Articles

India’s case at WTO may fail to sail

Even as India rejects the US contention of failing to protect IP rights, passing the TRIPS test might be tough In the recently released Special 301 report on trade and industry practices, the US Trade Representative (USTR) has stopped short of putting India on its Priority Foreign Country (PFC) list. Under Special 301, USTR tracks the intellectual property (IP) rights record of countries and lists them according to the strength of their IP environment. If, on review, it identifies substantial deterioration in any country’s IP regime, it gets downgraded to PFC status which carries with it trade and economic sanctions. India may have escaped being listed as such for now, but the Damocles sword hangs over the country as the...
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FAILING TO LOOK BEYOND THE ‘RED LINE’

The Union Finance Minister’s penchant for window-dressing figures is clearly evident in the interim Budget which he presented to Parliament a few days ago. But nothing he has done changes the fact that the economic scenario is gloomy, writes UTTAM GUPTA In the interim Budget he presented to Parliament on February 17, Union Minister for Finance P Chidambaram has achieved fiscal deficit at 4.6 per cent of GDP during 2013-14 against target of 4.8 per cent. He has set a target of 4.1 per cent for 2014-15 which is even lower than 4.2 per cent as per roadmap laid last year. When viewed in backdrop of a shortfall of around Rs 77,000 crore in in tax collections and Rs 30,000 crore...
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Enough of this urea populism

A urea price hike is in order to curb subsidy outgo and redress nutrient imbalance A Group of Ministers (GoM) was set up last year to suggest a suitable hike in urea price to neutralise increase in energy cost, so that subsidy can be reined in. The Government, however, has categorically ruled out any increase until general elections. The maximum selling price (or MRP) of urea has been under control since 1957. Until the late 70s — a period of low inflation and low feedstock price — the MRP was higher than the cost of production and distribution. Hence, there was no subsidy. Since 1977, equation was reversed, with cost exceeding selling price. The Government had to give subsidy to...
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Gas pricing rewards the defaulter

The Government has given Reliance a pretty long rope, despite its inability to meet its production sharing contract (PSC). This has led to fertiliser and power companies being badly hit for no fault of theirs. Will these companies be compensated for losses? First, for some background on how the PSC came unstuck. In June, 2013, Cabinet had decided to double price of domestic gas from $ 4.2 per mBtu to $ 8.4 per mBtu from April 2014, based on recommendations of a Committee under C. Rangarajan, Chairman, Prime Minister’s Economic Advisory Council (PMEAC). However, a notification was held back in view of a dispute with RIL-BP-Nikko, operating the D 1, 3 fields in KG basin. The bone of contention was...
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50% cut in power tariff – Mr Kejriwal can deliver

In its election manifesto, Aam Aadmi Party (AAP) had promised to reduce electricity rates by 50% if voted to power in Delhi. Even before new Government under Mr Kejriwal settles down, doubts have been raised whether he can do it. Staunch critiques rule it out completely on the ground that a 50% cut would require a steep increase in subsidy from existing Rs 550 crores per annum to nearly Rs 5000 crores. But, Mr Kejriwal is certainly not looking at this option. He alleges that there is lot of ‘bungling’ in the manner three power distribution companies (PDCs) viz., BSES Yamuna Power/Rajdhani Power and Tata Power Delhi Distribution are run. They mis-appropriate funds through un-metered sales, inflated operation & maintenance...
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Coal allocation – robbing peter to pay paul

PM’s statement dated October 19, 2013 regarding  allocation ofTalabira-II coal block in Odisha to Hindalco for its 650 Mw captive power plant (CPP) in its integrated aluminium project in Sambalpur, Odisha and for a 100 Mw CPP for expansion of its Hirakud aluminium plant in Odisha throws up some serious questions on  approach of GOI towards central PSUs. In August 2005, Ministry of Coal had informed PM about the decision of the Screening Committee to allocate Talabira-II block to Neyveli Lignite Corporation (NLC). The allocation was made to NLC in the 90s under a ‘special dispensation’ for public sector undertakings (PSUs). Committee felt that Talabira-II & III blocks [Talabira-III had been separately allocated to Mahanadi Coalfields Ltd (MCL)] needed to...
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No reason to fear WTO on farm subsidy

Commerce Minister Anand Sharma managed to wrest some elbow room for India’s food subsidy programme, bringing around the US and other developed countries to accept his point of view. The agreement finalised at the Ninth WTO Ministerial in Bali is expected to let the ‘peace clause’ — a euphemism for not taking any action for supposedly violating commitments under the Agreement on Agriculture (AoA) — continue till a permanent solution comes into being. Developed countries (DCs) wanted this window to be only for four years, without even drawing a time line for a lasting solution. They were merely willing to discuss it at the next Ministerial in 2017. Sharma exudes confidence that subsidy under Food Security Act (FSA) is now...
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Why beg at Bali?

The Indian delegation, led by commerce minister Anand Sharma, is approaching the WTO Ministerial in Bali with a ‘begging bowl’. The government has agreed to the so-called ‘peace clause’—a euphemism for not taking any penal action for violating commitments under Agreement on Agriculture (AoA)—proposed by WTO Director General but with the caveat that this will remain in place until a permanent relief is granted. India’s concurrence with the ‘peace clause’ proposal of DG tantamounts to conceding that India has committed a violation but would want WTO to alter rules to allow developing countries to maintain agricultural subsidies in excess of 10% of agricultural GDP. This has catapulted developed countries to a position from where they resort to aggressive posturing. They...
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