Times of India ⁽⁹²⁾

Read full article Abstract: A trade war is now in progress on two fronts. The United States opened the first front by imposing a 25% tariff on steel imports and 10% tariff on aluminium imports from a large number of its trading partners. That led many damaged parties to take retaliatory actions. China was the first to respond with a 25% tariff on $3 billion worth of food imports from the US. Mexico, Turkey, European Union and Canada followed suit once it became apparent that the US would not grant them the exemption from tariff they had sought. On the second front, the US has exclusively targeted China by slapping 25% tariff on a wide variety of imports worth $34 billion from it. China hit back in this instance as well, imposing 25% tariff on $34 billion worth of imports from the US. The US has threatened China with 25% tariff on another $200 billion worth of imports. China has said it will respond in kind. Imposition of tariffs by members of the World Trade Organization (WTO) is not unusual.

Read full article Abstract: Trade openness today faces both external and internal challenges in India. Externally, tariff hikes on aluminium and steel imports by the United States invited retaliation by us, at least as a last resort. We also face challenges of secondary sanctions arising out of the US sanctions against Iran and Russia. Internally, bureaucratic forces have regrouped to return India to import substitution. This column is exclusively about the latter, internal challenge. Despite repeated assertions that ‘Make in India’ is about making for the world, in reality, it is the ‘Make in India for India’ view that is winning. The first significant tilt in this direction came with the extensive tariff hikes in the 2018-19 budget, which the revenue secretary later defended as necessary to promote import substitution. True to his word, he went on to deliver additional tariffs subsequently. To top it all, we have now appointed a taskforce headed by the cabinet secretary aimed at cutting imports of items that India can produce at home. It may be recalled that the key elements of our 1991…

Read full article Abstract: A Russian parable has it that a man once visited a natural history museum and returned all excited about some rare insects he saw there. When asked what he thought of the dinosaurs at the museum, he replied, what dinosaurs? Something similar has happened to the commentary on the recently released Higher Education Commission of India (HECI) Bill, 2018. While focussing on certain legitimate but correctible shortcomings, this commentary has entirely missed numerous path breaking features of the Bill. To put the matter in perspective, the Bill These are truly major desirable departures from the existing regulatory framework of higher education, bringing us closer to global best practices. If the government can appoint truly outstanding individuals with unimpeachable integrity to HECI, the latter would be in a position to truly transform India’s higher education system for the better.

Read full article Abstract: Collection of broad-based taxes is more efficient if done by the Centre than individual states. Expenditures on items such as education, health and local infrastructure require decentralisation. This calls for the Centre to collect the broad-based taxes and share them with the states. But who is to decide how this divisible pool of revenue is to be shared between Centre and states? A neutral umpire is required. The Constitution designates the Finance Commission (FC) as that umpire. It calls for the appointment of an FC minimally every five years. The current FC is the 15th such commission. The FC must perform a tough balancing act. If allocation to the states is disproportionately small, there is risk that expenditures on education, health and local infrastructure, which must be substantially locally provided, will go underfunded. Equally, if allocation to the Centre is unduly small, national public goods such as defence, internal security, highways, waterways and railways may go underfunded.

Read full article Abstract: Progress in reforms is like the movement of the hour hand of the clock: human eye is unable to detect the movement in it and yet it has gone full circle twice a day. While naysayers complain that they can see no progress in reforms, reforms in the past four years have accumulated to the point that only highlights can fit a newspaper column. During the last two full fiscal years of the United Progressive Alliance (UPA) government, inflation had averaged 9.7% and growth 5.9%. To address inflation, the new government adopted inflation targeting on the monetary front and a strict fiscal consolidation plan on the fiscal front. To address growth, it undertook numerous structural reforms. The result has been an average inflation rate of 4.3% and GDP growth of 7.3% during the past four years. Governance has been a key focus of the government. The government’s concerted efforts towards improving the ease of doing business have translated into India jumping from 140th to 100th position in the World Bank rankings. In parallel, the government has worked to…