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PERSPECTIVE

A Tribune Special
Civil services: The blunted edge
Asst Editor V. Eshwar Anand examines the Moily Commission’s prescription for reforms
As the nation is decked with festoons and tricolour to celebrate the 60th anniversary of Republic Day tomorrow, all is not well with the Indian bureaucracy.

Illustration: Kuldeep Dhiman


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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE
TERCENTENARY CELEBRATIONS

 

Towards a new culture of governance
by N. Krishnaswamy
T
HE increasing terrorist attacks in India underscore the imperative need for examining the fundamental inadequacies of our security systems.

OPED

The fall of the IT czar
Ramalinga Raju’s experiments with truth
by Aditi Roy Ghatak
There may be no confessional to explain why Ramalinga Raju confessed. Accountancy corridors are rife with stories of others getting away with more serious fraud. In fact, there is some derision with which the lurid acknowledgements of the Satyam supremo – a first generation cheat – are treated in those exalted circles.

Profile
Kalyan’s exit a big loss for BJP
by Harihar Swarup
Politics is a weird game. There was time when former Uttar Pradesh Chief Minister Kalyan Singh had turned a bete noire of Atal Behari Vajpayee and called him “a tired and retired leader”.

On Record
Manufacturing sector needs overhaul: Krishnamurthy 
by Bhagyashree Pande 
THE National Manufacturing Competiveness Council (NMCC) headed by V. Krishnamurthy has been giving critical review of the country’s manufacturing policy to the Prime Minister.


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A Tribune Special
Civil services: The blunted edge
Asst Editor V. Eshwar Anand examines the Moily Commission’s prescription for reforms

As the nation is decked with festoons and tricolour to celebrate the 60th anniversary of Republic Day tomorrow, all is not well with the Indian bureaucracy. The steel frame has become brittle and is riddled with sloth, indifference and inefficiency. There is virtually no accountability in the system.

The Second Administrative Reforms Commission, in its tenth report under the title, Refurbishing of Personnel Administration: Scaling New Heights, has recommended wide-ranging reforms to make the administrative system responsive. Some of the reform proposals are not new. These were raised in 2004 soon after Dr Manmohan Singh took over as the Prime Minister. At several seminars, he has been emphasising the need to pull the civil services out of inertia and goad the officers to perform.

A significant recommendation of the Commission, headed by Mr M. Veerappa Moily, its Chairman, is the need to weed out the deadwood after periodic review of the civil servants’ performance. Few can differ with this view. Job security and time-scale promotions have made our bureaucrats too lethargic. The present system is such that even a non-performing bureaucrat automatically gets promoted to the next higher rank and pay oblivious of its deleterious impact on the administrative system and the quality of governance.

If the government accepts the Moily report in toto, a civil servant can no longer ensconce himself in the seat until superannuation. The Commission wants an officer to be appointed initially for a period of 20 years with scope for extension after due assessment. It has proposed two intensive reviews, one after 14 years and another after 20 years. While in the first, the officer will be apprised of his strengths and shortcomings for future advancement, in the second review, his “fitness” for further continuation in service will be assessed.

The Commission rightly wants the government to act firmly against the deadwood. It has recommended their outright dismissal from service. No officer can claim continuation in service as a matter of right. If a private company cannot afford to keep the deadwood on its rolls, why can the same logic not be applied in the case of bureaucrats? Admittedly, the civil servants’ rights should be subordinate to the overall requirement of public interest and contractual rights of the state. Clearly, the need of the hour is not to protect corrupt, inefficient and non-performing officers but strive for an honest, effective and result-oriented administration at the Centre and in the states.

The aspect of domain expertise of the officers has been given due treatment in the report. The manner in which IAS officers are posted in crucial positions in the government — at the Centre and in the states — without any relevance to their background, experience or expertise tends to create an impression that they are primarily used as desk officers rather than as advisers and specialists in policy formulation and decision making.

Apparently, there is a change in the authorities’ attitude that an IAS officer has the “core competence” to handle any job in any field under the sun. This attitude has wreaked havoc on the system over the years. In 2007, a revised system of mid-career training was introduced for IAS officers to develop competencies for assignments at different levels. Officers will not get confirmed or promoted without training.

However, the training modules are too generic and do not inculcate greater domain knowledge in civil servants. The Commission wants suitable measures to be put in place for mandatory training of officers periodically at all levels — senior, middle and lower in addition to the induction stage— in view of the rapidly changing environment and the increasing demand for improved governance. The quality of training, too, should improve. It should seek to impart officers the functional knowledge, skills and aptitude necessary for performing their assigned jobs diligently. At the cutting edge level, the focus should be citizen-centric and service-oriented.

Unfortunately, the expertise that most officers acquire during their training invariably goes waste as the Centre and the states do not make best use of it. IAS officers go abroad for advanced studies and training in such diversified areas as agriculture, transport, energy, higher education, geology, science and technology. But they are hardly able to put this training to practice because they are not given the fields in which they specialise after they return from abroad.

Significantly, the Commission has said that acquisition of domain competency has become imperative for All-India Services officers. It has suggested the setting up of an independent Central Civil Services Authority (CCSA) to undertake the responsibility of assigning domains to officers. The CCSA could invite resumes from all officers in the government who have completed 13 years of service.

The Commission feels that domain assignment at this stage of the career (when the officer is eligible to become Director in a Union Ministry) would be appropriate because when the officer is due for the rank of Joint Secretary, he/she would have had 3-4 years of exposure to a domain.

The Moily report wants an improvement upon the classification of domain competencies as suggested by the Surendranath Committee report. Accordingly, it has suggested, in today’s context, 12 functional domains of civil services. These are, namely, general administration, urban development, security, rural development, financial management, infrastructure, HRD, social empowerment, economic administration, tax administration, agricultural development, natural resources administration and health management.

Interestingly, it has dwelt at length the pros and cons of the “career-based” and “position-based” Senior Executive Service (SES) model. It feels that job security is the “biggest lacuna” in the career-based system because of its excessive dependence upon seniority, inadequate annual reporting system and frequent transfers. Surely, what is the use of seniority if the officer turns out to be a complete dud? Of course, the counter argument is that the All India Services — the IAS in particular — provide a “unique link” between the cutting edge at the field level and top policy-making positions.

The Commission has rightly proposed competition for senior positions in the government (Senior Administrative Grade or the present Joint Secretary level and above) by opening these positions in the government to the All India Services. If implemented, this will reduce the increasing bitterness among officers of other services against the monopoly of the IAS.

Equally significant is its proposal that for positions at the Higher Administrative Grade (HAG) or the present Additional Secretary and Secretary level, the CCSA should, in consultation with the government, earmark positions for which outside talent would be desirable. Applications would be invited to fill up these posts from eligible persons from both the open market and the serving eligible officers.

Peremptory transfers are a big menace today though these demotivate the officers and sap their morale. This is particularly endemic in the districts. The District Collectors and the Superintendents of Police are shuffled by the political masters at their whims and fancies. In the past four years, Dr Manmohan Singh has sincerely tried to convince the Chief Ministers about the merits of a statutory fixed tenure for district officers. However, he could not succeed because of the reluctance of the non-Congress Chief Ministers.

According to the Government of India’s figures made available for the Second Administrative Reforms Commission, the number of IAS officers spending less than a year in their respective postings has ranged from 48 to 60 per cent of the total strength of the IAS over the years. Surprisingly, the number of IAS officers who spend more than three years in their respective postings is less than 10 per cent of the total strength of the IAS.

Admittedly, if officers are not allowed to continue in their positions for, say, 2-3 years, they would hardly be able to acquire adequate knowledge and experience of their job, build the required mutual confidence and understanding necessary for administrative leadership.

The proposal for catching bureaucrats young is sound. In fact, this was the guiding principle till early eighties when it was compromised for reasons best known to the powers that be. The age limit and the number of attempts for candidates were indiscriminately raised.

The suggestion for post-school recruitment for grooming the country’s future administrators may look pragmatic, but care should be taken to ensure that the rural students don’t suffer. They are late bloomers compared with their urban friends and this fact should not be lost sight of by the policymakers while drawing up the new recruitment plan.

Similarly, ideas on setting up of national institutes to run BA courses on public administration, governance and management, encourage Central and other universities to offer such courses with scholarships to help those admitted to these centres may appear rosy, but what matters ultimately is whether this grooming will help them pass the rigorous test and become responsible administrators.

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Towards a new culture of governance
by N. Krishnaswamy

THE increasing terrorist attacks in India underscore the imperative need for examining the fundamental inadequacies of our security systems. It is heartening that the country’s political system, in a rare show of unanimity, have now supported the establishment of a National Investigation Agency (NIA) and approved tough amendments to the Unlawful Activities Prevention Act (UAPA). However, there is a big gaping hole untouched in the critical area of intelligence.

Though a few noises are being made, one is deeply apprehensive of the system’s capacity to come up with intelligent answers, not even commonsense answers, on intelligence. The incapacity has to do with a mindset that is frozen in outmoded organisation, methods and attitudes in respect of the intelligence function that becomes apparent when we see how virtually every major security event has been throwing up an outcry of the failure of intelligence.

Intelligence is the bedrock on which police effectiveness rests, whether one is dealing with a criminal, a terrorist or a political situation. The strength of the intelligence apparatus at the Centre and in the states is an infinitesimally small fraction of the strength of police forces. It is manned mainly by officers of the rank of Sub-Inspector and above, with a small sprinkling of constables used mainly as drivers and orderlies. They are all positioned in national, state and district headquarters. Much of information they collect and present as intelligence, is what is available, often much earlier and in greater detail, in the media.

A lot of information, clothed in interpretation and analysis or plain speculation is also often presented as intelligence. Hard intelligence, as distinct from such information, is generally derived from intercepts of communications, or interrogations of suspects or arrested persons, or from informants or other sources. But we need hard facts, not only after an event that constitutes ‘evidence’, but more critically, that anticipate an event, which constitutes ‘intelligence’.

Real or real-time intelligence must rest on what originates in time and place, on the ground, as movements and actions of the evil-doers, when they enter the country, or when they operate from a safe base within the community. Our arrangements for detecting their movements or activities are now fairly effective at airports, but not at the long porous stretches of our land borders or coastlines, or within the vast local communities into which evil-doers easily merge. Our need is, therefore, for ways to constantly and intensively monitor these entry points or activity areas.

At one level, there could be systemic networks founded on technology- based monitoring, like monitoring of wired or wireless traffic, radar tracking of air and sea movements, CCTV coverage on ground locations, etc. all of which form part of what one might call a technical infrastructure. At the more fundamental level of the people, however, we would need something like the Citizen’s Network resting on human participation — of people, policemen, home guards, civil defence personnel, private security organizations and others working or living on land, or among fishermen and sailors on or off the coastline.

Effective hard intelligence cannot be generated by the existing skeletal intelligence network because it has far too few roots in the ground. Nor can it come from an expansion of existing organisation and methods. It calls for establishing an intelligence infrastructure which can be built quickly and inexpensively on a wide manpower network as described above, equipped and trained to function like the new breed of the ‘citizen journalist’, who are literally transforming the media’s reach and power today.

The equipment will be the same: the cell-phone- cum-camera. The training will be on how to keep a sharp lookout for and report with voice, text and image, on individuals, movements or activities that look suspicious or significant, in and around the area where they live or work.

The training would be typically for two days, one day for learning to use the equipment and engaging in a brainstorm that kindles their imagination and motivation, on what to look for; and another day for field orientation, where they would have go into the community, armed with the new equipment, and turn in a report at the end of the day, on the information they could pick up or the citizens they could enlist into the infrastructure. In six months, we can enroll, equip and train millions and cover the entire country by intelligence infrastructure.

The resources and solutions are very much available today. The public personnel should be consciously trained. The people, instead of waiting for the system to respond or change, should learn to demand response. They should explore and exploit new high-visibility methodologies that compel their efficient performance and public accountability. This would usher in a new culture of governance.

The writer, a former IPS officer, is a retired IGP of Tamil Nadu

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The fall of the IT czar
Ramalinga Raju’s experiments with truth
by Aditi Roy Ghatak

There may be no confessional to explain why Ramalinga Raju confessed. Accountancy corridors are rife with stories of others getting away with more serious fraud. In fact, there is some derision with which the lurid acknowledgements of the Satyam supremo – a first generation cheat – are treated in those exalted circles. Elsewhere, the averments are regarded as sheer stupidity that will force the investigative searchlights into the universe of crooked corporate accounting practices.

Clearly, the problem was with Raju being a novice at the complex game of manipulative mathematics. He may have mastered the art of concealing the numbers but not how to manage the business environment. He did not know whom to please and how much.

India is a country where corporate fraud is a matter to be brushed under the carpet. Tax evasion is not a crime whether it be on a medical prescription or electronics goods; one is happy to refuse a receipt and evade the tax. That much is a matter of public knowledge. When it comes to bigger fraud, the first problem is to have the fraud seriously investigated and the second is to get a conviction.

The more than 50,000 cases under the Companies Act pending in the country’s courts with a conviction rate of 5 per cent or less is adequate testimony to this. The corresponding number from the UK is reportedly around 61 per cent.

Curiously, it is one of the big four audit firms, KPMG, which published a report in March 2008 saying that corporate India was unprepared to handle fraud with more than 70 per cent corporates believing that fraud would increase over the next two years in the country, primarily via the “supplier kickback” route.

Other forms of fraud would include theft of intellectual property and, of course, the IT-related scams. KPMG said that organisations did not have effective internal control mechanisms to manage risks.

Indeed, there have been many measures of corporate governance, ethics, transparency under all of which India fares poorly. The “corporate ethics index” designed by Daniel Kaufmann of the Brookings Institution rated the US very poorly; almost as bad as India and South Korea and far worse than China! India was 57th among the 104 countries that he ranked while Thailand was 70th, Pakistan 88th with Bangladesh and the Philippines as the worst two. Making a travesty of the claimed and acclaimed corporate governance standards in India – amongst the most tomtomed qualities of the Indian corporate – reports of India’s regulatory quality reveal a different story.

The World Bank’s annual World Governance Indicators place the US regulatory quality at 90.8 out of 100 – never mind that the country boasts of Enron, WorldCom and Madoff – while India is at 46.1. South Korea (78.6), Malaysia (67.0) and Thailand (56.3) are all superior to India. China (45.6), Indonesia (43.7) and Vietnam (35.9) are worse. The Economist Intelligence Unit rating of accountancy practices gives India two on a scale of 0-4; 0 being the best; better than China, the Philippines and Vietnam (all 3) and Indonesia (4).

Neither the corporate sector nor the Indian bureaucracy seemed the slightest bit in a hurry to change things. Now comes the Satyam confession that has set tongues a wagging about corruption being rampant; accounting firms being irresponsible; the auditors also being consultants to the same companies that they audit for fat fees; with the subterranean war between Indian audit firms and those with international names, coming to the fore.

Firms that audit accounts clearly have been guilty of too many blunders for comfort. To take one example, Pricewaterhouse Coopers – that even after the Raju confession insisted that there was nothing wrong with Satyam’s books of accounts – has an interesting history that includes the $225 million Settlement of Securities and Accounting Fraud Claims Related to Tyco Class Action cast that was amongst the largest ever recoveries on record from an outside auditor.

The hapless Indian investor is left with no option but to deal with global auditors because only they have the wherewithal of auditing large accounts spread all over the world. Then, there are respectable organisations and newspapers feting corporations for all kinds of accomplishments – the Indian Institute of Directors honour for Satyam has been much derided in recent days. Associations like the Hong Kong-based Asian Corporate Governance Association rank India third out of 11 Asian countries on the corporate governance score, behind only Hong Kong and Singapore. They seem to suggest that all is well with Indian financial-reporting standards, especially with the Securities and Exchange Board of India keeping a watchful eye.

Clearly, much of this is hogwash with companies wanting to go astray, doing so at will, aided and abetted by poor shareholder activism and a business press that is even worse informed or simply not allowed to do its job.

Had the media done its job, some reporter would have come across the 240 companies in which the Rajus had invested as they built the network to siphon out the $1.4 billion. Had the auditors done their job, there should have been some occasion to independently cross check the receivables and the balances with bankers. Possibly, the Rajus would have been checked in their errant tracks instead of having a whole country shamed before the world about its questionable ethical standards; a world of investors ruined and more than half a dozen investigating bodies desperately trying to find clues to the missing billions.

The story is all the more scandalous because the Indian regulatory authorities did place Satyam under the scanner six years ago when there were questions around its accounting practices but the Union Ministry of Company Affairs ensured that nothing more was heard of the matter. Ramalinga Raju was at that stage confident of being able to ride what must then have been the tiger cub without any fear of being devoured by it.

Over the six years that he continued to ride the growing tiger, he was under the misplaced notion that he only had to transfer the big cat from Satyam to Maytas, owned by his offsprings, to circumvent the danger of becoming food for the animal. To give the Satyam boss his due, he almost pulled it off by getting his highly respected board – replete with its independent directors – to clear the $1.6 billion deal to acquire the subsidiary and thus conceal the missing billion and a half.

Could Ramalinga Raju have managed to cling on to his mount on the charging tiger? Some of his more seasoned corporate compatriots would have done so without a doubt. The charitable suggest that Raju could not handle the enormity of his crime – the skeleton that he was hiding in his closet that had developed the seven-year itch and was bursting to come out – and hence his confessions.

Those in the know suggest that even though Raju’s political connections could have seen him through the Indian mess, he did not have the necessary network to deal with the mess in the global scene where incarceration would be inevitable lest he turned approver. That and only that fear led to Raju’s experiment with truth.

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Profile 
Kalyan’s exit a big loss for BJP
by Harihar Swarup

Kalyan Singh
Kalyan Singh

Politics is a weird game. There was time when former Uttar Pradesh Chief Minister Kalyan Singh had turned a bete noire of Atal Behari Vajpayee and called him “a tired and retired leader”. Vajpayee was the Prime Minister then. His no-holds-bar hostility against the then Prime Minister led to his expulsion from the BJP. The former Chief Minister floated his own party —Rashtriya Kranti Party.

Times then changed. He was seen standing in the front row at a BJP workers’ meeting in Lucknow to lyrically greet Vajpayee on the eve of his birthday; Tum jiyo hazaron saal, aur sal ke din hon pachas hazar (you may live for a thousand years, with each year comprising 50,000 days). Expectedly, Kalyan rejoined the BJP.

Kalyan Singh has again ditched the BJP when the party needed him the most and joined hands with Samajwadi Supremo, Mulayam Singh Yadav. Though he has not yet formally joined the Samajwadi Party, his son has switched sides. And promptly he has been made the general secretary of the SP.

It is believed that Kalyan Singh still wields influence in 12 Lok Sabha seats in UP. He has already been acknowledged as an unquestioned leader of the Lodhis, comprising about 3 per cent of the electorate in UP.

Kalyan Singh had served as UP Chief Minister twice lasting for two years each and both were marked by controversies. His first term began in 1991 after the BJP secured a massive majority in the State Assembly elections but his government was dismissed following the demolition of the Babri Masjid.

Had the BJP-RSS- VHP combine desisted from the disastrous course, he would have ruled the state for a full five years. It was generally believed that he was against the suicidal step but was helpless in the face of mounting pressure from the leaders of the three organisations — the BJP, the RSS and the VHP.

Kalyan proved during his short-lived rule that he was an effective administrator. He was not only able to enforce the rule of law in the chaotic state but there were no communal riots. One of his achievements was firmly stopping the menace of mass copying in the examinations.

His second term began amidst controversy after he split both the BSP and the Congress and formed a coalition with the breakaway MLAs of both parties. Earlier, as per rotational arrangement with Kanshi Ram, the BSP and the BJP nominees were to hold office for six months by turn. Mayawati became the Chief Minister for the first six months, but after completion of the period, she refused to accept Kalyan Singh as her successor. The BSP-BJP rotational understanding was on the verge of collapse when the twin splits were engineered enabling Kalyan Singh to acquire a majority and head the state government. Kalyan Singh’s second term was also marked by dissidence in the state unit of the BJP as never witnessed before.

His bias against the upper caste reflected in his clash with his cabinet colleagues — Kalraj Mishra and Lalji Tandon and the president of the state unit, Rajnath Singh. Also he picked up cudgels against the then Prime Minister and, it was alleged, he tried even to sabotage Vajpayee’s election from the Lucknow Lok Sabha constituency.

From the sleepy town of Atrauli in Aligarh district to the imposing UP Vidhan Sabha, it has been a long and arduous journey for Kalyan Singh, now in his seventies. This backward caste leader joined the high-caste, Hindu-dominated RSS on the eve of Independence while in school.

He rose from the ranks under the tutelage of disciplinarians like Deendayal Upadhyaya and Nanaji Deshmukh. The former CM says he had to struggle at every step to make his way in politics in the RSS-dominated Jan Sangh and later the BJP. “I was born in a farmer’s house in a village. Trodding the zigzag path, I have travelled a long way to attain an important stature in the state”, he says.

In course of time, Kalyan Singh emerged an important leader of the Other Backward Castes (OBCs) having immense potential to make a dent in the Bahujan Samaj Party Supremo and Chief Minister Mayawati’s dalit vote bank. Evidently, the BJP needs him more than ever before as dalit votes hold the key to electoral success in the most populous state of the Union.

Kalyan was elected to the UP Assembly for the first time in 1967. Since then, except 1980, he has been getting elected from the Atrauli constituency.

He emerged as an effective BJP leader in the House, widely noted for his polemics and debating skills. He, however, shot into fame towards the fag end of the eighties as the Leader of the Opposition. It is said that the opportunity to excel in that role was often provided to him by the then Chief Minister, Mulayam Singh Yadav.
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On Record 
Manufacturing sector needs overhaul: Krishnamurthy 
by Bhagyashree Pande 

V. Krishnamurthy
V. Krishnamurthy

THE National Manufacturing Competiveness Council (NMCC) headed by V. Krishnamurthy has been giving critical review of the country’s manufacturing policy to the Prime Minister. It has suggested an overhaul to improve industrial production, national security, and get critical foreign investment with transfer of technology.

The NMCC Chairman, who holds the rank of a Cabinet Minister, speaks to The Sunday Tribune about the blueprint to improve the crucial sector.

Excerpts:

Q: Given the falling industrial growth, what is your advise to the Prime Minister?  

A: We had indicated to the Prime Minister that the slowdown had started in early 2007 and what is happening today was anticipated.

The stimulus packages announced now need to create demand for manufactured goods and the demand creation is done through people’s incomes. Making liquidity available with the banks is not sufficient. Banks are moving very slowly as they fear that credit given by them will not really be risk free. The lending institutions should change their psyche.

Q: Is the failure to provide domestic security a result of lack of industrial progress and innovations?  

A: With the terrorist attacks, the electronics industry has to be braced up. The equipment used by our police and defence personnel is outdated. No new manufacturing is taking place in the absence of the technology. We should concentrate on capital goods industry like electronics, shipping, aerospace etc. to cater to our security needs. The 123 agreement will give us access to technology and upgrade the industry.

Q: Has foreign direct investment been beneficial? 

A: Foreign investors want to exploit our large growing market and provide various concessions to set up industries. It is for us to decide on a policy to make strategic use of trade and foreign investment for our benefit. We need a long-term view to lead the nation to become a manufacturing hub. We must have the competitive advantage in the manufacturing sector and get foreign technology for India to strengthen our capabilities. 

Q: Are the Small and Medium Enterprises hit because of lack of proper policies? 

A: In the short term, recession in the West will hit the SMEs which contribute to around 40 per cent of exports. The concessions announced recently must be implemented. For the long term, we need to concentrate more on making this sector competitive and viable. 

Most products being imported are produced traditionally in India by the SMEs. The damage can be contained if we adequately support the SMEs.

Q: Have we benefited from our FDI policy?  

A: FDI is good but we have to see whether we are getting the required technology or merely assembling jobs by allowing FDI. Consider the car industry. When Maruti got FDI, Suzuki came up with 40 per cent equity participation and brought technology, new products and design with it. As we have developed ancillary industries which absorbed the technology, 95 per cent of the car components are being produced India.

Post-1991, when Hyundai introduced the car in India, it was a 100 per cent Korean car.  It started using domestic components produced by Korean-owned ancillaries substantially. By this model, Indian companies have not benefited much. 

And now in 2000, we have BMW, Skoda etc., under FDI. These cars neither get us technology nor help us set up ancillary units. These companies work as mere assemblers exploiting our market. There is reluctance in some quarters to accept this inadequacy and we must introduce the necessary course corrections.

Q: Will the fall in inflation resolve the economic crisis? 

A: Let’s study the rapid decline carefully since it is also accompanied by decline in the production of manufactured goods. The stimulus package is expected to address this issue of demand and production. Let’s wait for sometime to assess the results.

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