Democracy is Failing in Developed World: Soros


The political class is manipulating public opinion in developed economies to stay in power, said billionaire investor, political activist and philanthropist, George Soros, while addressing management students at the Indian School of Business (ISB) in Hyderabad on Thursday. ³Political discourse is not designed for better understanding,´ Soros said, while adding that ³it has undermined the democratic process in the developed world. So, institutions that have worked for 200 years are now not functioning properly´. In contrast, Soros said, in the developing world, people are not so jaded and so there is a primitive belief in right and wrong although there the abuse of political power and corruption is rampant. Referring to India and China, Soros said the developing world still has the desire to do the right thing. Soros warned of an eternal conflict between economicdecision time and politicaldecision time that often spurs a crisis and stressed on the requirement of a farsighted leadership to overcome this. He said India as a democracy has its drawbacks because of inadequate infrastructure, but hoped that it would overcome this to become one of the leading economies alongside China. Soros is the chairman of the Open Society Institute and has donated $100 million to develop internet infrastructure for regional Russian Universities and $50 million for the Millennium Promise to eradicate extreme poverty in Africa. On philanthropy, he said altruism cannot do very much and cannot take place of governments. Education and healthcare for all the citizens is beyond its capacity, he said. The role of philanthropy is to show the way and prove that it can be done, he added. ³You have to push governments to do it than do it yourself.´

A Less Lustrous Bharat Ratna?
Let us not degrade the country s highest civilian honour by being too liberal with it

The awards on R-Day and I-Day are another legacy inherited from the British Raj. It is said that a Briton feels naked without post nominal letters and the target is to have as many alphabets, if not more, after his name as in the name. The same awardiarrhoea disease has gripped us. No wonder criteria for awards are being diluted, the latest being the Bharat Ratna. First proposal. In the US, the highest civilian award is called the Freedom Medal, but the highest gallantry award, the Congressional Medal of Honour, ranks higher. Place the Param Vir Chakra above the Bharat Ratna. Hence those who get the Bharat Ratna cannot claim to have received the country s highest award. Thereafter it does not matter who gets it because the Param Vir Chakras will remain the real heroes as they deserve to be. After all, 41 people, some questionable, have received the Bharat Ratna while only 21 have got the PVC. Only 7 lived to see themselves being awarded. Another rule

like the Nobel Prize ³ no posthumous Bharat Ratnas. That should end all political
wrangles. Till the 1970s all was well. In the mid-1970s the then PM gave it to a southern politician just before elections in that state. A dozen years later her copycat son did the same by giving it to another neta of the same state. However the intended objective of winning the elections deservedly failed both times. Maurya, Ashoka, Samudragupta, Akbar, Shivaji, Ram Mohan Roy, Swami Vivekananda, etc Then with

a change in the political scenario, came the era of honouring not only those who were dead, but some who died long before the award was even instituted. What did they achieve after their deaths? Why were they not honoured immediately when the awards were instituted? Did someone not want their names to become as prominent as the paterfamilias of the ruling parivar, who was one of the first to get it? Perhaps we can even now find a reason for giving it to Bhishma, Arjuna, Chandragupta. We make a huge hue and cry that the Nobel Peace Prize was not given to Mahatma
Gandhi. So, why not a consolation Bharat Ratna? Recollect that we gave it to Mother Teresa only after she got the Nobel Prize. Even Bahadur Shah Zafar, the first Indian leader who really fought for independence in 1857 probably deserves one. If at all the Bharat Ratna it is to be given, the only persons who perhaps currently deserve it are Dr Verghese Kurien, the late Field Marshal Maneckshaw, Narasimha Rao and A B Vajpayee. And if sportspersons are to be considered, Viswanathan Anand ranks head and shoulders above Tendulkar. Also Presidents and PMs and other netas/netis, should be given awards only 10 years after they remit office, if we remember them that is. That should incentivise political retirement. How about a transparent publicly disclosed achievement-award matrix. This is easily possible in sports with each

sport having a graded hierarchy of achievements.

The ideal solution is to have Shri, Bhushan, Vibhushan and Ratna awards separately for different categories. For example, we could have Khel Shri, Khel Bhushan, Khel Vibhushan and Khel Ratna for sportspersons. Similarly Vigyan Shri etc for sciences, Kala Shri etc for the arts and so on. Each such award will rank one level below the similarly named Padma/Bharat Ratna awards. For someone to get the Bharat Ratna, he/ she should have achieved something really outstanding in their field of activity of truly international impact. A game which only 10 countries representing barely 21% (5% if India is removed) of the world population play hardly qualifies. Being No. 20 in football is more difficult than being No. 1 in cricket.
I would like to nominate an Association of Persons (AoP) that really deserves the Bharat Ratna. These persons were largely born on or after the 15th. August 1947. From the time they could walk, life, starting with school admission, graduation and employment, was a saga of numerous queues and bribes. On getting employment the queue for a ration card, gas connection, telephone connection voter s identity card, passport, UID, had to be endured, which they did thanks to the earlier experience and strength gained from drinking adulterated milk and eating adulterated dal and chawal. On retirement they had to fight for pension, provident fund and gratuity and on death the bribes continued with their children bribing the crematorium for more wood and later the municipal authorities for the death certificate. This AoP is none other than the common person (to be politically correct). And I nominate I am sure you would all also agree Mr R K Laxman to receive this award. No one has portrayed our daily travails better than he has done in just 10 sq cm. After this, the award should be retired forever. There is one more necessity should not the Bharat Ratna be awarded by someone who has already been so honoured? Should not the highest office in the land be occupied by a true Ratna? Or is the quality of the awardees keeping pace with the quality of the awarder?

Want the Bharat Ratna? Take my advice. Start singing classical music or playing some classical musical instrument (something really obscure) and continue for life. The chances are very great that you may get one, when you are over 70. Half the awardees in the last decade are musicians, indicating that they are the safest category without stirring a political hornet·s nest.


India has acted strongly to pressurise foreign banks into accounting for and in the future returning illicitly acquired assets to the country.Guest Column Eliminating Black Money RAYMOND BAKER It is encouraging to see the zealous enthusiasm that has surfaced in India over the past few years on eliminating black money or illicit financial flows. A more productive outcome can be to focus on stemming future illicit financial flows. But any asset recovery will be a longdrawn process and is likely to result only in a fraction of illicit dollars being returned. and others across the globe. India is a large. both domestically through mechanisms such as anti -corruption legislation and by applying pressure on the international community. Applause is due the nation. As long as this system persists. The West maintains a shadow financial system that allows corrupt or tax evading Indians. This is a worthwhile goal. India . India has gone ahead to make the issue one of pressing national importance. India is in a unique position to address this problem. Unlike many other countries that suffer the scourge of illicit capital flight. black money will continue to flow out of the country. While many other countries are taking modest steps to curtail illicit flows. powerful nation with significant international influence. Prime Minister Manmohan Singh demonstrated this at the G20 meeting in Cannes when he advocated his fellow heads of state to establish a global system of automatic exchange of tax information. to hide and launder ill-gotten gains. while more work remains to be done. Much of the onus for further progress should be placed on the world·s most developed nations.

both foreign owned and domestically owned. companies that are used to hide transactions and assets. or anonymous. spread out all over the world. whether or not tied to money laundering. y y India can take the lead among emerging market nations to make tax evasion a criminal offence. Automatic exchange would allow authorities to track tax evasion more easily across borders. If India does so. India has already been a global leader in pressuring banks in secrecy jurisdictions such as Switzerland to stop enabling tax evasion. This would make it more difficult for multinationals to use abusive accounting tactics. to evade corporate taxes. is considering a measure to make tax evasion a money laundering offence. to claim profits in foreign jurisdictions where taxes are lower. G20 countries should require all corporations formed anywhere in the world to declare who are the natural persons owning the entities. First. The current system allows multinational corporations operating in India. the Paris-based Financial Action Task Force (FATF). Shell corporations can be found both in places such as Liechtenstein and Cayman Islands. Further pressure needs to be exerted on G20 nations to make automatic exchange a reality. costs. and needs to be corrected. This would end shell. y Criminals and tax evaders often use layers of shell corporations. but also in more powerful jurisdictions such as the UK and US. the global anti-money laundering standard setter. Creative use of abusive transfer pricing can result in a very profitable multinational paying little or no tax.has aggressively signed numerous bilateral Tax Information Exchange Agreements. India should push its G20 partners to require that multinational corporations report revenues. profits. Doing so would help prevent banks from being willing and active facilitators of tax evasion. not secrecy to owners. and taxes paid on a country-by-country basis. to hide money and conduct illicit business. This glaring deviation from the original intent often facilitates crime and tax evasion. but further than that tax evasion should be a criminal offence in its own right. It can move forward by passing domestic standards on money laundering and tax evasion than are tougher than what the FATF is looking at now. including the mispricing of trade. India can push for three important measures to combat black money. India can take the lead on a more transparent global financial system. we may one day . Corporate vehicles are intended to provide limited liability to owners. This is all well and good. In addition. but this process involves requesting for information and oftentimes it requires an onerous effort to drag account data from reluctant foreign jurisdictions. for the sake not only of its citizens but for all developing nations as well. Currently. This creates an unfair system where companies with the will and means to avoid corporate taxes are able to outcompete and out-earn companies who pay their fair share.

Washington. This world will be safer. the government intends to launch a satellite for agricultural monitoring as part of its plan to improve the accuracy of farm output forecasts. But a critical element of this plan better field-level surveillance of farmers· sowing preferences is yet to get off the ground. DC) ‡ India should have an anticorruption law and make tax evasion a criminal offence ‡ All corporations should be mandated to disclose real owners of shell companies ‡ MNCs should report financials in every country to halt transfer pricing abuse Sample Size Concerns Cloud Farm Forecast Reliability Government plans to launch satellite for improved estimates. but undecided on size and quality of footmen on ground to collect data MISHITA MEHRA & VIKAS DHOOT NEW DELHI Gearing up for its food for all promise. thanks to a statistical stand-off between the agriculture ministry and an . and more prosperous for all. (The author is director of Global Financial in a shared world where illicit funds no longer find easy safe havens and those who would shift their gains are deterred or caught before their assets illegally leave poorer countries for richer ones. more equitable.

The tussle over the right sample size has now been referred to the Indian Agricultural Statistics Research Institute (IASRI). as well as a problem of matching the new all-India estimates with the existing system s estimates. and almost every year there is a 10% error between the first advanced estimates and the final estimates. Different surveys will give different results. as 15. The panel. for which a sample size of 15. As per the current system. as they largely rely on overburdened local revenue officials. The problem is that the committee s focus was on getting estimates within a bound of error for all India. whose report has the backing of the Planning Commission. The current 1.000. which would give all-India estimates of farm output. One has to analyse why there is a difference. But the agriculture ministry also wants district-level panel on farm statistics.2 lakh villages is impossible to manage and we need a system that is manageable to control large errors. All data is imperfect. we have to use it with introspection. Agriculture secretary PK Basu said the first step towards implementation of the recommendations would be to decide the sample size for estimating each crop. But. the ministry is also worried about duplication of farm output estimates leading to face-offs between the Centre and the states. said chief statistician of India TC Anant. the government gets production estimates of 27 major crops from state governments for a sample of 1. as pointed out by experts. The current system gives final estimates one-and-half years late. these have been prone to error. Vaidyanathan said. .000 is just a ballpark figure. Sen said he was insisting on the change but there was a certain reluctance . Planning Commission member Abhijit Sen sought urgent action from the ministry on accepting the committee s key recommendation of forming a National Crop Statistics Centre. At a recent meeting. Besides the sample size.2 lakh villages. has suggested creating a new cadre of workers focused on collecting farm data. This would mean any reform would be delayed till kharif 2013 and add a contingent risk to India s balance sheet if the food security bill becomes law by then. However. Vaidyanathan told ET. or patwaris. The ministry agrees with the need to get its own people to collect field-level data. The committee thinks that around 15. which submitted its report last February. the real concern in the current farm output estimates is the non-sampling error. We have been asked to do a study to empirically find the optimal sample size and the results would be out in five to six months. The ministry had appointed an expert committee under agriculture economist A Vaidyanathan in 2009 to suggest a framework for improving agriculture statistics. Sen said.000 villages was suggested. Sen agrees that sampling errors will rise as one replaces the sample from 20% of the villages to 2. said IASRI director VK Bhatia. for which they have a problem with a sample size of 15. but isn t convinced of the dramatic reduction in sample size proposed by the panel.000 villages could be adequate to get reliable all-India estimates for policy.5% of villages.

separated from their American families. obtaining the waiver was almost as hard and time-consuming as obtaining a green card. Now. and often for a decade. and the immigrants were permanently stranded. Immigrants had to leave the United States and return to their countries of birth to wait for at least three months and sometimes much longer while the waiver was approved. Although the tweak that officials of the Bureau of Citizenship and Immigration Services are proposing appears small. But the law requires most immigrants who are here illegally to return to their home countries in order to receive their legal visas. they said. immigration lawyers and advocates for immigrants say it will make a great difference for countless Americans.US Mulls Easier Route to Green Card JULIA PRESTON NYTNS Obama administration officials announced on Friday that they will propose a fix to a notorious snag in immigration law that will spare hundreds of thousands of American citizens from prolonged separations from immigrant spouses and children. Citizenship and Immigration Services proposes to allow the immigrants to obtain a provisional waiver in the United States. And sometimes the waivers were not approved. if the immigrants can show that their absence would cause ³extreme hardship´ to a United States citizen. The change that immigration officials are offering would benefit United States citizens who are married to or have children who are illegal immigrants. Thousands will no longer be separated from loved ones. even if they are fully eligible to become legal residents. Having the waiver in hand will allow them to depart knowing that they will almost . The immigration agency can provide a waiver from those tough measures. The catch is that once the immigrants leave the United States. they are automatically barred from returning to this country for at least three years. It would correct a bureaucratic Catch22 that those Americans now confront when their spouses or children apply to become legal permanent residents. Illegal immigrants who are married to or are children of American citizens are generally allowed under the law to become legal residents with a visa known as a green card. The journey toward the green card to which they were entitled was so fraught with risks for the illegal immigrants that many families simply decided to live in hiding and not apply. But until now. and the change could encourage Americans to come forward to apply to bring illegal immigrant family members into the legal system. before they leave for their countries to pick up their visas.

managing director of financial services firm Geojit BNP Paribas. the government announced a scheme which would allow foreign individuals. the agency will publish a formal notice in the Federal Register that it is preparing a new regulation governing the waivers. For long. On January 1. were earlier allowed to invest only in Indian mutual funds. Some believe that the QFI route may.certainly be able to return. called Qualified Foreign Investors (QFIs). Barred direct entry into the Indian stock markets. foreign individual investors and other institutional investors had to access the markets through participatory notes (PNs). emerge as a preferred option for relatively savvy . is no stranger to foreign investors. Indian administrators had kept foreign individual investors at bay arguing that allowing their entry would lead to routing of slush money and funds from dubious sources. especially from West Asia where he has forged business ties and runs a realty fund in one of the Gulf countries. was pleasantly surprised this week when a Polish investor wrote to his firm enquiring about India s decision to allow foreign individual investors to buy into Indian stocks directly. the director of the immigration agency. On Friday. over time. Will the Foreign Hand Carry Cash? 2012 started with the government allowing foreign individuals to directly buy Indian stocks. foreign pension funds and foreign trusts to invest directly in the Indian equity market.´ said Alejandro Mayorkas. These investors. The agency is also seeking to sharply streamline the process to cut down the wait times for visas to a few weeks at most. a three-decade veteran in the stock-broking business. But George. derivative instruments that allow offshore entities to trade in Indian stocks anonymously. ³The goal is to substantially reduce the time that the US citizen is separated from the spouse or child when that separation would yield an extreme hardship. officials said. The wealthy foreigner will need clever marketing by Indian banks and brokerages :: Shaji Vikraman CJ George.

These intermediaries are critical as they will be far better equipped to handle the Know Your Client ( KYC) requirements than many of the other brokerages. George says as sentiment improves. What could also help is some pro-active marketing by some of the top state-owned banks and the bigger private banks all of whom have a good franchise in West Asia and Far East. The QFI scheme will also mean that overseas investors will have more shareholder engagement with the managements of these companies. there is a broad consensus that money will flow initially into a handful of large-cap stocks or to companies which foreign investors are familiar with. Indian policymakers say that it will be relatively stable money coming in as it is from individuals rather than portfolio investors who are driven by the herd mentality. Firms like Geojit plan to make presentations on top Indian companies to potential clients who sign up as QFIs to help them make investment decisions. says C Jayaram. Compared to the initial move to restrict QFI investment to mutual funds. Add the rupee depreciation and the returns are very attractive. The ball bounces . Software firm Infosys is another draw for overseas investors. George believes that the familiarity about Indian corporates among a growing number of foreign individual investors (not just non-resident Indians) will weigh in favour of the QFI scheme. If the QFI scheme does take off. What we are going to tell investors is that the Indian markets are over 20% off compared to last year. That is not surprising considering that foreign institutional investors have preferred the relative safety of companies with size and whose stocks are more liquid and listed elsewhere in the world in the form of global depository receipts. something that they did not enjoy while investing through the PN route. Managers love the transparency and the easy-going Australian culture. It now remains to be seen whether the QFIs will buy that pitch. this has more promise as it allows foreigners to buy stocks of their choice. And if you take into account that only investors from jurisdictions which are signatories to strong anti-money laundering rules are allowed to invest directly. George says that there is enough money to be taken off the table in India. Take engineering giant Larsen and Toubro. Much of the success of this will hinge on the state of the economy and policy action this year. he says. The company s significant presence in West Asia could prod individual investors who have done business with the firm to buy the stock. there could be opportunities for companies to raise money from foreign individual investors. the quality of money will be superior. the losers could be offshore funds dedicated to investing in India. he says. joint managing director of Kotak Mahindra Bank which has offices overseas to handle equity investors. Biz in Oz: Bounty and Bouncer Indian companies have been heading towards business-friendly and resource-rich Australia. For now. Or forging ties with banks such as the Abu Dhabi Commercial Bank. But a new Australian tax could spoil the party CR Sukumar & Deepika Amirapu It is not easy doing business in Australia that s what the India s cricketers would say.foreign individual investors.

The spadework was enormous. Vedanta. Indian infrastructure companies Lanco Infratech. So. One trip to Australia s expansive rugged terrain almost changed the aspirations of the chief executive of one of India s leading infrastructure firms. Sadly. and the turquoise blue waters. The country s trade union friendly labour laws can also make companies balk. Tata Group. the workers tend to demand high wages. That s how we settled down to buying coal assets in Australia. In the past two years. Indian company executives say that approvals take longer as all states demand extensive documentation to make sure all environmental norms are complied with. just ride away. increasing focus on renewable sources of energy generation and transparent policies made it a hot destination for companies. putting the cost of mining on the high side compared to other countries with coal reserves. GVK. Lanco sealed a deal to acquire Griffin Coal on the west coast of Australia for A$730 million.and seams. there are the Australian cricketers themselves a hardened bunch of motormouthed toughies who don t yield an inch. spent couple of years in Africa and even entered into agreements with local companies. says Rao. unexpected bouncer. Aditya Birla Group. The stock fell because of a nasty. There are well laid out processes in place in every region of the country. called the Mineral Resources Rent Tax (MRRT) 22. Lanco teams burnt up nearly two years on an exhaustive search for coal mines with rich reserves that needed relatively small investments to develop infrastructure to mine and ship coal to India. Square Deal In the past few years. Others including GMR. resource-hungry companies from across the world have made a beeline to Australia as countries like Indonesia have started conserving their resources to meet growing domestic demand. says Madhusudhan Rao. Unlike India's attitude to workers. Rao views Australia s export-oriented economy as extremely investor-friendly. as he said. chairman of Lanco Infratech. though. Like an executive with an Indian firm put it bluntly. and then. Australia has a greater concern for the safety and welfare of the workers. but companies are jittery as they reckon it could lead to ad hoc restrictions on mining. Australia is definitely a good investment destination. many are wondering now if investment Down Under is worth it. We just need to follow those processes. Julia Gillard imposed a new tax. They have very strong unions and are committed to working well. Finally. the rock-hard pitches are hell on bowlers ankles. but finally pulled out of these markets due to a host of unfavourable factors. in March 2011.5% on profits of extractive industries upsetting the plans of many riders-to-be.000 more . The levy will kick in from June this year. the news of his company s share price falling abruptly ended his dream. We had looked at more than 170 coal mines in Indonesia for over three years. There s also significant labour shortage in the Australian mining sector around 16. JSW Steel and ICVL have taken a page and are now scouting for assets there. Australia s sparse population. he wanted to. To that extent. India Inc s experience Down Under. The law supports unions and with well-protected structures. Sucker Punch Australia s premier. has been altogether different. But cracking Australia is not all easy. Struck with awe at the sheer size and emptiness of the landscape. Adani and state-owned iron ore giant NMDC have sealed deals worth around $10 billion to acquire mines in Australia.

will deter Indian investments as they will increase the price of coal imported from Australia. he adds. the cost of shipping coal to India worked out cheaper than seaborne transportation of coal from India s west to east coast.workers are needed and that adds to labour costs. adds the executive citing that Australia may soon become less appealing. has a contrarian view. Retrograde Step? The executive. . industry-friendly mining policies such as easy approvals. finance. and despite high costs involved in creating infrastructure in Australia. But the new tax regime may negate this advantage. chairperson of Australia India Business Council. take a major hit? The new tax regime. says a senior executive of an Indian company that concluded deals to acquire two mines in Australia this year. Indian companies have invested in Australia because they see the country as a steady supplier of coal for the next 30-40 years. says Arun Sharma. The division is expected to generate about 8.500 firms currently employ 243. S Thiagarajan. paying about $32. of course. All these years. Many companies are awaiting a fuller understanding of the MRRT on their businesses.9 billion in wages in 2011-12. One point many Indian managers make is this: so far. transferable leases and availability of adequate number of junior exploration companies across Australia made it an attractive destination for the Indian companies. The country allows large-scale mining and the absence of forest cover allows us to mine large swathes of land. Australia will continue to be a destination for NMDC to acquire and operate more mines. they want the rules of the game defined so that they can assess the direct and indirect impact of the tax. And since most companies are here for the long term. Even India has decided to levy 26% on the profits of miners for district development. Mining is a big revenue spinner for the island country.5 a tonne on carbon emissions. When weighed against the domestic tax issues. Australia s 22. said the Australian mining sector fears the new tax regime to lead to closure of at least 20 mines and could cost thousands of jobs. Will Australia s mining economy and foreign investors. says Thiagarajan.8% of Australia s GDP in 2011-12. managers say. Those who have already made an investment may have to look at their businesses differently. says Sharma. According to the latest IBIS World Mining Report. who did not want to be named. NMDC s director. Brazilian mining giant Vale already warned the Australian government that the new tax proposals would significantly increase the risk of investing in Australia s resources sector. Waiting for Clarity Indian mining companies are not the only ones fretting about the new taxes. The Julia Gillard government has also mooted a law that would make it mandatory for Australia s top 500 polluting companies to pay a tax of A$24. Considering the resources and the hasslefree clearances granted to mine owners for exploration. However. Its 2.8 billion in 2006-07. coupled with the investments involved in creating the infrastructure for mining and evacuation operations.9 billion in 2011-12 against $138. The tax probably stems from a belated realisation of the Australian government that mining firms did not pay royalty commensurate with the humungous profits that they had earned. revenues from mining are expected to top $224. Julia & Julia But.5% will still be viable because of the volumes.152 people. including Indian ones. it s the Julia Tax that worries Indian companies in Australia most.

Further. given the significant shortages of coal in the domestic market now. Indian executives will again find that special comfort that comes from doing business in a country that loves cricket. where you can efficiently deploy equipment. in fact. But they probably had the same problem with us. They would be grumpy if Australia played badly. Global audit and consultancy firm PricewaterhouseCoopers says Indian power companies have no option but to look overseas for coal supply. recalls Prasad Kandimalla. is one of the very few exceptions. they have to be mechanised given the higher labour costs and severe labour shortages in Australia. There is no better way of life in the world than that of the Australian. who didn t want to be identified. A GVK senior manager who didn t want to named had this interesting observation about the typical Australian worker: Grumbling. Australia is probably the only country in the world that offers very large-scale resources for large Indian companies to develop. loyal-to-his-mates. the Ashes tournament was underway. Almost everything in Australia seems inviting. joked a senior manager with a big infrastructure firm. The new mining tax. Australia is one place where you can acquire large-scale assets at one go. . cursing. The Culture Thing If the tax issues do pan out well.But Indian companies are short of choices. When we were finalising the Griffin Coal acquisition last year. and says his verdict is based on sampling desi cuisine in many foreign countries. he adds. In fact. Life. According to Lanco s Rao. whenever I happened to be there for the weekend. Lanco Infra. For now. An Australian Joe. costs have to be spread on a larger volume. He also claims Australia serves the best Indian food outside India. business development. But the new tax regime pertaining to carbon emissions is not going to impact all the mining firms uniformly and the implications vary from the type of minerals. Where as we work even on Sundays and during the small hours to finish business. head. a very distinctive thing for most Indian managers who are working there or go for frequent business trips. they are one of a kind. adds Kandimalla. says a senior Indian executive in a mining company. is one of the few free men left on this earth. I was silently hoping the Aussies would win against the English. It was really difficult to refuse the numerous invites I got to join them for sporting activities. most companies are hoping that some regulatory certainty comes through. both in the short and long term. Australian culture is. it seems to me. they often advised me on vacations and were very hospitable. Indian companies say. it would adversely affect our negotiations. They have a perfect work-life balance and don't believe in stretching themselves too much. the Aussie Way Indian managers used to British and American accents also found the Australian accent slightly difficult on first encounters. Mining acquisitions in Australia are not for the weak hearted. Kandimalla says. beer-drinking. Their passion for the game was reflected in our conversation and sometimes. For the project to be viable. I firmly believe this. laughing. says Rao. Kandimalla says.


It¶s the Economy. much less than filching welfare funds or caste . and conducted raids across UP and Delhi. But has her economics been as inclusive? The answer to that question will have a large impact on her re-election chances :: Avinash Celestine It s been an extraordinary week. The NRHM scam itself has resulted in two. right? Yes. This was the same Kushwaha whom the BJP had heavily criticised a few days earlier for his alleged involvement in the burgeoning multi-crore scam involving the siphoning off of funds for the National Rural Health Mission (NRHM). But here s the elephant in the room: economics. Mayawati came to power in 2007 thanks to inclusive politics. Coming a week after the Election Commission announced polling dates for UP. possibly three. Barely days after she sacked Babu Singh Kushwaha. Stupid UP polls mean caste calculations. the BJP took him under its wing. murders and earlier this week. even by the standards of Uttar Pradesh politics. Chief Minister Mayawati upped her tally of ministerial sackings to 20. the Central Bureau of Investigation filed FIRs against a bunch of bureaucrats. the campaigning season could not have gotten off to a more hectic start. one of her closest aides for decades. But here s something that s getting little press.

Businessmen say they need to budget for a substantial margin (much more than earlier years) over the cost of any project. And while the shift to a higher growth path began before Mayawati came to power. his friends pooled together funds to provide him with the seed capital for his first business processing and selling packaged masalas. But the biggest refrain among entrepreneurs and industrialists that ET on Sundayspoke to was about corruption in the bureaucracy. . Under it. says the head of a local industry association who didn t want to be identified. This is the highest growth UP has ever recorded. Manufacturing costs are much higher in UP than elsewhere. I went from pillar to post trying to raise money from banks. looks at economic and business data and. Growth in UP is occurring after a long period of stagnation. but that will play a significant role in polling booths UP s economy. Drill deeper into that 7% number and troubling anomalies begin to surface. director of the Giri Institute of Development Studies in Lucknow. says Rajan. Rajan experiences a sense of frustration with the problems of doing business in UP a sentiment widely shared among other entrepreneurs and industrialists. Mayawati came to power in 2007 on the basis of an inclusive politics which welded castes from across the hierarchy under the banner of the Bahujan Samaj Party (BSP). digs deep into them. the UP government scrapped a centralised system of tendering which had been in place since before independence. Entrepreneurs in UP get little or no support from the government in this regard. the average growth in these past few years will still be well above what it was in the 1990s. Singh says. The level of demands [for bribes from the bureaucracy] has shot up substantially over the past few years. While the data stops at 2008-09. But almost 10 years after starting out. which had the responsibility of procuring goods for different arms of the government. UP had completed three years of 7%-plus growth. His total turnover is around 10 crore. A Tender Example Sukesh Rajan s experience exemplifies both the possibilities of Mayawati s Dalit revolution and the problems of the UP economy. points out AK Singh. first. After two attempts. at least from the people that ET on Sunday spoke to. Even if the state s economy has slowed since then. This view is echoed by others.calculations. A small example: in April 2011. as payoffs. pointing to frequent power cuts and a heavy burden of taxation as a major reason. But have her economic policies been as inclusive? That s the key economic question for the elections. Rajan started out by appearing for the civil services exams after graduating from Allahabad University. he gave up and decided to get into business a difficult decision for someone with little family money. Some of the most fascinating undercurrents in the state s poll politics can be found only if one. Himself a Dalit. or its sources of growth. small entrepreneurs could register themselves with the directorate of industries (DI). has shifted much in the past two years. she could well reap some of the benefits at the polling booth. By 2008-09 (the last year for which data is available and which was a recession year for the Indian economy). From there he branched out to other processed foods and now also runs a large bottled water plant in Lucknow. that the structure of the UP economy. 7% Growth Enough? Mayawati enters the election season with one big economic plus point. there is little evidence. Or so it seems. Finally. he says. For a year. second. says Rajan. but there was no way they would fund me given that I had no experience whatsoever.

interestingly. So. a rise of about 2. It was not as if the DI bureaucrats were purer than anyone else. for example. forming a government together. if 10 different departments want paper clips. It s a safe zone. The second biggest contributor to GDP growth is agriculture. rather than place one large bulk order through the DI. says the industry association head. The trickle-through and trickle-down effects of growth are muted as well. With a few sectors and regions accounting for so much growth (even if there are stimulus effects into other sectors. with two or more parties.5 percentage points compared with 2004-05. who are more numerous than most communities. it is the lopsidedness of UP s growth that is worrying. it is construction. each appealing to a different segment of society. then it s logical that they [bureaucrats] will try and recover those costs from us. In rural UP. has potential political consequences. six districts of a total of 71 contributed a quarter of UP s growth between 2000 and 2009. who has already set up a real estate company. are a minority of the total population. followed. But what if alliances were set up between castes directly. though these are trends which predate Mayawati. says the association head. And as was the case with NRHM. Hence the era of coalition politics came about. Manufacturing s contribution to output growth this past decade has been less than half of that. Construction is the biggest employment generator. In 2009-10. one of every 10 workers in urban UP was employed in construction. the benefits of growth are concentrated. The Sarvajan Strategy When Mayawati came to power on the back of a Sarvajan (all groups or all castes) strategy. This is unsurprising. Even Dalits. showing any dynamism. such as cement or building materials. If the selling price of top posts in the bureaucracy itself has gone up sharply in recent years. though the sector still employs one in every four workers. Manufacturing s share of total employment actually slipped in these years. he says. Now each department potentially becomes a hub of graft. accounting for almost a fifth of the total growth in the state output since 1999-2000. the jump was even more stark 7 percentage points. no one group or community had the numbers to come to power on its own. In regional terms. I will sustain this business for maybe a couple of years more and then shut it down. And this in turn. they conduct 10 separate tenders. or there is migration from poorer regions). Rather than the boom in construction per se. His new venture? Real estate. If there has been one boom sector in the past decade in UP. In place of this system.Entrepreneurs wishing to participate in tenders were spared the hassle of dealing with different arms of the government and of having to prove their credentials to each department separately. which accounts for 13% of the growth in output. laughs a Kanpur-based industrialist. the UP government announced that henceforth. each department would conduct its own tenders. says Rajan. corruption can even lead to murder. This pattern of growth. Given the vast heterogeneity of India s castes. but at least you dealt with only one central point of authority for many tenders. The Boom Sector So frustrated is Rajan with the problems he faces that he s thinking of dropping out of manufacturing altogether. is reflected in employment trends as well. by the state government. with just a couple of sectors (communication has also been a boom area). it marked a new beginning in politics. This dramatically increases the scope of corruption. rather than between the parties that .

but not in others. The record of Ambedkar scheme has been patchy. she says in disgust. says Ramwati. The scheme exists only in name. successive governments ignored the scheme (Mayawati was in and out of power in the 90s under different coalition governments). where opportunities for the mass of the population expand slowly. Paurana village. Electrical connections have been installed. We hear from relatives elsewhere that it has been implemented in some places. A potential policy problem created by the Sarvajan strategy is the balancing act the BSP needs to perform between the interests of its Dalit voters. involving the upgradation of rural infrastructure. A Thakur shopkeeper in the village also grudgingly admits that the village has seen substantial changes under the Ambedkar scheme. The government promised tanks and drains but nothing has happened. may not necessarily suit her constituency economically. says AK Verma. This is effectively what Mayawati did (though she wasn t the first. UP s finances have improved since the 90s. the greater the chance of shrinkage of political space for Dalits. Tale of Two Villages Hiralal says there was little or no development between the late 1990s and 2007. a resident. Mardanpur is almost wholly Dalit with just one or two OBC and Brahmin families. But the picture could not be more different in Mardanpur village. Only one village road has been built. several thousand villages with large Dalit populations. the Mayawati government dropped the Dalit tag from the Ambedkar scheme and extended it to villages across the state. It is only under the current government that all this development has taken place. Also an Ambedkar village. a farmer of the Chamar caste. there has been a sea change in Paurana. Since then. an innovative scheme introduced by Mayawati in 1995. part of this district. irrespective of caste. admits Hiralal of Paurana.represented them? A party that could bring a number of castes under its umbrella could come to power on its own rather than go to the trouble of having to deal with fractious and demanding coalition partners. Extending benefits to all. In a sense. necessarily means that some get fewer benefits than before. Under the scheme. but ensuring that the initial set of beneficiaries are not left with less than before is starker in a polarised economy like that of UP. But what are the policy consequences of the Sarvajan strategy? Unnao district is a couple of hours journey from Lucknow. The Ambedkar Yojana website no longer portrays the scheme as Dalit-only. Kanpur. roads have been built and tanks put in place. says 65-year-old Hiralal. from a pool of resources which is relatively static. he says. the more you try to be inclusive. another resident. What suits Mayawati politically. In 2007. giving Mayawati the space to extend the scope of her . about 10 km from Paurana. were made the focus of an ambitious village development programme. was one of the first beneficiaries of the Ambedkar Gram Yojana. arguably the Congress was the first umbrella coalition under which different castes came together) by welding support of upper castes such as Brahmins and others onto her core base of Dalit support. Even the ration shop in the village has been closed for a couple of months. No Maya for Businessmen The policy dilemma of a Sarvajan strategy the need to extend benefits to all. professor of political science at Christ Church College. says Premkumari. and the imperatives of its Sarvajan strategy. In that period. when she first became the chief minister (her tenure lasted barely a few months).

or for that matter. aspiring entrepreneurs from any community. given that many come from nonbusiness backgrounds. If jobs have to be created and income mobility is to increase. The researchers picked villages in two districts in eastern and western UP for their study. And . are seen to have reaped the most rewards. There are very few Dalit entrepreneurs in UP. dominated as it is by communities such as Marwaris and Banias. need a more open economic system one that allows someone like Sukesh Rajan to set up and run his own business with relatively few hassles. Only a few sectors. Chandra Bhan Prasad and D Shyam Babu published an article in the Economic and Political Weekly. The survey reveals. its economy will play a large part in the voters decisions. He contrasts this with states like Gujarat and Maharashtra that have a far more business-friendly climate. very substantial shifts in Dalits lives. the pattern of UP s growth under Mayawati has been sharply exclusivist. Lance Pritchett. countering the argument that liberal economic reform necessarily leads to sharply higher inequality and disparity. In 2010. construction being the prime example. he adds. No one would argue that Dalits have achieved anything like equality. private business has to play a big role. but no chapter in the only state where a party with a strong Dalit vote base is in power (DICCI does have plans to set up a chapter soon). says Rajan. But deficits have risen since 2007. say the authors. and so far there is little evidence that the UP government has realised that. says the paper. but it is certainly the case that many practices that reflected social subordination and routine humiliation of Dalits have declined considerably. consistent with a growing sense of empowerment and opportunity and declining ability of others to impose social inequalities Traditional stratifications in social life within the village have also rapidly eroded. Even Mayawati s critics admit that she has taken several economic initiatives promoting investment in power and roads for instance. Maharashtra has a far more robust tradition of Dalits entering into business. But in contrast to her politics. There have been not just changes but massive changes. an umbrella body of Dalit entrepreneurs has Delhi and Mumbai welfare schemes. when UP goes out to vote. Devesh Kapur. It is very difficult for Dalits to set up businesses in this state. Maya s Big Social Triumph The stagnation of manufacturing in UP also highlights another interesting irony. There is very little support from banks as well. have benefited and only some large business groups such as the Jaypee group and liquor baron Ponty Chaddha. Therefore. But so have the shifts in the Indian economy since 1991. The Dalit Indian Chamber of Commerce and Industry. The rest of UP s industrial economy is pretty much trapped between an extortionist bureaucracy and a still-weak infrastructure base. which looked at the shifts in economic and social status of Dalits in the market reform era. it is Dalits. And UP is simply too vast and populous for the majority to be able to get by on government support. both big and small. Cut out of the traditional business environment. This is an irony because if there is one community that can benefit from economic reform and an environment that is friendly to all businesses. But Her Economics? The BSP s rise has been a big part of such transformation. Dalits.

one of the factors will be the difference. . the contradiction and the tension between Mayawati s economics and politics.




It has to translate into seats and for that. says political scientist AK Verma. it was the Congress which replicated BSP s performance [of 2007]. but that the sarvajan castes whom she got on board in 2007 will defect elsewhere. What probably concerns Mayawati more than anything else is not that her Dalit support base will desert her. what must have given Mayawati more than a little pause for thought is the shift in voting patterns across castes between UP s assembly elections in 2007 and the way it voted in the General Elections in 2009. merely achieving a sizeable vote share. OBC and SC. But even in these categories. by crony capitalism :: Ravi Srivastava Most people assume that the only arithmetic that would help political parties get past the winning post in Uttar Pradesh is caste arithmetic. the shift in two years towards Congress was complete across all castes in the social hierarchy. your politics has to be inclusive. And the support of such sarvajan castes is critical if she is to retain power on her own in India s first-past-thepost system. Kanpur. and retaining it across the state in the next election. Congress gained.WAVING A FORMULA GOODBYE? While assembly and parliamentary election voting patterns are not necessarily comparable with each other. Between 2007 and 2009. and Muslims. it s back to the fact that to win power on your own. That s the big if in this election. Mind you. the only increase in support for BSP came from within Dalits. among other things. The . Maya Started Building Her Economic Case too Late UP CM knows economics will partly affect the poll verdict. But her efforts are subverted. In 2009. as it consolidated votes of these communities from other parties. According to election surveys of voting patterns (see chart on the left). adding up castes and sub-castes across UP s regional mosaic is itself no easy matter once you get past the big 3 aggregates of upper caste. of Christ Church College. Again. is not enough. voting by various communities in a given constituency must consolidate within the BSP.

But the lack of any distinctive development thrust or growth impetus by the present government and other aspects of its economic performance have been recognised and commented upon quite widely and will contribute to anti-incumbency. will issues pertaining to economic governance matter in UP s elections? Growth: Then & Now The general evidence is quite clear though often ignored by analysts. who also have been the major beneficiaries of land acquisitions. we found that the state along with Bihar and Jharkhand was one of the poorest performers in 2004-05.1891 census listed 54. but showing better performance than its own past. almost unnoticed. Recent data. Mayawati has. but close to the national average. . Smarter Voters UP s management of welfare schemes has been poor and riddled with corruption. also shows very little improvement. But the relative decline started during Congress rule and continued after it. Mayawati has also mooted a new cash transfer scheme. This has now begun to change. and to what extent. remain a matter of debate and the specific context. Mulayam Singh Yadav s government had the Industrial Development Council. cutting across kinship and caste groups. people s awareness of their entitlements was low and governments could get away. under-performing in comparison to some of the other low-income states.Based on various indicators derived from large-scale surveys such as those of the NSSO. In Mayawati s current phase of government. Mayawati has not constituted a formal structure but her industrial policies are widely known to favour a few cronies. In the past. although they have not received adequate attention in the national media. political parties may well hold several hundred conclaves for different caste groups. to whom. three national schemes the MNREGS. It is unlikely that the average citizen will pin overall poor performance at the doorstep of any one political party. As is well known.000 sub-castes in UP. These issues are a part of popular perception. Both individual preferences and broader issues can influence political choice. UP s economic decline was perceptible to its middle classes. the state achieved a growth rate below. and even across households. such as Orissa. That has alienated sections of farmers. stepped up efforts to deliver these schemes more effectively in 2011. Employment under MNREG has also increased. Rich Friends One key aspect of policymaking in UP relates to crony capitalism. and on the eve of any election in UP. called the Mukhya Mantri Mahamaya Garib Arthik Madad Yojana for those poor households who were not identified as being below poverty line in the last 2002 survey. castebased identities to determine such choice? More specifically. with the programme effectively functioning as a cash transfer programme since payments are not linked to tasks. its per capita income today is only about 55% of the national average. Knowing this. which bring the story up to 2009-10. There is no denying the role of caste. But is caste-based interest all that matters in a citizen s political choice? Do overarching issues such as those of governance either cut into. Reports from several parts of the state indicate that the poor are now able to lift their PDS entitlements. Once almost on par with the national average. But which issues will matter. Chhattisgarh or Bihar. which was chaired by Amar Singh with his cronies as members. the TPDS and the NRHM have been dogged by monumental corruption. or across.

given the failures of the UPA government and the extent to which these failures have been projected by the media into popular consciousness. except the state capital which Mayawati took personal pains to beautify. UP s JNNURM cities. The government has also allotted 1. However. New Delhi .089 crore to it in the 2011-12 budget. Due to sub-standard contractors and poor management. are a collection of pot holes and sewage pits. Urban Angst Another national flagship scheme viz. Thus. and for the rest. Mayawati has done just enough in recent months to ensure that her government s performance in some of the major social protection programmes passes muster among the rural poor. the final calculations by voters are likely to strengthen the anti-incumbency mood among urban middle-class voters and a segment of rural voters. the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) is also suffering but has still not figured in the national watch list . as long as people s memory is short enough. it is difficult to say whether this anti-incumbency will be decisive enough and who will benefit from it. Jawaharlal Nehru University. Ravi Srivastava is Professor of Economics at the Centre for the Study of Regional Development (CSRD). Combined with power cuts. many of whom voted for her in the last elections because of her reputation as a tough administrator. Mayawati s policies and performance on the economic front have not been radical enough to override other issues at a state-wide level. Although she may also have been able to recoup some ground in recent months.The scheme. with a monthly cash transfer of 400 per month to a female member of the household. she would hope that her actions of axing her tainted colleagues will clear her own name and that of her government and take the sting out of the opposition s campaign. In other words. the quality of life in urban UP is a sad commentary of present-day governance and this is unlikely to endear Mayawati to urban voters. particularly farmers affected by land acquisition. is intended to attract poor non-SC households to her fold and has roused considerable expectations.

April and June. Farmers and consumers are paying the cost of an endless debate :: Mishita Mehra and Vikas Dhoot Singhari Ram Porte of Meu village in north Chhattisgarh is a patwari. But they have a more important job. a littleknown group of around 2 lakh spread across India. Each estimate is revised with more data. but Porte and Co s word is the main ground-level information . After the onset of the agricultural year in July.DISAGRICULTURE Government of India knows farm output is measured wrong. rabi and kharif. The patwaris are primarily land record officers who collect land revenue on the state s behalf. But government agencies bitterly disagree on correctives. they provide a key input to the economy s managers the sowing patterns of farmers for the two seasons. The information is critical to the advanced estimates of harvest the government provides for the rabi and kharif crops in September. January. and the expected harvest.

rewind two years. says Sen. That is no laughing matter for a government which has admitted that inflation is a tax on the poor. the first and final estimates of rice harvest had a difference of nearly 15%.244 crore. In 2010-11. 39% farms had the late kharif estimates wrong and the rabi season data was off the mark for 34% farms. A red-faced UPA government was forced to prevent more onions from reaching ports. Gulati is convinced that inaccurate farm statistics distort market prices. the favoured protein source for many Indians. They eventually sold videshi pulses to four large private firms instead of the poor. Looking to curb the massive shortage of pulses over the last decade. When the government underestimates output. four different government schemes and as many as 16 departments are involved. And the final estimates come out one and a half years after sowing . Debate on Data But lately. says Ashok Gulati. it ends up banning exports and the resulting oversupply of those items leads to a fall in prices. wrong data can have disastrous results. Five years later. the data sent by states is validated by independent agencies such as Institute of Economic Growth and even the Indian Space Research Organisation (Isro). importing agencies were confronted with losses of 1. Among the villages that did. their art of reading India s farm leaves has indirectly impacted the money the farmer s produce fetches and the price consumers in villages and cities pay for grain. For one such instance. From the stage where patwaris like Porte provide primary inputs on expected crop patterns to the conference rooms in New Delhi s Krishi Bhawan where production estimates are aggregated. The Root Cause So why then is farm data quality poor? It is because the fundamental flaw in the system remains . For over 50 years. economists say even a 5% variation can lead to dangerous policy choices. In a damning report tabled in Parliament s recent winter session. Now patwaris find themselves at the heart of a heated debate among agriculture ministry mandarins and farm economists on a cure for shoddy data. The government allowed onion exports. With India bracing for an ambitious food security programme. The statistically significant scandal was criticised by the Comptroller and Auditor General. farmers and consumers have learnt the hard way. It was the same story with the import of pulses. it pointed out that the main objectives of the endeavour availability of pulses and at stable prices remained largely unfulfilled . the government spent nearly 800 crore in subsidies to import and stabilise domestic prices. A recent review of crop data by the National Sample Survey Organisation found that less than half of India s villages report cropping patterns and yield expectations on time. The agriculture ministry holds a weekly crop weather watch meeting where inputs from as many as 11 departments are taken. which advises the government on farm pricing. chairman of Commission of Agricultural Costs and Prices. the patwari s job as information providers has come under scrutiny because farm data has increasingly become prone to errors. The shoddy data work is not due to lack of resources or energy. the final estimates are around 10% higher than the first estimates. As the government. But the move boomeranged as the onion crop fell short of expectations and prices shot up.that goes into the government s food management decisions on whether to export or import grain. Planning Commission member Abhijit Sen says almost every year. enthused by rosetinted output estimates. a quarter of the farms had wrong data for early kharif estimates. That apart.

Agri-metereology and Land-based observations (FASAL). but how it is used. rice. adding that it is not humanly possible for them to go to each village. . the anganwadi and government schemes like mid-day meals. Fodder for Thought Experts say it s high time the government took better stock of the fields. Science of Getting it Right The ministry isn t sure if the massive reduction in sample size from 1. In late December. The patwaris must traverse 20% (or 1. Six years later. poor output estimates. while working on the 11th Plan. the magnitudes would be affected. timely and reliable data . If [farm] data is misreported.000 villages and assimilating it through a new autonomous body called National Crop Statistics Centre (NCSC). although it won t change the direction of growth rates as long as we are missing data year after year. has run unchanged in all its 50 years. government bodies have long highlighted the ills of farm data. Porte says they are roped in for other jobs in the village at the ration shop. he admits. officials say. But all the 11th Plan gave farm statistics was a scheme called Forecasting Agriculture output using Space. In February 2009. says India s chief statistician TCA Anant. the National Statistics Commission headed by former RBI governor C Rangarajan had asked the government to improve the functioning of the patwari system. Astute observers blame the glut on. But there is a certain reluctance . This was to be implemented in the 10th Five Year Plan. an official group on the farm sector under economist VS Vyas reminded the government of its unfulfilled commitment to fix the patwari system. block development officers and states end up revising figures on their own if they don t like them. Sen said. This too. It is difficult to record output as there isn t enough time to go to the 6-8 villages assigned to us. but the patwaris have more on their plate. But the system.2 lakh) of Indian villages and record the quantum of wheat. Rahul Gandhi belatedly backed foreign direct investment in retail.000 would throw up good data for the 27 crops that they need to track. the government created another panel this time under noted agriculture economist A Vaidyanathan.unattended. District authorities. His report submitted last February clearly shows that the system does not deliver complete. 15 villages are assigned to each patwari. They must also conduct 8 lakh experiments on crops to check productivity levels. what else. an agriculture ministry official told ET on Sunday. India s farm sector growth rate was revised upwards by 22% thanks to wide variations between initial and final estimates. In some states. That s no mean feat. It isn t scientifically done. as 70% of Indians subsist on farms and the other 30% are wary of persistently high food prices. They preferred dumping their harvest because of a potato glut that hammered prices. Planning Commission s Sen had asked the agriculture ministry for urgent action on the Vaidyanathan panel s recommendation. Wrong farm data also tinkers with India s growth numbers. His panel had asked the government to create an independent pool of workers gathering farm data from just 15. Sen believes the problem is not in the system itself. In 2001. followed by most states. sugarcane or 24 other crops sown in each farm twice a year. For their part. In a recent meeting. His support was directed at the potato farmers of Farrukhabad in Uttar Pradesh. In 2010-11. has been a failure.2 lakh villages to 15.

2 lakh villages to tide over the patwari problem. the government is due to create a National Crop Forecasting Centre (NCFC) where Isro s technologies for using remote sensing and satellite images to estimate crop output will be transferred. This year. The government is now keen that Isro launch a satellite dedicated purely for agricultural applications with the capacity to deliver highresolution images up to 1 sq m. the art of using science for better farm statistics has a long way to go though. . the ministry is keen to hire independent staff for 1.000 is just a ballpark number. another 35 years may be needed before all 27 crops can be correctly identified through satellite images. the satellite images can t always tell the difference between elephant fodder and sugarcane. While this issue has been referred to an agricultural statistics research institute that will take six months to suggest the right sample size.It s all complicated math and the first stage in implementing the committee s recommendations would be to find the appropriate sample size for estimating each crop as 15. Moreover. A single such forecast is yet to come. While nomenclature battles can be resolved over time. At Isro s current pace. The Vaidyanathan panel had suggested that these activities be subsumed under NCSC. says agriculture secretary PK Basu. Isro s Space Applications Centre was to develop the methodology for forecasting 11 crops by remote sensing techniques. There is a real risk that the satellite may well be past its expiry date by then. One key element of FASAL. which is to be extended into the 12th Five Year Plan. was sophisticated forecasts based on a crop weather model by the weatherman. but has managed to do so for only four.


after taking the patwari exam and 10 months of training Job Profile Maintains land records & collects revenue in 3-4 gram panchayats.000 and 20.000 (patwari salaries range between 10.000) What He Likes About His Job Flexible timings What He Dislikes Too much workload . Also.Portrait of a Patwari Singhari Ram Porte 37years State Chhattisgarh Education BA (min qualification for patwaris: Class XII) Became a patwari in 1995. gets roped in for welfare schemes and census work Monthly Salary 18.

The Big B12 Debate .

and all of them used to complain of fatigue and general weariness. Mason started complaining of tiredness. The year was 1971 and Chandy says. Physicians across the world have warily begun to listen :: Ullekh NP What is B12? Vitamin B12 is also called cobalamin. It was a routine thing. 1970. Durham County. was the only reasoning offered. B12 deficiency a highly under-researched area leads to huge fall in red blood cells. None of them suffered from hypertension. Chandy has treated hundreds of cases of Vitamin B12 deficient patients some of them . is trying to spread the word that Vitamin B12 deficiency leads to many debilitating ailments. a sensation of pricking and numbness. It is good for vegetarians. and their blood tests showed normal results. Chandy suggested tests. But Chandy insisted. A year later. saying initial tests didn t show enlargement of red blood cells. They weren t diabetic either. Chandy used to wonder why no scientific explanation was given for suggesting liver pills. The haematologist (specialist in blood disorders) resisted Chandy s suggestion. like he is to several others in Horden. Since then. before me was a case that defied regular textbook logic. and as he says.Joseph Chandy. Chandy became their family doctor. characterised by macrocytosis (enlarged red blood cells). he got a call from a family in Horden. which falls in the category of severe B12 deficiency. Chandy migrated to the UK and became a general practitioner (GP). The results showed Vitamin B12 levels of 182 nanograms per litre. And here. which are required to carry oxygen to all cells Harrison s Principles of Internal Medicine lists the following categories of B12 deficiency based on blood serum B12 Serum B12 level <180/<200Ng/L Severe/ Clinically significant B12 deficiency 200-300Ng/L Moderate B12 deficiency >300Ng/L Subtle B12 deficiency (Ng/L: nanogram per litre) Years ago when Dr Joseph Chandy was a house surgeon a fresh medical graduate attached to a hospital he often had pale-looking Brahmin patients dropping in. He had to attend a delivery because the midwife hadn t come. an Indian-origin Brit doctor. On November 15. Soon. A few years later. Glenise Mason. also asked her to go for anti-serum B12 test. And they used to get well. Our chief [a senior doctor at the Thiruvananthapuram Medical College] used to prescribe liver extract [for them]. gave birth to a healthy baby with his help. by some strange intuition . then 26. where he went on to practice medicine for more than four decades. Until then the textbooks never talked about B12 deficiency without macrocytosis. This test is normally done on patients with anaemia. She also had pins and needles. in the late 1960s.

However. he recalls. including cardio-vascular diseases. Learn to deal with it. Vegetarians Need It More? Renowned cardiologist Dr Ashok Seth concedes that Vitamin B12 deficiency is under-diagnosed. For the record. but evidence suggests that B12 deficiency. Earlier. Kohli. is responsible not merely for tiredness. A lot of it is yet to be proven completely. contends a wellknown Mumbai-based physician who asked not to be named. came down with a viral fever some 15 years ago. exhaustion. adds he. At the age of 35. he notes. but nobody could diagnose what was wrong with him. Chandy adds. awareness about it is on the rise. Kohli recalls. my back . 71. Five years ago. He says that evidence suggests that B12 deficiency leads to illnesses such as Alzheimer s. etc . proudly. That is what most of them used to tell me. Doctors told him he was all right. crawling out. etc. that is. Chandy. but not living. dementia. Kohli has lost count of the doctors he met over the next 13-odd years. Diagnosis has been a major issue with regard to B12. An MBA in finance. he started suffering from severe lower backache and joint pains. But it was. he says. like other vitamin deficiencies. they usually send their earlystage patients back saying exercise well or do yoga. forgetfulness. That shouldn t have been a big deal. It is in the mind. kidney diseases and so on . Which means I couldn t even sense the smell of my food. He kept visiting new ones. Vitamin B12 is a nutrient found in some foods and the body needs it to create healthy red blood cells to keep its nervous system functioning properly. multiple sclerosis. Seth also warns that with more people taking to vegetarianism for health reasons. says he is lucky to have treated six generations of patients in his neighbourhood . heart. My hands often became numb and I completely lost my sense of smell. it is important that they do annual tests to monitor B12 levels or take B12 supplements. Under-Diagnosis Delhi-based entrepreneur Manu Kohli got fed up with doctors advising him to go to the gym or to do breathing exercises long time ago. now 40. Masons daughter came to me almost a decade ago with symptoms similar to her mother s. it is being understood [through experience] that B12 deficiency causes many other ailments. And because of their lack of understanding. His story. was that of a man alive. In fact. says Chandy. People with chronic B12 deficiency are those who can t absorb enough vitamin B12 from food and this is because they lack a protein made in the stomach. He did numerous tests including very expensive ones and experimented with alternative medicines and lifestyle changes to no avail. I used to wake up from bed like an old man of say 90. but also for several diseases. Until he got in touch with me. but increasingly. he says. Chandy confesses that he has become sort of a B12 evangelist. it was largely associated with anaemia. offering his services for free to several needy patients. Seated in the lobby of a Delhi hotel where a few patients are eagerly waiting for him. including in early stages and others afflicted with debilitating illnesses such as multiple sclerosis and acute cardiovascular disorders. lately. Now a principal GP. Doctors not just in India but even abroad never seem to have understood the subject well.

who instantly realised his was a case of acute B12 deficiency. She is now down with multiple sclerosis and is confined to her wheelchair. my numbness of the hands was gone and from then started my search for B12 treatment. when Dr Chandy was asked by British authorities not to prescribe B12. oxygen. In four months. He first got in touch with another B12 evangelist Sally Pacholok. Chandy prescribed high-dose injections. he says. How can they sell their expensive drugs for numerous illnesses? B12 treatment is so cheap that it is not even on their radar. For the acute irritable bowel syndrome (IBS). He didn t take the drug. Chandy says he is just reviving a subject that has been overlooked for years. Incidentally. says Neil. By the time Chandy had won that battle. But Simple Cure This is no miracle. and then treat it. because of IBS. says Neil. He was appalled by the under-diagnosis as early as the 1970s. claiming that . The progression of MS has been stalled. He insists: If you ask me what are the most important building blocks of life. he says. No Miracle. There was deep anxiety all the time when I was out. In the case of Wendy Kitchen. Until then. ignoring them may lead to serious health complications. nausea. according to reports. but was advised to take B12 by his physiotherapist. for more than a year she stayed off B12 injections because Chandy was barred from prescribing it by health authorities. But in 2000. says Kohli. who is also under medication for B12 deficiency. she stopped it for almost a year. She showed good improvement some 15 years ago when she started taking B12 regularly. it was a BBC documentary on B12-deficient patients in the UK that came to his rescue. too. While general symptoms of B12 deficiency include shortness of breath. weight loss and so on. depression. I am just carrying his baton forward. which has been 70-80% cured. he contacted Dr Chandy. says Kohli. water and B12. Last year. In fact. UK-based businessman. He was prescribed anti-depressants and pain killers and suggested physiotherapy. He also says that the global pharmaceutical industry doesn t seem bothered. I had to change jobs and started losing confidence and didn t even drink a cup of coffee outside for fear of IBS. They revoked their order yet again. Chandy. But his patients put pressure on their MPs to get the order revoked. In 2005.bent and completely exhausted. joint pains. he was told there was no medicine. I also sleep very well. says Chandy. Except my IBS. It is simple: diagnose it. it was too late for Kitchen. During that period [when Wendy was put off B12 doses]. coauthor of Could it Be B12? And then. her health deteriorated terribly. a Durham. But constant B12 medication has ensured that her health hasn t deteriorated much further. Megaloblastic Anaemias] have long lamented about the lesser importance that doctors give to B12 deficiencies. came under the scanner because he was treating at least 600 of his patients at one point using B12. he was prescribed gabaneuron for a slipped disc. adds Neil. But it was too late for my wife. In fact. Everything is out there for you to pick up. says husband Neil Kitchen. He took treatment for sleep disorder. she didn t ignore her B12 deficiency she was prescribed B12 dosage on time. one of Chandy s patients in the UK. no doctor had suggested a serum B12 test. I am as young as a 25-year-old. I will say. forgetfulness. and in the next few months Kohli completely recovered. He was asked not to prescribe B12 medication for patients who didn t have megaloblastic anaemia. Eminent haematologists such as Israel Chanarin [author of the book. again. it led to multiple sclerosis.

as confirmed by reports by the WHO and EU. confusion. autism . London. My father. neuralgia. a science enthusiast. Anil Kumar. dementia. always told us to have Vitamin B12 whenever we felt tired. Delhibased health writer Priyamvada Kowshik says she takes Vitamin B12 tablets every time she feels exhausted. a Delhi-based media professional and a chainsmoker. who has been an alcoholic. myalgic encephalomyelitis. Tired? Pop B12 Interestingly. says he always takes B12 tablets to beat the hangover. For his part. says he pops B12 pills to maintain his energy levels. The habit has stayed with such as Vikrama Singh from Imperial College. B12 is believed to offer benefits even for the healthy. Major Illnesses Due to B12 Deficiency Anaemia. have confirmed my fears in his writings that B12 deficiency is the increasing cause for several major ailments . depression. But he also warns: One shouldn t create an impression that all major ailments are due to B12 deficiency. Bangalore-based Prem. Dr Seth agrees that vitamin B12 deficiency cases are under-diagnosed. multiple sclerosis. Chandy s response: Let s spread the word first and then not overdo it.


Celebrities with B 12 Deficiency Problems JOHN F KENNEDY MADONNA MARGARET THATCHER .

does not mean they should be free from all scrutiny. The registration of the said society constitutes a contract between the said associations of persons for the said purpose keeping in mind the said conditions.Make RWAs penally accountable for unplanned construction Just because residents welfare associations are registered as non-profit societies under the Societies Registration Act 1860. says Debasish Roy The registration of residents welfare associations (RWAs) with the registrar of societies must be interpreted for social benefit and also read with the Indian Contracts Act. . One such condition has to be a) the condition of the real estate b) the nature of the construction being indulged in by the members of the society at the time of registration or intention thereof immediately after the registration.

Miracle Apartments Housing Society. That law and order situation emanates directly from neglect in framing the correct law and the execution of the said law in the form of administrative law. As the supreme office of governance for the national capital territory of Delhi. Therefore. The registration document for a) Cooperative societies (example: The Indian Express Credit and Thrift Cooperative Society. the office of the chief minister should initiate law commission work to plug this loophole in the law with a proper and due notification to the relevant offices. amount of garbage generated and electricity consumption. It should be noted that when a company is registered as a private limited company with the Registrar of Companies (ROC).For instance. drinking water and clean air. Madrasi Colony RWA etc) c) Housing societies (example: Parth Apartments Housing Society. within a closed walled group of apartments in a society then the registration document should specifically say so and should not allow the members of this society to flout this social contract by converting these apartments through any means into commercial establishments such as doctor s clinics. Let us take the other situation. the functioning of the company is severely restricted by the by-laws of the article of association and the memorandum of association. Even in such a case. Gujarati Sammelan etc) should specifically state the nature of the association and the limits of that associations functioning. passageways and roads). the registration document should mention that particularly and the members should not be allowed to deviate from this condition of registration. Bengal Colony Housing Society Mahavir Enclave etc) d) Corporate welfare societies (example: General Motors Housing Society. will play havoc with the availability of space. use of easements. where the RWA in question comprises people who owns plots of land and are planning to build houses. It also stretches the man made resource of electricity to be generated. Banga Darshan. distributed and consumed. Therefore. Converting houses where four to five people live and consume drinking water. the buck stops at the chief minister s office for good governance best practices. CGHS Medical Staff Welfare Society. which stretch the availability and use of natural resources such as parking space. The Kinnaur Weavers Cooperative Society etc) b) Residents Welfare Associations (example: Vasant Vihar C-Block RWA. park cars on the road or use easements to ease cars and their bodily self onto the main road. leaving this loophole in the law unprotected from citizens who take the use of natural resources lightly and cause a law and order situation as a result. natural resources. pour dishwater and wash water into drainage. However. Chittaranjan Park RWA. . Bengal Association. washing water. Canara Bank Housing and Welfare Society etc) e) Regional welfare socieities (example: Tamil Society. Andhra Society. property dealers offices and pathology laboratories. if converted into apartments ranging from four to 12 apartments on a plot of land. drainage systems. registration of a society is relatively an easier process and the functioning of an NGO or association under the societies registration act is limitless provided the barest minimum paperwork is couriered to the office of the registrar at periodic intervals. These examples are of commercial activities. if the RWA is for owners of apartments. (lanes.

The laws of good governance. It should be made mandatory by law for all the office bearers of any kind of nonprofit organization to report any change in the basic conditions to the local police with copy to the office of the concerned registrar. Areas such as the National Capital Region (NCR) are not only getting over populated every day but also getting populated in an unplanned and haphazard manner. is it logical to free the activities of NGOs and societies from all shackles and allow them to operate in such a manner so as to: 1) Pollute the air. For instance. which shares its profits. 3) Pollute the soil.Just because it is officially not an organization. extra electricity to be consumed. passageways and roads as parking lots. 4) Pollute the living standards of common people. 7) Hinder drinking water from reaching citizens. This will never trickle down but creep up. Executive action is required to handle this issue at the highest level immediately so that this trickles down at the lowest level of operations. Then the office bearers should be held accountable and responsible for the extra water to be consumed. if suddenly a plot of land measuring 300 square yards is sold to a builder and the builder develops eight apartments on the same. . Just because the charter members of an organization chose to disregard a profit motive at the time of registration through the by laws of a statute does not mean they automatically become trusted members of society whose intention is above scrutiny. 5) Overuse easements. 6) Hinder daylight from reaching citizens. the principles of equity and natural justice should ensure that the office bearers of such so-called nonprofit organizations should be accountable for changes in the basic conditions of the social contract with the state. extra sewage drained and extra parking space blocked that the new residents will be accentuating. 2) Pollute the water. 8) Encourage a law and order crisis to develop To be devoid of a hunger for profit is not excuse enough to let loose unmindful managers of society who will wreak havoc on the environment they live in. if any with its members and because it is not officially a profit seeking organization.

Piramal Healthcare launches aromatherapy for children with off the shelf products This is quite an innovation. off-the-shelf fragrances. many . says Debasish Roy Visualising this brand and execution of the production of the product must have taken quite an effort as it is obvious that the product team has thought out of the box. No pun intended. bored housewives who need the scent of the natural world to get motivated. we also know aromatherapy to comprise an experience. It is considered an exclusive experience. Following this long standing concept. However. Aromatherapy is usually associated with bored housewives and fat bank balances. this new range under the Jungle Magic brand introduces the effects of aromatherapy for children in the form of bottled. The word aromatherapy is automatically associated with rich. fat.

The brand could be poised over a juncture right now as it can be sold as perfume for children and also be sold as aromatherapy. This may be the ideal path to take for the company. it has also created categories and smells. this fresh new concept is amazing. However. which achieve different results. herbs and spices. The product will need a lot of channel sales partners and also a lot of advertising. However.natural oils. . In fact. Piramal Healthcare has taken it upon itself to get it done. We also know whose goose is usually cooked with this experience. It offers aromatherapy to chirpy an d bouncy kids for God s sake. positioning it as aromatherapy will give it a unique platform and the positive branding resonance will rub off on the brand. They could also think of below the line activities through events and connect to the positive brand recall effects that they should be looking at. Selling it as perfume for children will offer a lot of competition to the brand from all the perfume manufacturers in the world as Indian markets are open to the world now. One can imagine that this product may soon become another rage with children looking for this gift from their parents not only for the theraphy but also for the novelty value. If they did. As if they needed any more egging on. We shall wait and watch where the dice rolls.

The regulator came to know of the option agreement after the company had approached it to complete certain documentation. Amid fears that a ban on options could adversely impact FDI inflow. are permissible. it issued another notification lifting the ban -. head of M&A at law firm Nishith Desai Associates. Even after the government clarifying that such rights. said that there are instances where the RBI has raised objection even after the clarification by the Department of Industrial Policy & Promotion on the option issue. the ministry of commerce and industry banned the use of options in FDI transactions. foreign investors have a right to exercise such options to sell back shares to Indian promoters if certain conditions related to listing and performance are not fulfilled. Since the central bank has the final say on all cross-border inflows. .a decision that all concerned felt would put an end to adispute that was feared to have a serious bearing on future FDI deals. But in December. it may also send a wrong signal to investors. last September. the RBI put a question mark on the shareholder agreement between the promoters of a domestic company and its FDI partner which was sold a put option. said H Jayesh. FDI). For years. founder partner at law firm JurisCorp. Joshipura declined to name the company due to client confidentiality. A month later. it is not a good thing in these difficult times if what has been expressly rolled back is still sought to be enforced. the RBI has been objecting to such conditions on the ground that such inflows are foreign currency loans masquerading as foreign equity (or. the Reserve Bank of India (RBI) is unwilling to approve the practice. Confirming the development. While not aware of the specifics. in the form of in-built options in foreign direct investment (FDI). Since options can significantly influence the pricing and size of a deal. In eight out of ten FDI deals. With the RBI sticking to its earlier view on the subject.Special Rights to Foreign Investors Hit RBI Block Apex bank refuses to allow FDI with options despite commerce min saying rights permissible SUGATA GHOSH MUMBAI The dilemma among policy makers over allowing special rights to foreign investors acquiring strategic stakes in local companies has once again turned up like the proverbial bad penny. Nishchal Joshipura. industry lobbies and several professional advisors who mediate such deals. The move sparked a spate of representations from private equity investors. the ministry did a volte face. several companies may have to renegotiate the terms with their foreign strategic investors.

Agro Tech India president and CEO Sachin Gopal said the firm was undertaking a series of initiatives to achieve its target of being a diversified foods maker beyond its core Sundrop edible oils business which contributes 60% of its topline. 100 crore in capacity expansion over the next two-three years which would include setting up a . to invest 100 cr RATNA BHUSHAN NEW DELHI Two months after American foods major ConAgra Inc acquired tobacco-and-hotels major ITC's stake in its India arm Agro Tech Foods. is accelerating its India strategy. In an exclusive interaction with ET.Agro Tech Oils its India Strategy. ready-toeat meals and peanut butter in bottles and tubs. Act II popcorn to ready-to-eat variants. best known as the maker of Sundrop edible oils followed by Act II popcorn. investing . The moves include extending Sundrop to high-margin variants like oil sprays in cans.

and will fund the capacity expansion internally. 1. Its existing plants are in Uttarakhand and Hyderabad where it makes pop corn.82 crore.000 crore. ³We will need a third brand in the. Agro Tech plans to increase its manufacturing strength from two to six in three years.93 lakh shares. Gopal said: ³Yes. has increased to 3 lakh stores now. Sundrop has close to 45% share in the premium edible oils market estimated at . the company has zeroed in on a cost-effective way increase its salesforce. This also helps in getting better shareholder return. As and when the need arises we will look at getting one of our global brands here.peanut butter plant in Gujarat. Analysts say Agro Tech¶s aggression could also be a precursor to its American parent ConAgra further hiking its stake in its India arm. close to 98% of Agro Tech¶s business was driven by its three edible oil brands ± Sundrop. but said: ³Increasing equity is a big move and reflects ConAgra¶s confidence in the India business. Though categories like oil sprays and convenience meals are niche and not volume contributors.66% stake for Rs 51. these are long bets. the stake ConAgra acquired.´ Till five years back. Going by Nielsen data.´ Gopal said.´ He said Agro Tech¶s coverage which was about a lakh stores four years back. Gopal declined comment on the speculation. It would take five-seven years to bring such categories to a scaleable level. and the exercise which was kicked off four months back. or 3. analysts at banking and brokerage group Ambit Capital wrote in a report last month: ³Agro Tech has traditionally focused on its edible oils business and hence the company¶s blended margins reflected those of a trading business.1 to 51. ³Increasing share of our foods business and margin realisation go hand in hand« we need to grow our gross margins consistently. says the company. In November. While Agro Tech sold off Rath last year to Cargill. the company is now looking to introduce new products away from edible oils to capture the growing trend of µon-the-go¶ consumption. Crystal sells only in AP. ConAgra had become majority stakeholder in Agro Tech Foods by acquiring 3.´ .´ Gopal said. With support and intellectual property rights of its parent. It hired about 140 cycle rickshaw pullers on a monthly salaried basis. Anand Mour and Shariq Merchant. ConAgra Foods. To reach its target of reaching half a million stores by next year. hiking its overall stake from 48. and targeting a distribution reach of half a million stores by next year. But we don¶t see ourselves having more than three brands here. is getting the desired results. Agrotech will explore potential of launching premium brands from its American parent's portfolio like chocolate desserts and puddings.77%. ITC held 8. We expect the share of non-edible-oil branded foods segment to increase to 28% in financial year 2013-14 from 17% in FY11. but good bets. Rath and Crystal.6% stake in Agro Tech. On the brand portfolio front. Prior to this development. but there is no time frame yet. indulgence¶ space to complete our India portfolio.

3 crore paid by private insurers. But industry experts said response could be as poor this time as in the past. Actuaries are professionals who determine pricing of insurance products. Insurance regulator Irda for the second time in less than a year has called for applicants to fill up the post lying vacant since May 2011. as its salary offer of almost a tenth of what private actuaries are paid deters talent from taking the job. which don t mind paying high salaries foreseeing prospects of huge growth. 30 lakh annual package for the post of directoractuary compared with about .Irda¶s Bid to Hire Actuary may Hit Pay Hurdle Again Insurance regulator offers just one-tenth the salary drawn by private sector actuaries SHILPY SINHA MUMBAI The insurance regulator s ninemonth-long search for a director-actuary has been futile and may remain elusive. as expectations and offers don t match. after retirement of R Kannan. assumption of future profits and . Experts said Irda needs to raise the salary offer to attract candidates who earn hand over fist at private insurers. The regulator offers about .

Although Hema Malini is 2-3 years younger than the minimum age requirement of 40 years. The post of ED-actuary is also vacant after retirement of K Subrahmanyam. said Ashwin Parekh. chief actuary. The regulator relaxed the required qualifications for the post after its first vacancy advertisement failed to get any response. Currently. appointed actuary of ING Life Insurance and A Appa Rao. former LIC actuary. said GN Agarwal. of which two were short-listed. currently none of the LIC actuaries are eligible for the post. appointed actuary at SBI Life. The regulator is also facing the problem of finding suitably qualified actuaries for the top actuary post. Irda had formed a search committee to hire actuary. Despite low package. There is no dearth of actuaries in India now . but she qualified for the post. Some experts said salary is not the only reason why Irda is finding it tough to attract suitable talent for the position. The other option that the regulator has is to hire someone from state-owned Life Insurance Corp of . Irda is like a semi-government organisation and there is little room available for the chairman to do anything. Two candidates Hema Malini and Appa Rao were fulfilling all criteria. president. is looking after the functions of the post of director. an actuary said. most actuaries want to work from Mumbai. The regulator is likely to advertise again for the post in May 2012.sinha@timesgroup. Institute of Actuaries of India. There is also no sense of direction on whatever is happening in international market like solvency II. though final call will be taken by a panel comprising finance secretary and Irda chairman. joint director actuary. The insurance industry has been complaining that the delay in actuary appointment has been impeding product approvals. Working in insurance company is a different experience. including Hema Malini Radhakrishnan. said Sanjiv Pujari. However. However. Future Generali Life Insurance. national leader and partner. an actuary said. Actuaries would not like to join the regulator at a lower package. Irda got 5-6 applications. said some experts. said. Also. Following the relaxation. there are 250 fully qualified actuaries with fellowship. shilpy. economic capital and emerging area of risk management. Ernst &Young. Meenakumari J.valuation of businesses by looking into the probability of an event based on mathematics and mechanisms. candidates apply for the post. According to the Institute of Actuaries of India. Liyaquat Khan.

Irda chairman Hari Narayan

Kisan Credit Cards to Double as Debit Cards

The nearly 10 crore farmers who hold kisan credit cards (KCC) will soon be able to use their card as a deposit account and a debit card. This will help the government scale up its financial inclusion plan quickly without relying on bank accounts alone. KCC, which has been instrumental in faster delivery of credit to farmers, is like an overdraft account with a bank that has to be operated through a cheque book or withdrawal slip. The card is used only to store the details of the account. ³We are working on revamping the current concept of KCC. It is aimed at providing more financial freedom to farmers who can use this at various point of sales,´ said a finance ministry official, requesting anonymity. The revamped card will have features of both credit card and deposit account. ³This would reduce the need for multiple accounts in the bank,´ said the official. Banks will give interest credit to farmers with credit balances in KCCs to encourage them to remit farm sale proceeds into their KCC account. ³Today, farmers avail the full credit amount in one go and end up paying higher interest amount. If it becomes a debit card, they will use it as and when required and pay substantially lower interest burden,´ said UC Sarangi, former chairman of Nabard, or the National Bank for Agricultural and Rural Development. The kisan credit card scheme, which is administered by Nabard, was introduced in August 1998. By the end of September 2011, . 5.12 lakh crore had been lent through KCCs. A task force set up under Nabard had in June 2010 suggested that the KCC should be technology-enabled, and the credit limit be fixed for five year based on the banker¶s assessment of total credit needs of the farmer for a full year. Currently, credit limit for three year is fixed on the basis of cost of the assets proposed to be acquired by the farmer and his repayment capacity. Within this limit, banks carve out sub limits to cover short term, medium term and consumption needs.

India Passing Through Difficult Times, GDP to Slip to 7%, Says PM
However, Manmohan Singh exudes confidence that growth rate in the coming years would go up to 9-10%


Prime Minister Manmohan Singh on Sunday said the country was passing through difficult times and the economic growth in the current fiscal would be 7%, down from 8.5% a year ago. Our country is going through difficult times ... We are up to the task of meeting these challenges we face as a nation , he said while addressing the 10th Pravasi Bharatiya Divas being attended by over 1,900 overseas Indians. Despite an adverse international environment, Singh said, the Indian economy is expected to grow by about 7% this financial year ending March 31. The country recorded a Gross Domestic Product (GDP) growth rate of 8.5% in 2010-11 and was initially estimated to grow by 9% in the current fiscal. The growth rate projection, however, was scaled down gradually by the Reserve Bank as well as the Finance Ministry. Although Finance Minister Pranab Mukherjee had on Saturday said the growth rate in 2011-12 would be about 7.5%, Singh further lowered the projection to 7%. The growth rate in the first half of the year slipped to 7.3% from 8.6% in the year ago period. The Prime Minister, however, exuded the confidence that growth rate in the coming years would go up to 9-10% as the economic fundamentals are strong and ...constitutional processes are robust . ...we hope to bring back the rhythm of our growth process to sustain an annual growth rate of 9-10% in the medium-term. Our domestic savings rate which currently stands at 33-35% of our GDP will greatly facilitate the realisation of our growth objectives , he said. Singh also said that efforts to combat inflation have started yielding results and there has been an improvement in the situation. Fulfilling a longstanding demand, Prime Minister Manmohan Singh today announced a novel pension and life insurance scheme for overseas Indian workers that is expected to benefit over 5 million workers, especially those in the Gulf, and help them save for their return, resettlement and old age. Addressing the second day of the 10th Pravasi Bharatiya Divas in this Rajasthan capital, Singh also sent a message of comfort to the diaspora saying that his government is acutely conscious of the safety and security of Indians living abroad, particularly in Gulf and West Asia. I am happy to inform you that the government has decided to introduce and sponsor a new Pension and Life Insurance Fund for overseas Indian workers. The scheme will encourage, enable and assist overseas workers to voluntarily save for their return and resettlement and old age, he told over 1,900 delegates from 60 countries.

The scheme, which was recently cleared by the Cabinet, will also provide a low-cost life insurance cover against natural death, Singh said, adding that this fulfils a long pending demand of our workers abroad. Under the scheme, the government will co-contribute . 1,000 per annum for all subscribers who contribute between . 1,000 and . 12,000 per year. Women overseas workers will enjoy a special additional co-contribution of . 1000 a year. Welcoming the Chief Guest and Indian-origin Prime Minister of Trinidad and Tobago Kamla Persad Bissessar, Singh heaped praises on the Caribbean nation and said our shared passion for cricket is well known. Which Indian sports fan does not know the names of cricketing legends like Brian Lara or Sonny Ramadhin, Singh noted. Singh also said India has told countries of Gulf and West Asia, some of whom have witnessed an upheaval in the recent past, that it has a stake in the peace and stability of this region and asked them to appropriately look after the interests of its citizens in these countries. We believe that the Indian diaspora has much more to contribute to the building of modern India. We propose to facilitate, encourage and promote this engagement, he said.

PM Manmohan Singh inaugurates 10th Pravasi Bharatiya Divas with Trinidad and Tobago Prime Minister Kamla Persad Bissessar and Rajasthan Chief Minister Ashok Gehlot in Jaipur on Sunday PTI

he Mother of All Reforms

) There is a growing. improve tax administration. when they were merely having a chat. and a likely waste of time. Processes for electing citizen s representatives are democracy s warp its vertical threads. Each type of interaction fulfils a purpose and should be used accordingly. we can lament that this is our unfortunate destiny: a combination of our argumentative culture and the systems of democracy that we have adopted. FDI in retail and the insurance sector. Which is. Processes of social dialogue. conflict resolution and consensus should be conducted to produce results. simply. the opposition or sections of civil society as political analysts are. such as We were having a dialogue . The strength of democracy s fabric lies in a combination of vertical and horweft. and. (Think of the rush to announce FDI in retail. Processes for social dialogue. as many economics commentators do. hence less concrete. an argument. as they are. Let us consider each of these. In other situations. It requires action in three broad areas: improvement of processes of social dialogue. Or we can argue about who to blame for the discord the government. Diversity on many dimensions social. albeit yet small. Urgently necessary reforms are stuck in contention amongst affected stakeholders: reforms to reduce corruption. Or worse. and consequent differences of perceptions and needs are straining India s democratic fabric. the practical way is to address the root cause of the problem. consensus is necessary whereby even the minority will support the decision even though they may not have much passion for it.Institute democratic processes to reconcile conflicting views and arrive at consensus that we can act on India s discordant democrats cannot agree. For a layman. for example. Whereas an expert carpenter can distinguish different tools and understands the functional need for their differences. deliberation and consensus formation. thus. The need for consensus has never been more. strengthen the fabric of India s democracy. In some situations. are democracy s weft. We can wring our hands and lament lost opportunities. a debate followed by a decision by majority vote is appropriate. laymen use the term dialogue loosely. this causes more delays when latent conflicts not resolved emerge and stall action. touchy-feely . land acquisition. than processes for enrolling voters and counting their votes. Often. An expert can distinguish a conversation. The weft of Indian democracy must be made much stronger for reconciling conflicting views and enabling faster and more equitable economic progress. Consensus is a search for the highest common factors and agreement about them. mandates to use these processes and strengthening of institutions required for their performance. even though a minority may remain strongly opposed to it. consultation and consensus are less mechanical. that link people laterally within society. India has developed these very well: its electoral machinery is admired around the world. rather than quickly settling on the lowest common denominators merely to . a debate and a dialogue. political and economic. Strains in India s democratic fabric are evident when elected parliamentarians question the rights of citizens to recommend what Parliament should do. On the other hand. our inability to agree and align our actions. body of expertise in the world on how processes for consultation. Therefore. This expertise must be systematically tapped to improve the speed and quality of consensus and. The urge is to decide immediately and get into action. to mention some. there is a bias against them: they are considered fuzzy. all metal devices with wooden handles are tools. Similarly.

and to split them and keep them small. India will be able to implement many difficult reforms. Switzerland and Germany are examples of countries in which social consensus is actively sought. culturally or even constitutionally. that processes of social dialogue must be followed. Disagreements about which civil society organisations should have been invited to give recommendations for the Lokpal Bill. and how they should have gone about it. The third requirement for efficient consultation is good institutions for representing stakeholders. and good civil society organisations representing various other stakeholders. And there are a few situations. are necessary for an effective social dialogue. suggest the need for a pre-specified consultation process in India too. ARUN MAIRA MEMBER. and the right process applied. The constitution of representative institutions.have none opposed. with several steps specified. where unanimity is required. with all strongly in support. internally democratic and transparent political parties are necessary for good parliamentary democracy. So. For example. albeit very few. We must hear all the people. installation of democratic processes to arrive at genuine consensus must be the mother of all reforms. German law requires that stakeholders be consulted in law-making processes. If India s discordant democrats could come to consensus more quickly. But the masses of individual inputs must be aggregated to make sense of them. Sweden. Therefore. Japan. is mandated by law and their roles in consultation are provided for. Whereas there is often a tendency to suppress the formation of unions and associations. such as business federations and unions. situations must be diagnosed. Therefore. The second requirement to improve the lateral weft in democracy s fabric is to mandate. good unions representing the collective interests of workers. transparent and large to make social dialogue processes effective. good business associations that synthesise the views of myriad businesses. Just as large. PLANNING COMMISSION . Internet-based technologies make direct consultation with citizens seemingly easy. as German and Japanese experience shows. so that the voices of those they represent will not be loud and may be ignored. we must encourage the formation of good associations that are democratic.

Some of this can be attributed to external factors such as the financial crisis in the western world. But that is for the future. If India had backup arrangements with other central banks say. high inflation and a weakening rupee are signs of weak fundamentals. The rupee can remain strong only if India continues to attract net foreign inflows in sufficient quantity.6 billion during April-October 2011-12 from $27. If India did not hold large reserves. But in the Indian context. There can be no doubt that slower growth. we must also look at domestic factors as the main reason for the macroeconomic problems. the panic on the rupee would be even greater. China and Brazil are also slowing down. Global risk aversion and outflow of funds from emerging markets is affecting countries with weaker fundamentals. If India s inflation is higher than world inflation for a persistent period of time as has been the case since 2008 at some point. high inflation and a weakening rupee. by joining the east Asia reserve pool or by having arrangements with major central banks it could hold fewer reserves. The weakening rupee comes as no surprise. The RBI alone cannot be blamed or solve these problems. The recent controversy over foreign direct . They are inter-related and require a coherent and coordinated policy response. the rupee must fall to maintain the real exchange rate.Guest Column Restoring High Growth AJAY CHHIBBER India faces a Trifecta: slowdown in GDP growth. net inflows in India have declined to $0. The main reason for the lack of confidence is the economic slowdown and the lack of political cohesion to continue with badly-needed reforms to revive it. As a result.5 billion in the corresponding period in 2010-11.

GST. The passthrough effects of fuel prices and other commodity prices will be felt either on more inflation or a larger fiscal deficit. the latter is a result of persistently high inflation and not its cause. the fight against inflation becomes more difficult. the GST stuck in the states and no prospects of any labour reform. With a weaker rupee. a greater share of government expenditure now goes to increasing demand. people will say India flirted briefly with rapid growth but sank back to the Hindu growth rate . A key factor behind inflation is that India has run a very large fiscal deficit and a very loose monetary policy for a long time as part of a stimulus package following the 2008 global financial crisis. advanced purchase agreements in futures markets globally and intelligent use of private stock holding. now the issue is how to resolve the gridlock in legislating change. helping fuel inflation. The new law for FDI in retail would also help in reducing middlemen and handling losses and margins. to name a few.investment in retail was a clear signal that political deadlock will not allow reforms to go through. it is hard to see how to revive growth prospects. Inflation was a problem even before the weakening rupee. If not. and financial access to SMEs. The policy uncertainty has also slowed down investment despite considerable liquidity in the market. India s top leadership knows the answers. With these we can be back again on the top table of growth. the economy started to slow down. A weakened rupee encourages exports and discourages imports and may be the best hope for some revival. but with balance sheets of major corporates affected by a weaker rupee. Subsequently. (The author is assistant secretary general at the UN and regional director for Asia and the Pacific at UNDP) . How does India get back to growth and low inflation that we saw in the golden period 2002-07? Simply stabilising the economy by cutting expenditure and raising taxes will not solve the problem although it may avert a crisis. the ensuing exchange rate uncertainty will hurt investment. It will take India back to an era of lower growth. FDI in retail. in fact. This helped prop up growth artificially at over 8% between 2009 and 2011 but led to inflation as supply bottlenecks meant demand outstripped supply. labour laws. We need a shift to much smarter food reserve management through a better combination of physical storage. and combined with measures to further reduce red tape. when the RBI started to reverse its stance and apply the brakes through higher interest rates. With rising subsidy payments and a growing wage bill. With key reforms in insurance and land acquisition held up in Parliament. Mismanagement of the PDS is also a contributor to food inflation with a large share of India s foodgrain reserves destroyed by poor storage and transport bottlenecks. The solution has to be a new round of reforms that will restore confidence in the Indian economy and a fiscal compact to bring the deficit down in the next three years through expenditure restructuring and tax reform. The reforms needed are obvious land acquisition.

the US currency appears to be regaining ground against currencies of nations with large current account deficits and high rates of inflation Portuguese-speaking concierges have of late been much in demand in New York hotels. but that will only avert an outright crisis To resume fast growth. After steadily declining for many decades. Tourism on its own hardly dictates a currency s trend but other data from US exports to foreign direct investment. These flows are all working to narrow the US current account deficit from a peak of nearly 7% of GDP at the height of the US consumption boom in 2007 to 3% now. India needs another round of economic reforms The challenge is to find the political will to do what leaders know has to be done Greenµback¶: The Dollar is on a Comeback Trail Following a decade of underperformance. FDI inflows have picked up meaningfully over the past decade and are currently running at 1.5% of US GDP compared to the mere 0. inflows reaffirm the greenback s highly competitive position. the multilingual cacophony on Fifth Avenue suggests tourists from other parts of the world too are finding the US a bargain. Adjusting for relative inflation differentials. . While the Brazilian real is an extreme case.5% share in 2002. or FDI. which dates back to the end of the Bretton Woods system in the early 1970s. the US dollar by mid-2011 was at the lowest level against currencies of its trading partners in its floating rate history. The people of a country with one of the most expensive currencies in the world are flocking to a nation where the currency is about as cheap as it has ever been. A record number of Brazilians are floating around the city on shopping expeditions and could do with all the local help possible. the US share of global exports is beginning to tick higher from a low of 8% in 2008.India needs fiscal stability. lying at one end of the valuation spectrum.

not just due to weak demand but also on account of an onshore production boom in places such as North Dakota. the country s trade deficit could further narrow. From a low of 68% in 2005. a recent report by the Boston Consulting Group. US imports of oil too have declined over the past five years.The long-talked-about trade imbalance should narrow even more in the years ahead as the US import bill for energy falls further and some manufacturing moves back home. then . all abetted the trend of emerging market currency strength. The Brazilian real appreciated by more than 200% against the dollar over the past decade. Many emerging market currencies have depreciated significantly against the dollar over the past few months. if capital flows return with the sort of fervour seen in many years of the past decade. Meanwhile. the Turkish lira and the Indian rupee fell by 15-20% against the greenback. the Brazilian real. With multinationals likely to bring some production work for the North American market back to the US. But over the past five years. The current account deficits of these economies ran at anywhere between 3% and 9% of GDP while inflation was close to double digits in India and Turkey. followed by other commodity-exporting currencies such as the Russian rouble and the Chilean peso that more than doubled in value during that period. However. the US is now 78% selfsufficient in terms of its overall energy needs. as is the nature of markets. Some of the world s weakest currencies in 2011 belonged to those countries running a large current account deficit and with inflation rates much higher than the US. manufacturing in the US will be just as economical as in China for many goods made for North American consumers. The South African rand. suggests that the US manufacturing sector is set for a major revival. the Chilean peso and Polish zloty declined by around 10% largely due to their current account deficit positions of 2. higher efficiency as well as greater use of biofuels and unconventional liquids such as shale oil. The popular explanation is that the currency weakness is a function of heightened risk aversion arising from troubles in euroland. These trends are already in progress but are yet to be recognised by the conventional wisdom. To be sure. but the bigger story may well be that the dollar is on a comeback trail as many of factors that led to its decline and the rise of emerging market exchange rates have exhausted themselves. BCG estimates that by 2015. Pay and benefits between 2005 and 2010 rose 19% annually for the average factory worker in China while the cost of employing US labour increased by only 4%. surging capital inflows and stable to falling inflation rates. the pendulum swung too far and is probably now retracing its path. China used to be the clear choice to build a manufacturing plant for global suppliers because of its low-cost labour. the greenback appreciated by more than 30% on a trade-weighted and inflationadjusted basis. Between 1991 and 2001. the renminbi has appreciated 20% against the dollar and China s annual inflation rate has averaged 1% more than that of the US inflation. Perhaps more surprisingly. That can explain some of the volatility. The situation was very different a decade ago when China was just joining the WTO and the US dollar was in the midst of a powerful bull market. Similarly. The dollar bear market of the past decade more than reversed the earlier gains with currencies of many emerging markets rising the most instead. Booming exports. That undermined the competitiveness of the manufacturing sector and contributed to the record widening of the US current account deficit. cheap currency and significant government incentives to attract foreign investment. or BCG.5-5% of GDP though all of these countries had less of an inflation problem. The ramp up in production of shale gas with new technological breakthroughs has played a meaningful role in cutting down the US import bill for energy.

it can happen in very quick time. The real story here is that the dollar appears to have turned the corner after a decade of underperformance. currencies such as the Brazilian real still have a very expensive feel about them. Its fundamentals are improving as evident in the narrowing current account gap and the underlying US economy is more competitive than it has been in a long time. the domestic fundamentals of many emerging markets are deteriorating now after the vast improvements from the low expectations base of a decade ago. risk appetite is unlikely to get anywhere near as high as in the heydays of the 2000s. many economies from those in Europe to the big emerging markets are grappling with all sorts of local problems and their exchange rates are no longer that competitive.the large current account deficits will get funded easily and not be a drag on the currencies. the sudden strength of the dollar is not strange behaviour. On the other side of the equation. unchanged on an inflation-adjusted and trade-weighted basis. on a threeyear basis. conversely. When commodity prices come unhinged due to a likely fall-off in commodity demand from China. Markets always price in any change at the margin and the dollar could be in a bull market for the next few years as its fundamentals improve relative to the rest of the world. Further. the Indian currency is. some catalyst is needed to correct the misalignment. the real will correct rather abruptly. However. while the rupee s recent fall appears dramatic. and once the process begins. Usually. Interestingly. Traditional metrics such as inflation rate differentials and current account positions that long dictated exchange rate movements but were forgotten in the last decade s mad rush to chase growth in emerging markets are back on the ascendant and that situation is likely to persist for the foreseeable future. and so will keep risk-seeking behaviour in check. Relatively high commodity prices are preventing a bigger decline of the real. In this regard. the sharp weakness of many emerging market currencies over the past few months and. Fifth Avenue may yet again become a primarily English-speaking zone. The psychological scars suffered during the serial financial crises take a long time to heal. While the rupee now appears to have more than made for its past overvaluation. (The author is head of emerging markets at Morgan Stanley Investment Management) RUCHIR SHARMA . in fact. Valuation has never been a good timing tool on the currency marketplace and deviations from fair value can persist for years at a run.

or sectoral. Even my tribe of usually self-important columnists. If there s one trend I ve noticed in the prediction and forecasting business. or even more exotic like the possible yield curve of German bunds or something. a favourite . nobody seems to want to stick their necks out for what promises to be an impossible year. predictions and forecasts.Letter From London Economic Plates are Shifting Sudeshna Sen This is the time of the year when we all wallow in an orgy of reflections. not only have the Mayans predicted the world is going to end in 2012. who are more than happy to lecture anyone at the stroke of a key. The year 2012 is giving all the usual crystal-ball gazers immense trouble. Remember that word delinking which became. for a very short period of time. are being unusually circumspect. it s that most people are restricting their pronouncements to a very narrow field: either geographical. confusing the issue.

Hate to upset everyone s plans. I m appalled. it s to keep an eye out of either window. The Russians are in the throes of political unrest. as far as I can make out currently. Igather the UP assembly polls are about the most important thing that can happen. food is one of those things that s intensely local. and even Sarah Palin. I don t get cosmetic surgery. or investors in India understands why Rahul Gandhi needs to be hyperventilating over some local election instead of national issues. how they re getting there. yes. Tesco has been making losses all over US. I ve been doing a quick scan of headlines around the world. and I m vaguely looking at all the Didi and Maya stats and psephs. And it isn t quite clear that the global majors will want to take over all the mom-and-pop shops. Frankly. they aren t issues we relate to. are seriously bothered about the US increasing its defence presence in the Asian sphere. I d even say fragmenting. Like a fellow noman s land traveller told me after we d just come out of a serious briefing by a seriously-important Indian government official. so all those women don t die of cancer or leaking or some bizarre medical condition. et al. Now. the government will let the FDI rule in. I could be looking into different planets.. but far more fundamentally. not just to me. Where they re going. Today s headlines in the UK and European media are about faulty breast implants for those of us who don t live in the developed world. not when the global economy is headed downhill. Before I get to Europe and India. in the global . This time this year. given that Indian political leadership is currently non-existent. Take this weekend.e. but nobody anywhere including NRIs and Indian overseas companies. the G20 club. or even understand. Which. learning about diaries carved in stone tablets and assembling Ikea furniture. in what different countries and regions see as their national priorities for the immediate future. To be fair. The Chinese. is completely incomprehensible as a matter of national importance. Carrefour is struggling. not in markets or P/Es.buzzword among economists and analysts until the 2008 crisis killed it? If there s one thing one learns living in ano-man s land between two and more different worlds. from where I see it. UPA officials can fulminate all they want at Indian businesses. It s always been difficult. Just now. Mitt Romney or Nick Santorum? Frankly. And that s new. because things seem to be much worse than the media reports. I m now getting worried about India. and Clinton. who s gonna help all these women with mattress stuffing in their bodies? It s an issue. but global retail majors are in what we d call deep trouble. It s a different universe. like all the rest of my Indian readers. And now to India and Europe. when I look out of those windows. and though they tell me they d be willing to make the long-term investments in India off the record. with very little in common between what is. and what they want to do at the end of the road. Anna Hazare and Team continue to be. i. I think the world is delinking. but to everyone in Europe and Asia. for women who chose to get bigger lingerie cup sizes. But it s never been so completely disconnected. so don t hold your breath. a quick look at what s happening in US. Not like the last US presidential elections. to use a convenient yardstick. As a UK taxpayer. the French and British governments are deciding to use taxpayer money to get those implants out. the worlds I most intimately track. to the rest of us everywhere. the primary issues seem to be about same-sex marriage and abortion. I saw Indian retail stocks are rising on the hope that after the UP assembly elections. some French company used bad silicon to manufacture breast implants for cosmetic surgery. I don t get the Indian headlines these days either. everyone had heard of Obama. like Iowa. which I look at from the midway GMT time zone between Asia and US. But hey. UP is a vague location in a remote somewhere.

more localised and less interconnected. I also saw something about foreign airlines being allowed to hold 49% in Indian airlines. I saw a study by Ma Foi. About the way I m feeling right now: schizophrenic. get real. Everyone here is expecting job cuts. one of the bigger temp agencies in India. The EU and India played a key role in final negotiations that unlocked the pact on the . Oh well. about how Indian employees expect more money because they think their salaries have no relationship to their performance.context. not salary hikes. So here s my only prediction for 2012: the world is going to get narrower. People. irrelevant. There are very few foreign airlines with purses deep enough or the willingness to bail out Kingfisher. and how hard it s going to be for companies. in my no-man s land. Perspectives India a Constructive Force in Durban A legally-binding framework alone can ensure that countries cut emissions at the levels that science dictates The Durban conference in December 2011 marked a breakthrough in international efforts to combat climate change. Oh. keeping wage bills down and not allowing real income rises is accepted economic theory.

This means that we will simply not succeed if the major emerging economies are not on board too. The result of the Copenhagen conference in 2009 and the Cancun conference in 2010 mobilised significant action across the globe in the form of emission limitation or reduction pledges for 2020 from some 90 countries. But it should be clear to everyone by now that Kyoto is not going to save the planet. The agreement reached on the Durban Platform allowed the EU to agree to a second commitment period of the Kyoto Protocol. plus other interested parties. The EU fully supports that. It covers too small a proportion of global emissions to prevent dangerous climate change. the South African presidency of the conference asked the EU and India. India and many others. developed countries must do more. But in today s interdependent world. The EU believes the new global framework must be legally binding because this provides the strongest possible signal that countries will follow through on their commitments. This is encouraging. These include important action by India and other developing countries. Fortunately. This is what a successful outcome for almost 200 different parties looks like. we both gave a bit of ground to get a good result for the global community. and all the projections point to this share continuing to increase. majority of emissions come from developing countries. We also understand that sustainable growth will be among the objectives of India s new Five-Year Plan to be adopted in early 2012. the sum of emission reductions for 2020 resulting from our collective efforts is insufficient. the Durban Platform ensures that this principle will continue to apply. While protecting our respective interests. We are keeping our side of the bargain. Kyoto is not the only game in town. and earlier. With the others that may join. India s National Action Plan on Climate Change is being implemented. The Durban Platform explicitly recognised this and launched a work plan to enhance our collective ambition and explore ways to close the ambition . Of course. This would also not be in India s interest given its great vulnerability to the effects of climate change. and this could enable India to overachieve its Copenhagen pledge for limiting its emissions intensity. to huddle together and sort out our differences. In stating that the new global climate framework will be placed under the Convention. It is no secret that the EU wanted the Durban Platform to be about developing either a protocol or another legal instrument. At around 3:00 am on Sunday. This is vital to give confidence that all will deliver and to enable all of us to increase our commitments to the level of ambition science requires. the second period will cover at most 15-16%. December 11. India s environment minister Jayanthi Natarajan and I agreed on the formula of an agreed outcome with legal force . Together. India wanted to add a legal outcome as a third possibility.last morning of the conference. Today. as India and the rest of the developing world had demanded. what all countries promise to do must have equal legal weight. The EU felt this was too weak. not as it was 20 years ago. A voluntary pledge and review system would not provide these assurances. The EU fully recognises that commitments to curb emissions should be differentiated in line with the principle of common but differentiated responsibilities and respective capabilities enshrined in the UN Framework Convention on Climate Change. That is what UN negotiations are about. but it must be applied in a way that takes account of the world as it is today. The EU accounts for 11% of emissions. we found the compromise that provided the basis to launch negotiations on a new global legal framework for climate action that the world so badly needs. But we also know that despite the efforts from the EU.

Our desire is to design a legallybinding multilateral framework that helps India to do this. minister Natarajan has my sincere appreciation. To have a chance of holding global warming below 2° C compared to the temperature in pre-industrial . We also respect that India s contribution will reflect the tremendous development challenges it faces. On the contrary. The EU fully acknowledges that while India is now one of the biggest emitters in absolute terms due to the size of its population. not least the need to eradicate poverty and provide energy access to all. For this. While once again confirming India s role as a major player and defending her country s interests. the EU is convinced that the best way forward is through a coherent sustainability strategy that addresses these challenges and the climate challenge together. and she deserves no less from others. minister Natarajan ensured in Durban that the world can move forward in tackling one of the greatest challenges facing mankind today. Nobody denies the absolute priority given to meeting these challenges and that this will mean that India s emissions will continue to grow in the near future even on a low-carbon development pathway. (The author is European Commissioner for Climate Action) CONNIE HEDEGAARD . the global community is going to have to pull together. both before and after 2020. That is why a new framework for truly global action is needed. its percapita emissions are very low compared to those of the developed world and other major emerging economies.

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