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A weak reshuffle
The laggard vs the vibrant |
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Flag down “Ekta Yatra” BJP brainchild can polarise society There is no denying that every Indian has the right to hoist the Tricolour anywhere in the country. But when the BJP plans an “Ekta yatra” which is to culminate in a flag-hoisting ceremony at Srinagar’s Lal Chowk, the motives of the move become highly suspect.
Black money stashed abroad
Of RTE, BMWs and Lamborghinis
Inclusive growth to be in focus
Implement reforms this year Indian auto sales
may slow down
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A weak reshuffle
FOR a government that is in the dock over a spate of corruption scandals and runaway inflation, the reshuffle of the Union council of ministers on Wednesday is utterly uninspiring especially if it was intended to restore public confidence. There is an undercurrent of expression of disenchantment over the running of certain ministries but by not showing such ministers the door and merely reshuffling their portfolios Prime Minister Manmohan Singh has sent out a weak message. There is evidently a conscious effort not to ruffle feathers with elections to some states being round the corner. However, the Prime Minister’s assertion that this is a ‘minor reshuffle’ and his hint of a more ‘expansive exercise’after the budget rekindles hopes that a more significant exercise may be in the offing and that the non-performing ministers are under scrutiny. Evidently, the claims of some allies for greater representation and the need to induct some young ministers would find expression in the next reshuffle. The eye on elections is clear from the preferential treatment given to UP and Kerala. While UP’s Salman Khursheed and Sriprakash Jaiswal have been elevated to Cabinet rank and Beni Prasad Verma inducted, in Kerala K V Thomas and K C Venugopal have been accommodated while Vyalar Ravi has got the high-profile civil aviation ministry albeit temporarily. The snub to M.S. Gill (he was in the thick of controversy during the Commonwealth Games for his role as sports minister) by shifting him to planning and statistics, a ministry that was with a minister of state earlier, is palpable. In a hint that ‘croney capitalism’ is frowned upon, Praful Patel, a great votary of the private sector, has now the task of overseeing the working of the public sector enterprises as Heavy Industries Minister while Murli Deora who was believed to be too close to a leading corporate house has been divested of Petroleum and given corporate affairs instead. In the change of Kamal Nath’s portfolio too there is an underlying message. But how effectively such subtle messages would work is, however, anybody’s guess. All in all, the much-awaited reshuffle which was in the air for five months, has flattered to deceive. It is imperative that the next reshuffle reflects the reality that the UPA needs to pull up its socks.
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The laggard vs the vibrant
Gujarat and Punjab are poles apart. Gujaratis are basically entrepreneurs, Punjabi NRIs largely hail from families engaged in government service, agriculture and small businesses like transportation, hospitality and real estate. Investors put their money where returns are maximum. They avoid risky, low-return destinations. Today investors have a wide range of choices. Love for the birthplace or nostalgia does not much influence investment decisions. Canadian MP Sukh Dhaliwal is right when he says Punjab lacks the right environment. Rail, road blockages are common. Religious faction-fights can erupt any time. Gujarat has a dynamic chief minister in Narendra Modi. None, not even his political opponents, have ever accused him of corruption or financial wrong-doing. This has a trickle-down effect on the bureaucracy. Can one say the same about any of the top political leaders in Punjab? Almost all of them face, or have faced, corruption cases. Punjab’s bureaucracy and police are politicised and serve politicians’ interests. Unlike Punjab, Gujarat offers a red carpet, not red tape, to investors. NRIs from the West are used to a clean and responsive administration. In Punjab they are engaged in endless property disputes. An interaction with the police or officialdom can be nightmarish. In Gujarat there is “minimum government and maximum governance”. The state focusses on infrastructure and ensures social peace, and leaves much else to the private sector. Modi is known for taking quick decisions. After Ratan Tata quit West Bengal, he got land for the Nano project in three days. No wonder, the Tatas alone have invested Rs 30,000 crore in Gujarat. Gujarat has overcome the setbacks caused by the earthquake in 2001 and communal riots in 2002. It aggressively holds a biennial global investors’ summit and hires top lobbyists to reach out to investors across the globe. Punjab leaders make a feeble, lazy attempt to woo Punjabi NRIs, back home for a vacation. A few days ago Gujarat secured investment commitments of $450 billion. Punjab’s NRI show has yielded zero investment. |
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Flag down “Ekta Yatra”
There is no denying that every Indian has the right to hoist the Tricolour anywhere in the country. But when the BJP plans an “Ekta yatra” which is to culminate in a flag-hoisting ceremony at Srinagar’s Lal Chowk, the motives of the move become highly suspect. Given the uneasy calm in the Valley, this can come to be seen as a provocative act. The consequences can be violent and unfortunate. The least it will do is to aggravate tensions and thwart the dialogue process. Much worse can happen. The Valley, which has battled with a long summer in which stone-pelting youth kept the security forces on edge, can again be sucked into another orgy of violence. Surely, that is something which the BJP must guard against. What it has named as “Ekta Yatra” can instead polarise society and precipitate a communal situation. That is exactly what the enemies of the nation would want to happen. What needs to be underlined is that when the BJP was in power for five years at the Centre, it never had convulsions of patriotism which would have galvanised it into marching onto Lal Chowk. Doing so at this stage can only be seen as a mischievous gameplan. Syed Ali Shah Geelani has already given a shutdown call and can be depended upon to claim that it is in response to the BJP “provocation”. Chief Minister Omar Abdullah has adopted a cautious approach and invited BJP leaders to join Jammu and Kashmir’s official Republic Day celebrations at Srinagar’s Bakshi Stadium “to give the flag hoisting the respect it deserves”. Considering the BJP response, no such via media is likely to be accepted. The Centre and the state will have to keep their firmer options in readiness to tackle the situation before it gets ugly. |
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God gives every bird a worm, but He does not throw it into the nest. — Swedish proverb
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Black money stashed abroad
WHAT kind of government is the Congress-dominated United Progressive Alliance trying to provide the country with? Barely a fortnight after the grand declarations — at the Congress party’s 125th anniversary — of “zero tolerance” of corruption, venality and wrong-doing, the powers that be are resisting resolutely the legitimate demand for a disclosure of the names of 26 Indians caught stashing their black money with the LGT Bank in Liechtenstein. Having received the names from the bank concerned, the Union government decided to conceal them. It might have succeeded in this dubious design were it not for public interest litigation (PIL) filed in the Supreme Court by three concerned citizens — eminent lawyer Ram Jethmalani, former Secretary-General of the Lok Sabha Subhash Kashyap, and former Director-General of Punjab Police KPS Gill. In the apex court, the government tried to brazen its way out by repeating its specious plea that any disclosure would run counter to the “confidentiality clause” in the double-taxation avoidance agreement with the country concerned. Such ploys have worked in the past. For instance, successive governments have succeeded in hiding the names of fat cats who habitually took huge loans from public sector banks and merrily refrained from paying them. Non-Paying Assets (NPAs) was the official euphemism for these bad loans; at work, in fact, were NPCs (Non-Paying Crooks). Yet, their identities were kept secret on grounds of “customer confidentiality”. This time, however, the trickery may not work, judging by the proceedings in the Supreme Court so far. When Solicitor-General Gopal Subramanium went on pleading “international obligations” and even claiming “immunity” for as many as 16 of the 21 documents the government has filed, Justice B. Sudershan Reddy, presiding over the two-member bench, observed: “Forget about the documents … We are asking you what prevents you from disclosing the names?” At an earlier stage, his lordship had asked the Solicitor-General: “What is the big deal about disclosing the names?” Eventually, the government’s law officer offered to submit the names of the culprits to the apex court “in confidence” but persisted in refusal to make them public. Since then the Central Board of Direct Taxes has submitted the 26 names to the apex court in a sealed cover with the edict that these must not be put in public domain. What happens next would depend, of course, on further proceedings in the Supreme Court and its final order. But that is now immaterial. For the UPA government seems firm in being totally indifferent to the people’s diminishing faith in its promises and growing suspicions about its motives. Would someone in authority please explain why is the secrecy of the list of the country’s swindlers being guarded more zealously than that of top-secret military files that are sometimes found on the roadside? No wonder, there is a widespread impression that the government’s secretiveness is fuelled by the fact that in the hidden list are mentioned not only tarnished tycoons, corporate crooks, hawala honchos and so on but also some “high-profile” politicians and bureaucrats. The plea of international obligations is hogwash. There are reports that Germany had initially offered to convey the swindlers’ list unconditionally. What happened to change the situation and why? It is against this backdrop that the veteran BJP leader, Mr L. K. Advani, at a public rally in Mumbai, raised the question whether the Prime Minister was hesitating to take steps in this matter because “people belonging to the Congress and its allies are involved”. He also drew the Prime Minister’s attention to a news report alleging that the name of a former Prime Minister also figures in the list.” Another red herring that the government through its Solicitor-General has drawn across the trail is that proceedings to collect tax from and impose penalties on the worthies on the Liechtenstein list had begun. Once again their lordships had to remind all concerned that the matter went “far beyond taxation”. The rogues that stash black and ill-gotten wealth abroad are criminals. They need to be exposed and punished, not coddled in strict privacy. What has come to light about the Liechtenstein deposits is disgraceful, no doubt. But it is, in relation to the problem of black money, whether stashed abroad in secret bank accounts or hoarded at home, what the proverbial drop is to the bucket. To India’s eternal shame, half its economy is black at any given time. At the same time, all expert estimates — including that of Dev Kumar of Global Financial Integrity, a Washington-based watchdog — agree that the Indian black money stashed abroad with virtual impunity is close to $ 3 trillion. Successive governments have periodically promised to bring this money home. But so far none has done so. Suppose by some miracle someone some day does bring back the mind-boggling amount home and decides to distribute it among the 1.2 billion Indians equally, each of us can expect to get a reasonable amount. Mr Arun Kumar, a Delhi-based economist who has worked on the problem for years and has published an informative book on the subject, argues that had the Indian black money stacked in the vaults of foreign banks (that earn a decent income from it) not gone out of the country but were invested productively here, the per capita income of Indians would have been $ 5,000 and not $ 1,176 as at present at market exchange rates. All this, however, is wishful thinking, given the rude realities of life in India. The money hasn’t come back in the past, and it is unlikely to be brought back in the foreseeable future. The United States and several other countries have forced Swiss banks to waive their secrecy laws and cough up the illegal deposits of their respective citizens. India hasn’t even tried. In this context Mr Advani went on the offensive against Prime Minister Manmohan Singh for the latter’s “failure” to deliver on his 2009 promise to “take steps to bring back the black money stashed by Indians in foreign banks within 100 days of coming back to power”. The BJP leader also complained that Dr Singh “hadn’t bothered to reply to a letter written jointly by NDA leaders over a week reminding him of his poll promise”. Therein, unfortunately, lies the rub. The black-money-stashed-abroad issue looks like turning into a no-holds-barred slugfest between the Congress and the BJP, as the problem of mind-boggling corruption already
has.
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Of RTE, BMWs and Lamborghinis
You haven’t written for a long time”, says my mother. I am an inspirational writer and I need to feel to write. I write when something moves me with joy, hope or despair, and of late like all the other “aam aadmis” in this country I’ve just been too shell-shocked with scam after scam hitting our collective conscience. It’s a crisis of faith; no one is sure who to believe in anymore. The bureaucrats and politicians were always the black sheep but we believed in the judiciary, we believed in the Press, and we believed in some corporate houses whose pristine reputations of ethical conduct had been built up over decades. As the entire North Western Region faced the onslaught of a cold foggy winter, I was dwelling in this numbed state of unfeeling inertia. And then in the New Year I was jerked out of my somnolence by an incident at the traffic lights. There we stood waiting for the lights to turn from red to amber. The rush of women and children hiking their wares congregated towards the waiting vehicles. Soon there was a bright-eyed youngster, tapping on my window, selling maps for his school fees. What about the Right to Education (RTE) and free and compulsory education, I wondered. “Buy a map, God will bless you”, he intoned. And then, more hopefully, “Buy, God will bless you with a good husband”. He continued in the same vein, all the while watching my expressions and gauging my reactions carefully —“Buy please, God bless your children”, and then looking at the squat sarkari Ambassador he tried again, “buy please, God will bless you with a big car”. That certainly hit the right vein and catching the gleam in my eyes he quickly realised it too. So the blessings for a big car rained thick and fast and — soon he was blessing me with a Mercedes-S Class no less, and then half question-half blessing a BMW-7 series, ya phir Lamborghini? That was what got me out of my numbness. I couldn’t help being awed by the potential of the Indian dream as I’m sure are CEOs like Michael Bassermann, Helmut Panke and Stefan Winkelmann and others buying into the India story. The Cassandras can take a hike — look at the brand awareness coupled with the size of the market that this country constitutes: A population of 1 billion of whom 80 per cent are bright young things like my BMW boy. And this is even before the RTE has even been implemented. Let education empower these youngsters and fuel their drive to strive ahead and the only way this country can go is up and ahead. As long as we have these resources in place, all we need is to keep the faith and be vigilant and draw inspiration from men of conscience like J Gopikrishna who broke the 2G scam. Suddenly I’m filled with the warmth and cheer of the holiday season and the infinite blessings of a wonderful New
Year.
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Inclusive growth to be in focus Controlling persistent inflation will be a priority, which was difficult to tame last year also, especially food inflation. Since most of this seems to be supply side pressure, the government will have to look to galvanise the farm sector and increase productivity with increased private sector participation. The creation of rural infrastructure and jobs will also be a priority area. With sustained economic growth, disparities have grown and migration to cities is relentless and increasingly policies will have to address these issues. The UPA government's concern is to ensure that the benefits of growth percolate and growth is balanced and inclusive.It has been argued that introducing FDI in retail will induce investments in cold storages and warehousing and cut down the wastage of farm produce. The government will have to balance this reform with the perception of the kiryana stores that large retail stores will mean the end of neighbourhood grocery stores. The other pressure point for inflation will come from crude prices, which are expected to touch $100 a barrel. Commodity prices are also globally on the upswing which will affect corporate bottomlines and margins.The government will also have to address two major tax reforms that are pending: general sales tax (GST) and direct tax code (DTC). Many large Indian business houses are increasingly going in for overseas acquisitions. This may be a strategic move to enter new markets, hedge risks and acquire the benefit of scale but somewhere there is also a nagging doubt that this may be a comment on the business environment. Certainly, in the second fastest-growing economy in the world with 9 per cent GDP growth rate, opportunities or growth is not an issue for business houses. The flip-flop on policies and clearances and some decisions getting reopened or controversies breaking out are being cited as some of the reasons that corporate houses find it easier to do business abroad where rules are clear and stable. Also, increasingly land acquisition for projects is becoming increasingly difficult with protests breaking out in most cases. Environment issues are also becoming dominant. For investments, all these issues will need to be balanced so that all stakeholders benefit. Another big issue which raised its head during the end of 2010 was corporate and political mismanagement with several scams breaking out. This has certainly affected India's global image as an investment destination. The Prime Minister and the Finance Minister have alluded to the importance of ethics in business and India Inc will have to do introspection. There is skepticism with the government not carrying out major reforms. However, the silver lining remains India's remarkable entrepreneurship story, which has driven growth and created wealth. The fact that the Indian story is of robust domestic demand is a buffer against global economic uncertainty.
The UPA government's concern is to ensure that the benefits of growth percolate and growth is balanced and inclusive.
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Implement reforms this year THE year 2011 will be a year of consolidation - a year when India will be able to consolidate its gains made during the recent years. India's potential to emerge as a global economic powerhouse will become even more visible in 2011. India has many advantages like its young population, rising consumerism and aspirations, growing talent pool, R&D and engineering design capabilities. These factors are also helping India emerge as a preferred location for manufacturing and R&D in many industry segments. I foresee significant volatility and uncertainty about global growth, especially in advanced economies. This may impact India to some extent but as we have seen before, this impact will be much less for India as compared to many other countries. India's growth still depends largely on domestic demand. Government programmes like the rural employment guarantee, rural roads programme etc. will ensure that domestic demand remains buoyant. My wish list in a broad way will be to see that India is able to fully achieve its potential. This requires easing of constraints and removal of hassles that come in the way of this. The government has taken up a number of reform initiatives but many of them have remained unfulfilled because of slack or lack of implementation. Implementation, for me, will be the key to achieving the potential that exists. There are a number of areas where implementation is important but I would like to pick on a few and those which I consider as top priority. zGST: Despite various moves and discussions, we have not made progress yet in being able to implement the goods and services tax (GST) by April 2011 as envisaged earlier. I would like to see significant progress made in this next year. zAgricultural reforms: India is expected to achieve a record food grain output in 2010-11, thanks to a good monsoon and rise in acreage sown this year. This should not, however, make us complacent. We need a holistic reform in agriculture. This should cover the entire supply chain from the farm to the fork. Besides reducing the level of subsidies, it will also increase supply, thereby ensuring that prices are kept under control and the onion-type crisis is not repeated. zInfrastructure is one area where we are seeing a reasonably good progress. We, however, need to push the pace of infrastructure development both for ensuring a double digit annual GDP growth as also to enhance manufacturing competitiveness. The government needs to undertake the following steps: zDespite intense discussions and moves a consensus on the GST between the Centre and different states has not yet emerged. To some extent this is understandable because of the complexity of various issues. I hope the Centre and the states would make significant progress in evolving a consensus on this so that it could be implemented at least by April 2012. zThe government should involve the private sector in agriculture in a much more aggressive way even if it involves providing financial concessions and incentives. zThere are some Bills that still remain pending before Parliament -- a good example being the Companies Bill. These need to be pushed through and necessary legislation introduced quickly. In conclusion, the visits by senior leaders from some developed countries reflect the growing importance of India in the global economy and geo-politics. I believe that these are good signs but we can achieve a faster growth and realise our full potential if we implement the reforms earnestly and ensure good governance.
The writer is the MD, JK Paper, and past President, FICCI |
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Indian auto sales may slow down THE Indian automotive industry has survived the global economic hiccup and not only come out virtually unscathed but also with growth figures which may make more matured automotive markets go green with envy. The global economic recession notwithstanding, the domestic market clocked around 17.2 per cent growth in 2009 and around 28.5 per cent in 2010 (year-on-year basis) and as things stand, it is poised to continue growing although the rate of growth might come down. The economy is strong, disposable incomes are rising, infrastructure is improving and retail financing is easily available and these all provide an impetus for growth. The Indian automobile industry will happily latch on to all these drivers of growth and ensure that it outpaces most markets of the world as it steadily turns in to a mature market. The Indian car market, especially the small car segment, has captured the attention of global automotive players in a big way and it has become intensely competitive. The Indian customers' expectations have also gone up and they now have options of world-class cars at their doorstep. We at Hyundai hold a highly optimistic view for the next year and will be coming up with more products for our customers. While we should continue to work collectively to achieve the objectives of the Automotive Mission Plan outlined by the government, we expect supportive government policies, especially in the area of exports. Hyundai Motor India Limited aspires to live up to the expectations of our customers in 2011 on all aspects and bring them the best in terms of technology, design and performance with a price tag which is not heavy on the wallet. So expect innovations, new cars and an unmatched ownership experience from Hyundai in 2011.
The writer is the Managing Director & CEO, Hyundai Motor India Limited The Indian customers' expectations have also gone up and they now have options of world-class cars at their doorstep
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IN almost every speech that Finance Minister Pranab Mukherjee has made in the recent past he has stressed on inclusive growth. That and controlling inflation will be the dominant theme for the government and the economy in 2011.The economy is on a sound footing with the GDP growth touching 9 per cent, industrial production, exports, FII inflows, domestic demand, corporate profits and investments all in good health but several pressure points, both domestic and global, will play up this year.