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Title: Left To Review Govt Support After Polls
Author: Simon Denyer
Source: Reuters
Date: April 10, 2006
URL: http://in.today.reuters.com/news/newsArticle.aspx?type=topNews&storyID=2006-
04-08T010413Z_01_NOOTR_RTRJONC_0_India-243998-2.xml

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: http://in.today.reuters.com/news/newsArticle.aspx?type=topNews&storyID=2006-
04-08T010413Z_01_NOOTR_RTRJONC_0_India-243998-2.xml

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: http://economictimes.indiatimes.com/articleshow/1474139.cms

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: http://www.deccanherald.com/deccanherald/apr302006/editpage175282006429.asp

"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:
http://www.thestatesman.net/page.news.php?clid=3&theme=&usrsess=1&id=11155#1

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: http://www.thehindubusinessline.com/2006/04/28/stories/2006042801291100.htm

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: http://www.hindu.com/mag/2006/04/30/stories/2006043000010100.htm

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




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: http://www.tribuneindia.com/2006/20060426/edit.htm#2

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: http://www.financialexpress.com/fe_full_story.php?content_id=12582#9

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
URL: http://www.hindu.com/2006/04/11/stories/2006041103671000.htm

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
URL:
http://www.dailypioneer.com/indexn12.asp?main_variable=EDITS&file_name=edit2%2
Etxt&counter_img=#2

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
URL: http://www.telegraphindia.com/1060420/asp/opinion/story_6115414.asp

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
URL: http://www.dailyexcelsior.com/web1/06apr06/edit.htm#3

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
URL: http://www.financialexpress.com/fe_full_story.php?content_id=12226#7

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: http://www.tribuneindia.com/2006/20060503/edit.htm#6

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: http://www.deccanherald.com/deccanherald/may22006/editpage22157200651.asp

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: http://www.indianexpress.com/story/3241.html

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: http://www.thehindubusinessline.com/2006/04/12/stories/2006041200191100.htm

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: http://www.hindu.com/2006/04/25/stories/2006042504140800.htm

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: http://in.today.reuters.com/news/NewsArticle.aspx?type=topNews&storyID=2006-
05-06T051525Z_01_NOOTR_RTRJONC_0_India-247824-4.xml

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: http://www.dailytimes.com.pk/default.asp?page=2006\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: http://www.tribuneindia.com/2006/20060504/edit.htm#8

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: http://pakobserver.net/200604/06/news/topstories01.asp?txt=Indo-US 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: http://www.thehindubusinessline.com/2006/04/06/stories/2006040600680800.htm

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: http://www.tribuneindia.com/2006/20060424/edit.htm#1

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: http://www.financialexpress.com/fe_archive_full_story.php?content_id=12559#7

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: http://www.hindu.com/2006/04/06/stories/2006040605751500.htm

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: http://in.today.reuters.com/news/NewsArticle.aspx?type=topNews&storyID=2006-
04-16T182430Z_01_NOOTR_RTRJONC_0_India-245010-2.xml

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: http://economictimes.indiatimes.com/articleshow/1483587.cms

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: http://www.telegraphindia.com/1060405/asp/opinion/story_6057110.asp

 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: http://www.hindu.com/2006/04/07/stories/2006040705091400.htm



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: http://www.indianexpress.com/story/1925.html

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:
http://www.thestatesman.net/page.news.php?clid=3&theme=&usrsess=1&id=11502#3

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: http://www.tribuneindia.com/2006/20060506/edit.htm#8

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: http://www.thehindubusinessline.com/2006/05/08/stories/2006050801000800.htm

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: http://www.business-
standard.com/common/storypage.php?hpFlag=Y&chklogin=N&autono=221858&leftnm
=lmnu5&lselect=0&leftindx=#5

 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: http://www.financialexpress.com/fe_full_story.php?content_id=12607#8

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:
http://www.thestatesman.net/page.news.php?clid=2&theme=&usrsess=1&id=11463#0

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: http://in.today.reuters.com/news/NewsArticle.aspx?type=topNews&storyID=2006-
04-18T135529Z_01_NOOTR_RTRJONC_0_India-245252-3.xml

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: http://www.hindu.com/2006/04/13/stories/2006041307351000.htm

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: http://www.jordantimes.com/mon/opinion/opinion3.htm
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: http://www.telegraphindia.com/1060424/asp/opinion/story_6136265.asp

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: http://economictimes.indiatimes.com/articleshow/1514933.cms

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: http://www.hindu.com/2006/04/25/stories/2006042505010900.htm

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: http://www.thehindubusinessline.com/2006/04/24/stories/2006042400240900.htm

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:
http://www.deccanherald.com/deccanherald/apr152006/panorama149432006414.asp

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: http://www.dawn.com/2006/04/15/ed.htm#4

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: http://www.business-
standard.com/common/storypage.php?autono=224080&leftnm=4&subLeft=0&chkFlg=

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: http://www.hindustantimes.com/news/181_1679925,001302200000.htm

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: http://www.hindu.com/2006/04/20/stories/2006042005130800.htm

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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