Support for further economic reforms in the context of India's globalisation will be mustered more easily if the deprived sections are assured of some safety net, says M K Venu FINANCE minister P Chidambaram's fifth budget stumped the chattering classes, mostly with incomes of well over Rs 10 lakh a year. The Rs 10-lakh income threshold is relevant because there are less than 300,000 people in India showing a taxable income of Rs 10 lakh and above. But they exercise disproportionate influence on policy. There are many more in the above income category, who do not pay taxes and probably have even greater influence on public policy! The budget also stumped economists, who are also part of the chattering classes. Initially they did not know what to make of a budget that seemed to give everything to everybody. The budget certainly did not lend itself to instant analysis on television channels where many economic pundits were sitting. In the first flush, one economist simply said he was overwhelmed, and didn't know how the numbers would work after so much goodies were handed out by the finance minister. "I am overwhelmed', is what he kept saying. The impatient TV anchor, obviously looking for a one liner, kept pressing, 'Is it good or bad?'. The only reply was,' I am overwhelmed.' It didn't take long for everyone to realise that it is not necessary for numbers to strictly add up in politics. In certain situations, sentiment and psychology can subsume numbers that don't add up. Which is why politics is often described as the art of the possible. While economics parades as an exact science, there are times when economists get lost in their linear frameworks and miss the wood for the trees. Further, what really stunned the chattering classes was someone like Dr Manmohan Singh or P Chidambaram could come up with such a massive loan waiver package. They associated such acts with politicians like the late Devi Lal, Charan Singh or among contemporaries, Prakash Singh Badal and M Karunanidhi. How could Manmohan Singh and Chidambaram do this, was the main question on their lips. However, at the end of the day the budget seemed to have got overwhelming support, if one went by how the vernacular press treated the finance minister's announcements. Politically, it is one of the sharpest statements one has come across in the past decade and a half. Chidambaram's dream budget in 1997 too had a mesmeric impact on the people but this one covers a much wider terrain in its inclusiveness, whatever critics may carp about. It took a while for the immensity of the political statement to sink into the BJP leaders. Initially some leaders tried to attack the Rs 60,000 loan waiver as irresponsible. Later, possibly after deeper consultations within the BJP leadership, it was decided to tone down the attack. The politics of it was visible even in Parliament when Chidambaram said only kulak landlords will oppose loan waivers for small farmers holding up to two hectares of land. The invocation of kulak landlords has an interesting dimension. Politically, it is significant that the Congress is attempting to wean the poorest among the backward caste, scheduled castes and minorities away from regional parties that have established themselves over the years. This would easily rank as among the most audacious attempts by the Congress to upset the present political arithmetic of various strong regional parties. If viewed in this perspective, it becomes easy to understand why considerations such as fiscal profligacy and misplaced budget assumptions do not stand a chance. In any case, of late, a feeling had developed in non-urban India that the country was reaping the riches of globalisation, in terms of mounting forex reserves, high corporate profits, and government revenues doubling in three years. IN SUCH a situation it becomes difficult to convince the other India that fiscal belt tightening is the way to go. Besides, this would be most hypocritical as even anecdotal evidence would suggest that the bulk of the growing government subsidies today are consumed by the urban middle class. Just take the Rs 71,000-crore energy subsidy. Over 80% of it must be going to the urban middle class. The finance minister has also been careful in not going overboard while opening the purse strings. He has kept enough head-room in his fiscal deficit target to ensure that some discipline remains. For instance, he has budgeted fiscal deficit at 2.5% of GDP, when he could have kept a target of 3% as per the FRBM timeline. He can technically spend extra about 0.5% of GDP or Rs 20,000 crore, without violating the FRBM Act. In fact, the expenditure on loan waiver in the first year could be no more than Rs 20,000 crore. Operationally, the waiver of Rs 60,000 crore will occur over three years. More interestingly, much of the write-offs will happen among loans which are already sitting as non-performing assets (NPAs) in banks. So the bank books will get cleaned up to that extent. In lieu of the write-offs, the banks could receive government bonds which they could liquidate in the market or sell to the Reserve Bank of India. True, this may constitute another offbalance sheet borrowing by the government. Even after taking some of the off-balance sheet items, heavens won't fall if the fiscal deficit moves up to 4% of GDP. What is the great sanctity to the 3% figure, one fails to understand. Both oil and food subsidies today are being enjoyed across the board by urban and rural India, and these subsidies have helped to keep food prices under control. It is difficult to imagine the political class surviving if the price of wheat in India were to track international trend. Global wheat prices have doubled in the past year. The price of other mass consumption items such as edible oil too has been maintained at lower than international price. Bad economics, but good for collective survival. So current circumstances in the global economy are exceptional and the budget has done well to admit that there are off-balance sheet subsidies whose value is growing by the day on account of rising global prices. Finally, support for further economic reforms in the context of India's globalisation will be mustered more easily if the deprived sections are assured of some safety net. The benefit of all this will eventually accrue to the growing aspirational middle class. This perspective must not be lost sight of. After all, it is in the interest of the emerging bourgeoisie to keep the present system alive and ticking.

HERE'S the answer to the most intriguing question about this year's budget

SINOSTEEL, the $16-billion state-owned Chinese steel major, will start work on its proposed unit in West Bengal in April. The new unit due to come up in the port town of Haldia will be Sinosteel's first manufacturing presence in India. Sinosteel, which plans an investment of Rs 200 crore, will manufacture cold forged steel rolls used in cold rolling mills. "Construction work on our plant in West Bengal will start from April. We have got possession of 30 acres at Haldia on which the plant will come up. We have already placed orders for equipment which will be shipped from China,' Sinosteel India MD Hangseng Wang said. He is in the city to attend a steel seminar. The meet will focus on bringing steel and allied sectors of China and India closer. The Haldia unit will have a capacity of 5,000 tonne and will meet one-third of the requirements in the Indian steel industry. The investment in West Bengal is a part of the $2-billion package being readied by Sinosteel for stepping up its manufacturing presence in India. As part of this project, Sinosteel had signed an MoU last year with the Jharkhand government for a 2-million tonne (mt) integrated steel plant. "All necessary approvals from external affairs, finance and steel ministry have come through. We would like to start work as soon as we get the land,' Mr Wang said. Sinosteel, which is into mining, design and manufacturing of steel plant equipment, has been involved in construction of almost all major plants in China. The proposed project is likely to come up in Silli-Chandil area near Ranchi. Sinosteel is looking at 300 mt of iron ore reserves for which the company will apply for a mining lease. "However, we will not wait for getting a mining lease before we start our operations. Instead, we will stick to our schedule. If necessary, we would source iron ore from private mines in and around the area,' Mr Wang added. China, which produced 489 mt of steel in 2007, is the largest steel producer in the world. "We can do a lot for the fast growing Indian steel industry,' Mr Wang added.

R&D is a fast evolving segment of Indian pharmaceutical industry. Innovation, international partnerships, collaborations, inflow of funds, clinical trials partnerships and co-development deals are changing the landscape of R&D. However, the potential is far greater and to aid the harnessing of this potential, the Times Group organised the ET Bio-Pharma Development Summit in Mumbai. Dr Swati Piramal, director, Nicholas Piramal, was the chairperson of the forum, with the keynote speaker being Dr Ted Bianco, director, Wellcome Trust. The highlight of the event was the special address delivered by Kapil Sibal, union minister for science and technology and earth sciences. Dr Piramal delivered the opening address to a house full of delegates. She highlighted the need of innovation in R&D and how India can excel in the same. Her address was followed by an interesting speech made by Dr Ted Bianco, director, Wellcome Trust, UK. He provided an insight into early stage R&D through translational research funding and management of intellectual property arising thereafter. Then, it was time for Mr Sibal's speech. He termed the new disease pathogens the terrorists of the 21st century and said there was an urgent need to safeguard public health. He also made a strong case for growth of R&D in case of Indian pharmaceutical industry and how it could be harnessed in India to provide affordable cure. The minister stressed on the need for a forward-looking drug policy and government subsidies to boost innovation in the country. Malvinder Singh, MD and CEO, Ranbaxy Laboratories, the speaker for the second session, gave a address on the future of generics. He informed that the global bio-generic industry was worth $60 billion today. Indian pharma industry can capitalize on this opportunity and grow to become $100 billion industry in the coming years. He pointed out that having 50 NCEs being produced by 15-20 companies is not economically sustainable. Industry needn't duplicate infrastructure as it would be feasible to unite through partnerships and collaborations, he said. He also stressed upon the need for an enabling regulatory framework, which moves away from the price control regime. He pointed out that at present, R&D done internally by the companies alone qualified for weighted deduction under section 35(2AB) of Income tax act. He urged that the government to facilitate innovation by extending this benefit to outsourced R&D as well. The third session was a panel discussion providing an HR perspective on strategies for human resource management. Dr Ganesh Shermon, partner & country head, human capital advisory services, KPMG India, Rajorshi Ganguli, director, HR, Dr Reddy's Laboratories, Sanjay Muthal, president, HR, Nicholas Piramal and Shiv Raman Dugal, chairman, Instiute of Clinical Research of India, were the distinguished speakers forming the panel. Various strategies needed to drive excellence in research and cross-functional areas were discussed. The next session emphasising on what's next in Indian bio-pharmaceuticals was moderated by Utkarsh Palnitkar, national head of health and science industry, Ernst & Young, India. One of the speakers - Dr Ramani Aiyer, chief scientific officer, Actis Biologics - highlighted the new trends in bio pharma. He also delved into the concepts of angiogenesis, gene therapy, recombinant proteins and follow-on biologics. Kavita Khanna, president, Bharat serums & Vaccines, was the next speaker in the session and gave her views on the way forward in publicprivate partnerships. She presented a case study on 'Kala Azaar' (Leishmaniasis), to explain how public private partnership was being proposed to eradicate the disease by 2010. Adnan Naseemullah, a student of university of California, Berkeley, was one of the invitees to the session. He spoke about the growth and development of the Indian pharmaceutical industry and highlighted the variations in research strategies followed by the industry. The post lunch session was a two-speaker special session held by Dr S K Gupta, dean and director, Institute of Clinical Research of India (ICRI) and Dr Anand Bidarkar, VP, Siro Clinpharm India. They delved into the various clinical research strategies to maange research and development in India. Dr Gupta provided the statistical data on the infrastructure which is available for clinical research in India and how can India emerge as a world-class destination for conducting quality clinical research. Dr Bidarkar explained how MNCs were taking advantage of Indian clinical R&D to shorten their drug development timelines. He also highlighted how Indian companies could look at outsourcing to overcome their competitive disadvantages. The concluding session of the day was the CEO round table. Presided by Dr Piramal, with Pratibha Pilgaonkar, CEO, Rubicon Research, Dr Naveen Rao, MD, Merck India and Dr Ajit Dangi, president and CEO, Danssen Consulting, being the other participants in the discussion. Dr Piramal posed various questions to the panel relating to scope of R&D in India, possibility of doing a Nano in pharma and cost of innovation. Dr Naveen Rao, MD, Merck India, expressed the need for big pharma companies to look at India and its cost-effective resources. He also stated that partnerships offered an attractive method of risk and reward sharing. Ms Pilgaonkar pointed out that SMEs in Indian pharma industry at an early stage need the support and funding from big players in the industry to become agents of research and innovation. Dr Dangi stressed on the need for world class intellectual property (IPR) regime, lowering of transaction costs and a liberal price policy in the country. Strengthening of the infrastructure of Drug Controller General of India, approval of various protocols for clinical trials, framing of laws on cloning and neutraceuticals were other issues discussed by the panel discussion. Dr Piramal projected that by 2010, India would have discovered at least five new drugs . Her personal bet on the cost of innovation of a new drug in India stood at less than $50 million. The session concluded after a question and answer session where the audience put forth their questions to the panelists.

THEglobal steel sector is passing through a phase of extraordinary growth due to all round growth in steel demand led by China and India. International Iron & Steel Institute's (IISI) provisional report shows that the world crude steel production has increased from 1,250 million tonne in 2006 to 1,343 million tonne in 2007. China, with 489 mt of crude steel production, continues to be the largest steel producer in the world, whereas India with 53.1 mt now ranks fifth, up from its eighth rank in 2003. Steel consumption in India is presently growing at nearly 12% and keeping in view the anticipated growth in infrastructure and manufacturing sectors, the demand is further likely to grow by 14-16% during the next few years. During the current year, between April-December 2007, the domestic steel demand has grown at 12.2% over the same period of previous year. However, production has grown at 6.6% in April

FOR the new-age green consumer and those who believe in sustainable tourism here is a good news. After eco-friendly hotels, India will have it's first green hotel

Given the way world prices for food, energy and other industrial goods are moving, the potential implications on the price situation at home is of great import and cause for concern, says Saumitra Chaudhuri THISis a strange year, most likely it will get stranger. There are so many conflicting signals as to where the world economy is headed that market movements are seized of great volatility. Eminent voices see a major US recession down the road; some among them are yet willing to see an "if' about it. Other street signs

Water availability for agriculture was estimated to go down by up to 12% from the current level by 2025 if remedial measures were not taken, Indian Council of Agricultural Research director general Mangala Rai warned. "The water availability for agriculture is projected to be 10-12% of what is now available,' he said while inaugurating the Krishi Vigyan Mela here. Mr Rai said farmers would, in fact, require 25% more water in 2025 than what they are consuming currently to produce food grains for feeding the domestic population.

AHEAD of the Union budget, which is expected to make major announcements for the farm sector, Congress president Sonia Gandhi and Prime Minister Manmohan Singh met farmers' representatives from Maharashtra, Haryana and Rajasthan here on Thursday. A large number of farmers from these states were given audience with Ms Gandhi at her 10 Janpath residence in a bid to give her an opportunity to directly understand their problems, the party said. Congress leaders who attended the meeting said Ms Gandhi had assured them that "she would talk to PM and the FM' about their concerns. However, the Congress chief has already conveyed her message to the government that the budget should be aimed at the

THE upcoming Union Budget should have a special focus on women and farmers. This message was conveyed by Congress chief Sonia Gandhi while speaking at a function in her constituency, Rae Bareli, on Wednesday, where she expressed certainty that finance minister P Chidambaram would "keep the common man's difficulties, especially faced by women and farmers, in mind while preparing the budget'. Speaking at a Bank of Baroda function to launch the 1,000th self-help group, Ms Gandhi was also quoted by agencies as saying that while 8-9% economic growth was not a mean achievement, real happiness would come when the common man's difficulties are wiped out. She added that health and education were keys for achieving real happiness. The comments are politically significant as many in the Congress have been saying much the same thing. At a pre-budget meeting with Mr Chidambaram recently, Congress leaders pointed out that 9% growth alone growth was unlikely to pay dividends for the party in an election year. They had asked the FM to focus on the