ET2008 (12)

A Quiet Revolution in Service Delivery?

It is only through demonstration in some sectors that we will bring pressure on service providers in other sectors - including the public sector - to mend their ways. Read full article Abstract:The events preceding the recent trust vote in the Parliament, the chanting, the shouting, the waving of wads of cash, nd the display of total contempt for the country's highest office expressed in the hissing and heckling that forced the prime minister to table rather than deliver his speech point to virtual chaos in governance. Daily reports of rapidly deteriorating law and order situation in our major cities reinforce this picture. Yet, within the complex democracy that is India, this image masks some dramatic improvements under way. The entry of multiple private-sector players into areas that were previously monopolised or dominated by the government is bringing a quiet revolution in service delivery.

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Ease of Doing Business at World Bank

An index that fails to correctly represent two of the best-performing economies of the world cannot get a pass from serious observers. And 2.5 billion people cannot be dismissed as exceptions. Read full article In its 2008 "Ease of Doing Business" (EDB) rankings, the World Bank ranks India 120th out of 178 countries. This poor ranking stands in sharp contrast to investor behaviour. Gross investment in the country rose from a high of 25% of the GDP in the early 2000s to 34% in 2005-06. Likewise, foreign investment has been pouring into the country - it rose from $8 billion in the early 2000s to $26 billion in 2006-07. True, Indian multinationals are increasingly investing abroad, acquiring foreign firms. But this is not to be interpreted as their flight from India, as many on the lecture circuit fashionably do. Having been freed to invest abroad, Indian multinationals are now doing what their foreign counterparts had been doing for decades: acquire trade marks, get closer to customers, diversify production facilities and seek new sources of input supply. China offers a similar contradiction: while…

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Rethinking Inflation

Increases in per-capita income growth bring either a rise in the inflation rate or appreciation of the rupee. Since India has generally resisted rupee appreciation, some acceleration in inflation is predicted. Read full article There has been remarkable consensus among the public, press and policymakers on the severity of the recent inflation bout, its detrimental effects on the poor and the need to combat it on a war footing. The government has gone on to deploy every conceivable weapon in its arsenal - cutting import duties, banning exports, appreciating the rupee in the initial phase, raising the cash reserve ratio, suspending futures trade, cutting excise duties, imposing export taxes and threatening price controls to tame the monster. Is the consensus view right? To gain perspective, let us begin with a review of the rates of inflation during the past several decades. On an annual basis, data allow us to do this by recourse to the Wholesale Price Index (WPI), Consumer Price Index for Industrial Workers (CPI-IW) and Consumer Price Index for Agricultural Labourers (CPI-AL). WPI is also readily available on weekly and…

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Global Economic Governance

WTO has adapted to rising economic weight of developing countries. Read full article Two key institutions - the World Trade Organisation (WTO) and International Monetary Fund (IMF), are central to global economic and financial governance. A third institution - the World Bank is often included in the list but its substantive significance is now limited, except perhaps in Africa. Most countries now have ample access to private capital and the Bank is now a substantial net recipient of funds from the developing countries. The IMF, which is designed to oversee the international financial system, came into existence in 1945. The WTO, which oversees the flow of trade in goods and services and the implementation of internationally-agreed intellectual property rights regime, technically came into existence much more recently in 1995. But the General Agreement on Tariffs and Trade (GATT), which came into force in 1948, determined its essential architecture.

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The Loan Waiver: A Primer

It’s time for the government to reconsider its anti-poverty programmes. The subsidies can readily finance generous direct cash transfers, vouchers for primary education, and health insurance for the poor. Read full article Abstract:It's time for the government to reconsider its anti-poverty programmes. The subsidies can readily finance generous direct cash transfers, vouchers for primary education, and health insurance for the poor. There has been much confusion on the implications and desirability of the loan waiver programme announced by finance minister P Chidambaram in his 2008-09 Budget. There is need for clarity of thought so that each of us can arrive at an informed judgement on whether the proposal is a net plus or minus for India. My own bottom line is that given the daily hardships marginal and small farmers face, virtual absence of formal social safety nets, and 8-9% overall growth per year, the waiver is justified. At the same time, politicians on both sides of the aisle need to use the occasion for serious soul searching on devising the right policies to help the poor. Are repeated loan waivers the…

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