ET2004 (12)

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Get set to weave history

India stands on the threshold of a historic opportunity to accelerate the growth of manufacturing. Textiles and clothing account for nearly 40% of India's manufacturing output. And the time for giving this highly labour-intensive sector a major push has never been better. Will Dr. Singh's government seize the opportunity? Reform labour laws to end fragmentation in the textile industry and grab the historic but short-lived opportunity, which will come up this weekend as the quotas go. Behind the fog of the populist expenditure packages floated daily, the ray of hope for the proponents of reforms remains the prime minister himself. True, progress on reforms has been slow but the blame for that goes to the anti-reform wing of the Congress that is reasserting after being underground for 15 years. Thus, it is Dr Singh, who called for an end to the small-scale industry (SSI) reservation in a speech to the Small Industries Development Organisation some months ago. He is also the one to have called for an end to the export subsidies that risk being countervailed abroad. And he also…

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Are we spinning the right yarn?

The quota regime that has governed the exports of textiles and clothing from developing countries to the United States, European Union (EU) and a few other developed countries for nearly four decades will meet its demise on January 1, 2005. Is India ready to capture a much larger share of exports to these markets? Read full article The quota regime that has governed the exports of textiles and clothing from developing countries to the United States, European Union (EU) and a few other developed countries for nearly four decades will meet its demise on January 1, 2005. Is India ready to capture a much larger share of exports to these markets? Clothing production, which involves cutting fabric into different pieces, grouping them by different parts and sewing them into complete garments is one of the most unskilled-labour-intensive activities.

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Bipartisan Predicament

Few proponents of reforms had thought that in a controversy between the Planning Commission deputy chairman Montek Singh Ahluwalia who symbolises pro-market reforms and the Left that abhors them, they could side with the latter. Yet, sadly, that is where some of us find ourselves in the controversy over the appointment of foreigners and employees of multilateral institutions to the consultative groups of the Planning Commission.Few proponents of reforms had thought that in a controversy between the Planning Commission deputy chairman Montek Singh Ahluwalia who symbolises pro-market reforms and the Left that abhors them, they could side with the latter. Read full article Few proponents of reforms had thought that in a controversy between the Planning Commission deputy chairman Montek Singh Ahluwalia who symbolises pro-market reforms and the Left that abhors them, they could side with the latter. Yet, sadly, that is where some of us find ourselves in the controversy over the appointment of foreigners and employees of multilateral institutions to the consultative groups of the Planning Commission. Admirers of Mr Ahluwalia, among whom I count myself, are acutely aware of…

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Kelkar's Balancing Act

Fiscal Responsibility and Budget Management (FRBM) Act, 2003 requires that the revenue deficit be eliminated entirely and fiscal deficit be reduced to 3% of the GDP by 2008-09. The Act also requires that each year the revenue deficit be reduced by 0.5% of the GDP and fiscal deficit by 0.3% of the GDP until the final 2008-09 target is reached. How can this be achieved? The recent report of the Kelkar taskforce offers a roadmap. Dr Vijay Kelkar, one of India’s finest economists to serve the government of India, completes his two-year term as adviser to the finance minister this month. During this brief stint, he has provided the intellectual leadership that is rare in policy making. Few observers can forget the intense debate he launched through the comprehensive draft reports on direct and indirect tax reforms soon after he took his position at the invitation of the former finance minister Jaswant Singh. That debate set a new standard for giving the common man a voice in the policymaking. Having closely observed the deployment of the Gramm-Rudman-Hollings Act to bridge…

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Moving Trade Policy Forward

The Union commerce and industry minister, Mr Kamal Nath, scored an important victory in Geneva last month. must now build on his success by further reforming India’s trade regime. The National Foreign Trade Policy, due on 31 August, offers an excellent opportunity to accomplish this objective. The policy must pay particular attention to two issues — export subsidies and anti-dumping.The Union commerce and industry minister, Mr Kamal Nath, scored an important victory in Geneva last month. To his credit, while he engaged in tough talk and successfully extracted the concessions he sought, he did not shy away from making the necessary concessions of his own. Abandoning India’s original, self-defeating stance that it will not accept any reduction in its trade barriers in agriculture, he agreed to place agricultural barriers on the negotiating table in return for similar offers by his counterparts. That led to a happy ending for all — except a handful of obstructionist NGOs which tried until the end of the negotiations to provoke developing countries into blocking the deal. Kamal Nath must now build on his success…

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