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Loose rate policies suit Asia, for now: ADB chief

Reuters — Tue, 24 Nov 2009 05:40:00 GMT

New York: Asia’s speedy economic recovery relative to the rest of the world is not yet strong enough to withstand tighter monetary policy, Asian Development Bank president Haruhiko Kuroda said on Monday.

“You see, at this stage the economic recovery, even if not fragile, (is) not so solid. So monetary policy will continue to be expansionary for some time,” Kuroda told Reuters in an interview before a speech at Columbia University.

“That might encourage some asset markets to overreact, so to speak. But at this stage, it is not advisable for monetary authorities to tighten monetary policies,” he said.

The ADB expects developing Asian economies on average to grow 3.9% this year and 6.4% next year.

The so-called Group of Three or G3 -- Japan, the United States and the euro zone -- are projected by the bank to contract 3.7% this year and grow 1.1% in 2010.

Kuroda said inflationary pressures remain low and in fact are not rising in many countries, allowing them to keep interest rates low.

But when they do start to take away the monetary and or fiscal stimulus, there is no compelling reason for Asia do so all at once.

“It all depends on country circumstances... No need for emerging economies to exit in a synchronized manner, or fiscal and monetary policy exits at the same time.” Kuroda said.

Who tightens first?

Kuroda pointed to South Korea’s measures to reign in real estate prices as careful management that has allowed them to hold off on raising interest rates.

South Korea’s top state-run research agency, the Korea Development Institute (KDI), said the government should phase out emergency policy measures after predicting Asia’s fourth-largest economy would grow 5.5% next year.

For India, Kuroda noted that while the country managed the crisis and its own fiscal situation relatively well, the nation’s high deficit will probably result in it being among the first to start removing stimulus measures.

“If you look at the macro figures, then India’s fiscal situation is not so good. India’s fiscal deficit in relation to GDP is quite high. I think once the economic recovery is solidified, probably the government would exit,” he said.

India’s fiscal deficit is forecast to rise to 6.8% of GDP in the year through March 2010, a 16-year high, compared with 6.2% in the previous year.

This is a result of fiscal stimulus measures as well as the economic downturn, which cut government revenues.

Separately, Kuroda reiterated that emerging economies may not benefit from having free floating currencies.

“Generally, I think for emerging economies, free-float won’t provide the best basis for their economic engagement with the global market... That does not mean that all emerging countries need or should adopt heavily managed float systems,” Kuroda said.

“Many emerging economy currency markets are thin, shallow, and subject to large fluctuations if left completely free. So some sort of management is necessary and appropriate.”

The Mint report for 23 November 2009

Mon, 23 Nov 2009 18:13:00 GMT

New Delhi: India’s stock market regulator Sebi has issued a show-cause notice to RIL on several alleged violations. The show-cause notice asks RIL why it should not be prohibited from buying and selling listed securities, not be prohibited from accessing capital markets or not be made to pay up profits that it claims RIL made through insider trading. RIL has denied the allegations and says it has submitted a detailed reply to Sebi, which had not replied. A show cause notice is not an indictment and only requires RIL to provide a reply.

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Reliance Capital says three foreign insurance firms have approached it about buying a stake in its life insurance business. The move comes at a time when Reliance Capital plans to float an IPO for up to 26 % of its life insurance unit called Reliance Life. Prior to the IPO, the company plans sell another 10% of Reliance Life to a strategic investor including foreign insurance companies.

A senior Merrill Lynch executive has said India should not be complacent about undertaking major financial reforms. Kevan Watts, who’s head of the Indian operations of Bank of America and Merrill Lynch says the danger is India will not be enthusiastic about reforms after having avoided last year’s global financial meltdown. For many years, India has been talking about financial sector reforms including giving equal voting rights to foreigners in private-sector banks and allowing foreign companies to participate in the pension sector.

There was uproar in Parliament on Monday over a leaked report that blamed the opposition BJP with playing a role in the Babri Masjid demolition in 1992. Politicians were reacting to a report in The Indian Express newspaper that published excerpts Liberhan report on the demolition. The report mentions current leader of the opposition L.K. Advani who has called the accusation ridiculous. Also on the list of the accused is former prime minister Atal Bihari Vajpayee. Both Vajpayee and Advani say the demolition of the Babri Masjid occurred spontaneously and was not planned.

No replacement for US dollar: PM

PTI — Mon, 23 Nov 2009 05:38:00 GMT

Washington: Praising the entrepreneurial spirit of the American enterprise, Prime Minister Manmohan Singh has said that there can be no substitution for the US dollar.

“As far as I can see right now there is no substitute for the dollar,” the Prime Minister said in an interview to CNN.

Responding to questions about the economic crisis in the United States, the Prime Minister said: “There is a temporary setback and temporary questioning, about relevance of the American model, but I have seen these things much before.”

Singh said even the Chinese, who holds $2.5 trillion in reserve assets, have not disposed off even a fraction of them.

“That is a measure of the confidence that the world has in the dollar. There are problems. There is the confidence problem, which can be very destabilizing,” he said.

“My own feeling is that the world has not entered an era of irreversible shift in the economic strength of the United States,” he added.

‘Pak not doing enough in 26/11 attack case’

Accusing Pakistan of not doing enough to bring to book the perpetrators of the 26/11 Mumbai terror attacks, Singh has said India does not know whom to deal with in Islamabad as the army is the most powerful force in the neighbouring country.

“No, they (Pakistan) have not done enough,” Singh told CNN in an interview which was taken in New Delhi and aired minutes before the Prime Minister arrived in Washington on the first State Visit of the Obama administration.

“They have taken some steps. I have discussed this matter with (Pakistan) prime minister Yousuf Raza Gilani, when we met at Sharm al-Sheikh (in Egypt). The joint statement we issued, he assured us Pakistan will do all that is possible to bring to justice the perpetrators of Mumbai massacre,” he said.

“But it is our feeling that Pakistan has not done enough. Hafeez Saeed is roaming around freely. Maulana Azhar Masood and other terrorist elements, the Lashkar-e-Toiba, according to Pakistan’s own admissions is actively involved in perpetrating massacre in Mumbai, they are moving around freely. The conspiracy took place in Pakistan,” Singh said.

He said a “friendly” government in Pakistan, which would be equally determined to tackle terrorism, would take the case to its logical conclusion.

“That is not happening,” the Prime Minister said.

Asked if he believed the Pakistani army was serious in tackling terrorists, Singh said he is not certain if the military will take on those elements.

Implementation of the landmark civil nuclear deal, the situation in Pakistan and terrorism emanating from there would be high on the agenda as Prime Minister Manmohan Singh and President Barack Obama meet here on Tuesday for talks during which they are expected to give a major push to the Indo-US strategic ties.

The two countries will sign a number of pacts, including an MoU on counter-terrorism to provide a legal framework for stepped up cooperation against the menace, and discuss the problem of climate change ahead of the Copenhagen

Manufacturing sector showing signs of revival: CII

Samar Srivastava — Sun, 22 Nov 2009 17:43:00 GMT

New Delhi: India’s manufacturing sector is showing signs of revival, according to a survey carried out by the Confederation of Indian Industries (CII).

“This improvement in manufacturing growth has been a result of the stimulus packages announced by the government,” CII director general Chandrajit Banerjee said in a statement.

Positive outlook: CII director general Chandrajit Banerjee says the improvement in the sector has been a result of the stimulus packages. Rajkumar / Mint

The survey, carried out by CII’s Association of Manufacturing, Agriculture and Service Councils (Ascon) acts as a bellwether for manufacturing output measured by the Union government’s Index of Industrial Production (IIP)— usually reported with a lag of six weeks.

Growth rates in the CII-Ascon survey are based on data from member firms of CII and its affiliated associations. These make up around 65% of total industry output in the country. A total of 100 sectors were surveyed.

The survey showed an increase in sectors reporting “excellent” growth, which the survey describes as over 20%. One-tenth of the sectors surveyed in the April-September period fell in this category compared with 7% during the same period the year before.

Significantly, construction and earth moving equipment recorded excellent growth. This echoes the pick-up in economic sentiment that has resulted in rising truck sales in the last two months.

While the sectors recording high growth (10-20%) stayed the same at 26%, there was a decline in the sectors that registered “moderate” growth of 0-10%. They fell from 42% to 36%. Aluminium, cement, fertilizers, paints, circuit breakers and light commercial vehicles registered moderate growth.

Exports continue to be a laggard as the global economy takes time in recovering. Twenty out of 29 sectors surveyed reported negative growth rates. Automobiles exports were a bright spot as global demand for small cars increased. Car exports jumped 35% in the April-September period while light truck shipments jumped 26%.

Candidates, test centres gear up for online CAT

Aparna Kalra — Sun, 22 Nov 2009 17:03:00 GMT

New Delhi: Gaurav Kishore, a student at the Dr B.C. Roy Engineering College in Durgapur, a steel city that’s a commuter train ride away from West Bengal’s capital Kolkata, had his parents buy him a Dell laptop and an Internet connection in September.

He had class assignments to complete for which a computer could be useful. But there was another over-riding consideration behind the purchase: Kishore, 20, wanted to get into the habit of reading online.

Tech-savvy: Students taking a mock test for the online CAT run by prep firm Career Launcher. Considered one of the world’s toughest, CAT deals with reading comprehension, besides math and data interpretation.

He plans to join some 240,000 candidates who have registered for the first computer-based Common Admission Test, or CAT, to open from Saturday this week for 10 days. The high-stakes test can get him a seat next year in one of the prestigious Indian Institutes of Management (IIMs), among other business schools.

A chunk of the two-hour, 15-minute test, considered one of the world’s toughest, deals with reading comprehension, besides math and data interpretation.

“(We are) used to reading on paper since our childhood,” said Kishore, who has opted to take the CAT on 4 December. “It gets a bit difficult to concentrate on computer.”

As candidates arm themselves with online skills, US-based testing company Prometric Inc.’s local arm, Prometric Testing Pvt. Ltd, mandated to conduct the test, is gearing up for its big challenge in the Indian assessment market. The company won a closely fought battle to secure a five-year, $40 million (Rs185.5 crore) contract to administer CAT, beating competitors such as Pearson VUE of Pearson Plc, based in the UK, the sole testing partner worldwide for the Graduate Management Admission Test (Gmat).

Prometric, which handles global exams such as the graduate record examination, or GRE, and Test of English as a Foreign Language (Toefl) for admission to universities and colleges in the US, has sanitized and secured 105 test locations in 32 cities, including Durgapur, where Kishore lives. Roughly 24,000 candidates will take the test daily over the 10-day duration.

It’s “for the first time”, that Durgapur is getting a test centre, said Kishore, who travelled to Kolkata to sit for a qualifying examination for the Institute of Rural Management Anand, or Irma, and will do so again for an entrance test for the Indian Institute of Foreign Trade, or IIFT.

The test locations for CAT, said Prometric, were evaluated for candidate access and convenience, physical space, computer availability, generators, uninterrupted power supply, Internet connectivity and security.

The locations are equipped with closed-circuit television cameras and devices for the fingerprint identification of candidates.

One of the test locations, a privately run business school in Delhi, said it made little investment in terms of money to become a centre. The school is offering over 150 computers in three enclosed areas for CAT. It expects 3,500 candidates per day for the test and considers the exercise a good way of reaching its future clientele.

“They will see our institute for the first time, interact with our students, come to know our faculty,” said the director of the Delhi business school, who requested that he and his institute not to be identified as they are not allowed to seek publicity under the contract with Prometric. The school’s name is listed among the test centres on the official CAT website.

Prometric declined Mint’s request to visit a test centre. Earlier this month, the company issued guidelines on the test, warning candidates they will not be allowed even bathroom breaks. The company said it is prepared for power outages, computer crashes, natural calamities and even terrorist attacks.

The computer-based test is seen as the IIMs’ effort towards creating a market for testing services in the country and also introducing an error-free mechanism for their entrance examination, which, in the last few years, has been marred by complaints of leaks and errors in question papers.

In 2003, for instance, the question paper for CAT was leaked ahead of the exam, a first in the 28-year-old history of the test. The CAT 2006 had printing errors. The institutes acknowledged the errors and formed a committee that ruled that answers to the wrong questions would be ignored.

A terror suspect with feet in East and West

Ginger Thompson / NYT — Sun, 22 Nov 2009 16:55:00 GMT

Philadelphia: The trip from a strict Pakistani boarding school to a bohemian bar in Philadelphia has defined David Headley’s life, according to those who know the middle-age man at the centre of a global terrorism investigation.

Different worlds: David Headley was raised by his father in Pakistan as a devout Muslim. He returned to the US at the age of 17 to live with his American mother. Headley as a child, with his mother Serrill Headley and younger sister in an undated photo. NYT

Raised by his father in Pakistan as a devout Muslim, Headley arrived back here at 17 to live with his American mother, a former socialite who ran a bar called the Khyber Pass.

Today, Headley is an Islamic fundamentalist who once liked to get high. He has a traditional Pakistani wife, who lives with their children in Chicago, but also an American girlfriend—a make-up artist in New York—according to a relative and friends. Depending on the setting, he alternates between the name he adopted in the US, David Headley, and the Urdu one he was given at birth, Daood Gilani. Even his eyes—one brown, the other green—hint at roots in two places.

Headley, an American citizen, is accused of being the lead operative in a loose-knit group of militants plotting revenge against a Danish newspaper that published cartoons of the Prophet Muhammad. The indictment against him portrays a man who moved easily between different worlds. The profile that has emerged of him since his arrest, however, suggests that Headley felt pulled between two cultures and ultimately gravitated toward an extremist Islamic one.

“Some of us are saying that ‘Terrorism’ is the weapon of the cowardly,” Headley wrote in an email message to his high school classmates last February. “I will say that you may call it barbaric or immoral or cruel, but never cowardly.”

He added, “Courage is, by and large, exclusive to the Muslim nation.”

Headley’s email messages, including many that defended beheadings and suicide bombings as heroic, are among the evidence in the government’s case against him and his accused co-conspirator, Tahawwur Hussain Rana, who was born in Pakistan, is a citizen of Canada and runs businesses in Chicago.

The men, who became close friends in a military academy outside Islamabad, were arrested last month in Chicago. They are charged with plotting an attack they labelled the Mickey Mouse Project against Jyllands-Posten, the Danish newspaper whose cartoons provoked outrage across the Muslim world.

Since then, the investigation has widened beyond Chicago and Copenhagen. The authorities have learned more, with cooperation from Headley, about the two men’s network of contacts with known terrorist groups, including Al Qaeda and Lashkar-e-Taiba, a Pakistani militant group, as well as officials in the Pakistani government and military. US and Indian investigators are also looking into whether the two Chicago men, who travelled to Mumbai before the deadly assault there last November, may have been involved in the plot.

Headley, 49, and Rana, 48, stand out from the young, poor extremists from fundamentalist Islamic schools who strike targets in or close to their homelands. Instead, their privileged backgrounds, extensive travel and bouts of culture shock make them more like Khalid Shaikh Mohammed, the self-proclaimed architect of the 11 September 2001 attacks, who attended college in the US, and Mohammed Atta, one of the lead hijackers.

Rana’s father is a former principal of a high school outside Lahore. One of his brothers is a Pakistani military psychiatrist who has written several books, and another is a journalist at a Canadian political newspaper, The Hill Times.

Trained as a physician, Rana immigrated to Canada in 1997 and became a citizen a few years later. Then he moved his wife and three children to Chicago, where he opened a travel agency that also provided immigration services on Devon Avenue, which cuts through the heart of the city’s Pakistani community. In 2002, he started a halal slaughterhouse that butchers goats, sheep and cows according to Islamic religious laws.

The Khyber Pass in Philadelphia. The bar was once owned by Headley’s mother. In 1985, his mother put him in charge of the bar, but he proved to be such a poor manager that the family lost it.Jessica Kourkounis/NYT

He and his family live in a small brick house on the North Side with a huge satellite dish on the roof. Neighbours described Rana as a recluse who rarely spoke to anyone and whose children never played with others on the street.

“He seemed very committed to his Islamic religion,” said William Rodosky, who once managed Rana’s slaughterhouse, in Kinsman, Illinois, about 100km south-west of Chicago. “He said he wanted the business so he could provide meat to his people and make a little money.”

Rodosky echoed the views of several others who knew and did business with Rana when he said he was “shocked about the terrorism charges”.

“As far as I knew, he was very nice man and a very good businessman,” Rodosky said.

But Headley did not draw the same expressions of shock. Those who knew him paint a more troubled image.

“Most people have contradictions in their lives, but they learn to reconcile them,” said William Headley, an uncle who owns a day care centre in Nottingham, Pennsylvania. “But Daood could never do that. The left side does not speak to the right side. And that’s the problem.”

Daood Sayed Gilani was born in Washington, where his parents worked at the Pakistani embassy. Friends of the family said his father, Sayed Salim Gilani, a dashing diplomat and an avid musicologist and poet, charmed his way into the heart of Serrill Headley, who had left Philadelphia’s Main Line to work as a secretary at the embassy.

In 1960, the couple and their infant son, Daood, left the US bound for England aboard the ship America, and from there went on to Lahore. But the marriage quickly soured, friends said, as Salim Gilani immersed himself in the traditions of his homeland and his bride refused to submit to them.

After Serrill Headley left Gilani and her son and a daughter, Syedah, in Pakistan, friends say, the details of her life become lost in a jumble of fact and fiction. Serrill Headley, a red-haired, green-eyed woman, told friends she married an “Afghan prince” but then had to flee Kabul after he was murdered.

She arrived back in Philadelphia, friends said, in the early 1970s, taking different office jobs and dating wealthy suitors until one of them lent her money to buy an old bar. She turned it into the Khyber Pass, decorated with billowing Afghan wedding tents and stocked with exotic beers.

In 1977, Pakistan’s government was overthrown in a military coup, and Serrill Headley, friends said, feared for her children. She travelled to Pakistan, withdrew her son from the Hasan Abdal Cadet College and brought him to live with her, a move recorded by The Philadelphia Inquirer. (Her daughter, Syedah, stayed behind with her father for several years.)

“He has never been alone with, much less had a date with, a girl, except the servant girls of his household,” the article said, referring to the teenage Daood Gilani. “But he has just this day found a cricket team to join. And he has just this day, after watching American TV, said to his mother in his soft Urdu-English that she is to him like the Bionic Woman.”

The second-floor apartment where Headley’s family lives in Chicago. Peter Wynn Thompson/NYT

According to family friends, the teenager soon rebelled against his mother’s heavy drinking and multiple sexual relationships by engaging in the same behaviour.

“Those were the days when girls, weed, and whatever, were readily available,” Jay Wilson, who worked at the Khyber Pass, wrote in an email message from England. “Daood was not immune to the pleasures of American adolescence.”

Later, said Lorenzo Lacovara, another former worker at the bar, Daood Gilani began expressing anger at all non-Muslims.

“He would clearly state he had contempt for infidels,” Lacovara said in a telephone interview from New Mexico. “He kept talking about the return of the 14th century, saying Islam was going to take over the world.”

Serrill Headley tried to help her son straighten out his life. In 1985, she put him in charge of the Khyber Pass, but he proved to be such a poor manager that they lost the bar a couple of years later, friends of the family said.

Serrill Headley embarked on her third marriage, and her son set off for New York, where he opened two video rental stores in Manhattan. It is unclear where he got the money to start the ventures. But court files suggest that the source may not have been entirely legal.

In 1998, Gilani, then 38, was convicted of conspiring to smuggle heroin into the country from Pakistan. Court records show that after his arrest, he provided so much information about his own involvement with drug trafficking, which stretched back more than a decade, and about his Pakistani suppliers, that he was sentenced to less than two years in jail and later went to Pakistan to conduct undercover surveillance operations for the Drug Enforcement Administration.

In 2006, he changed his name to David Headley, apparently to make border crossings between the US and other countries easier, court documents say. About that time, his uncle said, he moved his family to Chicago because it had a large Muslim community and he wanted to send his four children to religious schools.

There, the family lived in a small second-floor apartment. Headley claimed to work for Rana’s immigration agency. The two men attended the Jame Masjid mosque on Fridays, then stopped at the nearby Zam Zam restaurant to eat and talk politics. Cricket, neighbours said, was their passion.

But Headley never seemed to fully fit in. Masood Qadir, who sometimes watched cricket with him, said he was “different” and kept mostly to himself.

Email messages show, however, that Headley stayed in regular contact with classmates from the military high school he attended in Pakistan, often engaging in impassioned debates about politics and Islam.

Earlier this year, Headley complained about “Nato criminal vermin dropping 22,000 pound bombs on unsuspecting, unarmed Afghan villagers” or “napalming South-East Asian farmers”. Writing about Pakistan’s chief enemy, he said, “We will retaliate against India.”

And in an email message defending the beheading of a Polish engineer by the Taliban in Pakistan, he wrote, “The best way for a man to die is with the sword.”

Puk Damsgard in Islamabad, Pakistan; Emma Graves Fitzsimmons in Chicago; Nate Schweber and John Eligon in New York; Ian Austen in Ottawa; and Barclay Walsh in Washington contributed to this story.

GST revolutionary proposals: challenges and opportunities

Lawfully Yours | AZB and Partners — Sun, 22 Nov 2009 15:31:00 GMT

The first discussion paper released on 10 November by the empowered committee of state finance ministers of India on the proposed goods and services tax (GST) is noteworthy since it articulates the underlying conceptual basis on which GST would operate in India.

Illustration: Jayachandran/ Mint

The proposed GST model aims at resolving the problems of the present indirect tax regime, including the multiplicity and cascading effect of indirect taxes across industries by replacing the various indirect taxes (including service tax, central excise tax, value-added tax (VAT), various cesses and miscellaneous indirect taxes) with a single tax, that is, GST. This proposed change would address the problems of the current system arising from the complexity of multiple taxes with their respective compliance requirements, and the issue of tax credits not flowing seamlessly across states and the value chain.

The proposed model is based on fiscal federalism, which contemplates a dual GST structure, one levied by the Union government and the other levied by the states, thus conferring concurrent jurisdiction on both Centre and states to tax goods and services alike.

Now that the discussion paper has released the proposed GST framework to the public, all stakeholders should take the initiative to provide their feedback to the government and partner in evolving principles on taxability under the proposed regime. This article outlines potential issues that may arise in relation to the proposed GST regime.

The current regime of indirect taxes treats goods and services separately. However, in reality, many businesses have “composite supplies”, which entail supply of both goods and services. The expectation from GST was that it would render the dichotomy between goods and services irrelevant in the context of composite supplies.

However, the discussion paper suggests that the GST regime could have different rates of tax for goods and for services, and that the goods and services dichotomy could continue. The tax mechanism and the rate applicable on such composite supplies then become critical. It is likely that each type of composite supply may either be deemed to be supply of goods or supply of services under the proposed GST.

The deeming provision of a particular composite supply as goods or services could be based on the essential character of such supply. In addition, the view prevalent in the specific industry with respect to such supplies could also be duly considered.

Another approach could be to evolve a mechanism based on the principle followed under European Union (EU) VAT laws, where typically a single rate of tax applies to the entire transaction at the rate applicable to the principal supply. In such situations the principle followed under EU VAT laws is similar to the “dominant intention test” evolved by Indian courts. Essential features of the transaction, for instance, terms and scope of the contract, may be used for inferring the dominant intention of the parties to determine whether the principal supply entails supply of goods or supply of services. However, experience shows this approach is susceptible to disputes.

Another aspect critical to businesses is inter-state stock transfer (that is, transfer of their stock between their own branches or offices across states, without involving sale to the consumer), which is currently not taxed.

Any move to tax stock transfers would, therefore, be closely watched by businesses. The discussion paper indicates that no decision has been taken on taxability of stock transfers. Some of the challenges for businesses if these transactions are taxed include cash outflow at the time of stock transfer, timing of utilization of credit by the branch, valuation of such transactions, accounting treatment and the corresponding compliances. However, there could be positive fallouts, such as seamless flow of tax credit (unlike some existing state VAT laws where inter-state stock transfers suffer retention of credits).

Job work is another area, which is relevant from the manufacturing sector perspective. Currently, job workers are exempt from payment of excise duty under a specific exemption notification. It is pertinent to mention that GST aims at discontinuing exemptions since they interrupt the seamless flow of credits, leading to cascading of taxes. This could make job work transactions more tax efficient since the job worker would be able to utilize input tax credits. However, the treatment of supplies from principal to the job worker made on free-of-cost basis could be an area of concern.

Considering the complexity and relevance of the aforesaid transactions, the government, in consultation with businesses, should evolve mechanisms to address these situations under the new regime.

The proposed GST regime is expected to be successful in removing the distortions in the form of exemptions. The sentiment that emerges from the discussion paper is the government’s sincere efforts to make GST see the light of day. All efforts are being made to implement GST sooner rather than later. The first discussion paper enunciates the broad objectives that GST has set out to achieve. This window of time between the release of the discussion paper and the finalizing of the regime also provides an opportunity to businesses to participate and prepare before GST hits them.

This column is contributed by Aditya Singh Chandel and Ashish Singh of AZB & Partners, Advocates & Solicitors.Send your comments to lawfullyyours@livemint.com

India to figure among three largest economies by 2050: study

PTI — Sat, 21 Nov 2009 06:43:00 GMT

Washington: Growing at a pace faster than other G-20 countries, India is likely to emerge as one of the top three economies of the world along with the US and China by 2050, according to a study.

In terms of GDP, India’s GDP is expected to increase by 16 times from the current $1.1 trillion to $17.8 trillion by 2050, said the November issue of ‘International Economic Bulletin´ of the prestigious Carnegie Endowment for International Peace.

The bulletin projects that between 2009 and 2050, Indian economy is expected to grow at 6.19% point. It indicates that by 2050, India would be one of the three largest economies of the world -- the other two being the US and China.

Of the G-20 countries, it is projected that India would grow most rapidly and that in terms of PPP, Indian economy would be 97% as large that of the US by 2050.

The report entitled ‘The G20 in 2050’ said that the world’s economic balance of power is shifting dramatically.

By 2050, the United States and Europe, long the traditional leaders of the global economy, will be joined in economic size by emerging markets in Asia and Latin America. China will become the world’s largest economy in 2032, and grow 20 per cent larger than the US by 2050, it said.

Over the next 40 years, the report said nearly 60% of G20 economic growth will come from Brazil, China, India, Russia, and Mexico alone.

25 yrs on, a walk through the Carbide plant

Akshai Jain — Fri, 20 Nov 2009 19:45:00 GMT

Bhopal: A gentle breeze blows through the rusting carcass of the Union Carbide factory in Bhopal. White strips of insulation material peel off a scaffolding of tanks and pipes that towers three stories above the rampant undergrowth.

In what must have once been a chemical laboratory, large, dark bottles of benzene, hydrocholoric acid, chloroform and an assortment of other chemicals lie scattered in the middle of a hive of cobwebs. The windows are smashed, the doors have long fallen off their hinges and black chemical residues stain the ground. Like the rest of the plant , it looks like the laboratory stalled mid-reaction and was abandoned in unusual haste.

Click here to view a slideshow of photographs of the defunct plant

Hazardous history: Scaffolding of rusted towers and pipes at the factory. Madhu Kapparath / Mint

It was these sights that the Madhya Pradesh government wanted to throw open to the world for the first time ever on 20 November, two weeks before the 25th anniversary of the Bhopal gas tragedy.

The idea was to show the people of Bhopal that the plant was completely safe and to dispel fears that hazardous chemicals were still scattered in the factory.

It was the brainchild of Babulal Gaur , the minister for gas relief and rehabilitation.

“The plant has not been seen for the last 25 years,” he says. “We wanted to give people access to it for a week.” An exhibition on the disaster by the Indian Council of Medical Research was also to be held at the factory.

The clean up, the department of gas relief and rehabilitation claims, was the result of the nearly Rs30 crore that they had spent up to March 2009 on the environmental rehabilitation of the factory.

But one day before the plant was to be thrown open, there was no sign of any exhibition, and neither were any arrangements in place for the thousands of people who are likely to visit the site. The only sign of activity were a few workers who were clearing the undergrowth in the vicinity of the plant.

The move to open the plant drew sharp criticism from people across the country.

Tota Ram Chouhan worked as a chemical plant operator at Union Carbide till the day of the accident. He now works with the state industries department, but spends his spare time taking visiting scientists, researchers and journalists around the factory.

The factory, he claims, is completely unsafe. “You don’t need studies to prove that. Just sift a little of the soil and you’ll find mercury,” he says. That is apparently just one of the many chemicals that contaminate the site.

The corroding structure of the plant has not been maintained at all in the last 25 years, and can fall down at any time. “Why, if the plant is so safe,” he asks, “does the government want to erect a barricade to prevent people from getting closer than 20ft to it?”

Activists working with the International Campaign for Justice in Bhopal, a coalition of NGOs, see the move as one in a series of efforts by the government to absolve itself of any further responsibility.

They point to the continuing water pollution in the slums neighbouring the factory as indication of its toxicity. “We want the site to be preserved as a memorial to the people who died in the disaster,” says Syed M. Irfan of the Bhopal Gas Peedit Mahila Purush Sangharsh Morcha, “but the government is trying to use this occasion to absolve Dow (the owner of Union Carbide) of any further responsibilities.”

Gaur disagrees. The Madhya Pradesh Pollution Control Board (MPPCB) has declared the site safe. “I go to the site every two months, but nothing at all has happened to me,” he says. Neither, he claims, has anything happened to the labourers who were engaged to fill gunny sacks with contaminated soil from the factory.

But the government now seems to be having second thoughts about opening the plant. First it pushed the date back from 20 November to 25 November, and now Gaur says he’s not sure whether it will be opened at all.

Was it the protests that made the government change its mind? “Definitely not,” says Gaur. “The date was tentative.”

It seems that apart from the protests, the state government is also wary of falling foul of an October 2005 order of the Madhya Pradesh high court that required the authorities to secure the factory premises and ensure a thorough clean up.

“We’ve submitted all the documents and reports from the MPPCB to the court, and the opening is conditional upon their permission,” Gaur says.

Why then was 20 November declared the opening date? “It was conditional,” says Gaur. And when does he think the plant will open? “It depends on the court,” he says.

The department of gas relief and rehabilitation has, in the meantime, spent Rs1 crore on fixing the boundary wall of the factory. But driving around the factory you can see gaping 10ft wide holes in the wall.

The factory is far from secure. In one corner of the factory a game of cricket is in progress. Women from the adjoining slums collect firewood in what were once toxic solar evaporation ponds. Two young boys sit burning a few twigs on which they’ve piled up some electrical fittings they’ve fetched from the factory.

The department also plans to construct a Rs116 crore memorial at the factory.

As the 25th anniversary of the tragedy approaches, activities around the disaster are getting shriller and more frenzied. Activists are laying siege to the Dow Chemical Co.’s office in faraway Noida, and are playing a cat and mouse game with the Bhopal Nagar Nigam to paint slogans on the boundary walls of the factory. Meanwhile, the government is busy planning events for 3 December.

But inside Union Carbide all is quiet. It’s been quiet for 25 years, and it looks like it’s going to remain that way for some time to come.

This is the first part in the series. On Monday: 25 years of struggle through the eyes of Rasheeda Bi and Champa Devi.

A legal void follows 26/11 Mumbai attacks

Samanth Subramanian — Fri, 20 Nov 2009 19:45:00 GMT

New Delhi: In whatever other respects last November’s terrorist strike on Mumbai is said to resemble the 11 September 2001 attacks in the US, there is one crucial difference. While an avalanche of litigation followed 9/11, there has been only a small trickle of 26/11 lawsuits in the Indian courts.

Virtually all of the legal action has come in the form of public interest litigation (PIL) demanding accountability from a state unprepared for such attacks.

To cite an example, one writ petition—filed by former attorney general Soli Sorabjee last December—seeks “to compel the respondent and other states to adopt and undertake measures which may prevent recurrence of such terrorist incidents or in any event enable the police and security forces to better counter and combat terrorist activities and thereby save loss of, or injury to, human lives and destruction of properties”.

Many of these PILs are pending, says Ravi Kadam, attorney general of Maharashtra. “There was a flood of PILs after 26/11, and they were all bundled together for hearing. Some of them were really frivolous,” he says. “But these are in cold storage, because of what the Supreme Court (SC) said.”

Also See In memoriam: events happening in Mumbai and Delhi as tribute to victims of 26 November attacks (Graphics)

In August, the Supreme Court had stayed a Bombay high court order issued in response to another set of PILs, filed by the Society of Indian Law Firms and represented by Lalit Bhasin. The PILs demanded that the contents of the Pradhan Committee report, probing the government’s response to 26/11, be made public, and the Bombay high court had agreed.

“What is the use of disclosing it to public? What is the advantage… It will only serve for television discussions,” a three-member Supreme Court bench had said at the time.

Bhasin insists that the effort was to expose “the inadequacy of government preparation, and the lack of transparency”.

But after the Supreme Court offered this devastating critique of the Bombay high court’s order, the pending PILs went into hibernation. Also, as Somasekhar Sundaresan, a partner at J. Sagar Associates, observes, “There was just some judicial fatigue in dealing with PILs on issues like this.”

In contrast, 9/11 sowed the seeds for a veritable jungle of legal action. Some victims’ families, choosing to reject the awards (averaging $2 million, or Rs9.32 crore today, per victim) from the federal Victim Compensation Fund, sued airlines, security companies and other defendants. As of 11 September this year, lawsuits filed by three families, over airline security, were still pending; the other 93 had settled out of court, collecting an estimated $500 million.

Simultaneously, a consortium of relatives, calling itself the Families United to Bankrupt Terrorism, sued a multiplicity of defendants—including the governments of Saudi Arabia and Sudan, and the Saudi Binladin Group—for supporting the terrorists behind the 9/11 attacks. (The amount demanded, initially a dizzying $116 trillion, has since then dropped to $1 trillion.)

Lawsuits have also been filed by some of the Guantanamo Bay detainees against the American government, after they were captured and incarcerated during the “war on terror” born out of 9/11.

It is the liability lawsuits against private companies, which proved so popular in the US, that were missing after 26/11. The notion of third-party liability allows a person, for example, to sue a hotel for damages after incurring any injury on its premises.

“These hotels would have had public liability policies in place, but terrorism was excluded as a cover,” says Rajive Kumaraswami, head of risk and reinsurance at ICICI Lombard General Insurance Co. Ltd. “What is strange or interesting is, despite the fact that there were so many foreigners staying in the hotels at the time, we don’t seem to know of any suits filed against them. Unless they were suits filed abroad, in their country of residence.”

In India, Kadam adds, the proof of liability is much stricter. “Technically it might have been possible to file a lawsuit, but I don’t think that the Taj, for example, would have liability for this,” he says. “In the US, it is very, very different—it isn’t comparable at all. There, everything is tried by jury, and it goes by sentiment. Here there are statutes and caps on liability.”

Kadam also points to a less pronounced tendency to sue in India. “Nobody would have even thought of filing against the Taj or the Oberoi,” he says.

The centrepiece trial of 26/11 is, of course, that of Ajmal Kasab, the only one of the 10 terrorists to be apprehended last year; that trial began mere months after his arrest.

The centrepiece trial of 9/11, of Khalid Sheikh Mohammed, the architect of the attacks, began in June 2008 and is expected to move into a federal court in New York later this year.

The Week in review for 20 Nov 2009

Fri, 20 Nov 2009 17:26:00 GMT

New Delhi: The founder of Jet Airways, Naresh Goyal, may have to reduce his stake in the struggling airline so it can raise more money. Goyal currently owns 80% of Jet Airways, but could cut that figure down to 65%. Jet plans to raise $400 million through a qualified institutional placement and use the money to renegotiate contracts and buy crucial equipment.

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Operators of the airports at Delhi, Mumbai and Hyderabad are proposing an increase in their airport charges. While the Delhi and Mumbai airports want to increase aeronautical charges like passenger services by 10%, Hyderabad airport wants to hike its user development fee. Airport operators say they are trying to cope with lower-than-expected revenues ever since the economic slowdown.

Also in aviation news, troubled airline Air India now has a cost-saving plan for the future. Nacil, which runs Air India, has joined hands with Booz Allen Hamilton and prepared at least 70 cost-cutting schemes that could save Air India Rs5,000 crore. Mint has learnt that the measures include eliminating non-core activities, phasing out foreign pilots, reducing the fleet network and rationalizing routes.

And while Air India struggles to implement its cost-cutting measures, at least 140 people have applied to become the airline’s chief operating officer. Mint has learned that the applicants include several non-resident Indians as well as senior managers from airlines around the world.

Mukesh Ambani laid out his plans for the future of RIL on Tuesday. Talking to shareholders at the company’s annual meeting, Ambani said RIL would return to its project of setting up a new refinery in Jamnagar that will produce 580,000 barrels a day. He added that RIL would also increase its gas exploration programme in the KG D6 block and elsewhere. Ambani also announced a new initiative into renewable energy with research into biofuels, solar energy and fuel cells.

RIL also got a boost in its gas supply dispute with RNRL this week. On Thursday the Supreme Court allowed the petroleum ministry to become a party to the dispute between the two companies. RNRL has opposed the inclusion of the petroleum ministry after it filed a special leave petition against a Bombay High Court judgment favourable to RNRL.

Mukesh Ambani has another reason to celebrate. According to Forbes magazine, he remains India’s richest man, with a net worth of $32 billion. Lakshmi Mittal come second with $30 billion and Anil Ambani is at third place with $17.5 billion. Even more significantly, India has 52 billionaires in 2009 compared to just 27 in 2008.

The government’s new pricing policy for sugarcane has left many feeling bitter. Thousands of farmers from UP thronged the streets of Delhi on Thursday demanding better prices for their sugarcane. Several senior politicians also joined them, criticizing the new ordinance that puts the burden for increased sugarcane prices on state governments.

On Friday, the government announced it would modify its ordinance by once again allowing state governments to declare their own state advised price or SAP. The modified ordinance also restores the burden for increased prices to sugarcane mills rather than state governments.

The UPA has decided not to introduce its food security bill in the winter session of Parliament, which began on Thursday. The UPA is concerned about the size of the commitment and lack of consensus on defining below poverty line families.

India still scores a low 3.4 out of 10 in Transparency International’s 2009 Corruption Perception Index. But India’s ranking has gone up to 84 out of 180 countries. Last year India’s rank was 85.

Ratan Tata, the chairman of the Tata group, has indicated that he’slooking for a successor all over the world and not just in India. Ratan Tata’s tenure as chairman will end in 2012.

JSW Steel of India announced an alliance with Japanese steel maker JFE Holdings on Thursday. The two companies will collaborate to make automotive steel in India.

The new video game titled Call of Duty: Modern Warfare 2 is attracting controversy. Some gamers are claiming one of its levels bears striking resemblance to images from last year’s terrorist attacks in Mumbai. The controversial level in the videogame involves a shoot out in Moscow’s airport in which gunmen kill several travelers… The game’s publisher Activision has defended the level, saying it motivates players to stop the terrorists.

Navi Mumbai land auction prices rise, more to follow

Madhurima Nandy — Fri, 20 Nov 2009 17:13:00 GMT

Bangalore: The sale of two land parcels by City and Industrial Development Corp. of Maharashtra Ltd (Cidco) in Navi Mumbai has fetched higher prices than three months ago, signalling a revival of interest in a market that has largely been frozen since mid-2008.

A 5,000 sq. m plot in Kharghar was sold through tender on Friday at Rs75,515 per sq. m, more than the Rs68,000 per sq. m that Piramal Sunteck Realty Pvt. Ltd paid in a Cidco land sale in August. The other plot, of 1,500 sq. m, also in Kharghar was sold at Rs61,000 per sq. m, higher than the current market price by Rs5,000-7,000 per sq. m.

“Like property prices, land prices have also risen in the past three months, though they still haven’t reached the 2007-early 2008 peak levels. Land sales are still slow but demand has returned,” said Mohan Ninawe, Cidco spokesperson.

According to the official, land prices that crashed by nearly 60% in the past one year have gone up 20-25% in the recent two-three months. Land prices started cooling down from mid-2008, when both land and home sales slowed and developers, struck by a credit crunch, stalled expansion and land-buying plans.

State-owned bodies, such as National Textile Corp. Ltd (NTC) and the Mumbai Metropolitan Region Development Authority (MMRDA), which failed to sell land parcels in the past few months, even at reduced prices, are firming up new sale plans for the next few months.

“There is always interest for such land sales, but there is also a need to unlock the huge amount of land which belongs to government bodies to make valuations become reasonable,” said Akshaya Kumar, CEO of Parklane Property Advisors.

NTC intends to sell textile mill land estimated at around Rs4,000 crore in a phased manner in cities such as Kanpur, Indore and Mumbai. Nine mills, located on an estimated 100 acres, are in Mumbai alone.

In its only attempt at land sales this year, NTC had tried to dispose of the 10.4 acre Finlay Mill in central Mumbai for a reserve price of Rs710 crore but cancelled it twice because it wasn’t satisfied with the bids.

Lodha Developers Ltd, which had raised its bid to Rs710 crore from Rs657 crore to qualify, filed a petition in the Delhi high court, which has stayed NTC from issuing fresh tenders for the property. That hasn’t deterred NTC from being aggressive on the pricing front. “We are ready with the land for our remaining mills and we need to speak to property consultants to know how soon we can put them on sale. But we are very clear that we will not compromise on the market price and will not lower rates,” said K. Ramachandran Pillai, chairman and managing director, NTC, for which the sale of mill land is a large source of revenue.

After a hiatus of at least a year, MMRDA, which has put up plots for sale at a premium in the Bandra Kurla Complex (BKC) business district in suburban Mumbai, now plans to auction land earmarked for residential homes. In the last such auction by MMRDA (in September 2008, the early days of the downturn), a BKC site fetched Rs1.55 lakh a metre, half that of an auction in March. “We have about 20 hectares that can be sold. We are finalizing the tender because the market is picking up pace again,” said an MMRDA spokesperson.

UN State of World’s Children report highlights maternal deaths

Saabira Chaudhuri — Fri, 20 Nov 2009 11:28:00 GMT

New Delhi: The State of the World’s Children report highlights how severe the problem of maternal mortality is in developing nations like India.

On the 20th anniversary of the Child Rights Convention, the UN has released a special edition of its annual The State of the World’s Children report.

Click here to view a slideshow about the state of children in India

“The Convention on the Rights of the Child is the most ratified human rights treaty in human history,” said UNICEF executive director Ann M. Veneman. “It has transformed the way children are viewed and treated throughout the world.”

The report charts the progress in children’s rights and quality of life that has been achieved globally over the last 20 years: the under five mortality rate has declined by 28%, 84% of primary school age children are in class today globally, and progress has been made on a range of issues like child trafficking and child labour.

However, it also points to the problems that continue to exist, specifically maternal mortality in the developing world, stating that “the difference in pregnancy risk between women in developing countries and their peers in the industrialized world is often termed the greatest health divide in the world.”

The report emphasizes that education girls and strengthening health services are the most powerful ways to combat this phenomenon. It also identifies interventions and actions that must be scaled up to save lives: adequate nutrition, improved hygiene practices, antenatal care, skilled health workers assisting at births, emergency obstetric and newborn care, and post-natal visits for both mothers and newborns.

India and Nigeria together account for one third of maternal deaths worldwide. The latest international estimates show that India’s maternal mortality ration stands at 450 per 100,000 live births. A quarter of the world’s unattended deliveries take place in India.

Through initiatives like Janani Suraksha Yojana, which provides cash incentives for antenatal care during pregnancy, assisted institutional delivery and post-partum care, the Indian government is attempting to expand health care access for women. In some states, like Gujarat, the government is also partnering with private hospitals in initiatives like Chiranjeevi Yojana, which provides free obstetric care for pregnant women living below the poverty line.

Nuke cooperation high on PM agenda in US

PTI — Fri, 20 Nov 2009 11:06:00 GMT

Washington: As he prepares to meet President Barack Obama in Washington, Prime Minister Manmohan Singh hopes the US will be “more liberal” in transferring technologies to India and clear the way for implementing the landmark agreement on nuclear cooperation.

Singh, who leaves for Washington Saturday, gave enough indications in an interview to The Washington Post that nuclear cooperation would be high on his agenda during talks with Obama.

“We have a landmark agreement with the US on nuclear cooperation. We would like to operationalize it and ensure that the objectives for the nuclear deal are realised in full,” he said.

Singh said the restrictions on technology transfers to India “make no sense” since the country has an impeccable record of non-proliferation.

“My hope is that we can persuade the US administration to be more liberal when it comes to transferring technologies to us. The restrictions make no sense. India has an impeccable record of not participating in any proliferation of weapons of mass destruction. So that’s my number one concern,” he said.

Top Indian and US officials are holding hectic parleys to conclude a deal on reprocessing of spent fuel before the November 24 Singh-Obama meeting.

The US side is insisting on an assurance from India on nuclear non-proliferation, a sticking point in clearing the way for nuclear commerce.

India’s billionaires double

Fri, 20 Nov 2009 09:48:00 GMT

India’s richest have reason to celebrate 2009. That’s because they grew richer in the course of the year (net worths have been compiled based on stock prices and exchange rates as on 16 October), unlike 2008, when they grew poorer.

Much of this can be attributed to the rebound in the economy and the sharper recovery of the stock markets.

Click here to view a slideshow of India’s ten richest people

According to the annual rich list of Indians by ‘Forbes’ magazine, Reliance Industries head Mukesh Ambani, who took over from steel baron Lakshmi Mittal as the wealthiest Indian in 2008 has maintained his position this year with a net worth of $32 billion (around Rs1.48 trillion). Mittal comes second. And Mukesh’s estranged younger brother Anil, third.

Also See The Other Billionaires ( Graphics)

The combined net worth of India’s 100 richest people is $276 billion, or a little over 25% of the country’s GDP, although the two numbers aren’t comparable at all (still, it has become the norm to express all numbers, even that cannot be, as a proportion of the GDP). Last year ‘Forbes Asia’ had estimated the total networth of 40 richest Indians at $139 billion, 60 % down from 2007 estimates.

That we have a list of 100 this year compared to last year’s 40, is because we have a local edition of ‘Forbes’ now, ‘Forbes India’.“Last year there was a huge plunge in the combined and individual net worth of the richest people in India. But this year they have regained and the recovery has been faster as compared to their counterparts in rest of the world,” ‘Forbes India’ editor Indrajit Gupta told Mint.

Interestingly, India has 52 billionaires this year, up from 27 last year and only two less than the 54 it had in 2007, the peak of the economic and stock market boom. “We are very close to the all time high that was seen in 2007. Going ahead, if the growth momentum continues, next year could be better,” added Gupta.

The ‘Forbes’ list also highlights some interesting differences between the rich in India and China. The 100 richest Indians are worth $276 billion; their Chinese counterparts have a net worth of $170 billion. The three richest Indians are worth $79.5 billion. The top 24 Chinese billionaires are worth $80 billion. This is clearly one area where India is ahead of China.

*********

Methodology

A major difference between the methodology that Forbes’ global billionaires ranking follows and the Indian rich list, is that, in India, people’s family fortunes have also been taken into consideration. However, the net worths of individuals are compiled using stock prices and exchange rates as on 16 October. Their privately held fortunes were valued at book value or by coupling estimates of revenues, profits or book value to prevailing ratios for similar public companies. For compiling the rankings, Forbes’ reporters interviewed the people who were on the list, employees of their companies, rivals, investors, fund managers, real estate agents and securities analysts. They also looked at documents and databases to determine value and ownership of assets. Indian citizenship was required to make it to the list.

Compiled by Vijaya Rathore

Graphics by Sandeep Bhatnagar

The gendered face of climate change

Saabira Chaudhuri — Fri, 20 Nov 2009 06:31:00 GMT

New Delhi: A new report from the United Nations Population Fund (UNFPA) says that women, particularly those in developing countries, are most vulnerable to the effects of climate change.

Women make up a large share of the agricultural work force, which is directly impacted by the effects of climate change. They also manage households and care for family members — which restricts their mobility — and often lack the social capital necessary to deal effectively with climate change.

“Given women’s significant engagement in food production in developing countries, the close connection between gender, faming and climate change deserves far more analysis than it currently receives,” says the UNFPA report, which comes a few weeks before the Copenhagen talks.

The report also emphasizes that women are potentially key players in combating climate change, as voluntary declines in fertility, would reduce population growth, which would in turn contribute to a reduction of greenhouse gas-emissions in the future. Population dynamics—changes in geographic distribution, household size and age structure—must also be taken into account in formulating strategies to combat climate change.

The human and gender dimensions of the climate change problems must be considered in order to “launch a genuinely effective long-term strategy to deal with climate change,” said UNFPA executive director Thoraya Ahmed Obaid.

The UNFPA report follows close on the heels of the World Economic Forum’s gender gap index, which ranks India at 114 out of 134 countries, on the basis of economic participation, political participation, education and health.

Mumbai no longer ‘meri jaan’

Seema Chowdhry and Samanth Subramanian — Thu, 19 Nov 2009 19:45:00 GMT

New Delhi: On the Facebook group “Mumbai Terror Attacks: I condemn it” (membership 35,166), a new condolence message was posted on 15 June—mourning not a victim of the attacks last year, but the defeat of the Indian cricket team in a Twenty20 match.

A year is a long time in social networking. Facebook groups that sprouted like mushrooms last November, decrying political opportunism and the Centre’s weak security measures, have now become semi-comatose. Offline, citizens’ groups have similarly turned muted, or they have tried to storm the political establishment they once decried.

Until last November, Sathya N., 21, worked at Nirmal building, Nariman Point, near the Trident hotel in Mumbai. After the three-day carnage, when many of her friends were talking about participating in candlelight vigils or meeting groups of people hungry for change, Sathya was busy signing up with online groups forbidden by her parents to participate in the marches.

Sathya joined as many as four Facebook groups. “There was so much raw emotion around those days,” she says over the phone from Mumbai. “I found it easier to deal with my feelings by taking part in online discussions and urging friends to join these groups.”

But by February, things had changed.

“When I look back, I feel if I had not been working in that area at the time, I don’t think I would have been so traumatized or willing to seek out strangers on the Internet to express my feelings,” she says. “Now that emotion has sort of died down.” Sathya hasn’t posted a message on these groups in the last nine months because she says “there has not been much activity on these anyway”.

Evidently, Sathya is not the only non-active member across these groups. Many have seen no activity from members since December; those that have, are littered with off-topic posts. These Facebook groups have thus turned into platforms for random discussions unlinked to 26/11, its impact on Mumbai, or ideas that can bring about the change they once sought.

Protest march: A peace rally organized at the Gateway of India on 3 December 2008. Abhijit Bhatlekar / Mint

Among the last few posts on “E.N.O.U.G.H.” (857 members) was an open letter, written on 2 December, to L.K. Advani, asking him to stop “pretending that you care about this country”. On “People Against Terrorism—We Must Take A Stand” (1,997 members), the last post from 27 April talks about why people must vote. “Mumbai Terror Attacks: I condemn it” includes a 27 March post discussing India’s fear of Pakistan; on 11 August, a post advertised a business opportunity for all Mumbaikars.

On “One Million Strong for Bombay” (23,601 members), a 9 October post concerned the activist Hansel D’Souza, chairman of the Juhu Citizens’ Welfare Group, the Citizens’ Consensus candidate for the Andheri (West) assembly constituency; an earlier post involved the schedule of the Jazz Yatra. On “The Black Badge for Bombay” (853 members), the last post, from 31 August, wonders if Pakistan is a pawn being used by China against India.

“The idea behind ‘Black Badge for Bombay’ initially was to keep the pressure on so that the reaction to the attacks in terms of government preparedness results in concrete action,” says Somasekhar Sundaresan, the group’s creator. “The government has now set up a combat force in Mumbai, which was the stated immediate objective of this movement and pressure group. After that, we needed to move on.”

Sundaresan admits that the posts have not been updated more frequently because he hasn’t worked hard enough to get people interested in newer issues. “Most of my discussions about civil rights movements are restricted to five or six friends who are members of this Facebook group too,” he says. “It is easier to talk to them because I meet them professionally and personally often.” “The Black Badge for Mumbai” has also been unable to organize offline meetings.

What these groups lacked, according to Sunil Abraham, executive director of the Centre for Internet and Society in Bangalore, was a dedicated team to keep the momentum going. “They don’t have intelligently incremental action points that keep their audiences increasingly engaged,” he says in an email interview. “The creators often underestimate the importance of offline activities that will keep their audiences motivated. Finally, many of them take their membership for granted and don’t bother sending regular updates or even an occasional thank you.”

It was perhaps the need to sustain momentum that drove some of the offline citizens’ groups into the political sphere. Anil Bahl allied his Let’s Rebuild India with the Professionals Party of India. A group called Jago Mumbai turned into the Jago Party, which fielded a candidate in the Lok Sabha election from north-west Mumbai. (He lost.) “We decided that we couldn’t do anything alone,” says Bhuresh Barot, a working member of the Jago Party. “You need to be in power to do anything.”

As his party’s south Mumbai coordinator, Barot witnessed a rapid dissolution of voter outrage back into voter apathy; in the Lok Sabha election, the turnout stood at 43.3%. “The main reason seemed to be that voters thought they already knew the ideology of every party,” Barot theorizes. “And they decided they simply didn’t have faith in the candidates.”

Residues of faith do remain, however, in the power of social networking. Ruben Mascarenhas, a 22-year-old member of the Yuva Satta movement in Mumbai, believes that intelligent use of social networking sites to generate awareness is what will eventually usher in many revolutions in the country. “Post-26/11, I realized that online activism is not just about the euphoria that comes with creating a group or having 500 people sign up in a matter of days,” Mascarenhas says. “You also need the energy to sustain these groups.” He says he knows now that creating online groups with fewer but committed individuals, who give ideas and work on them, is a better model to follow than signing on strangers who will invest just a few minutes online.

The 26/11 online groups lost their followers, Abraham argues, only because “there was no unified vision of where these groups wanted to go. Properly designed advocacy efforts on the Internet such as that of Michael Geist from Canada, who managed to block anti-consumer changes to the copyright law by using a Facebook group, will and can work”.

That may be true. But it may also just be as Barot says: “People got busy. This is Mumbai. This is a fact of life.”

seema.c@livemint.com

Bharati Shipyard to appeal against Sebi’s open offer order

P. Manoj and P.R. Sanjai — Thu, 19 Nov 2009 18:25:00 GMT

Bangalore/ Mumbai: The battle for Great Offshore Ltd, India’s largest integrated offshore services firm, has taken a new turn, with Bharati Shipyard Ltd planning an appeal against the market regulator’s move allowing it to make an open offer for Great Offshore under a rule that would bar it from taking management control.

Takeover contender: A Bharati shipyard at Ghodbunder, Pune.

“We are examining all options,” said Vijay Kumar, managing director of Bharati Shipyard, India’s second biggest private shipbuilder. “In a democratic country, we are free to appeal against anything.”

The Securities and Exchange Board of India, or Sebi, on Wednesday approved open offers planned by Bharati Shipyard and ABG Shipyard Ltd, the country’s largest private shipyard, to buy an additional 20% of Great Offshore from the public.

The shares of Great Offshore rose by 3.14% on Thursday to close at Rs535.50 on the Bombay Stock Exchange (BSE) even as the exchange’s benchmark index, the Sensex, dropped 1.25% to close at 16,785.65. Shares of Bharati Shipyard rose 0.88% to close at Rs165.65 and ABG Shipyard gained 0.64% to end at Rs201.15.

Bharati Shipyard now holds a 23.17% stake in Great Offshore and ABG Shipyard’s stake is 8.29%. Under Indian company law, any investor holding a 26% stake or more in a firm can block any special resolution and, thus, effectively wield management control.

Some experts say that if Bharati Shipyard buys shares through its open offer under Regulation 10 of takeover norms, for which it has received regulatory approval, it may not be able to take management control of Great Offshore.

The market regulator has given its consent for an open offer with management control—under Regulation 12 of takeover norms—for ABG Shipyard, but for Bharati Shipyard, the approval is for an open offer without management control (Regulation 10).

Also Read Bharati, ABG compete for Great Offshore stake

The untold story of Great Offshore

Bharati Shipyard to stock up for Great Offshore

Bharati Shipyard ups ante in battle for Great Offshore by buying 3% more stake

In May, Bharati had made the open offer under Regulation 10. This meant it was buying shares in Great Offshore as a strategic investor. But after ABG Shipyard entered the takeover battle in June, Bharati Shipyard changed its open offer plan, seeking management control of Great Offshore under Regulation 12.

Sebi has struck down this change while approving the open offer. “ …the issue has been examined and the first bidders (Bharati Shipyard) have accordingly been advised to revert to the original position, i.e. to make an offer only under Regulation 10…,” Deep Mani Shah, a Sebi executive, wrote in an 18 November letter to Bharati Shipyard and ABG Shipyard.

“According to Sebi, the change in the structure should have been done within 14 days of making the open offer. We did it after 14 days,” Kumar of Bharati Shipyard, one of the two promoters of the company, told Mint.

ABG Shipyard, in contrast, made its open offer under Regulation 12. “We have received approval from Sebi to make an open offer under Regulation 12,” said Dhananjay Datar, chief financial officer, ABG Shipyard.

Analysts are divided on the issue. While one section says that Bharati Shipyard will indeed have effective management control as it can block resolutions once it acquires 26%, and the term “management control” is not defined in the company law, others say Bharati Shipyard will not be able to occupy the driver’s seat.

“It’s a big blow to Bharati,” said Navindar M., analyst at Mumbai-based brokerage Natverlal and Sons Stock Brokers Pvt. Ltd.

As per the Sebi decision, Bharati Shipyard will have to make the open offer under Regulation 10, but if it wants management control of Great Offshore, it will have to make another open offer under Regulation 12. “This would require additional money and make the deal too expensive for Bharati,” Navindar said.

Technically, Bharati can appeal against the Sebi decision either in the Securities and Appellate Tribunal or in a high court. Such an appeal would delay the takeover process.

“In our view, permitting Bharati to appoint majority directors will have adverse implications on the simultaneous open offer by ABG as ABG’s right to exercise any “control” will be blocked. Therefore, Sebi has refrained from permitting Bharati to have any controlling right at this early stage,” said Akil Hirani, managing partner at Majmudar and Co., an international law firm.

According to Hirani, this seems to be a well-thought-out move by Sebi as “permission to one acquirer should not act to the detriment of another, when both are making open offers at the same time and will have substantial holdings pursuant to the offer”.

Both ABG Shipyard and Bharati Shipyard are eyeing Great Offshore’s assets and customers to derisk their main business of constructing ships as the global shipbuilding industry faces an uncertain future, after the current orders are executed, due to a slump in demand.

Buying Great Offshore would help either of them to quickly enter the lucrative business of supplying ships to the offshore oil industry. The entry rules for new firms venturing into the support vessel supply business are stringent, both in India and elsewhere.

Sixteen of Great Offshore fleet of 41 vessels are capable of servicing the deep-water oil exploration market. Moreover, a large number of ships in its fleet have to be replaced over the next five years, bringing captive business to the shipbuilder who succeeds in acquiring Great Offshore.

Bharati’s interest in Great Offshore is much deeper. It is constructing one oil drilling rig and a support vessel for Great Offshore, together worth around $220 million (Rs1,021 crore).

Vijay Kantilal Sheth, promoter of Great Offshore, lost management control after he pledged shares with the promoters of Bharati Shipyard for a Rs240 crore loan in January. When he failed to repay the loan, the promoters of Bharati Shipyard acquired the 14.89% stake that Sheth had pledged with them.

Bharati then announced a public offer at Rs344 a share to the shareholders of Great Offshore in line with India’s takeover laws.

ABG Shipyard entered the battle in late June, offering Rs375 a share, and that forced Bharati to raise its offer to Rs405 a share. ABG Shipyard sweetened the offer first on 30 July to Rs450 a share and again to Rs520 a share on 4 August.

In September, Bharati Shipyard revised its open offer price to Rs560 after buying some shares in Great Offshore from the open market.

p.manoj@livemint.com

Setback for RNRL in KG gas case

Manish Ranjan — Thu, 19 Nov 2009 18:24:00 GMT

New Delhi: In a setback to Reliance Natural Resources Ltd (RNRL), the Supreme Court on Thursday allowed the ministry of petroleum and natural gas to become party to the ongoing dispute over gas supplies between the Ambani brothers.

RNRL counsel Ram Jethmalani had on Tuesday opposed the government joining the case on the grounds that the petroleum ministry was not a party to the dispute between Mukesh Ambani-controlled Reliance Industries Ltd (RIL) and Anil Ambani’s RNRL.

The ministry’s special leave petition (SLP), the basis for the government becoming a party to the case, argues that the production-sharing contract (PSC) between the government and RIL and the government gas utilization policy should get precedence over private agreements such as the Ambani family memorandum of understanding (MoU)—an agreement on the basis of which estranged brothers Anil and Mukesh Ambani divided the assets of the Reliance business empire between themselves. This stand is roughly in line with RIL’s argument and opposes RNRL’s stand of the MoU being paramount.

The ministry’s SLP against the Bombay high court judgement of 15 June says the ruling had adversely affected the government’s sovereign rights over natural gas and undermined the PSC and the government’s gas pricing policy.

Interestingly, the Bombay high court had allowed the government to “intervene” in the case. An “intervenor” can only make written submissions, but a party can make oral arguments besides filing replies and counter-affidavits.

Jethmalani had said on Tuesday that the government had no right to maintain the SLP and that if this was allowed then he should be permitted to cross examine petroleum ministry witnesses in the case.

When Jethmalani again raised the issue of cross examination on Thursday, the three-judge bench reminded him that the case is being argued through affidavits. Any party that has objections to the filings can file a counter-affidavit.

Jethmalani subsequently relented on the government becoming a party, saying that RNRL wanted to avoid prolonging the case.

“I am consenting not because they have a right to (but) because I want to avoid further litigation by the government,” the RNRL counsel told the bench of Chief Justice K.G. Balakrishnan, justice B. Sudershan Reddy and justice P. Sathasivam.

An RNRL spokesperson sought to downplay the change of stance in a late evening statement.

“There is no formal order and we consent to the government being a party subject to inspection, discovery of documents and cross examination,” he said.

RIL counsel Harish Salve said outside the court that his client’s stand had been upheld.

“We have always maintained that the government should be a party to this as we would have to deal with the government after the judgement,” Salve said.

The Supreme Court is hearing the case between RIL and RNRL over the supply of gas from the former’s D6 block in the Krishna-Godavari (KG) basin.

While RNRL has sought the apex court’s intervention in an SLP for immediate supply of 28 million standard cu. m a day (mscmd) of gas from KG D6 at $2.34 (Rs108.58) per million British thermal units (mmBtu) for a period of 17 years, RIL has opposed this, saying the price is 44% lower than that mandated by the government and that it cannot supply gas at a price not approved by the government and to a user not listed in its gas utilization policy.

In another development, Gopal Subramanium, solicitor general of India, clarified that he has been instructed by the petroleum ministry as also the Union government to clarify in the Supreme Court that the interests of state-owned power utility NTPC Ltd have not been jettisoned.

The NTPC suit in the Bombay high court, seeking supply of gas at $2.34 per unit, should not be prejudiced in any manner by the RIL-RNRL dispute, Subramanium said.

The solicitor general acceded to the request of the three-judge bench to file an affidavit on the government’s stand on NTPC.

The petroleum ministry had clarified its stand in an amended petition on 1 September, and said: “It is the unequivocal stand of Union of India that the approval of the price of gas at US$4.2 (per) mmBtu in respect of the D6 block was without prejudice to the rights of NTPC in the pending suit filed by it against RIL pending before the Bombay high court.”

The lawsuit between NTPC and RIL in the Bombay high court dates back to December 2005, with the point of contention being the existence and terms of a valid contract between the two. NTPC claims there is a contract in which RIL promised to supply 12 mscmd of gas for the expansion of the state-owned power generator’s Kawas and Gandhar power plants, both in Gujarat, for 17 years at a price of $2.34 (nearly Rs114) per mmBtu. RIL claims otherwise.

Mohan Parasaran, additional solicitor general, arguing on behalf of the petroleum ministry, said NTPC was a government nominee and would follow state policy. Any agreement that runs contrary to the PSC, to law and is against the public interest cannot be held as valid by the court, he added.

Under the government’s National Exploration and Licensing Policy, 203 PSCs have been signed. The Bombay high court order could jeopardize all these contracts if private MoUs are privileged above the PSC, he said.

Potato, onion prices push food inflation to 14.55%

PTI — Thu, 19 Nov 2009 17:33:00 GMT

New Delhi: Food inflation shot up to 14.55% for the first week of November, fuelled by higher prices of staple items such as potatoes, onions and pulses.

Food inflation had been 13.68% for the week ended 31 October.

Upward march: A file photo of a fruit and vegetable market in New Delhi. Analysts expect prices to remain high. Madhu Kapparath / Mint

While on a weekly basis inflation rose 0.87 percentage point from 13.68%, on a yearly basis, the price of potatoes shot up by 102.47%, onions by 38.24% and that of pulses by 27.03%.

Analysts expect prices to remain high, unless the rabi winter crops are abundant.

“Food inflation is likely to remain high, unless prospects of rabi are known. It is a matter of concern,” Crisil Ltd principal economist D.K. Joshi said.

However, he added that high onion and potato prices may be seasonal.

There is no item on the list mentioned in the data that has shown a declining trend on a yearly basis.On a weekly basis, though, prices of fruits fell by 1.3%, and that of jowar and poultry chicken by 1% each.

Urad, mutton, moong, condiments and spices, barley, wheat and bajra rose 3% each and milk, gram, river fish and eggs by 1% each.

Non-food articles inflation also rose to 0.59% from -0.17% a week earlier and the rate of the price rise in fuel, power, light and lubricants was higher at -1.51% compared with -1.71%.