. The AIADMK won a comfortable majority on its own, bagging 132 of the 141 seats it contested.

The Tamil Maanila Congress (TMC), founded by the late G.K. Moopanar, won 23 seats, the PMK 20 and the Congress seven, leaving the DMK with just 31 (after contesting 183 seats). The DMK secured just 30.92 per cent of the popular vote, while the alliance led by it won a little over 39 per cent.

The scenario changed during the 2004 parliamentary polls, when the DMK formed the DPA and won all 39 seats in Tamil Nadu and the lone seat in the Union Territory of Pondicherry. The TMC merged with the Congress after the demise of G.K. Moopanar, and the parent party aligned with the DMK. This time round, the AIADMK could get only around 30 per cent of the vote, while the DMK-led front garnered over 58 per cent.

The 2004 verdict was not only a clear victory for alliance arithmetic, but also a popular vote against the AIADMK and its Government. The economic reforms, the arrest of Mr. Karunanidhi, and the plethora of defamation cases against the media took their toll on the ruling party.

The rollback

But since 2004, Ms. Jayalalithaa rolled back all the reform measures, offered sops and concessions to all sections of the population, withdrawn most of the defamation cases, thrown open the coffers for tsunami and flood relief measures, and now cemented a new alliance with the MDMK. Ruling party functionaries hope that the alliance arithmetic will be over-shadowed by popular sentiment in favour of the Government as there is "no anti-incumbency factor now in play."

The DMK's campaign managers insist that not only arithmetic, but the "mood of the people" also is in their favour. The MDMK's volte face, they argue, has dented Mr. Vaiko's image.

The general expectation is that if the voter turnout is high, it will favour the AIADMK. But if it remains low — it has been only around 55 per cent in recent elections — it may aid the DMK. In that case, it will be interesting to see if the DMK is able to manage a majority on its own or will be forced to depend on allies to form a Government. Political leaders are certain of one thing — that the people will be unambiguous in their verdict and give one alliance or the other a clear mandate. No hung Assembly for the State. That's the track record.

****End of Story# 26 of 50

****Story#27 of 50

Title: Left, Congress In State Poll Standoff

Author: BAPPA MAJUMDAR

Source: Reuters

Date: April 17, 2006

URL:

Millions of people will vote in West Bengal on Monday as part of elections in five states whose results could further strain ties between the left and the national ruling coalition it backs.

The communists are fighting the Congress party, which heads the Union government, in three states including West Bengal in the east where they are expected to win power for the seventh straight time since 1977.

In the south, the left parties are hoping to take power from a Congress government in Kerala, while in the remote northeastern state of Assam, the left is the junior partner to a regional party which is trying to oust a Congress administration.

Left leaders and analysts say victories in Kerala and West Bengal would be used by the communists to wield more influence on the economic and foreign policies of the Congress-led United Progressive Alliance (UPA) government in New Delhi.

"We have been pursuing a course of action where we can intervene with the UPA government," Prakash Karat, the head of the Communist Party of India (Marxist) (CPI-M), India's biggest communist party, told Reuters in an interview this month.

"With an endorsement from Kerala and West Bengal, we can argue our case better and our arguments will have more weight."

He warned that his party would look at reviewing its support to the UPA after the elections.

All the polls are being held in several stages with counting due on May 11. Voting in Assam is already over.

The CPI(M) and smaller left parties have 61 parliamentarians in the 545-member Lok Sabha and shore up the minority UPA government. But they have clashed with Prime Minister Manmohan Singh as he pursues economic reforms and a U.S.-friendly foreign policy.

Analysts say reforms to further open up India's economy -- particularly in the insurance, pension and retail sectors -- could suffer if the left does well and the Congress poorly.

"The elections are extremely important in the context of national politics as the left with success in West Bengal and most likely Kerala will exert considerable pressure on the Congress government," political analyst Mahesh Rangarajan said.

The left is particularly upset with Singh's push for closer ties with the United States, particularly a landmark civil nuclear deal with Washington agreed last month.

DOUBLE STANDARDS?

Karat slammed the deal, saying the government had "shot itself in the foot" as it had opened New Delhi up to American pressure on a range of other issues.

But while communists oppose the government's economic reforms and pro-American foreign policy tilt in New Delhi, their government in West Bengal is going to the polls highlighting economic development with the help of foreign investment, including that by U.S. firms.

After two decades of wooing rural voters with land reforms and providing legal protection to farmers, the communists in West Bengal switched tack in the late 1990s and began to court foreign and domestic investors to Kolkata and other cities which had seen capital flight three decades ago.

Under reformist Chief Minister Buddhadeb Bhattacharjee, the state has received millions of dollars in foreign investment including cash from PepsiCo Inc. and IBM Corp. since 2000.

"These elections are to be a referendum on Bhattacharjee's rule in West Bengal and he has given the game a completely new set of rules," said Ashis Chakrabarti, another analyst.

Pre-poll surveys have forecast a communist sweep in West Bengal, with the left slated to win more than two-thirds of the seats in the 294-member state assembly, and Congress fighting for second place.

****End of Story# 27 of 50

****Story#28 of 50

Title: Linking Growth To Market Returns

Author: U. R. Bhat

Source: The Economic Times

Date: April 10, 2006

URL:

The frequently used macro argument for the raging bull market in India over the last couple of years has been the expected step up in the economic growth rate from the 6% level achieved over the last decade to the aspirational 10% level that is being targeted. The accelerated growth in the economy is to be achieved on the back of the ongoing massive infrastructure investments, as also the significant capacity creation by corporate India.

Coupled with this, the increasing affluence — in relative terms — of the burgeoning consuming class has the potential to generate sustainable growth in several sectors. Given that India is one of the fastest growing economies in the global context among a universe of economies growing at rather anaemic rates, the inflow of foreign portfolio investments has been robust — in excess of $1 billion a month for the last several months now.

Frequently, asset allocation decisions are made based on economic growth forecasts of the underlying economies with the implied assumption being that robust economic growth should automatically lead to better returns from the equity market.

While this relationship appears to be intuitively right, recent research by J R Ritter of the University of Florida covering the period 1900 to 2002 for 16 countries representing some 90% of the world market capitalisation in 1900, establishes that there is a negative correlation between per capita income growth and real equity returns. The experience in India since the onset of economic reforms too does not suggest any significant correlation between economic growth and stock market returns.

Several arguments have been put forth to explain the apparent anomaly between the findings vis-à-vis the conventional wisdom. Economic growth is driven by increased factor inputs like a high personal savings rate and increased labour force participation, as also technological changes that lead to productivity gains.

The research findings suggest that increased capital and labour inputs or even productivity gains do not necessarily translate into better returns for the providers of capital. If these factor inputs and productivity gains go to new corporations and unlisted entities, the present value of dividends of existing corporations — the metric that should theoretically drive their stock prices — is unlikely to change significantly.

Rapid economic growth does increase the standard of living of consumers and labour but may reflect in better stock market performance evidenced by the representative indices only under certain conditions. The factor inputs and productivity gains would need to go substantially into the companies represented in the indices with expected returns in excess of the cost of capital and possibly with the technological innovations leading to lasting monopolies.

However, in real life, monopolistic gains rarely last long and much of economic growth in the past has happened on account of capital infusion into new firms or into existing firms, frequently at sub-optimal returns. This could be one of the reasons behind the apparent dichotomy between stock market returns represented by the closely tracked indices and economic growth.

It is possible to argue that markets run up valuations in anticipation of expected economic growth and therefore the realised returns when economic growth does indeed occur, is lower. However, this argument too does not find much support from available evidence because there is not much of a correlation between economic growth and stock market returns even with a lag.

What are the lessons for the investor from these research findings? The obvious lesson is to realise that the impact of robust economic growth on the representative indices and on individual companies could be substantially different. Buying into an index, based on the supposition that economic growth should show up as robust returns from the indices may not be the right course of action, given the weight of available evidence.

The factors that need to be considered are the expected return from the capital infusion vis-à-vis the cost of capital, the distribution of the return between the factors of production and the residual return for capital providers, as also the period of competitive advantage.

****End of Story# 28 of 50

****Story#29 of 50

Title: Lone Rider

Author: Editorial, The Telegraph

Source: Telegraph

Date: April 05, 2006

URL:

The aftermath was a new high for the sangh parivar which brought in its trail the destruction of the Babri Masjid, communal disharmony and violence. The Bharatiya Janata Party, under the leadership of Mr Atal Bihari Vajpayee, had to reinvent itself as the party of governance after trying to rid itself of the tag of Hindu fundamentalism. Mr Advani was reduced to playing second fiddle to Mr Vajpayee and was forced to advocate the programme of making the BJP a party promoting governance over ideology. Since then, Mr Advani’s political career has been on a tricky slope. He has lost trust within the BJP and also in Nagpur. His decision to embark on a second rath yatra to protest against “minorityism and appeasement’’ is an obvious attempt to revive his own political fortune and the flagging ideological morale of BJP workers.

The overall context of Mr Advani’s second ride on a chariot could not be more different from the first one. In 1990, Mr Advani’s stridency had struck a chord among the Hindus of north India because of the prevailing atmosphere of gloom, pessimism and uncertainty. Today, that same section of the population, grown rich under the impact of economic reforms, will see a shrill Hindutva campaign as being disruptive. Mr Advani’s rath yatra may very well be self-defeating. Moreover, today, the BJP is in complete disarray. It is a house divided with no ideological or political bearings. The confusion is evident from the report that Mr Vajpayee has tried to dissuade Mr Advani from undertaking the yatra. Mr Advani’s decision to roll across the country on a chariot has produced very little enthusiasm even among die-hard sanghis. Nagpur prefers to keep Mr Advani at arm’s length after the latter’s eulogy to Mohammad Ali Jinnah in Pakistan. None of Mr Advani’s erstwhile trusted lieutenants has offered to join him in his campaign. One man on a chariot may not quite be enough to rejuvenate Hindutva’s flagging zeal. Mr Advani would have been well-advised to placate his critics within the BJP and the sangh parivar before he ventured out on a Bharat darshan. An old man trying to relive the past may not be the best thing for the future.

****End of Story# 29 of 50

****Story#30 of 50

Title: Mulayam, Chandrababu Naidu Form "Anti-Congress, Anti-Bjp" Front

Author: GARGI PARSAI and SUNNY SEBASTIAN

Source: Hindu

Date: April 07, 2006

URL:

Addressing a joint press conference here, they said their parties would work together with the AIADMK, the Asom Gana Parishad and the National Conference. "We are working towards a long-term understanding," Mr. Naidu said, adding people had lost faith in national parties.

Asked when the front would be finalised, Mr. Yadav said, "Wait till the Assembly elections in the five States are over." He said both the parties were jointly campaigning for the AGP in Assam. Asked about the Left parties' role in the proposed front, Mr. Yadav said they had always been supportive of any anti-Congress, anti-BJP front.

Attack Sonia

Criticising the United Progressive Alliance and the National Democratic Alliance, the two leaders singled out the Congress and its president Sonia Gandhi for attack. They described as "drama" Ms. Gandhi's resignation from the Lok Sabha on the "office of profit" issue. "She targeted the Samajwadi Party and became a target herself as she was bound to be disqualified," Mr. Yadav said.

Both the leaders alleged political victimisation of their supporters by the Congress-led UPA. They said the economic reforms had not touched the poor, farmers were committing suicide, unemployment was unaddressed and prices of essential commodities were high.

On questions regarding his party's support to the NDA, Mr. Naidu said the TDP had never compromised on secularism. However, in politics there were always developments that were incumbent on circumstances. "The Congress brought down the United Front Government accusing the DMK of being responsible for Rajiv Gandhi's murder. Now the Congress and the DMK are close," he said.

Asked why his party was extending support to the Congress-led UPA Government at the Centre, Mr. Yadav said the support was issue-based and in the same manner as the Congress was extending support to his government in U.P. The support was meant to weaken communal forces, but the opposite was happening, he said.

Asked to comment on the former BJP president, L. K. Advani's rath yatra, he said such yatras were taken out every day and did not deserve comment.

****End of Story# 30 of 50

****Story#31 of 50

Title: Murthy, Premji Join Kumaraswamy To Promote Brand Bangalore

Author: Correspondent or Reporter

Source: Indian Express

Date: April 07, 2006

URL:

Sharing a platform for the first time with Infosys chief mentor N.R. Narayan Murthy, Wipro chairman Azim Premji and finance minister P. Chidambaram, Karnataka’s new chief minister H.D. Kumaraswamy renewed his promise to ensure the continued growth of ‘brand Bangalore’ and the IT industry. The occasion was the inauguration of a World Customs Organisation IT conference here on Thursday.

‘‘Over the last one year there has been a lot of talk about the state of infrastructure in Bangalore, the future of the City, the future of IT in Bangalore and so on. Let me assure you that our government is very clear in its agenda. We want the IT industry and brand Bangalore to grow, develop and flourish,’’ Kumaraswamy said at the conference.

‘‘Bangalore’s infrastructure has come to be equated with the roads and traffic whereas the infrastructure in areas like electricity and water supply are of the highest quality in the country,’’ he said. The theme of the three day customs conference featuring delegates from over 70 countries is ‘Outsourcing and offshoring of IT - a challenge for customs?’

Both the Infosys and Wipro chiefs stuck to the theme of the conference and emphasised that only IT is often associated with outsourcing and off shoring, while the country needs to also focus on sectors like manufacturing.

Narayan Murthy stated that the nearly 65 per cent population in the rural agriculture sector is contributing to only 26 per cent of the GDP of the country. A per person, per capita GDP of $ 320 means 65 per cent of the population get only a dollar a day, he said.

‘‘If we have to make life better for rural people and give them reasonable standards of living, disposable incomes, healthcare and nutrition and education, I personally believe we have to look at low-tech manufacturing to start with and then high-tech manufacturing, just as China has done because most of these people are semi-literate,’’ Murthy said.

As India moves ahead with economic reforms outsourcing and off shoring opportunities will arise in other sectors, said Wipro chairman Azim Premji. ‘‘India has a unique window of opportunity. Like all windows of opportunity, this will not last forever,’’ Premji added.

****End of Story# 31 of 50

****Story#32 of 50

Title: Nepal Maoists

Author: Rajinder Puri

Source: Statesman

Date: May 03, 2006

URL:

The Maoists hold the key to Nepal's future stability. Their declared goal does not differ from that of the Seven Party Alliance (SPA). They simply do not trust the King. They are dragging their feet until elections to a new constituent assembly actually occur. Comrades Prachanda and Bhattarai, Chairman and Convener respectively of the Communist Party of Nepal (Maoist), stressed that their agitation would remain peaceful. They announced a three-month ceasefire. The SPA has indicated that the interim government will speedily elect a constituent assembly to make the new Constitution. The main problem would be to persuade the Maoists to give up arms. The Royal Nepal Army has already indicated its readiness to recruit Maoists in the army. If Prime Minister GP Koirala with his known tact succeeds in persuading the Maoists to enter the democratic mainstream they would become a major, if not dominant, factor in Nepal's politics. If that happened, what would be the result for India?

Armed struggle

In the mid-1990s the Maoists formed their own group to separate from other communists who participated in elections. The Maoists committed themselves to revolutionary change through armed struggle. The organisational structure and nomenclatures they adopted were inspired by the Chinese model. They established their own Peoples' Liberation Army (PLA) with its own Central Military Commission (CMC).

Analysts tended to conclude easily, therefore, that Nepal's Maoists were and are controlled by China. The truth may not be that simple. Interviewed by Charles Haviland for BBC World on 13 February this year Comrade Prachanda was asked: "Fighting a war is very expensive. If your supporters are mainly in poor rural parts of Nepal, where are you getting your money from?"

He replied: "We are certainly fighting for the rights of poor people in Nepal. We are the children of Nepali citizens. The main source of our income is the same people we are fighting for. As a secondary source, we used to extract from our enemies; but now, our main source is the support from the people. It's been well established that no government anywhere has financially supported our revolution. We are free to make decisions". No government, perhaps. But what about others? The Maoists have 40,000 armed activists. Comrade Prachanda may well be speaking the truth. But if he were getting arms and money from outside powers, would he admit it? He could be right, though, about his power to take independent decisions. Regardless of outside support any group engaged in armed struggle enjoys far greater freedom of action than its counterparts engaged in traditional politics. All politics today, including revolutionaries and NGOs, has become corporate activity. It matters little if money comes from governments, agencies or business houses. What matters is the agenda that is followed. The tendency to hide sources of funding arises from coyness associated with conventional morality. In a decade or so such coyness might disappear.

Internet and the InfoTech age could introduce a kind of transparency that renders secrecy impossible. From the beginning the Maoists have been closely associated with the Revolutionary Internationalist Movement (RIM) with its headquarters in Chicago, USA. On February 1, 1998 the RIM Committee wrote: "The participation of the Communist Party of Nepal (Maoist) in the Revolutionary Internationalist Movement, the concern and assistance given by your Party to the advance of the Communist movement in the South Asia region and throughout the world, even at difficult moments in your struggle, inspire us. The Committee of RIM and the CPN (M) will continue to march forward as in the past ~ united by our all-powerful ideology." In 2001 Prachanda responded: "The present rapid pace of development would have been inconceivable without the support of Communist revolutionaries, particularly the Revolutionary Internationalist Movement, during the period of the historic initiation of the People's War".

The Revolutionary Communist Party (RCP) is the US political arm of the apex international body, RIM. Mr Robert Avakian heads both RCP and RIM. Other fraternal members of RIM, apart from Nepal's Maoists, include Peru's extremist party Shining Path. RIM is strongly opposed to China's economic reforms initiated by Deng Xiaoping. Its leaders endorse China's Cultural Revolution. To evade arrest after a White House demonstration against Deng Xiaoping in 1981, Mr Avakian and other RCP leaders fled the US to live in France. While Mr Avakian directs affairs from France, RCP is led by Mr Clark Kissinger in the US. The RCP spokesperson is a former convict, Mr Carl Dix, who firmly believes in world revolution through violence.

The puzzling fact is that the US State Department has designated Nepal's Maoists as a terrorist group. Despite this, RCP's Avakian supports the Maoists. He condemns the US for describing Nepal's CPN (M) as a terrorist group. And yet, both RIM and RCP continue to function in the US. How? After 9/11 the Bush administration's security measures have been extreme enough to provoke allegations of even converting America into a police state!

It would, therefore, be reckless to identify which foreign inspiration, if any, guides the Maoists. If there is indeed covert US support for the Maoists it may or may not be in cooperation with elements within China. The economic advantages accruing to China's Peoples' Liberation Army (PLA) for decades through commerce with the US were not unnoticed. In 1996 reputed columnist Abe Rosenthal wrote in New York Times: "Wake up America! Wake up to the truth that the Republican leaders are partners with the Democratic leaders in building up the Chinese armed forces." In 1997 he wrote: "The great part of US business in China is with companies and cartels controlled by the Chinese military".

Historical links

Instead of speculating on the foreign links of Maoists, India would do well to focus therefore on its own interests in Nepal. Nepal and India have the closest of historical and cultural links. Nepal's Maoists have interaction with India's Maoists. They could influence their Indian comrades to enter the electoral mainstream. India and Nepal have enormous economic potential to explore. With Indian funding and technology, the two can utilise all the estimated energy of potentially 50,000 megawatts still available and untapped in Nepal. That would spectacularly transform the economies of both Nepal and India's heartland. If the Maoists remain difficult, India can shut the door and let Nepal fend for itself.

The Maoists want both China and India to have close relations with Nepal. That would be welcome only if China granted autonomy to Tibet and opened it to India. India's foreign policy should be dictated by two simple axioms. First, it must welcome democracy everywhere. Secondly, it must insist on reciprocity in all international relationships.

****End of Story# 32 of 50

****Story#33 of 50

Title: New Western Aid Plans Are Recycling Old Failures

Author: Editorial, The Tribune

Source: Tribune

Date: May 06, 2006

URL:

FOREIGN aid today perpetrates a cruel hoax on those who wish well for the world’s poor. There is the appearance of action – a doubling of foreign aid to Africa promised at the G-8 summit last July, grand United Nations and World Bank plans to cut world poverty in half by 2015 and visionary statements about prosperity and democracy from George W. Bush, Tony Blair and Bono. The economist Jeffrey Sachs even announced the “end of poverty’” by 2025, which he says will be “much easier than it appears.”

No doubt such promises satisfy the desires of altruistic people in rich countries that something be done to alleviate the misery of billions who live in poverty around the world. Alas, upon closer inspection, it turns out to be one big Potemkin village. These grandiose but unreal visions crowd out better alternatives to give real help to real poor people.

The new proposals to end world poverty are, for one thing, not new. They are recycled ideas from earlier decades that have failed. There was, for instance, the idea in the 1950s and 1960s that aid is necessary to finance a “Big Push” to allow poor countries to escape a “poverty trap” and climb the ladder toward prosperity.

This push has been underway for four decades now — and has resulted in the movement of $568 billion in foreign aid from rich countries to Africa. The result: zero growth in per-capita income, leaving Africa in the same abysmal straits. Meanwhile, a number of poor countries that got next to no aid had no trouble escaping the “poverty trap.”

Hence, it is a little surprising to see Sachs, who is director of the Earth Institute at Columbia University and an influential adviser to U.N. Secretary-General Kofi Annan, announcing once again that aid is necessary to finance a “Big Push”.

Where did all the aid money go? The $2.3 trillion, that is, sent to all the world’s poor countries over the last five decades? For one thing, it was stuck (and remains stuck) in a “bureaucracy-to-bureaucracy” aid model in which money gets lost along the way.

The way it works is that a large aid bureaucracy such as the World Bank (with its 10,000 employees) or the United Nations designs a complicated bureaucratic plan to solve all the problems of the poor at once (for example, the U.N. Millennium Project announced last year laid out 449 steps that had to be implemented to end world poverty). The aid money is then turned over to another bureaucracy in the poor country, which is asked to implement the complicated plan drawn up by out-of-country Westerners. (How complicated? Tanzania – and it’s not an unusual case – is required to issue 2,400 different reports annually to aid donors.)

A new initiative by Sachs calls for aid-financed “Millennium Villages” (moving the Potemkin village out of the realm of metaphor into reality.) It envisions a whole package of quick fixes, ranging from fertilizer, grain storage, rainwater harvesting and windmills to Internet connections — which would, supposedly, alleviate poverty in a handful of specifically targeted rural villages around Africa.

This much-trumpeted idea once again shows the amazing recycling ability of the aid industry — because a similar package of fixes called ``Integrated Rural Development’’ was tried in the 1970s (minus the Internet connections). It failed.

Flying in foreign experts to create a miniature village utopia has little to do with the complex roots of poverty, such as corrupt, autocratic and ethnically polarized politics; absent institutions for efficient markets, and dysfunctional bureaucracy. Millennium Villages are to world poverty what Disney World is to urban blight.

Bureaucrats have never achieved the end of poverty and never will; poverty ends (and is already ending in East and South Asia) by individuals operating in free markets, and by the efforts of homegrown political and economic reformers.

What are the better alternatives? If the aid agencies passed up the glitzy but unrealistic campaign to end world poverty, perhaps they would spend more time devising specific, definable tasks that could actually help people and for which the public could hold them accountable.

Such tasks include getting 12-cent doses of malaria medicines to malaria victims; distributing 10-cent doses of oral rehydration therapy to reduce the 1.8 million infant deaths from dehydration due to diarrheal diseases last year; getting poor people clean water and bed nets to prevent diarrheal diseases and malaria; getting textbooks to schoolchildren, or encouraging gradual changes to business regulations to make it easier to start a business, enforce contracts and create jobs for the poor.

True, some of the grand plans include some of these tasks — but to say they have the same goals is like saying that Soviet central planning and American free markets both aimed to produce consumer goods. These tasks cannot be achieved as part of the bureaucratically unaccountable morass we have now, in which dozens of aid agencies are collectively responsible for trying to simultaneously implement 449 separate ``interventions’’ designed in New York and Washington to achieve the overall ``end of poverty.’’ That’s just nuts.

The end of poverty will come as a result of homegrown political and economic reforms (already happening in many poor countries), not through outside aid. The biggest hope for the world’s poor nations is not Bono, it is the citizens of poor nations themselves.

(Easterly is a professor of economics at New York University and author of The White Man’s Burden: How the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good.)

****End of Story# 33 of 50

****Story#34 of 50

Title: No Longer A `Functioning Chaos'

Author: Ranabir Ray Choudhury

Source: Business Line

Date: May 08, 2006

URL:

Thanks mainly to the economic reforms, which have unleashed the productive powers of the nation and its people, India does not figure in the list of `failed states'. Indeed it has come a long way from being so described, in the 1970s, and a `functioning chaos', in the 1960s. For Noam Chomsky failed states are those "that do not protect their citizens from violence and.. destruction... and that suffer from a democratic deficit... "

Last November, just before attending the 13th SAARC summit in Dhaka, some controversy was generated by Dr Manmohan Singh's remark (made in Delhi) about `failed States' in the region, so much so that the Prime Minister had to issue a clarification in Dhaka stating that when he made the comment he had no particular country in the region in mind. What the Prime Minister had said was: "The danger of a number of failed states emerging in our neighbourhood has far-reaching consequences for our region and our people. The impact includes crises, which generate an inflow of refugees and destabilization of our border areas."

As far as India is concerned, internal crises leading to a flow of refugees across the border would refer to neighbours such as Bangladesh, Nepal and Sri Lanka, and it is hardly surprising that Dhaka has been among the capitals most perturbed by the statement.

The umbrage is perhaps justified because the tag of a `failed state' will in no way add to the image of a country in the world at large. At the same time, however, Dr Manmohan Singh was not being overly imaginative.

In fact, he was only referring to a category of countries which had been described as `failed states' by a 2005 report, some of which were located in South Asia.

AMERICAN IMPRIMATUR

In fact, even earlier, the US had imparted respectability to the term `failing states' when it proclaimed in its 2002 National Security Strategy thus: "For most of the twentieth century, the world was divided by a great struggle over ideas: destructive totalitarian visions versus freedom and equality. That great struggle is over.

The militant visions of class, nation, and race which promised utopia and delivered misery have been defeated and discredited.

America is now threatened less by conquering states than we are by failing ones. We are menaced less by fleets and armies than by catastrophic technologies in the hands of the embittered few. We must defeat these threats to our nation, allies, and friends. And this path is not America's alone. It is open to all."

Going a step further, the document said that to keep the threat from `failing states' under check, Washington would "champion aspirations for human dignity; strengthen alliances to defeat global terrorism and work to prevent attacks against us and our friends; work with others to defuse regional conflicts; prevent our enemies from threatening us, our allies, and our friends, with weapons of mass destruction; ignite a new era of global economic growth through free markets and free trade; expand the circle of development by opening societies and building the infrastructure of democracy; develop agendas for cooperative action with other main centers of global power; and transform America's national security institutions to meet the challenges and opportunities of the twenty-first century." Clearly, this is what Washington feels about the threat emanating from `failed' or `failing' states and how it proposes to combat it. Coming from perhaps the most powerful sovereign military outfit on the planet, these views cannot be shrugged off.

Even so, it is useful to know that the US has itself been designated as a `failed state' by some of the most powerful intellects of the 20th Century, which merely serves to throw light on the controversial cauldron of ideas about what constitutes a `failed state'.

DEMOCRATIC DEFICIT

Among others, Noam Chomsky has charged the US with being a `failed state' itself "and thus a danger to its own people and the world."

As Chomsky sees it, failed states are those "that do not protect their citizens from violence and perhaps even destruction, that regard themselves as beyond the reach of domestic or international law, and that suffer from a `democratic deficit', having democratic forms but with limited substance."

In Chomsky's eyes, Washington is guilty of being a `failed state' on these and other counts, a conclusion which should comfort to an extent a capital like Dhaka, among others, but which also raises the question of what exactly are the criteria for describing a nation thus.

The 2006 Failed States Index drawn up by the prestigious journal, Foreign Policy, and the Fund for Peace points to 12 indicators spanning the social, economic and political spheres among which are mounting demographic pressures; massive movement of refugees or internally displaced people creating complex humanitarian emergencies; chronic or sustained human flight; uneven economic development along group lines; sharp and/or severe economic decline; criminalisation or de-legitimisation of the state; progressive deterioration of the public services; suspension or the arbitrary application of the rule of law and widespread violation of human rights; the operation of the security apparatus as a "State within a State"; and the rise of factionalised elites.

INDEX POSITION

The index — the second in the series — has also drawn up a list of `failed states' giving them a ranking according to weightage apportioned under the separate heads of the 12 indicators.

Expectedly, the US does not figure in the list of 60 most vulnerable states (from among 148 countries), the first seven slots — led by Sudan — hailing from Africa and West Asia (Iraq). Among India's neighbours, Pakistan is in the ninth position, Myanmar, Bangladesh and Nepal in the 18th, 19th and 20th, Sri Lanka in the 25th and Bhutan in the 29th.

Of special interest is the fact that Russia and China occupy the 43rd and 57th slots, which should either make New Delhi (which does not figure in the list) happy or, alternatively, vest the exercise with an unacceptable degree of unrealism.

If the index is taken seriously, there is cause for cheer for New Delhi in that India has been singled out as one country (along with South Africa) which has been able to pull itself out of the category of `failed states' — an appellation that was staring the nation in the face in the 1970s. Today, according to the Index, India has turned itself around and "is the world's largest democracy, with a competitive economy and representative political system."

In the 1960s, one remembers, the country was described as a `functioning chaos'; today it is less so, thanks mainly to the economic reforms which have unleashed the productive powers of the nation and its people.

****End of Story# 34 of 50

****Story#35 of 50

Title: Not Another Quota Raj

Author: Correspondent or Reporter

Source: Business Standard

Date: April 11, 2006

URL:

The total ownership by all FIIs of a company is tracked. When the limit is reached, all FII purchase ceases. Sales naturally continue to take place, thus bringing the level back below the ceiling. This is a sensible and non-intrusive way of implementing a limit. The superiority of India’s FII framework is particularly obvious when compared with China’s “QFII” framework, where each FII negotiates a dollar limit with the Chinese authorities. There is a strong international consensus that India has built a superior equity market, and a superior framework for capital inflows into the equity market, when compared with China.

However, such good sense is conspicuously absent in the Securities and Exchange Board of India’s (Sebi’s) thinking about debt flows. There is now an overall limit of $2 billion for government bonds and $1.5 billion for corporate bonds. The economic logic of these limits is dubious, though the worry must be about levels of international exposure. Going beyond that, Sebi wants to define a “100 per cent debt FII” as opposed to a “70-30 FII”, who only invests up to 30 per cent of its assets in debt. There is no reason for the government or regulator to classify fund managers in this fashion. The sensible thing for public policy is to treat every fund manager as someone who wants to maximise returns and minimise risk, and not get involved in the portfolio choices of fund managers.

Then, Sebi has come up with a bureaucratic allocation of the $2 billion limit for central government bonds: the “100 per cent debt FIIs” get $1.75 billion and the “70:30 debt FIIs” get $0.25 billion. Similarly, in the case of corporate debt, Sebi’s bureaucratic allocation is $1.35 billion (out of the total of $1.5 billion) for the “100 per cent debt FIIs”. Such quota mongering is a throwback to the age when the government lorded over the allocation of scarce steel. But it gets worse. Sebi has “equitably” allocated limits to individual firms! FIIs apply to Sebi for a quota, and Sebi hands out quotas on an “equitable” basis. Then Sebi will keep a watch on whether the FII is using this limit.

This adds up to manifest over-extension of the state, unrelated to Sebi’s core task—which is regulation and supervision of the securities markets. But India’s bureaucracies can’t seem to break out of the licence-quota mindset. This only serves to underline why rupee convertibility is important. Such thinking at Sebi, which is supposedly a modern agency that interacts with modern securities markets, shows that the flame of the licence-permit raj burns bright even after 20 years of economic reforms.

The concept of a “100 per cent debt FII” as opposed to a “70-30 FII” must be abolished. All FIIs must be treated as financial investors, who will make choices between debt and equity securities based on their requirements and views. As in the case with the limit on FII ownership of a company, Sebi must monitor the aggregate ownership of all FIIs in (say) corporate bonds. When the level reaches $1.5 billion, all FIIs must be forced to stop buying until the level drops to $1 billion. This will ensure that no FII has to walk up to the Sebi office and ask for a quota.

****End of Story# 35 of 50

****Story#36 of 50

Title: On The Road To The Fourth World

Author: V ANANTHA NAGESWARAN

Source: The Financial Express

Date: May 06, 2006

URL:

The Indian Express reported recently that the Indian media enjoyed greater freedom than the US media. It might well be true. Indeed, in many respects, Indians enjoy far greater freedom than most other nations. There is perhaps too much freedom for Indians, in general.

One of the indicators of development is the behaviour of road users. In developing countries, it is usually ‘free for all’ and ‘might is right.’ In the developed world, driving is relatively hassle-free. Pedestrians would not have to cross roads with a prayer on their lips. Indeed, vehicles would stop for them. Based on this measure, some of the East Asian nations should still be considered developing nations.

In recent months, there has been a lot of euphoria about India. The stock market is booming and so is Indian real estate. Jobs for skilled Indians are plentiful and salaries are on the rise. India has been the toast of international investors. Foreign direct investment into India is picking up and Indian companies are confidently acquiring units abroad. Many international companies have announced that India would figure prominently in their global growth plans. Credit rating agencies have upgraded their assessment of India’s rating and/or outlook. It would appear that India has arrived.

Alas, this writer notices a fairly disquieting development. Every visit to major Indian cities reveals alarming det-erioration in road discipline and basic norms of behaviour on the road. Drivers skip red lights with impunity and, worse, those who obey the red light are shouted at and ridiculed. This is in contrast to international experience, where discipline on the road improves proportionately with economic prosperity.

In India, roads are being mended and improved and there is greater choice in vehicles for users. Yet, road behaviour is deteriorating. This scant regard for the rule of law percolates down and permeates other layers of the society. In one sense, the contempt that naxalites have for the Indian state is no different from the contempt shown by the ordinary Indian for the rules of the state that have been drawn up for his benefit and safety.

• A contempt for law can be seen parallely in our road behaviour and the IPO scam

• It is a sign of the ‘get rich quick’ mentality engendered by the asset price boom

• We need to regard the rules of the road and make a sombre assessment of risks

Indeed, one could even safely make a predict-ion, based on this behaviour pattern alone, that the country would never make the transition to the first world. Further, this behaviour is at odds with both the country’s spiritual heritage and with its aspiration to be an economic power. It is a sign of the ‘get rich quick’ mentality that the recent run-up in stock prices and real estate prices has engendered. We simply have to be ahead of others at any cost.

The IPO scam, where allocations were illegally garnered, is yet another manifestation of the short-term instincts that have polluted our thinking and attitude to life, particularly among the urban rich. Whether they are educated or not is irrelevant here.

Indeed, the Indian citizen had revealed both his insecurity and his impatience in a survey conducted by India Today, the English periodical. The youth of India, the survey revealed, preferred the job security of the Indian government, reservations in educational institutions and jobs and only an incremental approach to economic reforms. In other words, they were not prepared to earn their prosperity, but were keen to have the state shower it upon them. At the same time, our behaviour in every-day situations suggests we would not behave as responsible members of a society that allows every member to pursue her legitimate dreams. Might and privilege matter more in modern India than merit. Alter-natively, it is about rights without responsibilities in the world’s most boisterous and noisy democracy.

Does the Indian state have either the moral right or the administrative capability to enforce the rule of law? Recent revelations of ministerial high-handedness with reputed industrial houses and the overall conduct of the present ‘minority’ government have robbed the state of any right to expect its citizens to respect the rule of law. Such a situation has opened the field for people of all hues to break whatever laws they can: terrorists mock at the Indian state, naxalites, communists and pseudo-secularists seek to undermine it from within and ordinary citizens disobey, among other things, even the rules of the road. This is not a pleasant recollection as one contemplates the future of this nation over the long term, even as the current level of the stock market index lulls many into thinking the country has arrived.

As the results of elections to five important states are announced later this month, some of the inherent and glaring contradictions in the current ruling coalition at the Centre would begin to emerge. Its foundations could be undermined, leading to political uncertainty. Internationally, Iranian nuclear plans threaten to snowball into a wider conflagration and global investors are ignoring this, rising interest rates, tightening liquidity and rising oil price, etc. Complacency and hubris overwhelm realistic and rational assessment of risks and return.

However, history is replete with in-stances of such a mindless and seemingly endless frenzy of rising asset prices giving way to a more sombre assessment of risks and an eventual correction in stratospheric valuations. When that occurs in international financial and commodities markets in due course, Indian assets would not remain an exception.

No nation has prospered by not working for it and no driver has reached his destination by disregarding the rules of the road. In both cases, by the time realisation dawns, it is usually too late. We would do well to pause, reflect and revise. Otherwise, when the tide goes out, practically the whole country would be seen to have been swimming naked.

—The writer is the founder-director of Libran Asset Management (Pte) Ltd, Singapore. These are his personal views

****End of Story# 36 of 50

****Story#37 of 50

Title: Pm For Poll Fund Reforms

Author: Correspondent or Reporter

Source: Statesman

Date: April 29, 2006

URL:

The Prime Minister, Dr Manmohan Singh, believes that corruption in Indian public life has greatly reduced after dismantling of licence permit raj and taxation reforms, but it cannot disappear altogether unless there are reforms in financing of elections.

Dr Singh spoke on the issue while interacting with the 2005 batch of IAS probationers. Replying to questions, he told them “the role of black money in the financing of elections is a problem and until we tackle that problem, I think we can not say that we have reduced the scope for corruption.”

According to him, the dismantling of excessive controls since 1991 had reduced the scope for corruption, as powers of discretion with public functionaries were severely cut. The taxation system was streamlined in the last 15 years with same results. The government enacted the Right to Information Act to allow public vigilance over public spending by permitting people to know how Government money was being spent. The availability of this information could become a powerful tool to reduce the extent of corruption, he said.

Stressing on the need for probity and integrity in the civil service, Dr Singh said that if government functionaries strayed from the path, then they were not worthy of the trust the founding fathers of the Republic had placed in the Indian Administrative Service. The Prime Minister said India was a land of diversity, where all great religions were represented. Although this was a matter of strength, it also posed some challenges. It was up to the civil servants to ensure that all communities lived in peace and no one was allowed to disturb the communal harmony.

While economic reforms were taking care of the country’s growth rate, Dr Singh said that the civil servants had to play a role in ensuring that the weakest sections of society benefited from the government’s health and basic education schemes. “Winning the hearts and minds of the weakest sections of our society must be the primary concern of all civil servants,” he said.

****End of Story# 37 of 50

****Story#38 of 50

Title: Pm Says 10 Pct Economic Growth Realistic

Author: Unni Krishnan

Source: Reuters

Date: April 19, 2006

URL:

India aims to push annual economic growth to 10 percent and pursue policies to boost manufacturing output to create more jobs for its billion-plus people, Prime Minister Manmohan Singh said on Tuesday.

India, Asia's third-largest economy, has expanded at about 8 percent for the past three years and the government wants to accelerate the growth rate.

"As I look ahead, I feel that we can not only sustain the current rate of economic growth of around 8 percent but can realistically hope to target a rate of 10 percent," Singh told the annual meeting of the Confederation of Indian Industry.

His comment came ahead of a central bank monetary policy statement in which interest rates were left unchanged, surprising markets, which had expected a rise. The Reserve Bank of India said inflation expectations were contained for now.

The RBI forecast economic growth of 7.5-8.0 percent for the fiscal year ending in March 2007. India has estimated growth at 8.1 percent in fiscal 2005/06, exceeding expectations.

Singh, regarded as the father of economic reforms as he was the finance minister when India opened up the economy in the early 1990s, said the government would set up a panel to recommend steps to boost manufacturing output.

"Our endeavour will be to create a policy framework that can deliver an annual rate of growth of manufacturing output of at least 12 percent," Singh told the gathering of India's top business people.

Manufacturing output rose by 9.5 percent in February from a year earlier, faster than January's 8.8 percent growth and a 5.9 percent rise in December.

The rapid expansion is being driven by surging domestic demand as consumers enjoy higher incomes and cheaper credit, as well as exports, which have been rising 20 percent annually over the past three years.

Manufacturing accounts for about 16-17 percent of the economy, not far behind the 20 percent average in developed countries, but less than half of China's 40 percent.

As India's economy develops, agriculture is becoming less important as a contributor to growth. Its share of GDP has fallen from half in the 1950s to barely 20 percent.

More workers are moving off farms to look for jobs elsewhere and Singh said factories and production lines were becoming increasingly important to soak up the excess as well as the 12 million new job-seekers every year.

Analysts said the government had relied heavily on the service sector, which accounts for 50 percent of India's GDP, and would need to focus on boosting manufacturing.

"We are in a situation where there is rising unemployment in the rural areas. Most of them are low-skilled workers and they can gain employment only in the rural sector," said D.K. Joshi, an economist with credit rating agency Crisil.

"It is an anomaly the government has to correct."

****End of Story# 38 of 50

****Story#39 of 50

Title: Politics Key To India-China Engagement: N. Ram

Author: P.S. Suryanarayana

Source: Hindu

Date: April 13, 2006

URL:

Proactive politics rather than economic imperatives should be seen as the key to progress in India's buoyant interaction with China.

Making out a powerful case for recognising this reality in the context of the evolution of India's relationship with China, N. Ram, Editor-in-Chief, The Hindu said here on Wednesday that the prospects on this bilateral front should not be left to spontaneity.

Tracing the various phases in the India-China engagement over half a century, Mr. Ram drew attention to Rajiv Gandhi's visit to China in December 1988 as "the breakthrough event" that set the stage for a process of an "extremely inspiring" progress.

Addressing the "Asia Pacific Business Summit," organised here by the Singapore Indian Chamber of Commerce and Industry, Mr. Ram emphasised that "normalisation is aided by China's economic reforms." Identifying this aspect as just "one of the key factors" and noting that the breakthrough preceded India's own economic liberalisation, he said "the impulse came from politics, so far as India was concerned" at that time.

The conclusion that could be drawn, therefore, would be that "economic strategy and development imperatives are important, but politics must lead." Underlining the resonance of this "hypothesis" for the economics-savvy players on the international stage, like those assembled at the summit, he said: "Unless politics leads proactively, you can't really expect too much from spontaneity, if you have problems that have stood in the way of the full realisation of the potential of this relationship."

Damage repaired

Noting that "a frost descended" on the promising India-China diplomatic landscape following New Delhi's Pokhran-II nuclear tests in 1998, he said the two countries were fortunately "able to repair the damage" and "initiate a resumption of the process" that was launched in the context of the 1988 meeting between Rajiv Gandhi and Chinese helmsman Deng Xiaoping.

Summing up the political message from the management of the 1998 "setback," he said "the relationship is mature." As a result, "it has been an upswing all round." India and China should "cooperate, not fight, or pull against each other," he advocated.

Spelling out the principles that now govern the India-China engagement, such as "non-use of force to alter the status quo along the Line of Actual Control," a guideline now "set in stone," and other norms, he recalled how the Principles of Peaceful Coexistence, first enunciated by China in the context of Tibet issue in the1950s, was singularly devoid of any economic criterion.

As for economic dynamics as a factor in Asia in the 21st century, Mr. Ram recounted how Deng had famously noted that "if China and India fail to develop, it cannot be called an Asian century." Singapore's leaders had "instinctively" and consistently caught on to this political theme of the times, he noted. This marked a reflection of the City-State's "qualitative role" in the India-China milieu.

Presiding over the plenary session on the subject of "India and China — The Singapore Connection," K. Kesavapany, Director, Institute of South East Asian Studies here, said the message from the session was that the City-State could play the role of a possible connector in tapping the synergies in the equation between the two Asian neighbours.

****End of Story# 39 of 50

****Story#40 of 50

Title: Privatising Privatisation

Author: Yusuf Mansur

Source: Jordan Times

Date: May 08, 2006

URL:

In the mid-1990s, Jordan boasted with its privatisation programme and with being the first in many aspects of reform in the region. Privatisation resulted in decreased numbers of people employed by the public sector and the trend, aided by an increasing budget deficit and decreasing aid, steadily continues.

One contributor to the rising employment has been the creation of regulatory bodies in every sector that was being liberalised while failing to divert labour from the public to the private sector.

Jordan has done well in privatisation, one of the most difficult and controversial, albeit necessary, measure the economic reforms warranted, and embarked upon with the blessings of the World Bank and the donor community. When the Kingdom started privatising its publicly owned corporations, questions regarding labour were given the easy answer that the new management/ownership will continue to safeguard the welfare of the labour force employed there — i.e., keep them working — even though the remedy was clearly to train those workers viewed as in excess of the needs of the operator and place them in the private sector.

According to the Privatisation Law and the privatisation strategy, part of the over $1billion in proceeds from privatisation was supposed to be spent on retraining; instead, the majority went to debt repayment, with some money going to wage props, that exacerbated long-term problems. The effort of downsizing was remiss in that spending was curtailed on the training and the shift from public to private employment never really happened — jobs were lost as the new employers offered compensation packages, some of which were contested, and litigation continued as a reminder of what should have been done.

On another front, “independent” regulatory bodies started emerging in liberalised sectors in order to regulate the privatised ex-public sector monopolies. This was considered a de facto solution beyond questioning or any rudimentary, even preliminary, cost/benefit analysis. The model to follow was that of the Telecommunications Regulatory Commission (TRC), which was established in 1995 to become the first “independent” regulatory body in all MENA countries.

Every sector that witnessed some form of liberalisation since 1995 is being gifted with a new regulatory body that requires staffing, financial and technical resources, which many times are unavailable, even though the budget of the independent government bodies has risen to JD912 million in 2006, the year of soaring prices, budget tightening and increased unemployment.

Advocates of the creation of such bodies claim that the specificity of each sector warrants the creation of a regulator in each. Thus, in addition to the ministry in charge, there is a regulatory body that vies for authority in the sector and at times competes with the ministry. However, those proponents forget that the Competition Law No. 33 of 2004 has already created a body for safeguarding competition throughout the Kingdom and in all sectors, which renders most these bodies useless. In fact, their very existence weakens the implementation of antitrust legislation and infringes upon the powers granted to the Competition Directorate at the Ministry of Industry and Trade. Consequently, the regulatory bodies are still monitoring competition in many sectors even though they suffer from lack of sufficient resources to hire permanent antitrust experts.

Regulations in most cases become fragmented and weaken the ability of the Competition Directorate to save the Kingdom all these expenditures on bodies whose staff runs in the hundreds. The claim that the specificities of these sectors warrants specialised regulatory bodies is frivolous; the staff and administration employed in these bodies typically come from the public sector monopolies and are, therefore, not neutral when evaluating antitrust issues. In telecom, with the merger of all licences into one, the TRC role becomes less significant. It would only be limited to selling or leasing frequency, which is managed like in most countries by other bodies anyway.

So why the drive to create those bodies? The answer is simply that they provide a venue for hiring people in the public sector, something we have done well over the past years while failing to increase the competitiveness of the private sector to do the hiring instead. Hiring is a comfortable policy for the decision maker who shifts this political and economic burden and consequences to the next bureaucrat and the coming generations.

The upshot of both policy failures is that privatisation results in more public sector-sponsored jobs. But the public sector already uses 75 per cent of its budget to pay for the salaries of 340,000 employees, one third of the labour force. It may be the case, therefore, that Jordan needs to privatise privatisation.

****End of Story# 40 of 50

****Story#41 of 50

Title: Ride To Reform

Author: Editorial, The Telegraph

Source: Telegraph

Date: April 24, 2006

URL:

Politics can be a great leveller. Today’s protesters become tomorrow’s conformists. The rules of the game can force the transformation on one and all, irrespective of political and ideological differences. That is the moral of the story about Ms Mamata Banerjee finally using helicopters for electioneering. Ms Banerjee’s image of the woman next door — of one living in humble circumstances, wearing ordinary clothes, and keeping away from displays of wealth and power — has been the unique selling point of her brand of politics. It is not to be mistaken for the so-called creed of plain living and high thinking. Politicians in India take great pains to cultivate ordinariness. They have been groomed in a political culture that breeds in them a belief that a display of such an image, at least in public life, can win votes during the elections. Ms Banerjee had obviously learnt the art from others, but sometimes overdid it to absurd proportions. That this image did not help her beyond a point proves that substance, not style, is the important thing in politics as much as in other matters.

However, Ms Banerjee’s helicopter rides also show how the demands of times can change perceptions. In Bengal, the leftists once cried foul of things that were associated with the rich and the upper classes. Not very long ago, leftist leaders would try and do everything to keep away from the business community. Chambers of commerce and industry were out of bounds for most of them even after they had come to power in 1977. It did not occur to these leaders that once they had accepted the responsibilities of governance, their pretensions of political correctness would simply look deceptive. This aversion to business added to other factors that were responsible for the state’s economic slowdown. Besides, the left’s business-unfriendly image did not help promote the investors’ interest in Bengal. Much of that has changed, especially during the last five years of Mr Buddhadeb Bhattacharjee’s reign. The Communist Party of India (Marxist), once known for its obstructionist and anti-development image, has also changed. As the most popular opposition leader, Ms Banerjee has pursued the same old politics of street-fights. The agenda for all parties in India are increasingly being shaped by economic reforms. But before they accept such reforms, the politicians would do well to change their old mindset. If Ms Banerjee’s new image means a real change in her politics, it is good news for Bengal.

****End of Story# 41 of 50

****Story#42 of 50

Title: Tax Agricultural Income

Author: Editorial, Economic Times

Source: The Economic Times

Date: May 04, 2006

URL:

There was a time when it did not make much sense to tax income from agriculture. That was before India’s economic reforms.

India followed, along with a number of other developing countries, a policy of squeezing agriculture to transfer the sector’s surplus to industry for capital formation.

This involved repressing farm prices even as industrial prices were kept high through protection. The non-farm sector bought farm produce cheap while farmers had to buy all the industrial output they bought — fertilisers, pesticide, tractors, medicines, plastic mugs, etc — at inflated prices.

Such taxation through adverse terms of trade was sufficient for agriculture in those pre-reform days. Things are different now.

Industrial tariffs have been slashed even as the prices of a variety of Indian agricultural produce have been allowed to rise to global levels and more. The terms of trade have vastly improved for agriculture.

There is little justification for according income from farming a treatment any different from that of non-farm incomes. The vast majority of farmers would fall below the tax threshold.

But there is little reason why those who supply tonnes of grain or tomatoes to the food processing industry or lettuce to restaurant chains or grapes to wineries or cane to a booming sugar industry should not pay tax on their sizeable incomes.

The issue is not just horizontal or vertical equity among taxpayers. Exemption of farm incomes from taxation becomes a conduit for largescale evasion of tax on non-farm income.

People pass off large chunks of their income as farm income and escape tax on a sizeable proportion of their income.

Removing the exemption of farm income from taxation would end this form of evasion. Of course, this would entail cooperation between the Centre and the states, with the states empowering the Centre to collect tax on farm incomes, a state subject as per the Constitution.

Such federal cooperation is not a pipe dream: it resulted in the states agreeing not to levy sales tax on textiles, sugar and tobacco in the past. All we need is a little bit of political resolve.

****End of Story# 42 of 50

****Story#43 of 50

Title: The Ideological Debate In China

Author: PALLAVI AIYAR

Source: Hindu

Date: April 25, 2006

URL:

Dismissed by many as irrelevant, it has proved to be potentially the key to deciding the shape of the country's future.

FOR THE first time in over a decade, both the Chinese intelligentsia and political establishment are embroiled in an intense ideological debate about socialism and capitalism, which for long seemed to be buried by consecutive years of rocketing economic growth. Substantial inequalities, vanishing provisions for education and health care, and rampant corruption have combined to create disenchantment across sections of Chinese society, giving resonance to the voices of critics of China's economic reform, who represent a resurgent "New Left."

The strength of these socialist-leaning thinkers was evident when during the country's annual meeting of its parliament, the National People's Congress (NPC) in March, critiques by them forced the Government to delay the approval of a draft law intended to protect property rights. The critics charged that the new law gave too much weight to the protection of private property. The most widely cited opposition came from a jurisprudence professor at Beijing University, Gong Xiantian, who has been campaigning against the draft law for the last year or so, charging that it offered equal protection to a "rich man's car and a beggar man's stick." The fact that the law does not state that socialist property is "inviolable" has also come in for particular criticism.

The proposed law had taken eight years to prepare and was intended to codify the protection of private property that was enshrined in the constitution two years ago. Its rejection is just one symptom of the deeper underlying debate about the future direction of China's economic policies.

In the span of 25 years, China has gone from being one of the world's most equal, albeit poor societies, to becoming the fourth largest economy in the world with considerable rich-poor imbalances. China's gini index — a commonly used statistical measure of inequality where 0 represents perfect equality and 100 perfect inequality — figure of 44.7 is worse even than India's 32.5, according to the UNDP's 2005 Human Development Report.

Property that used to be taken away from the rich for redistribution to the poor is today routinely taken away from farmers and given to real estate developers. According to the Ministry of Public Security, in 2005 there were a total of 87,000 mass protests across the country, expressing public anger against official corruption, illegal land seizures, and unpaid wages and pensions. The number of such protests has seen a significant increase over the last decade.

China's New Left thinkers have used this background to give force to their criticisms. "Our primary aim is to deconstruct the illusion of neo-liberalism in China," says Wang Hui, a leading leftist intellectual and Professor of Humanities at Beijing's Qinghua University. Worker's rights, rural reform, health and education, and re-orientation of the government's SOE (state-owned enterprise) reform process are the primary foci of the New Left agenda. It is their belief that the current direction of economic liberalisation in China has led to a nexus between party bigwigs and business interests who have plundered the nation's assets under the cover of privatisation. "Today we are no longer an isolated group of intellectuals. We have become a broad-based movement with real support from the people which gives us clout," says Professor Wang.

Indeed, both the rhetoric and policies of China's current leadership duo, Hu Jintao and Wen Jiabao, appear to mesh to an extent with those of the New Left. The leadership has thus made tackling income inequalities between China's rich urban and poor rural areas the centrepiece of its new five-year plan. Since taking office in 2003, Mr. Hu has also tried to establish his left-oriented credentials by extolling Marxism and encouraging research to make the country's official socialist ideology more relevant to the current era. Moreover, he has tried to distance himself from his predecessor Jiang Zemin, who invited private businessmen to join the Communist Party, negotiated China's accession to the WTO, and stepped up the privatisation of SOEs.

In the 1990s, first under Deng Xiaoping, who called economic development "hard truth," and later Jiang Zemin, ideological discussion about the direction of change was sublimated. During that time, China laid off over 20 million workers from SOEs in a huge wave of closures, mergers and privatisations that halved their number since the mid-1990s.

It is only after Mr. Hu came to power that leftist opposition to China's reforms has increased. Now, leading proponents of the New Left including Liu Guoguang, a former vice-director of the Chinese Academy of Social Sciences, and Hong Kong-based economist Lang Xianping, charge that privatisation of SOEs through management buyouts are nothing but asset stripping. As with the property law, the New Left's criticisms seem to have had an influence on the decision to suspend the practice of management buyouts, taken in 2005. Whether or not China's resurgent ideological debate will derail the country's economic growth is another subject for debate. On the one hand, in a speech to the NPC in March, Mr. Hu declared that China must "unshakably persist with economic reforms."

However, some scholars are worried. "My concern is that the pre-eminence given to the income gap issue these days might hijack the reform agenda, which remains incomplete," says Professor Feng Lu of Beijing University's China Centre for Economic Research. He cites a Chinese adage: "If you want to walk a 100 kilometres and have completed 90 of these, you still have 50 per cent of the distance to go." "The last 10 per cent in many ways is the hardest," says Professor Feng citing unfinished business on the reform agenda from SOE privatisation in key sectors to financial sector reform. He shares New Left concerns regarding the need to improve education and health care services but where he differs is in his belief that simply injecting large amounts of cash from the Centre will not solve the problem.

China's Government has recently announced that it will spend a total of 339.7 billion yuan (about $42.4 billion) in rural areas in a bid to ensure a more equitable distribution of the fruits of the country's economic successes and create what has been called "the new socialist countryside." "There is a belief that the crisis in health care and education comes from their having been left to market forces. But this is nonsense. Both remain more or less monopolies of the government and what we really need is an expanded role for the market in these areas," Professor Feng says.

China's economic boom shows scant signs of slowing down. Mr. Hu recently announced that China's GDP grew by 10.2 per cent in the first quarter of this year. Financial sector reform is proceeding, if slowly. Many local governments are predicting double-digit growth in their own five-year plans. But the time when reform could proceed apace without opposition seems to have passed. China today is witnessing an ideological debate that many had dismissed as no longer relevant. It has instead proved to be not only relevant but potentially the key to deciding the shape of the country's future.

****End of Story# 43 of 50

****Story#44 of 50

Title: The Indo-German Confluence At Hannover

Author: Mohan Murti

Source: Business Line

Date: April 24, 2006

URL:

India at Hannover is not just about business and investment. It will glass-case a kaleidoscope of culture, cuisine, music and dance. The blossoming economic and business relationships between India's rapidly emerging market and Germany's massive economy is vital. India has played an important role in the WTO and Germany recognises and supports the contribution. We need to pool our resources with Germany and ensure Germany's backing on issues such as the removal of farm subsidies.

FILE PICTURE of the Commerce and Industry Minister, Mr Kamal Nath, unveiling, in New Delhi, the logo `India' partner country for the Hannover Technology Fair 2006.

While the Maha Kumbh Mela occurs in Allahabad once every 12 years, Germany's Hannover Technology Fair 2006, opening onMonday, will have India as the Partner Country after a gap of 21 years.

The Fairis the single biggest brand-building opportunity for India. The Hannover Fair, where there will be a confluence of the crème de la crème of India and Germany, will experience the elixir of trade and business partnerships. India's rising economic status and emergence as an innovation and high-end manufacturing hub will be in the spotlight, at Hannover. Reliance Industries, Ashok Leyland, Bharat Forge, along with over 300 companies in all, will represent Corporate India, at the Fair. An Indo-German Business Summit will focus on the `opening markets for trade and investment'. India at Hannover is not just about business and investment. India will glass-case a kaleidoscope of culture, cuisine, music and dance. The blossoming economic and business relationship between India's rapidly emerging market and Germany'smassive economy is vital.

There are tremendous opportunities for the two countries and these can only grow in the years to come, as Germany occupies an ever-important role in the EU and as India's economic reforms progress further.

Here are some thrust areas:

Associate in EU

Since Germany now plays a fundamental role in redefining Europe and is also one of the principal trading partners of India in the EU, we need to seek German support in securing for India the status of an `Associate'to the EU.

German Mittelstand

`Mittelstand' is very significant in the German economy. It is well reflected in the fact that 95 per cent of enterprises in Germany in the field of chemical industry, machine building, manufacturing of motor cars, electrical and optical instruments belong to small and medium enterprises sector.

The German `Mittelstand' has top class technologies that can be a great know-how and technology pool for India. Enormous opportunities exist for Indian companies looking for investment as strategic partners or even 100 per cent acquisitions.

In today's globalised and liberalised world, technology and competitive muscle together have become the force of change and are essential for growth. India has made some very good achievements in this regard. In this context, there is need for close cooperation between German DIN (Standards Institute) and the Indian BIS (Bureau of Indian Standards). Such a strategic partnership will benefit both economies. There is also a need to encourage exchange of experts to discuss matters such as quality assurance, environmental and consumer protection, occupational health and safety, conformity assessment, standardisation and legislation.

Outsourcing and off-shoring

These have become standard practice in manufacturing worldwide. But in the service sector, it is still something of a novelty in Germany, though that is rapidly changing. Germany's off-shoring sales volume currently amounts to about 850 million euros. An increase of more than 22 per cent is expected over the next five years, and it is a development that cannot be halted.

Though India is still the main destination for off-shoring projects (it has 90 per cent of the Western European market). Contractors from Eastern Europe are gaining ground. Germans do feel a cultural proximity to Eastern European countries.

In many Eastern European countries, German is spoken well enough to communicate on a working level. Indian companies must quickly forge joint ventures or strategic investments into countries of Central and East Europe.

Review Green Card

Graduates from India's elite universities are sought-after recruits for the world's high-tech businesses. Germany needs to review the "green-card" scheme to make it more attractive to top rated Indian "techies".

Environment

According to the UN Conference for Climate Change in Bonn, India will not be able to commit to greenhouse gas emission targets when the first phase of the Kyoto Protocol, designed to combat global warming, ends in 2012. When Germany was reunified, the Elbe was the most polluted river in Europe. Today, the salmon and people have returned. India needs to tapGerman expertise and knowledge in areas of environment management and sustainable development.

Biotechnology

A biotechnology revolution taking place in India, which is destined to be the biotechnology nucleus of the world. This is an area with very little German presence. Worldwide, German biotechnology and genetic engineering is second only to the US.. It is one of the most innovative sectors in Germany and posts above-average growth rates.

There are several German Life Science companies looking for strategic alliances and partnerships. Indian Life Science companies must, therefore, lock into partnerships where there is inter dependence for growth.

WTO and agricultural subsidies

India has played an important role in the WTO and Germany recognises and supports the contribution. We need to pool our resources with Germany and ensure Germany's backing on issues such as the removal of agricultural subsidies.

Bollywood Ho!

Last Friday, 8-15 p.m., the prime time film in the German TV channel RTL 2 was Hum-Tum, starring Saif Ali Khan and Rani Mukerji. Yes, most Germans, who never were used to watching Indian films are now glued to their idiot boxes watching Bollywood soap operas each week. Globalisation and the entertainment value of Bollywood films have helped it get a German fan-base.

****End of Story# 44 of 50

****Story#45 of 50

Title: The Uncertain Knowledge Edge

Author: Amulya Ganguli

Source: Deccan Herald

Date: April 15, 2006

URL:

Although the Manmohan Singh government has shown considerable political courage in shedding the Congress party's traditional commitment to Jawaharlal Nehru's Fabian socialism and taking to the path of pro-private sector economic reforms, it is evidently unable to break the shackles of identity politics which continue to haunt India. The latest example of such pandering to some communities in the name of egalitarianism but really to secure votes is the proposal to introduce 27 per cent quotas on seats in institutions of higher education for Other Backward Classes. Along with the constitutionally mandated 22 percent reservations already in force for the Scheduled Castes and Scheduled Tribes, the additional quotas will raise the number of seats reserved for certain groups to as high as 49 per cent.

If the quotas have remained below the halfway mark in terms of percentage, the reason is the Supreme Court's obiter dicta against such reservations exceeding 50 percent of the seats. Otherwise, in the government's zeal to placate various groups, including the Muslims or the poor among the upper castes, the quota might well have gone beyond the 50 percent mark. As has been pointed out by opponents of the move, reservations of this nature militate against the culture of academic excellence, which is the driving force behind the new economic policies with its emphasis on competition, quality and academic achievements.

The apprehension is that because of the limited number of seats in central universities and the institutes of business, technology and management, a sizeable number of meritorious students will be unable to secure admission if such a high percentage of seats remain reserved for various claimants. As a result, the standards of these institutions are bound to fall, especially if the entrance tests are made easier for the students in reserved categories. It would obviously have been better if affirmative action were in place at the primary and secondary levels of education so that the students from the lower and intermediate castes would have been better prepared to enter the higher academic bodies.

What is unfortunate is that this has come at a time when these institutes have been gaining recognition worldwide for their excellence and some of them have been thinking of setting up their campuses in Southeast Asia. Now the fear is that it is the Indian students who will go abroad in larger numbers. It is strange that the step to introduce quotas has been taken when the prime minister had set up a National Knowledge Commission to give the country what has been called a "knowledge edge". Not surprisingly, the member-convener of the commission, Pratap Bhanu Mehta, who is also chairman of the Centre for Policy Research, has ascribed the move on reservations to "political" predilections. It remains to be seen what impact this move will have on India's image as a country which is now the virtual home of information technology and a business destination for the corporate world, considering the upheaval which the quota system will cause at the academic centres of excellence.

****End of Story# 45 of 50

****Story#46 of 50

Title: These ‘Sick Men’ Of Europe

Author: Shadaba Islam

Source: Dawn

Date: April 15, 2006

URL:

EUROPEAN policymakers went on Easter vacation this week hoping for a respite from the spate of bad news which has engulfed several of the continent’s leading nations in recent days. The focus is on the three “sick men of Europe” — Italy, France and Germany — which in the past days have lurched into political troubles mirroring their longstanding economic woes.

Elections in Italy may have resulted in the defeat of the mercurial Silvio Berlusconi and victory for respected opposition leader Romano Prodi but the wafer-thin majority secured by Prodi’s centre-left coalition does not augur well for the stability of one of Europe’s most politically volatile nations.

Next door in France, the government has caved in to mass protests and withdrawn a key labour reform bill, a move which many fear will further aggravate the long-stagnating French economy. The retreat has also damaged the reputation of Prime Minister Dominique de Villepin whose hopes of replacing President Jacques Chirac in next year’s presidential elections now appear permanently dashed. And while Germany has a relatively effective chancellor in Angela Merkel, she presides over an internally divided “grand coalition.” Meanwhile, the leader of Germany’s Social Democrats who rules with Merkel has resigned after a nervous breakdown.

Europe is much more than three countries, of course. But Italy, France and Germany are also the eurozone’s three heavyweights and members of the powerful Group of Eight (G8) club of industrial nations. Collectively they contribute just over two-thirds of the gross domestic product (GDP) of the eurozone and just under half that of the 25-nation European Union.

Economists say Italy, France and Germany face the same problem — a vicious cycle of high unemployment and high labour costs, a lack of funds needed to finance the welfare system, and heavily regulated labour markets. But more is at stake than just economics. The sense of uncertainty in Europe’s three biggest economies points to a continent afraid of change of all sorts.

Europeans appear increasingly beset by confusion and division about where their countries and the EU should be heading. The talk in Brussels and other EU capitals in recent months has been on how EU policymakers can ease public fears over globalisation and rising competition from Asian economic powerhouses, including China.

The long list of contemporary European concerns include the fear of Islam, fear of immigrants and asylum-seekers and an ever-increasing fear of losing even more jobs to countries with lower labour costs. Such anxieties led to the defeat of the European constitution by voters in France and the Netherlands last year and has also prompted the tide of protectionism sweeping across many countries in the bloc.

Further EU enlargement is in danger because many Europeans do not want Muslim Turkey to become a member and are fearful that EU funds will be siphoned off by poorer Romania, Bulgaria and Western Balkan states. Interestingly, most European politicians appear to be stoking such fears, instead of easing them. For example, combating immigration and keeping out refugees remains a top government priority in most EU nations although United Nations figures show a decline in the number of people trying to seek asylum in Europe.

Government focus on counter-terrorism also keeps many Europeans on edge as does the constant demands from governments that the EU impose quotas or slap anti-dumping fines on Chinese and other Asian exports. In addition, EU governments are now warning that the bloc’s “absorption capacity” will be a factor determining their decision to further expand eastwards.

The problem, say economists, is that while there is peace and relative prosperity across the continent, Europe is in the throes of a deep malaise, with the public and politicians unsure about the future. In most countries, while officials and economists know that tough reforms are overdue, politicians in power seem incapable of pushing them through in the face of strong public resistance.

Middle-aged Europeans are resisting reform because they fear facing old age without the social safety net built up over the past several decades, while young people worry about starting their careers in a climate of insecurity.

The controversial labour law which was adopted and then abandoned by the French government would have allowed companies to offer two-year contracts to workers under 26. But students were outraged because the bill also said that those contracts could be ended for any reason.

Interestingly, it was intended in part as a response to last year’s riots in poor and often predominantly Arab suburbs of Paris, where joblessness is high and hope low. The idea was that employers, freed of the need to keep bad hires on the payroll, would be more willing to hire young Arabs.

Most EU policymakers are equally worried that French efforts to undertake other much-needed economic reforms have been dealt a fatal blow by President Chirac’s decision to retreat on the labour law. Prospects for change in Germany also look grim. Last autumn, voters initially looked set to deliver reform-minded Merkel’s centre-right party a strong mandate in elections — but then backed off, forcing the new chancellor into a cumbersome coalition that diluted her plans.

The current focus is on Italy. Although the country is mired in economic stagnation and badly needs strong leadership, Prodi’s painfully slim election victory also means his coalition has little chance of enacting any significant economic overhaul. Observers fear that the Italian voters’ verdict is a recipe for paralysis in which factional infighting will likely take precedence over reform.

Many European business leaders, meanwhile, are tired of slow economic growth and are demanding their countries become more competitive. But many are fast giving up hope about the prospects for a transformation at home — and are seeking opportunities abroad. A delegation of top European executives warned EU finance ministers in Vienna last week that protectionism, lack of reforms and fears of globalisation were holding back Europe’s economies. Politicians must do a better job of explaining the high economic stakes if red tape was not cut and reforms not implemented swiftly especially in the labour sector, the CEOs said.

The business leaders also insisted that while they were investing abroad, revenues from their foreign ventures were being channelled back into Europe, thereby creating jobs. In fact, while governments and the public moan about the future, many French and German companies have managed to remain trim, efficient and world-class — even as the countries they call home go into decline.

While the European Commission has been calling for more economic liberalization, current disarray in France and a fragile government in Italy means it is unlikely to secure much support from those two countries. Germany, meanwhile, also remains cautious about revamping the labour market, with Merkel still holding back on unveiling a new employment blueprint.

Germany, which has the biggest economy in Europe, has been mired in virtual economic stagnation for the past five years with growth since 2002 averaging just 0.8 per cent. Unemployment is currently 12 per cent and most experts say growth rates of over two per cent are needed to create the millions of needed jobs.

The fear in Brussels is that with Italy, France and Germany in a reflective, uncertain mood, plans to give a new impetus to the EU’s political and economic future may also run into the ground. Given their weight and their status as EU founding members, the three countries have a strong voice in EU policymaking. If they obstruct reform and promote protectionism, the entire EU will suffer.

All is not lost, however. Popular support for Merkel remains high in Germany and many are hoping that it will be the reformist Nicolas Sarkozy, the current French interior minister, who will win next year’s French elections, replacing Chirac. And in Italy, few can deny that many voters heaved a sigh of relief after the outspoken and boastful Berlusconi — who had likened himself to Napoleon and Jesus Christ — was defeated.

Prodi, who cuts a more reassuring and comforting figure, has said he plans to bring back “harmony and unity” to a nation facing major economic and social difficulties. His political record is impressive. As Italian prime minister between 1996 and 1998, he defied widespread scepticism and stubbornly pressed ahead with unpopular policies aimed at allowing the country into Europe’s elite eurozone club. And during his five-year stint as president of the European Commission, between 1999 and 2004, Prodi strongly defended the EU’s eastward expansion programme and plans to turn Europe into a major political heavyweight.

EU watchers seeking a glimmer of hope say that contrary to current fears, Prodi, joined by Merkel and perhaps next year by France’s Sarkozy, will be able to revive the flagging European economy and boost European morale. But for many others, looking for a silver lining in Europe’s current dark cloud is proving to be a little difficult at the moment.

****End of Story# 46 of 50

****Story#47 of 50

Title: This Will Inspire Trade Unions`

Author: Editorial, Business Standard

Source: Business Standard

Date: April 28, 2006

URL:

Between April 3 and April 10, over 2.1 lakh officers and clerks of State Bank of India struck work demanding revision in pension payment. In its 200-year history, this is the first instance where SBI officers and clerks joined hands for an indefinite strike that brought to a grinding halt all activities at 9,000 branches spread across the country. Shantha Raju, General Secretary of All India State Bank Officers’ Federation and All India Bank Officers’ Confederation, the mastermind behind the strike talks to Business Standard about the future course of action. Excerpts:

SBI employees get three superannuation benefits — gratuity, provident fund as well as pension — while public sector bank employees get only two benefits. How do you justify your strike?

We did not demand pension as an additional benefit. We struck work to retain whatever benefits we had been enjoying. Pension has been available to SBI employees for about 150 years.

The family pension had not been revised for 20 years and pension had not been revised for 14 years. The recently retired employees and officers had been getting pension as per their salary scale in 1993. A retired deputy managing director was getting a pension of Rs 4,250 under the 1993 scale, while his actual pension should have been close to Rs 20,000.

Was it a management sponsored strike?

Everybody had an interest in this issue including the chairman. But it is uncharitable to say that the management supported the strike. The strike was a success as the workmen union, including the sub-staff, participated. The management tried to avert the strike and the chairman asked for some more time to settle the issue.

You called off the strike even though the government had not accepted your demand fully.

The government did not concede to our demand (revision of pension up to 50 per cent of salary) but accepted that pension is a right of SBI employees and it needs to be updated from time to time. We hope to bridge the gap and make it 50 per cent for all officers at the next bipartite wage settlement.

You would not have accepted this had the clerical staff not called off the strike.

If this charge is true then they could have settled earlier when an offer was made covering about 90 per cent of the clerical staff. There was no question of any organisation independently deciding to call off the strike. It’s a joint struggle...

Didn’t the management offer you a better deal earlier but you rejected that?

This is absolutely wrong. To be frank with you, the management had little scope to settle with us.

Do you see a ripple effect on the entire industry with other public sector banks demanding pension as a third benefit?

The AIBEA, the strongest employees’ union, has gone on record to say that there will not be any counter demand from the industry for pension as the SBI employees were merely asking for a revision of pension, not making a fresh demand.

Weren’t you irresponsible by giving a strike call in these days of economic reforms?

We explored all possible avenues before taking the plunge. It’s not a happy situation for any union but we were driven to the wall.

The entire public sector banking industry, including SBI, is over-staffed and under-skilled. Will you recommend another round of VRS for the industry?

There is no need for VRS and, in fact, we must continuously recruit from the market as banks are rapidly diversifying and cross-selling products.

I don’t agree that people are unskilled. Even the sub-staff who have been promoted as clerks are working on computers... They can acquire skills if banks train them. All nine unions have given their commitment to redeployment.

There is a lot of scope for utilising the existing staff in an effective manner. Instead of doing that, banks including the Reserve Bank of India, have been outsourcing work. The RBI is even outsourcing sensitive work like clearing (of cheques) and debt management. If you say we have excess staff, how can you go for outsourcing? We have already established a co-ordination forum with the RBI union and united forum of bank unions to fight this.

So, the next indefinite strike will be against outsourcing?

We are not visualising any strike at the moment, but we want to launch a national campaign against outsourcing.

Do you see the success of your strike galvanising the entire trade union movement in the country?'

From the third day onwards we received suo moto support from all unions — even from outside the banking industry. An indefinite strike in an era of economic reforms is unheard off. It will inspire them and rejuvenate the trade union spirit.

What message did the strike send to the SBI management?

The management must introspect and find out what went wrong with the employees... Pension is only one issue. The entire HRD system has been damaged in SBI. Whenever the management has given a call for any new initiative, the employees have given their best to make it a success. In fact, the SBI is the first bank to sign a computerisation agreement with the unions. We were attacked on the streets by the Left unions for signing the agreement! We have accepted full computerisation and the single-widow concept (where one counter addresses all business needs of customers) and yet got alienated... We are not asking for the moon, the salary of the ICICI Bank employees... But give us something respectable.

Why don’t you break away from the industry-wide wage settlement?

There is no need to break away from the industry settlement as within the settlement, the banks can have freedom to offer more to their employees. The government has created so much of hype about autonomy but the banks cannot pay even a rupee to any employee without the government’s approval. How do we compete with private and foreign banks?

****End of Story# 47 of 50

****Story#48 of 50

Title: Wb, Kerala Set For Polls Tomorrow

Author: Correspondent or Reporter

Source: Hindustan Times

Date: April 21, 2006

URL:

Four more southern districts of West Bengal go to the polls on Saturday in the second round of staggered assembly elections the ruling Left Front hopes to win hands down.

Of the total 294 constituencies the second phase would involve 66 in Howrah, Hooghly, East Midnapore and Murshidabad districts where 348 candidates, including 28 women, are in the battlefield.

The first phase on April 17 saw balloting in 45 constituencies covering West Midnapore, Bankura and Purulia districts. Although these were known Maoist strongholds, there was no violence and the entire exercise took place peacefully.

Among the four districts having polling on Saturday, Hooghly has 19 seats followed by 16 each in Howrah and East Midnapore and 15 in Nadia. The total number of voters in the four districts is 11.3 million. Shibpur in Howrah is the largest constituency with 269,646 voters.

A total of 122,99 polling stations have been set up in the four districts.

The total electorate in West Bengal is 48.9 million. The five-phase elections end on May 8.

While Maoist violence and underdevelopment were the overriding concerns in the first phase, the areas in the second round are beset by industrial sickness, law and order problems, shoddy civic amenities, Bangladeshi infiltration and erosion of the Ganges river.

Howarh and Hooghly have been facing industrial sickness for decades, leading to the closure of hundreds of factories. In Howrah, which is also Kolkata's twin city, civic amenities are poor.

As everywhere in West Bengal, the main battle will be between the Left Front led by the Communist Party of India-Marxist (CPI-M) and the Trinamool Congress of Mamata Banerjee.

Ambika Banerjee, the Trinamool candidate who has won from Howrah Central five times, alleged that the Left had treated the district shabbily.

But of late Howrah has been in the limelight with upcoming projects like a food processing park, an IT hub and a motorbike factory by the Indonesian giant Salem besides a modern township by the same group.

Hooghly district, adjoining Howrah, too faces similar industrial sickness.

In Nadia district, illegal migration of Bangladeshis is a major problem and an election issue.

Murshidabad on the other hand is wilting under severe erosion of the banks of the Ganges. The river has devoured human settlements, rendering people homeless.

Some of the prominent contenders in the second phase are CPI-M's Fire Services Minister Pratim Chatterjee (Tarakeshwar in Hooghly) and Animal Resource Development Minister Anisur Rahman (Domkol in Murshidabad) besides Atish Sinha (Congress, Kandhi, Murshidabad) and five-time winner from Howrah Central Ambika Roy (Trinamool).

Putting up a brave face against exit poll predictions that the Trinamool would get barely three of the 45 seats in the first phase, Mamata Banerjee campaigned hard for the second phase.

"We will do better this time. We only want a free and fair election," she said at an election meeting at Nadia.

Chief Minister Buddhadeb Bhattacharjee hit the campaign trail in Nadia on Wednesday and attacked both the Congress and the Trinamool Congress with virulence.

Hoping that there would be huge turnouts in the second phase, he called the Congress "the party of the rich" and accused the Trinamool of aligning with the Hindu rightwing.

LDF sitting pretty, UDF hopeful in Kerala

Kerala goes to the polls from Saturday to elect a new assembly and the widespread feeling is that the Left is all set to bounce back after five years in the opposition.

The Congress, which heads the ruling United Democratic Front (UDF), of course does not think so. But it increasingly looks like it is only the Congress that thinks it can retain power in the staggered elections ending May 3.

At least three pre-poll surveys have predicted a sweep for the Left Democratic Front (LDF), saying it could win close to 100 seats in the 140-member assembly.

That was the number the UDF won in 2001.

The first phase of polling on Saturday will involve 59 constituencies in the six southern districts: Thiruvananthapuram, Kollam, Pathanamthitta, Alappuzha, Kottayam and Idukki.

A total of 409 candidates are in the fray. An estimated 8.4 million voters, including 4.3 million women, are eligible to exercise their franchise. Kerala's total electorate is 21.48 million.

Election Commission officials said the voting would take place in 8,292 polling booths, using 9,121 electronic voting machines.

"Is there any doubt about our victory?" asked Veliyam Bhargavan, state secretary of the Communist Party of India (CPI), a member of the Left Democratic Front (LDF) that is led by the Communist Party of India-Marxist (CPI-M).

"The electorate will give a fitting reply to the misdeeds of the last five years' rule of the UDF," he added.

Chief Minister Oommen Chandy still thinks he can make it -- somehow.

He and his colleagues are harping on the theme that Kerala's economic progress would come to a halt if the CPI-M takes power, since the Marxists have no love for economic reforms other states are embracing.

"We want the people to discuss and debate... We want them to understand the real character of the CPI-M," he said.

Of the 59 seats, the Congress-led UDF won 45 in 2001.

The first phase on Saturday is crucial because over the years it has been noticed that whoever wins the most seats in the southern districts, especially in Kollam and Thiruvananthapuram, emerges the winner.

The Congress feels that the whirlwind tours of Prime Minister Manmohan Singh and Congress president Sonia Gandhi would help the party to recover lost ground. But it is not an optimism widely shared.

The third factor in the Kerala elections is the Bharatiya Janata Party (BJP). Although its vote share has been falling in every election and now stands around five percent, it is hoping to bag at least one seat.

For the first time, digital cameras would come up in the polling booths in all three phases.

"Apart from these cameras, no video shooting or photography will be allowed inside the polling booths," said Nalini Netto, Kerala's chief electoral officer.

****End of Story# 48 of 50

****Story#49 of 50

Title: Which Way Is Latin America Headed?

Author: Jorge Heine

Source: Hindu

Date: April 20, 2006

URL:

A majority of Latin Americans are now ruled by Left-led governments. Their leaders are applying new, imaginative solutions tailored to their country's specific needs, rather than the "one-size-fits-all" approach that has wrought havoc in the region in the past.

A UNITED Nations University-sponsored conference on human rights in the Americas in Mexico City I attended a few weeks ago coincided with another on "close elections" put together by the Federal Elections Institute and Oxford University (Yogendra Yadav, India's leading pollster, presented the paper on India's 2004 vote). Apparently, the idea of the organisers was to throw light on the July 2 Mexican presidential elections, which a year ago were considered by some "too close to call." That may still turn out to be the case, but today Andrés Manuel López Obrador (or AMLO, as the former Mayor of Mexico City is known) is four points ahead of his closest rival, and the man to beat.

AMLO represents the Democratic Revolutionary party (PRD), a party on the Left, which until now has never won a presidential election. If we add to that the results of the Peruvian elections held on April 9, in which the two candidates on the Left, Ollanta Humala and Alan García, came out on top and will now face a run-off, the pattern of the recent electoral results in Latin America is straightforward.

The Left has won, in some cases with a significant majority, in Brazil (with President Inacio Lula da Silva in 2002), Argentina (with President Néstor Kirchner in 2003), Uruguay — another first (with President Tabaré Vásquez in 2004), the Dominican Republic (with President Leonel Fernández in 2004), Bolivia (with President Evo Morales in 2005) and Chile (with President Michelle Bachelet in 2006). President Hugo Chávez of Venezuela has been in power for quite some time now, and keeps winning elections.

Yet there is a paradox. One would expect a protest vote such as the one leading to first-time wins by the Left in periods of great economic turmoil and/or recession. Yet today Latin America is undergoing a "boom." In 2005 the region grew at 4.3 per cent, its third consecutive year of growth, unemployment fell from 10.3 per cent in 2004 to 9.3, and the poverty rate from 44 per cent in 2002 to 40.6. Thanks to the uptrend in commodity prices (with oil at $70 a barrel and copper approaching $3 a pound), exports are thriving and the region has benefited the most in the current business cycle.

After its 2001 crisis, Argentina grew at between 8 and 9 per cent a year for three years in a row; despite the misgivings in international financial markets in the months leading to his election, President Lula has stabilised the Brazilian economy, and the same markets now look with quiet nonchalance at his likely re-election next November; Mexico has become Latin America's biggest economy (as large as Brazil and Argentina's put together) and Chile's major "problem" is what to do with its burgeoning fiscal surplus, which threatens to reach $7 billion, or 6 per cent of GDP this year, leading to a considerable appreciation of the peso (a classic case of "Dutch disease"). FDI in the region in 2005 was $60 billion, only slightly less than in 2004 (at $61 billion), and international financial investors are smiling all the way to the bank. Mutual funds focussed on Latin American stocks have been the best performing Morningstar fund category for three years in a row.

So, what is going on? What we are seeing is a "third wave" of sorts. Much as from the mid-1960s to the mid-1980s, military dictatorships (or bureaucratic-authoritarian regimes, as they were typecast in the Southern Cone) ruled the roost, and after that, democracy, hand in hand with the Washington consensus, became the only game in town, today the pendulum has swung back again. This is a reaction against the dogmatic ramming through of economic reforms "for reforms' sake," as cycle after cycle of them promises heaven on earth, yet is unable to deliver. Once economists start talking about "third generation reforms" as the ones that will really work, there will be a problem.

Latin America is the region with the highest income inequality, and these successive (and seemingly never-ending) reform cycles, whatever their other virtues, have not been able to make a dent in these huge gaps between social classes. One may debate endlessly whether it is the reforms themselves (privatisation, deregulation, opening up) or the manner in which they were applied (too fast or too slow, half-way or too comprehensively, etc.), which is at fault, but despite the considerable economic growth and palpable progress across the region, vast sectors of the population feel that their lives are not improving and demand change.

Of what sort? An acquaintance, who looks at this with sympathy, told me he was delighted because "the ideas of the sixties were once again gaining ground in the region." Yet, that is precisely what is not happening.

These changes are an expression of cultural rather than ideological shifts. What we are witnessing is the replacement, at the highest levels of government, of a certain Europeanised elite that, although representing only a small share of the population, managed to secure the monopoly of not just social status and the means of production but also the top positions in politics. To have a metal worker who lost one of his fingers on the factory floor as President of Brazil, an aboriginal leader (another first) as President of Bolivia, and an agnostic, single mother as President of Chile, all of them elected with more than 50 per cent of the popular vote, entails a major shift from long-standing patterns of social and political behaviour, in which deference and submission to established elites seemed fully entrenched.

The second point is that far from harking back to the heterodox policies of the 1960s, the Latin American Left in government now has been, as a rule, remarkably orthodox in its fiscal and economic management. If there is something the electorates in our countries will not put up with is the inflation as well as economic instability we went through then.

I already referred to how Argentina and Brazil have stabilised their economies, as well as to Chile's stellar performance. Peru has had (ruled by left-of centre President Alejandro Toledo) five years of high economic growth and has attracted much FDI. It has just signed an FTA with the United States, something which Uruguay has also been considering. Most observers think that a PRD-led Mexican government would stick to the economic policies that have led to that country's increased imbrication with the U.S. and the NAFTA project.

Where Left differs with Right

Where the Left does part ways with the Right is on the issue of public policies in general and on social policies in particular.

On the first, the key notion has been that, much as in today's world it is the private sector that drives the economic engine, the government plays a key role in devising tools to leverage the statutory powers of the state with the material resources and managerial capabilities of business. The provision of public infrastructure, a fundamental need in a huge continent such as Latin America, is a classic example.

The notion that the free market by itself will provide the highways, bridges, tunnels and airports that are needed is just as mistaken as the one that hopes against hope that the public sector will come up with the enormous resources to pay for them, willy-nilly. Public-private partnerships are, of course, the answer here, something which India is actively pursuing, as we have seen recently with the adjudication of the bids to upgrade the Delhi and Mumbai airports but the same goes for other areas. Chile managed to generate $6 billion in private investment (mostly foreign) in public infrastructure from 1995 to 2003, and its highways and airports are today ranked among the best in the region.

On social inequalities the Right's standard approach has been "trickle down," that is, to allow economic growth per se to take care of the disadvantaged, on the theory that "a rising tide lifts all boats." And while there is little doubt that without growth there won't be much to distribute, the evidence shows than unless carefully calibrated social policies are also put in place, poverty and huge inequalities will persist. Once again the case of Chile, where poverty was almost halved, from 39 per cent of the population in 1990 to 18 per cent in a decade, is a good example of how the imaginative public policies implemented by a responsible Left have made much headway.

Yes, the Left has won quite a few elections, a majority of Latin Americans are now ruled by Left-led governments, and by leaders who are more representative of their peoples. But, far from being determined to turn the clock backwards towards the failed, statist economic policies of yesteryear, these leaders, by and large, are keen on applying new, imaginative solutions tailored to their country's specific needs, rather than the "one-size-fits-all" approach that has wrought such havoc in the region in the recent past.

****End of Story# 49 of 50

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