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FEB 26, 2006
 Cover Story
 BT Special
 Back of the Book

Oil On Boil
A surge in oil prices to almost $70 a barrel on concerns about the restart of Iran's nuclear programme only hints at what may lie ahead? Experts believe prices could soar past $100 a barrel if the UN Security Council authorises trade sanctions against the Middle Eastern nation and Iran curbs oil exports in retaliation. A look at the unfolding energy scenario.

Scrolling E-Tourism
As consumers increasingly look for tailor-made vacations, e-tourism is taking a new shape. Now, search engines are allowing customers to find the best value or lowest price for air tickets and hotels. Here is a look at global trends.
More Net Specials
Business Today,  February 12, 2006
The Empire Strikes Back
The Congress has obviously decided that it can be pushed only so much and not anymore. That's the best thing that can happen to the economy.
Left out in the cold: CPI(M)'s Prakash Karat (left) and Prime Minister Singh

The dog is reclaiming control over its tail. The government refused to buckle down on the issue of modernising the Delhi and Mumbai airports; and the Left, which had threatened it with dire consequences-CPI(M) leader Sitaram Yechury had even threatened to bring the government down-has been forced to pipe down. This marks the first instance of the Congress-led United Progressive Alliance government prevailing over the Left on a contentious policy issue.

It also signals a hardening of the Congress' stance vis-à-vis its Left partners. "The Congress, as the lead party in the UPA, believes in the true dharma of coalitions, which is to listen to and imbibe from all directions in a genuine spirit of openness, but ultimately to take decisions in supreme national interest only. No part of the coalition possesses, or can exercise, any veto power. After the consultation process is over, we cannot hesitate to agree to disagree if we find that to be in India's interest," says the party's spokesperson, Abhishek Singhvi. Comrade Karat, are you listening?

This desire to break free from Marxist shackles has been in evidence over the past few months. Prime Minister Manmohan Singh's enthusiasm for the nuclear deal with the us, India's vote on Iran, and the government's recent decision to allow foreign direct investment by single brand retail chains all point to an increasingly assertive government signalling that the tail can't continue wagging the dog indefinitely.

"The last word hasn't been said on any of these issues," says CPI(M) leader Nilotpal Basu, denying that the Left's ability to set the policy agenda is on the wane.

Too late! The UPA has called the Left's bluff. The door is now ajar; and time just right to push through other contentious reform measures. The wish list: pension reforms, labour reforms and FDI in (multi-brand) retail, for starters. The dog that did not bark has helped fictional detectives solve many mysteries. A Left that cannot bite may be just what the Prime Minister needs to push reforms forward.

In Fine Fettle
The government's report card is full of As.

» No disinvestment in core public sector enterprises
» Government to set up new pay commission for its employees
» Power sector reforms to continue; subsidy regime to stay
» Govt to invest Rs 1,70,000 crore on the National Highway Programme
» A "New Deal for Rural India" through a massive increase in rural credit

Twenty months into office, Prime Minister Manmohan Singh is still far from becoming a consummate and confident politician. He's quite happy living in the political shadow of Congress President and United Progressive Alliance (UPA) Chairperson Sonia Gandhi. But his writ clearly runs on the economy and, reportedly, on foreign policy issues, and the two areas bear his distinct imprint, despite unrelenting pressure from the Left parties on both.

So, what are his major achievements as the Chief Executive of the world's largest democracy? Singh himself feels his government's commitment to equitable development and generation of employment should occupy the pride of place.

"We've made major investments on this. And taken together, our five major initiatives-the National Rural Employment Guarantee Act, 2005, the National Rural Health Mission, the Jawaharlal Nehru National Urban Renewal Mission, the Rajiv Gandhi Vidyutikaran Yojana and the Bharat Nirman Yojana-will transform the face of India and the lives of the ordinary people," he said at his second press conference as Prime Minister on February 1, 2006. It's early days yet; so it's best to reserve judgment on that. Finding money for this grandiose vision will present potentially insurmountable hurdles, but his sincerity and the proven capability of his economic team may well carry the day.

The other obvious achievements were in sustaining the growth rate of the country's gross domestic product at 7 per cent-plus, keeping the inflation rate in check (it's expected to be at less than 5 per cent for the entire fiscal) despite soaring global crude prices and promising a new deal for rural India through a massive increase in rural credit and the refinancing of cooperative credit societies.

On the flip side, he's also committed to setting up a new pay commission (the sixth) to review the salaries of government employees. While this may win his party the loyalty of this crucial section in the forthcoming Assembly elections in six states, it can also throw public finances into disarray.

The government has also signed, or is in the process of finalising, bilateral free trade pacts with several Asian countries. These look good on paper, but their precise economic impact on the country will have to await more detailed data and analyses. But it's no secret that some Indian businesses are worried.

Singh has also promised to continue with reforms in the power sector, even while categorically committing his government to the continuance of power subsidies. This last is obviously a carrot to his Left allies, as is his promise not to sell any public enterprises in the core sector.

Overall, the report card looks good, but with a little effort, it can get a lot better.

The To Do List Keeps Growing
Several important Bills are pending in Parliament. But not all of them will be passed anytime soon.

The world over, legislators are called lawmakers. But our mps, it seems, have time for everything else apart from legislating on new laws. There were 62 Bills pending before both Houses of Parliament at the start of the Winter Session. Now, on the eve of the Budget Session, that number has shot up to 68. Several of these deal with important, even critical, economic issues. And legislative alacrity or inaction can greenlight or hold back laws that can, potentially, add billions of dollars to the gross domestic product. But has anyone informed our "honourable" mps about this?

» The Banking Regulation (Amendment) Bill, 2005
» The Chartered Accountant (Amendment) Bill, 2005
» The Essential Commodities (Amendment) Bill, 2005
» The Electricity (Amendment) Bill, 2005
» Petroleum & Natural Gas Regulation Board Bill, 2005
» The Pension Fund Regulator and Development Authority Bill, 2005
» The Reserve Bank of India (Amendment) Bill, 2005

Finance Minister P. Chidambram is very keen that the Banking Regulation (Amendment) Bill, 2005, which allows the Reserve Bank of India to lower the statutory liquidity ratio and the cash reserve ratio of commercial banks, is passed ASAP. In all likelihood, he will have his wish. Similarly, The Electricity (Amendment) Bill, 2005, which puts the onus of rural electrification on both the Centre and the states and mandates a steady reduction in cross subsidies within the sector, is also expected to sail through.

But the government's friends on the Left will definitely not allow The Pension Fund Regulatory and Development Authority Bill, 2005, which allows pension funds to be invested in stocks, to pass. The Petroleum Natural Gas Regulation Board Bill, 2005 seeks to establish a Petroleum & Natural Gas Regulatory Board that will oversee the oil sector. But with no one really pushing for it, the Bill may have to spend some more time on the table of the House. The Essential Commodities (Amendment) Bill, 2005, which empowers the Central government to delete items from the list of essential commodities, too, may not become law just yet.

But that does not, of course, make our mps any less honourable.




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