Economic Times ⁽²¹⁸⁾

We spend more than 0.7 per cent of India’s GDP on fertiliser subsidies. This is almost twice the entire amount we spend on higher education. Economic Times, February 28, 2001 WE SPEND more than 0.7 per cent of India’s GDP on fertiliser subsidies. This is almost twice the entire amount we spend on higher education. In absolute terms, the subsidy amounted to a whopping Rs 13,200 crore in 1999-2000. There is little economic justification for placing this huge burden on the Indian taxpayer. Not surprisingly, even the Prime Minister’s Economic Advisory Council advocates an end to the subsidy in a report available on his website. The bulk of the fertiliser subsidy rewards the gross inefficiency of our urea manufacturers. According to the second report of the Expenditure Reforms Commission, issued on September 20, 2000, production costs of urea vary from Rs 4,800 per tonne for the most efficient plant to Rs 15,175 per tonne for the least efficient one. In today’s highly competitive environment in which paper-thin margins in costs are sufficient to drive firms out of business in most…

The major new stimulus to growth must come from further freeing up of the Old Economy, which lags behind the unfettered New Economy. Economic Times, January 31 2001 Speaking to the U.S. Congress during his recent visit to the United States, Prime Minister Vajpayee noted, “In the last ten years, we have grown at 6.5 per cent per year: that puts India among the ten fastest growing economies of the world.” He boldly went on to add, “We are determined to sustain the momentum of our economy: our aim is to double our per capita income in ten years -- and that means we must grow at 9 per cent a year.” Vajpayee is to be applauded for setting ambitious goals for the nation he leads. After all, no general ever won a war without being ambitious. The bad news, however, is that the Prime Minister’s resolve is about to be tested. Finance Minister Yashwant Sinha must soon present the second budget of the present government. If he fails to announce bold new initiatives, the Prime Minister better shelve his…

In a recent report entitled Unfair Advantage: Workers' Freedom of Association in the United States under International Human Rights Standards (August 31, 2000), Human Rights Watch offers a stunning indictment of the laws governing worker rights and their enforcement in the United States. Economic Times, December 20 2000 In a recent report entitled Unfair Advantage: Workers' Freedom of Association in the United States under International Human Rights Standards (August 31, 2000), Human Rights Watch offers a stunning indictment of the laws governing worker rights and their enforcement in the United States. Based on systematic field research in California, Florida, Michigan, New York and numerous other states, the report offers an unusual window to the violations of worker rights that happen routinely in the country. The report also reveals a danger underlying the proposed link between trade and labor rights that has not been recognized to-date: the link may lead to trade wars between developing and developed countries in which each accuses the other of violations of labor rights. But consider first the assessment of the laws themselves as presented in the report.

Mathematician Stanislaw Ulam once asked economics Nobel Laureate Paul Samuelson whether he could point to an idea in economics that was universally true and not obvious at the same time. Samuelson’s response was the “principle of comparative advantage.” Economic Times November 22 2000 Mathematician Stanislaw Ulam once asked economics Nobel Laureate Paul Samuelson whether he could point to an idea in economics that was universally true and not obvious at the same time. Samuelson’s response was the “principle of comparative advantage,” according to which two countries necessarily benefit from engaging in free trade with each other provided their relative production costs are not identical. Being based on a mathematical relationship, the principle easily passes the test of universal validity. And centuries of assertions by politicians, journalists and policy analysts directly contradicting the principle testify to its subtle nature. If you are among free-trade sceptics, consider the following parable. During the 1970s, a trade economist was invited to visit China. As he toured the country, he noticed that construction workers invariably used shovels. He could not resist suggesting to his host…

We persist in ignoring the lessons of our own experience and stand ready to punish the consumer in favour of narrow, short-term industry interests. By all accounts, the government is poised to replace import licensing on used cars by prohibitive tariff duties and technical barriers. Economic Times October 25 2000 It was with much apprehension and fear that India lifted import controls on 714 consumer goods on March 31, 2000, following a WTO ruling. The messiahs of doom had predicted that imports would flood the markets and destroy the local consumer goods industry. But as the Commerce and Industry Minister Murasoli Maran explained in a recent interview published in the Economic Times (October 14), the “Apprehensions about surge in imports are misplaced.” Non-oil imports grew a paltry 2.78 per cent during April-August 2000. “This is definitely not a surge,” noted the minister boldly. This experience is a part of the now familiar pattern around the world to which India is no exception: greater openness benefits not just the consumer but industry as well. With liberalization, India has not only accelerated its growth rate but also…