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Inflation is one economic phenomenon that directly affects every citizen. Not surprisingly, politicians dread inflation, for it inevitably translates into popular resentment. Over the decades, the prices of sugar and onion have become symbols of voter anger against several incumbent regimes. So, when on June 22, 2007, Union finance minister P. Chidambaram—already under attack from his party colleagues, political opponents and Communist comrades for failing to rein in prices of essential products...

He has been lauded as India's most dynamic scientist. The list of prestigious awards and citations he has received runs into many pages. He took science out of the lab and brought it to factory floors. He has done more than most others to protect India's traditional knowledge that the MNCs eye avariciously. As the longest-serving (13 years) director-general of the Council of Scientific & Industrial Research (CSIR), which controls 40-odd research outfits with roughly 18,000 employees and an...

[With Alam Srinivas] It was the kind of ugly spat that doesn't exactly cover the Indian petroleum industry with glory. On one side was the director general, Hydrocarbons (DGH), head of a regulatory body that is under the administrative control of the Union ministry of petroleum & natural gas, an individual who doesn't enjoy the kind of independence that his counterparts in the telecom and power sectors do. On the other side was the country's largest (in terms of assets) and the most profitable...

The name sounded deceptively familiar, except it seemed to be in the wrong country. No, it wasn't Chandigarh, but Chundrigar. The reference was to Ibrahim Ismail Chundrigar, the minister for trade and commerce in the first Cabinet of the newly-constituted government of Pakistan headed by Mohammed Ali Jinnah, and prime minister for a brief two months in 1957. And the road that bears his name is busier than most major thoroughfares in Karachi on working days, hardly surprising since it happens to...

Deng Puffs 555 Kolkata and Calcutta—jealous mistress and dutiful wife; city of joy and megapolis of despair; arrogant about her intellectual prowess yet unsure of urban regeneration; glitzy malls and imperial colonnades cracking at the seams; brilliant beams of light in uneasy coexistence with quasars. Remember the infamous black hole? To use former West Bengal finance minister and author Ashok Mitra's memorable analogy: more poets per square km than even football fans. Rajiv Gandhi was wrong...

One of the tallest buildings in downtown Mumbai's financial district is the imposing 25-storeyed headquarters of the country's central bank and apex monetary authority. The higher one moves up the hierarchy in the RBI the more rarefied the atmosphere gets. Especially if one belongs to a northeastern state like Assam or, worse, a scheduled caste. This realisation came the hard way for the seniormost executive director of the RBI, R.B. Barman, who was first promoted as deputy governor last...

The government hasn't covered itself in glory by following a convoluted, arbitrary and opaque bidding process that led to a flurry of allegations of nepotism. Few were, therefore, surprised at the legal recourse taken by a bidder criticising the implementation of the programme to revamp the nation's two largest airports. This, because the tendering system was marked by subjective evaluation criteria and frequent changes in rules while the game was on. The criteria to judge the technical bids...

It's rare that the Reliance group doesn't succeed in bulldozing its way through the capital's labyrinthine corridors of power. But the manner in which the bidding process for the contracts to modernise and partially privatise the country's two largest airports in Delhi and Mumbai was sought to be manipulated, unsuccessfully, indicates there could be some hope yet for a country where crony capitalism hardly raises too many eyebrows. Influential corporates can fail to convince a pliant political...

At least three books have been published over the last 20 years about India's first family of businessmen, the Ambanis. The first by S.R. Mohnot was somewhat prosaic and academic in its style and content. Polyester Prince written by Hamish McDonald was a racy compilation of facts, most of which had appeared in newspapers like the Indian Express. For reasons best known to the Ambanis, this book is not available in India though quite a few photocopied versions are in circulation. Alam Srinivas has...

The verses and songs of Robert Zimmerman, better known as Bob Dylan, articulated the angst and aspirations of an entire generation. His lyrics and tunes, sung and recorded zillions of times, continue to enthrall thousands, even those who know nothing of the anti-establishment mood of the '60s. Over the decades, Dylan changed drastically, as did his music. His seminal The Times They Are A-Changin became an advertising jingle for an accountants' firm, while a track from his 2001 album "Love and...

Just days after the finance minister announced his budget proposal to hike the cap on FDI in telecom firms from 49 to 74 per cent, the bureaucracy had started working overtime. A fortnight later, on June 23, a draft cabinet note was readied and inter-ministerial consultations on it are now almost complete. The note, a copy of which is with Outlook, is a clear attempt to address the concerns raised by security agencies and allay the fears among the Left parties, which support the government from...

Does the Left have no alternative but to continue supporting the Congress-led UPA government despite strong disagreements on various economic policy issues? Are the claims of the Left that it is capable of not just "barking" but "biting" as well a lot of bluff and bluster? Have the Indian Communists—today more powerful than ever before if one goes by the number of seats they won in the Lok Sabha—been left in the lurch? Are they faced with a Hobson's choice, supporting a government that takes its...

The problem with trying to please everyone is that one could end up pleasing precisely no one. That is because the happiness can get spread so thinly that it is easy to ignore it altogether. When I used these words to describe the Union Budget for 2004-05 to Finance Minister Palaniappan Chidambaram, he was not amused in the least. He was appearing on a panel discussion on Doordarshan News and dared me to point out how he had tried to please different sections and, in the process, ended up...

On May 17, 2004, the stockmarket went into a tailspin. The one alleged reason for the panic was that the Left parties, supporting the Congress government from the outside, had suggested that the high-profile but controversial disinvestment ministry be scrapped. Needless to say, Prime Minister Manmohan Singh hasn't appointed a disinvestment minister—at least not till the time of going to press. But why has disinvestment got such a bad name? Well, if there's one individual who has given...

Dhirubhai Ambani was an amazing entrepreneur who aroused extreme responses in people. Either you loved him or you hated him. There was little or nothing in between. However, there is at least one important individual who had started out disliking the man who had founded the Reliance group of companies, India's single-largest privately owned corporate conglomerate, before becoming his admirer if not a faithful follower. He is none other than Arun Shourie, former economist with the World Bank and...

Raghuram G Rajan, Professor of Finance at the Graduate School of Business, University of Chicago, is the first person of Indian origin chosen by the International Monetary Fund as its chief economist. He is not only the youngest individual to hold this position, but also the first from a developing nation. Co-author of the book Saving Capitalism from the Capitalists (Crown Business, New York, 2003), Rajan has apparently sought to steer clear of the ideological position espoused by the extreme...

The performance of the Indian economy appears to have improved due to, among other things, the prospects of a favourable monsoon. However, the current state of the world economy leaves little or no room for optimism. During the current calendar year, the world economy is expected to grow at a niggardly 2.25 per cent, a quarter of a percentage point higher than the 2 per cent growth that was recorded during 2002. Whereas geopolitical uncertainties are easing, the persistence of a slowdown in...

It's amazing what the awesome clout of a large multinational corporation can achieve. The government of India is on the verge of changing its policy because of the pressure exerted by the Atlanta, US-based soft drinks giant, Coca-Cola. Coke is one of the best-known brands in the world. But the corporation and its Indian associates have not exactly covered themselves with glory by the manner in which they appear to have successfully lobbied with the government in New Delhi to change the rules of...

More than six months ago, the government had announced in Parliament that it was setting up a special Divestment Proceeds Fund. But there are no indications as yet as to when this fund would be established. The delay is particularly inexplicable because the establishment of such a fund could take some of the sting out of the attack on the government's privatisation programme. One would have thought that with state assembly elections in Rajasthan, Madhya Pradesh, Chhattisgarh and Delhi due to be...

There has been a lot of public concern about the non-performing assets of the country's banking system running into a figure close to Rs 100,000 crore (Rs 1,000 billion) or around one-twentieth of India's gross domestic product. These NPAs are now being brought down to more manageable levels thanks to a recently enacted new law. What has, however, escaped public attention is the fact that the Union government's total tax arrears are as high as the total amount owed to banks and financial...

The country's premier investigating agency, the Central Bureau of Investigation, is looking into whether or not a case of corruption can be made out in the questionable Rs 250 crore (Rs 2.5 billion) investment made by the public sector Mahanagar Telephone Nigam Limited in the Maharashtra government-owned Maharashtra Krishna Valley Development Corporation Limited. A number of leading politicians are said to have been associated with this controversial investment. They include Pramod Mahajan...

The April 8 decision of the empowered committee of state finance ministers postponed the deadline for implementation of a Value-Added Tax regime in the country to June 1. The new deadline, like the previous one, would almost certainly not be met. There are pressing political, economic and technical reasons why the implementation of VAT -- undoubtedly a superior taxation system than the current cascading type tax system -- will not happen in a hurry. As this columnist had pointed out in an...

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...