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The United States-led war on Iraq is certain to hurt India's economic interests. Higher prices of crude oil and petroleum products would stoke inflationary fires. Civil aviation, shipping, tourism, inward remittances and exports are also going to be affected. That the war would have an adverse impact on India is beyond doubt. What is not clear is the precise extent of the impact. A lot depends on the levels at which international crude oil prices stabilize in the coming months. If world crude...

There is considerable euphoria in certain circles about the impending introduction of value added tax -- a move described by Finance Minister Jaswant Singh in his Budget speech as 'a historic reform of our domestic trade tax system' that would take place 'in the highest tradition of cooperative federalism.' There are obvious advantages of a VAT system vis-à-vis what is commonly called a cascading type tax or CTT system, but the transition from a CTT regime to a VAT regime is fraught with hazards...

Why was the high-profile Pramod Mahajan 'demoted'? Did this development have something to do with a controversial investment made by a central public sector undertaking in a multi-purpose irrigation project being executed by a Maharashtra government company? Mahajan may believe he has not been demoted, but many think otherwise. He believes he was moved from the post of minister for communications, information technology and parliamentary affairs and made general secretary of the Bharatiya Janata...

Who claims to be concerned about the small investor? Answer: Everyone. The truth: No one gives a damn. Every now and then, at seminars and conferences, politicians, bureaucrats and even corporate captains pay lip service to the cause of the proverbial small investor. Every now and then, Union ministers, members of Parliament, spokespersons of apex chambers of commerce and industry associations, not to mention representatives of regulatory bodies, wax eloquent about how the country's stock...

Imagine the controlling interest in a fertilizer corporation in which public funds in excess of Rs 670 crore (Rs 6.7 billion) have been invested being sold to a private company for barely Rs 15 lakh (Rs 1.5 million)! Sounds improbable? Well, not really. This is exactly what has happened in the case of Paradeep Phosphates Limited, a former public sector undertaking located in Orissa's port town by the same name. The sequence of events following the privatisation of this company has placed Union...

How strong is the nexus between big business and politics? Was India's largest private corporate group responsible for the federal government withdrawing its nominee from the country's largest state-owned mutual funds organisation? To be more specific, was the Ambani-family controlled Reliance group responsible for the Union finance ministry's decision to withdraw its nominee from Unit Trust of India's board of trustees? A former head of UTI thinks so, but a panel of 30 lawmakers has sidestepped...

A battle royal has broken out to control the management of Larsen & Toubro, one of India's largest engineering and construction companies with more than 25,000 employees and an annual turnover in excess of Rs 8,350 crore (Rs 83.50 billion). The tussle relates to control over the company's cement manufacturing facilities. The outcome of the conflict could have far-reaching consequences for the country's corporate sector by determining the course and the ground-rules of future takeover attempts...

It has become fashionable in certain circles to deride anything and everything that pertains to India's public sector. When there is something positive to be said about a public sector undertaking, such news tends to be relegated to the background. The recent experience of the Hyderabad-based Electronics Corporation of India Limited shatters quite a few myths about the so-called slothful and inefficient manner in which PSUs are supposed to function. After earning profits for six years in a row...

Faced with mounting reserves of hard currency, the Reserve Bank of India has taken a few tentative steps towards capital account convertibility. On the first day of November, the country's central bank and apex monetary authority allowed resident Indians to maintain bank accounts in foreign currency under certain conditions. The new facility, known as the Resident Foreign Currency (Domestic) account, would be in the form of a current account with a bank that is also a licensed dealer in foreign...

Who controls the management of India's largest cement manufacturing corporate entity, ACC Limited (formerly Associated Cement Companies)? This question was given a new twist on Friday, October 25. On that day, the Securities Appellate Tribunal directed the watchdog of the country's capital markets, the Securities and Exchange Board of India, to examine whether the Gujarat Ambuja group had gained management control over ACC after a controversial acquisition of 14.45 per cent of the company's...

The controversy over the privatisation and the attempted resale of Centaur Hotel, located near Mumbai's airport at Santa Cruz, has highlighted the flawed manner in which public sector undertakings are valued before being put up for sale. What is worse, the Centaur Hotel episode indicates how a laudable attempt at getting the government out of the hospitality business - where it has no business to be in - can degenerate into the worst form of crony capitalism. The episode has already sparked off...

Balmer Lawrie is an unusual public sector undertaking. To start with, the company is 135 years old and has no less than 18 completely unrelated business divisions that, among other things, organise tours, blend tea, manufacture lubricants and operate container freight stations. Despite the opposition of a section within the Union ministry of petroleum and natural gas, the government-owned company is on the verge of being privatised. Petroleum Minister Ram Naik, who was himself at one stage in...

India's capital is unique in one respect. It is the only urban area in the world with more than a dozen English newspapers published daily. No, it's not London or New York or Washington or Los Angeles, but New Delhi that has the largest number of small, medium and large English newspapers that come out every day. The other cities have loads of periodicals, not dailies. This fact has evidently nothing to do with the population of English-speaking individuals in the country's national capital...

'The fruits of globalisation have not filtered down to the common masses of the country.' This statement was not made by a leader of the Communist Party of India (Marxist) or, for that matter, any other political party. Nor was it made by a Left-leaning liberal, sporting a jhola (cloth sling bag). No, this pronouncement did not come from an academic from the Capital's Jawaharlal Nehru University who wears his concern for the underprivileged on the sleeve of his trendy kurta, while he sips his...

Most economists - and I include myself in this category - often wax eloquent about the need to uplift those living below the poverty line, to provide the poor and the underprivileged a very small portion of what the rich take for granted in their everyday lives. But few of us seem to realise how the other half manages to survive on so little. Six billion individuals inhabit this planet. Over one billion are between the ages fifteen and twenty-four. An estimated 85 per cent of the youth of the...

BAT -British American Tobacco - is a UK-based multinational corporation. ITC used to be called India Tobacco Company and before that, Imperial Tobacco Company. It is India's largest manufacturer of cigarettes with a whopping market share. It also owns and runs hotels, manufactures paperboard and exports handicrafts and agricultural commodities. For over a decade now, BAT has been lasciviously eyeing the management of ITC, a company in which it holds 32.5 per cent of the share capital. In recent...

A committee of secretaries to the Government of India headed by Cabinet Secretary T R Prasad has sent a proposal for privatisation of Hindustan Organic Chemicals Limited to the department of expenditure in the ministry of finance. Behind this apparently innocuous decision lies a curious tale of politicking and lobbying, of twists and turns that have plagued - and continue to plague - the government's programme of privatising public sector undertakings like HOCL. One section of the bureaucracy...

Right through the three decades of the 1960s, the 1970s and the 1980s, there was no dearth of doomsayers who predicted that India would not be able to feed her teeming millions. Today the nation with over a billion people has surplus food stocks that are proving to be an embarrassment of riches. There have been many who argued that what the British political economist Thomas Robert Malthus had claimed in 1798 in his Essay on the Principle of Population, would turn out to be correct as far as...

There is one word that seems to be missing from much of the debate and discussion on current economic issues these days. The word is 'employment.' Economic analysts frequently discuss various aspects of globalisation, liberalisation, privatisation, divestment and so on. How come so few seem to talking about a topic that used to dominate the discourse on economics in India not very long ago? Prime Minister Atal Bihari Vajpayee did mention the need to create more jobs during his Independence Day...

Who was primarily responsible for the fiasco in the Unit Trust of India that led to the June 2001 freeze on transactions in the Unit Scheme of 1964 (US-64), the country's oldest and largest mutual fund? Was it the then Chairman of the UTI P S Subramanyam? Was it the secretary in the ministry of finance at that time, Ajit Kumar? Or his junior in the ministry, Jaimini Bhagwati, joint secretary, capital markets? Or was it the then Union finance minister Yashwant Sinha who is now the country's...

An unscrupulous promoter, his brother and their associates first acquired control over an urban cooperative bank. They then proceeded to milk the bank dry. Then, despite their connections with influential politicians, they found themselves behind bars. This is the story in brief of scamster Anand Krishna Johari and the ill-fated City Cooperative Bank of Lucknow. In the process, Johari and his cohorts have left behind hundreds of ordinary middle-class investors whose hard-earned savings have...

The more things change, the more they remain the same. Those who refuse to learn from the mistakes of the past are condemned to repeat them over and over again. These maxims are especially valid for financial scandals in India. And these are not my words. Similar sentiments have been expressed in a draft report prepared by the Joint Parliamentary Committee inquiring into last year’s stock market scam. Here is a sentence from the draft report: “It is the considered view of the committee that…the...

The manner in which the Indian associate of Coca-Cola has been thumbing its nose at government authorities in New Delhi is an example of how arrogantly a giant multinational corporation can behave. Given its awesome financial clout, Coke believes it will be able to successfully arm-twist a couple of bureaucrats and their political bosses to enable it to renege on its contractual obligations. Coca-Cola India has been deliberately dragging its feet on floating an initial public offering of shares...

The instances of crass corporate corruption currently convulsing the American economy are certain to have an impact across the globe. At one level, we can derive small comfort from the fact that crony capitalism is not confined to countries like India or even Asia as a whole. After all, the scams that have taken place the world's most advanced capitalist nation now threaten to lead all the way to the White House, to the doorstep of the US President George W Bush and Vice President Dick Cheney...

Sahib Singh Verma is a self-made man. From librarian of Dayal Singh College to Chief Minister of Delhi, he has risen slowly but surely up the political ladder. Labour Minister Sahib Singh VermaA grassroots activist of the Rashtriya Swayamsevak Sangh, he is also believes in the virtues of patience. After he was ignominiously removed from the Chief Minister's position to make way for Sushma Swaraj on the eve of the assembly elections in December 1998, Verma was promised a berth in the Union...

The problem with coercive diplomacy is that it is akin to a double-edged sword. The weapon cuts both ways. Like a scalpel, it can cut off a diseased organ in the hands of a skilled surgeon or it could maim and even kill. For six months since December last year, Indian troops and their counterparts from Pakistan have been confronting one another in an eyeball-to-eyeball situation - to use Defence Minister George Fernandes' colourful phrase - along the international border and the Line of Control...

On June 18, the Union Cabinet decided to promulgate an ordinance for the securitisation of assets of banks and financial institutions. Earlier, on May 7, the Cabinet had decided that the government would introduce a bill called the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Bill, 2002, during the Budget session of Parliament. This bill was, however, not introduced due to 'paucity of time.' Whereas the contents of the ordinance are not known, what has not...

The more things change, the more they remain the same. From All Fool's Day this year, the Union government was supposed to have dismantled the administered pricing mechanism for petroleum products. However, not too many were fooled. The politicians and bureaucrats who control the ministry of petroleum & natural gas housed in New Delhi's Shastri Bhavan seem most reluctant to give up their awesome powers over the working of the oil industry. Companies in this sector, which include some of the...

A recent judgment by a division bench of the Delhi high court could have far-reaching implications for the country's financial sector. The court has sought to plug the tax avoidance loophole in the infamous Mauritius route used for portfolio as well as direct foreign investments bound for India. If this judgment stands as it is at present and is not challenged and stalled by the country's Supreme Court - which might well not be the case in the near future - the status of Mauritius as a tax haven...

Why is our high-profile Union Minister for Communications and Information Technology Pramod Mahajan hopping mad at the Tata group? Telecommunications Minister Pramod Mahajan Has one of India's best-known corporate groups indulged in "asset stripping" and made a "mockery" of the divestment process? Or is the minister, considered to be Prime Minister Atal Bihari Vajpayee's right-hand man, peeved for all the wrong reasons? Has Mahajan been unduly influenced by powerful lobbies cutting across the...

There was more than a touch of irony when Union Minister for Divestment Arun Shourie told journalists on May 18 that the government of India had decided to offload 26 per cent of its share of the equity capital of the public sector Indian Petrochemicals Corporation Limited to the Ambani-family controlled Reliance group. That it was Mr Shourie who made this momentous announcement about the country's largest exercise in divestment till date would surely have seemed somewhat strange to those with...

When Tehelka exhibited its documentary film on cricket match-fixing in May 2000, its impact was a trifle muted as it had acted in concert with Manoj Prabhakar, also accused of financial irregularities. Few could have anticipated that nine months later, the same methods—secret video-taping of individuals—would be deployed to expose corruption in the defence services, and that too with such devastating impact on the polity. The episode not only influenced the course of Indian politics but also...

There'll come a time when most of us return here/Brought back by our desire to be/A perfect entity/Living through a million years of crying/Until you've realised the art of dying —from Art of Dying, 1970 George Harrison, son of a bus driver, born on February 25, 1943, guitar player, songwriter, composer, film producer, lover of most things Indian, died on November 30, 2001, of lung cancer. Quiet and self-effacing to a fault, he was the youngest of the four men from Liverpool who influenced the...

Noam Chomsky, USA, was recently interviewed by Paranjoy Guha Thakurta on the CNBC India television channel, during his India visit. Following is the (very slightly edited) transcript of the interview broadcast first on Saturday November 3, 2001 and again on Monday November 5, 2001. Introduction: Hello and welcome to Cutting Edge Perspective. I am Paranjoy Guha Thakurta in the Ashok Hotel, New Delhi and the guest on the programme is Professor Noam Chomsky. Professor Chomsky is much more than a...

Can a group of individuals or corporate entities hold the single largest stake in a particular company and not control its management? Alternatively, can those who control the management of a company not hold any - or a very small proportion -- of that company's equity shares? The answer to both questions is a resounding "yes" - especially if one goes by a recent decision of the Securities and Exchange Board of India (SEBI) in a case relating to Associated Cement Companies (ACC), the country's...

The Securities and Exchange Board of India (SEBI), the regulator of the country's 24 stock exchanges is often described as the watchdog of the capital markets. Some would, however, argue that the analogy is quite inappropriate given the inadequate powers that have been conferred on SEBI. If at all a comparison can be made with a member of the canine species, cynics contend the body should be described as a lapdog, a gentle pet whose bark is usually much worse than its bite. Those not so...

Who remembers Baburao Shankaranand, former Union Minister in successive Congress governments who created a record by getting elected from the Chikodi Lok Sabha constituency in Karnataka no less than six times? Well, Shankaranand's name came up recently in an official document prepared by the Banking Division of the Ministry of Finance for the members of the Joint Parliamentary Committee (JPC) that is inquiring into the stockmarket scandal. The document in question is the government's June 13...

How bad is the current state of the Indian economy? From all indications, things are pretty lousy. The half-hearted attempts made by the government to paint a brighter-than-actual picture of the economic situation seem to have miserably flopped. If anything, moves to project an optimistic future of the economy are backfiring on the country's financial authorities: negative sentiments seem to be feeding on one another to create a downward spiral of pessimistic expectations. It has been said that...

What does an idyllic island in the middle of the Indian Ocean have to do with the recent financial scam that broke out in Asia's oldest (and until recently, India's largest) stock exchange at Mumbai? What indeed does Mauritius have to with a stockmarket scandal that is currently being investigated by a Joint Parliamentary Committee (JPC) in New Delhi? Answer: Quite a lot, if not, everything. In August 1982, the governments of India and Mauritius signed a double-taxation avoidance treaty (DTAT)...

The Atal Behari Vajpayee government has become weaker in the wake of the assembly elections to Tamil Nadu, West Bengal, Kerala and Assam. In each of these four states, the ruling Bharatiya Janata Party (BJP) was at best a marginal player. However, after the elections, the BJP has become even more marginalised in these states of eastern and southern India. While the outcome of the elections would not have a direct or an immediate impact on the stability of the National Democratic Alliance (NDA)...

A sum of Rs 25 crore is not exactly small change. Not even for India's largest privately controlled corporate group with an annual turnover running into tens of thousands of crores. Yet this is the amount of money that had been offered in January 1998 by a company in the Reliance group, promoted by the venerable Ambani family, to "buy peace" with the income tax department. These are words that have been used by an official representative of the group, not conjured by this writer. Now why would...

Hers is a familiar face on the idiot box. She has headed newspapers and magazines. Married to the chief of a public sector giant with two grown-up daughters, she continues to write extensively alongside her career as a television newscaster and anchor. She, as the blurb on her fictionalised autobiography - presented as a novel - puts it, found herself at a disadvantage on two counts: because she was not a man and, more importantly, chose to be a Hindi-language journalist. But Mrinal Pande...