The Tribune, Chandigarh, India

Not a photo-op
VIPs should let the forces do their job

Politicians have this fetish for rushing in wherever there is even half a chance of a photo-opportunity. It is a pity that they saw such a prospect even in the terror-struck Mumbai and made a beeline. Mr Narendra Modi was among many who headed to the beleaguered hotels where people were getting killed and commando operations were on. They did succeed in giving sound bytes but it never occurred to them that it could hamper the work of the security agencies. Such visits become a distraction. It is high time all political parties evolved a code of conduct under which at least some places should be out of bounds for those who have no constructive role to play by going there. The VIPs’ visits also add more responsibility to the critical duty the security agencies are already doing.

That also brings one to the question of the media coverage of such life-and-death events as the terrorist assault on Mumbai. Giving the killers a chance to use the media for justifying their stand and making demands did not constitute responsible journalism by any stretch of the imagination. But that is exactly what one TV channel did. The live coverage of the battle by other channels too was at times not too healthy. By giving out details of the operation by the security agencies, some of them were almost compromising the lives of the brave men fighting the killers.

What should have been remembered by all concerned was that this was an attack on the country and the success of the fightback was far more important than the success of the saturation media coverage and the competition for the TRP ratings. Almost every single move of the security personnel and army helicopters was shown on the TV in real time. Freedom of the Press is very important but it should not become a hindrance for the men risking their lives in the line of duty. Sometimes restraint serves the people better than excess.

Some action at last
Court pursues Budha Nullah cleanup

UNDER pressure from the Punjab and Haryana High Court, the Punjab Pollution Control Board has ordered the closure of 35 dyeing units guilty of discharging effluents into Ludhiana’s Budha Nullah. The board need not be complimented for its step because for so long it had slept over the issue. Even now it has not acted on its own but has been forced by a strong court directive. In fact, when the high court warned that the pollution board chairman and other functionaries would be in serious trouble as it was “a clear case of bribery”, the board counsel denied the charge of bribery but admitted that “there are pressures from the top”.

Still the pollution board’s action needs to be monitored closely for the desired effect because its previous order of closure of 26 units had been scuttled by the state government on the plea that a committee had been formed to look into the whole issue. It is no secret that the industrial lobby has a strong political clout and politicians openly plead their case. Anyone coming in the way of the implementation of the court order to clean up Budha Nullah must be hauled for contempt. Governments form committees, which take their own time to submit reports, and then no action is taken unless it suits them. In this case the court is only expediting the implementation of the P. Ram committee’s report on the pollution of Budha Nullah.

It does not require experts to find out what havoc Budha Nullah is playing with the health of citizens. Just a visit to the area is revealing. Besides, surveys by scientists of the PGI, Chandigarh, and Punjab Agricultural University have pinpointed ill-effects of the contaminated Budha Nullah on public health. Vegetables grown in the area contain heavy metals beyond the acceptable levels. A series of reports in The Tribune had painted a grim picture. What more evidence does the government need to act firmly?

Thought for the Day

Be as beneficent as the sun or the sea, but if your rights as a rational being are trenched on, die on the first inch of your territory.

— Ralph Waldo Emerson

ARTICLE

G-20 meeting
George Bush’s last hurrah!
by Mohan Guruswamy

PRIME Minister Manmohan Singh has returned from Washington after attending the G-20 conference summoned by the lameduck US President George Bush on November 15 to discuss the current economic crisis and possibly even find a way to halt the US contagion from spreading any further. As expected nothing significant has come out of it, yet our PM’s friends in the media have been going gaga on his intellectual contribution to the deliberations and are making much of his having been given a speaking opportunity. Typically they have also been touting this as a sign of India’s coming of age and place in the international pantheon.

The crisis is entirely one of American origin and a consequence of the prolonged mismanagement and under-management of both the US economy and its financial system. When Bill Clinton handed over to George Bush in 2001, he left him with a budget surplus and a robustly growing economy. Since then the US government’s finances have deteriorated sharply because of its vengeful and senseless war on Iraq and another misadventure in Afghanistan. Both wars are without UN sanction and due to US’s delusions of omnipotence. So financially things ended up worse than before Clinton took over from the earlier Bush. This year the US had a budget deficit of about $ 455 billion.

The US has had a balance of trade deficit for decades now and this has now grown to $847 billion in 2007 and still growing. Traditionally it has been quite simple for the US to bridge the ever-widening gaps because the rest of the world constantly hungered for US securities. China has almost $1 trillion in US securities and India too has over $120 billion. Consequently the US had an external debt exceeding $12.5 trillion in 2007 and this is growing by $500 billion since 2003. If you add future outgoes to its citizens like Medicare, pensions etc. the USA has another $42 trillion due for payment.

The irony is that the world and even relatively poor countries like India saw lending to the US by buying US securities as a sound investment instead of the pyramiding scam it had actually become. That India still sees it as a sound investment is amply reflected by the fact that there have been no withdrawals even when the rupee came under pressure due to the flight of FII dollars.

What now compounds this problem is that the US accounts for about 20 per cent of the Gross World Product (GWP) which is the sum of all national GDPs. So when the US sneezes many others catch a cold, which might even turn into pneumonia for some. If it was some Third World country that was caught in this situation it would have been taken into hand by the IMF and the finances set right with all the attendant pains it would have entailed. If you didn’t accept the IMF conditionalities you were threatened with a foreclosure and shut down, as happened to India in 1991. This has happened to Brazil, Argentina and even Great Britain. Now you can’t do that to the US of A. It practically owns the IMF.

And there is no one among the G-20 who has the gumption or even the clarity of vision to tell the US that it can’t go on with spending and borrowing as usual, and if it doesn’t set its house in order the rest will have to act. Not only is the US the worlds greatest debtor, most of its citizens are just as profligate borrowers. The credit card debt in the US is now in excess of $365 billion and of this $91 billion is considered as bad debt. This debt is bigger than most national debts of even good sized economies like India. This now threatens to be the next big blowback.

The US crisis is two crises morphing into one. The economic crisis which has been festering for long and the financial crisis which came to a boil a couple of months ago resulting in the failure of giants like AIG, Lehman Brothers, Merrill Lynch and Bear Stearns etc. The largely unregulated US financial system began to tank when the bottom fell out of the US housing market. This was due to downward spiral brought about by oversupply of housing, high interest rates and poor creditworthiness of the borrowers. This turned into a severe liquidity crisis for the commercial and investment banks with huge exposures in the housing markets.

Back at our PMO and North Block they measure a crisis in terms of the fall of the Sensex. This, of course, is nonsense, but what else can Manmohan Singh say or do having all along made the rise of the Sensex an index of the success of his economic policies?

The Breton Woods Conference of July 1944 took place under the fast receding shadow of the WWII and when the US was literally the last man standing. All other pre-war powers, including the victors, were in shambles. The US was now the world’s dominant economy and military power. The Soviet Union was excluded from the conference and so a new arrangement was easily midwifed by the US. This system was unilaterally abrogated when in 1971 US President Richard Nixon US delinked the dollar from the gold standard. In the absence of a standard and a useful regulatory function for the IMF, coupled with the Reagan/Thatcher era that followed, the great private banks were given a license to run amok. We are now reaping the bitter harvest.

The G-20 met under this backdrop. It’s a very different world now. For a start there is no towering visionary economist like John Maynard Keynes on the scene. How can there be one like him when the world economic and financial elite lionised the likes of Alan Greenspan for so long? Or when the world’s economic agenda making was privatised and handed over to dubious NGOs like the World Economic Forum? There is no towering leader like Franklin Roosevelt either. Instead we have a George Bush on his way out.

Except for China’s leaders few others have any capital or standing to make a difference. Not Manmohan Singh or George Brown, both on the way out. After Georgia, Russia is angry and will stand isolated in this crowd. Neither Nicholas Sarkozy nor Angela Merkel has the stature or financial muscle. But Manmohan Singh would typically read being there it as India coming of age under his stewardship. The only good news for is that our elections are around the corner.

MIDDLE

E-eavesdropping
by Rana Nayar

YOU may wonder what this “E-eavesdropping” is all about. No, I’m certainly not saying that “e” stands for “eavesdropping”, which it does, but I’m sure, you don’t expect me to state the obvious, or do you?

Well, you may have heard of all sorts of e-words. Please for e’s sake, don’t get me wrong. I’m only saying, e-words, not “f,” “g” nor “h” words. And though “e” does figure in the middle of “swear,” I’m certainly not using it in that sense, either. None of the “s”wear words, I suspect, ever begin with “e” or do they?

“E” was known for its “elephantine” associations, once. At least, that was the case when we all used to learn our alphabets. I don’t really know what children do these days. Perhaps, they have moved on to “e-learning,” already.

In the past few years, “e” has become a shorthand for all things “electronic.” So, our lives have suddenly been invaded by all kinds of hyphenated “e-ees,” such as “e-mail,” “e-transfer,” “e-learning,” “e-teaching,” “e-shopping,” “e-commerce,” “e-management” and now “e-governance.”

But again, I doubt if you have ever heard of e-eavesdropping! Until very recently, I didn’t even know, it existed. But wasn’t it Nietzsche who said, if God didn’t exist, we would have had to invent one. So I simply went ahead and invented this phrase, without which I couldn’t have possibly shared this experience of mine.

One fine morning (or was it a foul one!), a message was flashed on my mobile, saying, “Wah, mukti, Kya baat hai! Life is looking rosy 4 me after that, and I hope 4 u 2.” Though I keep getting all kinds of “bizarre” messages, this one seemed to beat all of them hollow. Mystified, I rolled it down to see if I knew the sender. Of course, I did. It was a friend, but with her I had no known history of “ex”-changing “coded” messages.

Believe me, being a very “insipid” person, I only send straight-“forward” messages, not the “coded” ones. All my efforts at decoding the message failed to yield results. Even my little knowledge of literature didn’t help much. What is literature, in comparison with the mysteries of the e-world, after all?

I was wondering, when and where did I talk of either my “nirvana” or hers? And what mystical experience was it that transformed both of us, all at once, leaving the fragrance of roses in the air.

I immediately checked with my diary to see who all I had met over the past week, and in what connection. I know, you’re tempted, but don’t you say “eeks” now! When nothing worked, I turned to my friend for help.

Her answer was a real damper. With a single stroke, it took away all the fragrance of roses, leaving me to my dowdy pre-occupations.

Her message simply said, “Sorry, wrong number! Not meant for u.” Do you now realise what this “e-Eavesdropping” is all about? And tell me, do you have a better word for whatever happened? Don’t you tell me, you aren’t “e”-mused!

OPED

Prejudice prevails
Gulf between Delhi and Dhaka widens
by Kuldip Nayar

THE first time when I went to Dhaka a few weeks after the liberation of Bangladesh in 1971, I could even taste pro-India feelings but with noticeable anti-Hindu sentiments. A few days ago when I was there, I sensed something entirely opposite. There is a strong anti-India feeling but a positive attitude towards Hindus, who constitute 9.1 per cent of the Bangladesh population of 180 million.

My guess is that the Bangladeshis earlier felt indebted to India for having helped them in their liberation struggle. Their prejudice towards Hindus at that time was the fallout of what they had imbibed while being part of Pakistan: Hindus and Muslims were two different nations as founder of Pakistan Mohammad Ali Jinnah had propagated.

Now the Bangladeshis are one nation. Religion still plays an important role but liberalism has smoothened its rough edges. This is reflected in music, art and such other fields in Bangladesh.

In early 1972 I heard Hindus complaining about their inhibition in celebrating their festivals. This time they told me how Durga Puja was held at Ramma Bari Maidan and Dhakarwari temple at Dhaka with all the rites and prayers.

The temples and the images were well decorated at both the places. Thousands of devotees and their friends, including hundreds of Muslims, were present “to savour the sight and solemn feeling of the occasion,” as a Hindu leader put it.

What frightens me is the yawning gulf between New Delhi and Dhaka. Both the governments are going over the same exercise again and again as if they are not even listening to what the other is saying.

Delhi believes that Bangladesh has become a base of all those forces, religious and others, which are operating against India and that the government is looking the other side.

Chief Adviser of the caretaker government Fakhruddin Ahmed does not rule out some Bangladeshis crossing into India. But to allege that there were training camps of terrorists or that the authorities connive at such activities was “very unfair to us and I deny all these charges categorically.”

He says his government has been able to contain terrorism within his own country by taking appropriate measures. It is time that India realises that it has home-grown terrorists.

However assuring his statement, it does not remove the general impression in India that Bangladeshis were behind the recent blasts at Guwahati. Assam Chief Minister Tarun Gogai has reportedly written to Delhi to take up the matter with Dhaka.

The belief which is gaining ground in India is that Bangladesh is a country where fundamentalism is spreading through mosques and madarassas which are coming up in hundreds in the countryside.

Dhaka, in turn, thinks that New Delhi is only bullying it without understanding, much less appreciating, what ails Bangladesh. My impression is that we would make progress if we were to eschew two topics: natural gas and transit facilities. Both points have been beaten to the pulp and they have come to represent India questioning the sovereign rights of Bangladesh.

The infiltration by Bangladeshis into India is not denied at Dhaka. But the number, said to be three million, is considered highly exaggerated. It is admitted that economic factors take them across the border. Perhaps, India issuing work permits for three to five years can mitigate the problem of infiltration.

When I was a Parliament member, the then Home Minister L.K. Advani welcomed the suggestion I made. He even mentioned it at some public meetings. But it was suddenly dropped, probably because of bureaucratic pressure.

If Bangladesh is not assisted in coming up economically, its nationals are bound to get into India. It is like our people in the hinterland coming to cities to earn their living. With the infiltrators some extremists, probably at the instance of certain foreign powers, travel to India but their agenda is different.

New Delhi is not among the donors in Bangladesh. I wish it would be. But it can at least contribute to the country’s development by lowering tariffs and excise duties.

The official trade of Bangladesh with India is around $2 billion. Goods worth more than $1 billion are smuggled unofficially. By providing more money in the hands of Bangladeshis India would gain.

But Dhaka too should put its house in order. New Delhi’s fears over fundamentalism are not unfounded. The manner in which Saudi Arabia is evincing interest in Bangladesh is ominous.

Its mission at Dhaka is probably the busiest place. Its envoy has become so active that Bangladeshi civil society is also talking about his unusual interest in what is happening in their country in the political field.

One good result of his efforts has been to get the participation of Jamiat-e-Islami in the election scheduled to be held on December 29. Jamiat was an ally of the Bangladesh Nationalist Party (BNP) in the last election. Probably, it is the pressure of Jamiat which has brought around the BNP not to boycott the election.

Whatever their limitations or, for that matter, of the Awami League and the BNP, the Bangladeshis accept them to sustain democracy in their country. I asked the Chief Adviser whether the army would one day take over the country. His reply was: never!

Laws for a growing economy
by Harpreet Sandhu

India’s regulatory hold on competition is relatively short; its first anti-trust legislation was the Monopolies and Restrictive Trade Practices Act (MRTPA) of 1969. But as our country’s economy expanded, its ambit and approach were considered inadequate.

So in 1999 an advisory committee was appointed by the government to consider what changes were needed to keep our laws abreast of international developments in the field.

The result was the Competition Act of 2002, which aimed to shift the emphasis of the law from curbing monopolies to promoting competition and freedom of trade and protecting consumers.

The Monopolies and Restrictive Trade Practices Act was to have been repealed by the Act, but this has still not occurred, a constitutional challenge to the Act in the Supreme Court prevented it from becoming fully operational.

As the case unfolded, the government did, however, activate the Act’s provisions for the establishment of the Competition Commission of India (CCI), which was formed in 2003 with Vinod Dhall being appointed as its sole member and acting Chairman.

Since then it has busied itself commissioning studies on competition in many industries which have revealed plenty of anti-competitive practices in some areas. Then in 2007 came an amendment to the Act that addressed the constitutional issue and introduced, controversially, new merger rules.

Other laws that apply to mergers and takeovers include some parts of India’s Companies Act and Substantial Acquisition of Shares and Takeover Regulations of the Securities and Exchange Board of India.

But again today the legal practitioners in our country seem to say that these apply to transactions infrequently.

That till date, neither the main substantive provisions of the Act and the amending Act governing anti-competitive practices, nor the regulations drafted to modify and clarify some parts of them, are operational and the CCI has never been fully constituted.

If the said amendments come into force, then the Act, the Amending Act and the regulations will usher in a substantially new competition regime in India, for legal professionals, especially in the metros.

Lawyers in India need to prohibit anti-competitive agreements, abuse of dominant positions and to regulate certain combinations, which include mergers and acquisitions.

The CCI policies the Act’s objectives using as its benchmark whether actions or situations will have an appreciable adverse effect on competition in our markets.

Now many multinationals have businesses in India and it will be on the competition law’s “hot list” when acquisitions and mergers are contemplated.

Bureaucrats are often wary of business and the devil will be in the implementation of the Act and the regulations.

There will be no level-playing field and the shorter notice period may not operate clearly in practice if the regulators continue to view businesses with suspicion.

Brazil’s boom is going bust
by Chris Kraul

JUST weeks ago, Brazil’s housing market was one of the world’s most dynamic. But now, the global credit crisis has set up housekeeping, and government efforts to stimulate buying are being trumped by consumers’ fears about the future.

Through September, Brazil’s housing sector was on fire.

January-September sales of new houses and condos were up 25 percent from the same nine months in 2007, ignited by a rising economy, decades of pent-up demand, job growth, an increase in affordable mortgage loans and legal changes that improved banks’ powers to repossess property.

The sales slowdown, which isn’t reflected yet in official statistics, has hit with sudden force. The nation’s largest homebuilder, Cyrela Brazil Realty, laid off 300 workers last month and lowered its sales estimate for the year by 25 percent. Shares of Cyrela and two dozen other publicly held homebuilder stocks have plummeted in recent weeks.

“Whoever thinks Brazil has decoupled from the world economy is talking science fiction,” said Cyrela director Luis Largman, in an interview at the company’s Sao Paulo headquarters. “We are being affected collectively.”

Housing is just one Brazilian economic sector feeling chill winds. October auto sales fell 2 percent from the same month last year, after clocking 23 percent growth over the previous nine months. The federal and Sao Paulo state governments stepped in with $4 billion in emergency purchase financing to preserve the market — and thousands of Brazilian auto-factory jobs.

Although automakers insist that they’ll hit their 2008 sales target of 3 million vehicles and that billion-dollar investments in several plants are going forward, the 2009 market remains a question mark. Inventories are backing up, and General Motors, Volkswagen and Fiat each plan to shut down assembly lines for an extra two weeks in December, in anticipation of softer demand.

Consumer spending on appliances, furniture and electronics also has been affected, prompting the government-owned savings bank Caixa Economica Federal to make $1 billion in low-cost consumer financing available. One reason for the dip is the 30 percent decline in the value of the Brazilian currency against the dollar since mid-September, making imported goods more expensive.

The bigger issue, President Luiz Inacio Lula da Silva said in a speech last week, is ebbing consumer confidence.

“The problem is not lack of money; the problem is that people are afraid,” Lula said. “Workers become afraid of losing their jobs and don’t buy anything. But if they don’t purchase, what happens? Factories close and jobs are lost, which is what they fear.”

The housing boom was an integral part of Brazil’s economic success story that had Lula touting the nation’s imminent entrance into the First World. In the first nine months of this year, the total value of mortgage loans made rose 89 percent from the year-earlier period.

In Sao Paulo alone, 67 new housing developments opened subdivisions in October, three times the average number of new developments unveiled monthly over the first half of the year. Fueling the demand were relatively cheap mortgage loans that featured 11 percent interest rates, which is low for Brazil. As recently as 2002, mortgage rates were 40 percent.

Builders were encouraged by assessments such as that of Standard & Poor’s analyst Eduardo Chehab, who estimated Brazil had an 8-million-unit housing deficit. That made it appear to be a huge, under-exploited market for construction companies.

Investors here and abroad saw that figure and snapped up publicly traded shares in homebuilder companies. Cyrela and other homebuilders raised an aggregate of $6 billion in public stock offerings between 2005 and 2007, Chehab said, making it the leading industry in new stock issues over that period.

But the credit crunch and collapsing stock market of the past two months have taken a toll. Mortgage applicants are having a tougher time qualifying for loans, and homebuilders are unable to get short-term loans to buy land and build more houses.

“Banks are just sitting on their money and won’t lend,” said Lisa Schineller, a sovereign debt analyst at Standard & Poor’s. Contracting credit is one reason S&P is cutting its 2009 economic growth estimate for Brazil to 2.5 percent from 5.25 percent this year.

The Lula administration has ordered the two largest publicly controlled mortgage lenders, Caixa Economica Federal and Banco do Brasil, to keep mortgages available at September rates of 12 percent or less. The mandate is politically motivated, observers say, as Lula seeks to preserve the appearance of economic well-being to smooth the path for his chosen successor candidate in 2010 elections.

— By arrangement with LA Times-Washington Post