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India’s Bullet Train with Japanese Aid Tramples Fiscal Transparency
- Published on 26 September 2017
(Image Courtesy: nhsrcl.in)
Japan-India bonhomie over the latter’s maiden bullet train project can spin into a can of worms, if subjected to an independent probe.
The only ‘bulletish’ aspect of the project at present is its skyrocketing cost: It has shot up about five times over 11 years from Rs 20,352 crore in 2006 to Rs.1,08,000 crore in 2017. This in spite of reduction in length of high speed rail (HSR) line from 650 km to 508 km achieved through alteration in route. On per Km basis, the cost has thus shot up about seven times from Rs 31.31 crore to 212.59 crore!
The project is thus destined to become a subject of several global case studies on six major counts.
The major issues are: 1) Fiscal Transparency; 2) tied foreign credit; 3) technology transfer & project execution through bilateralism, thereby frittering competitiveness available under global competitive bidding; 4) potential response of countries that have been edged out by Japan in bullet trains lobbying 5) alternate models for introduction of bullet trains and 6) strong potential risk of corruption.
Before discussing these concerns, take a look at Japan’s 30 years-long effort to market bullet trains to India that culminated in a foundation-stone laying of the maiden project on 14th September 2017 by PMs’ of the two nations.
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Winning Perception Battle In Enforcing Contracts Can’t Hide Rot
- Published on 21 September 2017
(Image Courtesy: US Bureau of Alcohol, Tobacco, Firearms and Explosives atf.org )
Modi Government is desperate to see India pole-vaults in the ease of doing business (EoDB) sweepstakes. Take the case of ‘enforcing contracts’. It is one of the 11 indicators on the basis which the World Bank assesses 190 countries for EoDB rankings in its annual Doing Business (DB) Report.
On the ‘enforcement contracts (ECs) parameter, the Government is eying 50-points jump in the forthcoming DB2018 report from 172nd rank in DB2017 report. A Task Force (TF) chaired by Secretary (Justice) has prepared slew of reforms that appear to fit well into DB methodology.
The problem here is that EC evaluation methodology is very narrow in scope and is standardized for all countries. This approach thus does not reflect the ground reality on EoDB that varies from one nation to another.
It has thus left out a lot of major irritants in ECs in India as we find a bit later.
Under ECs, DB report measures the time and cost for resolving a commercial dispute through the first-tier court. It also assesses good practices adopted by each country to promote quality and efficiency in the commercial court system.
This quality of judicial processes index reckons good practices across four areas or components. These are: 1) court structure and proceedings, 2) case management, 3) court automation and 4) alternative dispute resolution.
Unveil Industrial Policy to Promote Unhindered, Efficient Production
- Published on 08 September 2017
(Image Courtesy: SAIL)
Demonetization-battered Modi Government appears to be in search of Aladdin Ka Chirag for ringing in elusive double-digit growth. Its move to draft a new industrial policy reflects this quest.
“A comprehensive, actionable, outcome oriented industrial policy will enable industry to deliver a larger role in the economy; to fulfill its role as the engine of growth and to shoulder the responsibility of adding more value and jobs”, says the ‘Industrial Policy - 2017 A Discussion Paper’ released by Department of Industrial Policy and Promotion (DIPP) on 29th August 2017.
The discussion paper (DP) might put off Aladdin as it is mishmash of “Illustrative outcomes and questions that trigger the search for solutions”. Had DP authors done some additional homework, they would have found solutions to all their questions in official documents including reports of expert committees one of which was specifically appointed by DIPP.
DP does not articulate policy objectives. It is deficient in offering credible solutions to major problems that delay projects, erode their competitiveness and curtail scope for productivity increase.
DP does not provide assurance to investors against risks such as retrospective Raj unleashed by Government. The new policy should promise not to hurt/kill a greenfield project with duty-free imports under a new free trade agreement (FTA). Assurance is the key to attracting and sustaining investments in highly uncertain times.
It is here pertinent to cite Prime Minister Pandit Jawahar Lal Nehru’s statement on participation of foreign capital delivered in the Constituent Assembly on 6th April 1949.
Corruption Encounters New Sound & Fury From All Quarters
- Published on 31 August 2017
(Edited Image Courtesy: Transparency International's UNCAC Guide)
The more the merrier. Yes, the idiom ‘too many cooks spoil the broth’ is invalid in the global battle against corruption. One can infer this after scanning a slew of new initiatives against bribery being cooked at multilateral, regional, bilateral and at national levels.
The rationale for stakeholders upping the global ante against corruption is the fact that bribes are like mosquitoes that resists all controls. They react by acting as vector of new diseases in addition to malaria.
As put by the World Bank in its recent Brief on Corruption, “Businesses and individuals pay an estimated $1.5 trillion in bribes each year. This is about 2% of global GDP—and 10 times the value of overseas development assistance. The harm that corruption causes to development is, in fact, a multiple of the estimated volume, given the negative impact of corruption on the poor and on economic growth”.
It adds: “Data on international financial flows shows that money is moving from poor to wealthy countries in ways that fundamentally undermine development. Corruption is a global problem that requires global solutions”.
All stakeholders agree that new steps are needed to rein in corruption. No one is, however, sure about the precise efficacy of existing measures. Bribery can be checked substantially if all countries embrace global treaties and implement them sincerely.