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As the world looks to end the era of easy money, India must be prepared India’s external balance sheet may have improved significantly since the infamous taper tantrum of 2013, but there are now signs that warrant more caution from policymakers. Last week, the current account deficit (CAD) widened to a four-year high of $14.3 billion in the first quarter of the current financial year, standing at 2.4% of gross domestic product, compared to 0.1% last year. The widening CAD was driven by a greater increase in merchandise imports than exports. A strong capital account surplus, however, has helped the country pay for its import bills without much trouble. Foreign investors starved of yield have been stepping up their investments in India, which remains one of the few places offering higher yields. Compared to last year, net FDI almost doubled to $7.2 billion in the first quarter, while net portfolio investment jumped about six times to $12.5 billion. The strong inflow of foreign capital...

Glitches in the GST regime are increasing the anxiety among Indian businesses For a reform that was cracked up to be India’s biggest tax overhaul since Independence, the roll-out of the goods and services tax is off to a less-than-desirable start. Over 80 days after its introduction, the GST Network, its online backbone, is struggling to keep pace with the millions of invoices and returns being filed electronically by businesses across the country. The government has extended the deadline for filing GST returns for July, the first month of the GST era, twice. And Finance Minister Arun Jaitley has reiterated an appeal to taxpayers to not wait till the last day, to avoid burdening the GSTN. But even those filing returns well before the last date have struggled. It is clear that the network had not been fully tested for chinks before July. A ministerial group formed by the GST Council to resolve the GSTN’s glitches gave an assurance last Saturday that 80% of the problems would be fixed...

The interim report on a new constitution should set off an informed debate in Sri Lanka It is only with a great degree of caution and circumspection that the interim report of the Steering Committee of the Constitutional Assembly of Sri Lanka can be welcomed. The panel, chaired by Prime Minister Ranil Wickremesinghe, has done creditably by producing a forward-looking proposal within 18 months of its first sitting. However, there have been several such reports in the past that envisioned far-reaching reforms in the country’s structure. None of them found broad acceptance within Sri Lanka’s polity. It is thus difficult to see the interim report as the beginning of an irreversible process of constitutional reform. There is room for both hope and fear. There is scope for optimism that Sri Lanka’s fractious polity could get its act together and adopt a durable constitution that would protect its unity and stability, distribute powers equitably across ethnic and geographical divisions, an...

A second failure by Republicans to replace ‘Obamacare’ exposes incoherence in the party A second concerted push by Republicans in the U.S. Congress to “repeal and replace” the landmark health-care reform law passed by the Obama administration ended in tears when it failed to garner the minimum 50 votes necessary to pass on the floor of the Senate. The latest proposal, which came to be known as the Graham-Cassidy bill after the Senators who sponsored it, was built on the idea, contra-Obamacare, that each U.S. State could effectively write up its own provisions for implementing certain aspects of healthcare policy. And in return for ensuring that some basic tenets were followed, such as patients with pre-existing conditions not being excluded from health insurance schemes, they would be given sizeable block grants. These grants, effectively “sweeteners” for moderate Republicans nervous about the mid-term elections due in November 2018, were supplemented with the promise of further de...

The Mumbai stampede was preventable; pedestrian access must be ensured in all cities Mumbai’s ghastly suburban railway stampede, in which 23 people died after being crushed on a narrow staircase, was the inevitable consequence of prolonged neglect of urban public transport in India. The financial capital depends mainly on the 300 km suburban system, which has some of the highest passenger densities for any city railway in the world. Yet, it has no single accountable manager. It is unthinkable for a modern railway system to continue with business as usual when about 3,500 people die on its tracks in a year. But Mumbai goes on. Over the past two decades, policy attention has tilted towards road projects, with just token appreciation of the challenges faced by public transport users. The Elphinstone Road station stampede should lead to a course correction and re-ordering of mass transport in all cities. Augmenting the creaking and broken infrastructure at suburban stations should be a ...

The Medicine Nobel touches on our curiosity about an inner clock and links to nature Time and clocks have held a special fascination for humankind down the ages. So, it is particularly revealing that two of the three Nobel Prizes for the sciences announced this year have been linked to time. While the Nobel Prize for Physics was awarded to a trio of physicists for their work in the detection of gravitational waves emanating from the recesses of the space-time continuum, the 2017 Nobel Prize in Physiology or Medicine was won by a triumvirate of chronobiologists for their work in discovering the mechanisms controlling the internal clocks that keep time in all living organisms, including humans. Jeffrey C. Hall, Michael Rosbash and Michael W. Young, three Americans born in the 1940s, made pioneering contributions in helping unravel the genetic coding and protein pathways that regulate the circadian rhythm — that rhythm which tells us when it is time to eat and sleep, or wake up even wh...

The U.S. President needs to wind down war talk and initiate direct talks with North Korea U.S. President Donald Trump’s harsh rhetoric against North Korea and equally strident counter-threats by Pyongyang have made the situation in the Korean Peninsula drastically worse. After reports emerged that North Korea has developed a miniaturised nuclear warhead that can fit inside its missiles, Mr. Trump said that the country would be met with “fire and fury” of the sort the world had never seen if it continued to threaten the U.S. If Mr. Trump’s tough talk, which he repeated again in the following days with even a reference to America’s nuclear weapons, was intended to deter Pyongyang from escalating the situation, it was an instant failure. The North issued a specific threat, saying it was considering a plan to fire missiles towards Guam, the American territory in the Pacific. It is appalling that there’s no substantial effort to defuse tensions even as two nuclear powers are steadily es...

The disqualification of 18 MLAs in Tamil Nadu is highly questionable The disqualification of 18 dissident AIADMK legislators by the Tamil Nadu Assembly Speaker is a partisan decision aimed at securing a majority for the seven-month-old Edappadi K. Palaniswami government after a rebellion reduced it to a minority. The Speaker’s ruling comes at a time when there is an increasingly indefensible reluctance on the part of the Governor, Ch. Vidyasagar Rao, to order a floor test. It serves the political purpose of reducing the total membership of the House from 233 to 215 and, thereby, the majority threshold from 117 to 108. The disqualified legislators are loyalists of T.T.V. Dhinakaran, who heads a faction of the AIADMK opposed to the ruling dispensation controlled by Mr. Palaniswami and his Deputy Chief Minister O. Panneerselvam. The Speaker has interpreted their memorandum to the Governor expressing lack of confiidence in the Chief Minister as amounting to “voluntarily giving up” their...

Each shell company must be duly investigated, instead of a ‘name and shame’ data dump The decision by the Ministry of Corporate Affairs to crack down on so-called ‘shell companies’, disqualify select directors in these entities and debar them from taking board positions for a specified period of time cannot be faulted. This would begin the clean-up of the Augean stables of firms set up in many cases with less than bona fide intent and having virtually no business operations. However, the Union government’s move to publicise the identities of some of these individuals with a view to ‘naming and shaming’ them is fraught with risk; the devil, as always, is in the detail. While the underlying motive for this action, as cited by the ministry, of “breaking the network of shell companies” in the government’s fight against black money is laudable, there is a real danger of inadvertently tainting genuine firms and individuals. This was in evidence when the Securities Appellate Tribunal recen...

Glitches in the GST regime are increasing the anxiety among Indian businesses For a reform that was cracked up to be India’s biggest tax overhaul since Independence, the roll-out of the goods and services tax is off to a less-than-desirable start. Over 80 days after its introduction, the GST Network, its online backbone, is struggling to keep pace with the millions of invoices and returns being filed electronically by businesses across the country. The government has extended the deadline for filing GST returns for July, the first month of the GST era, twice. And Finance Minister Arun Jaitley has reiterated an appeal to taxpayers to not wait till the last day, to avoid burdening the GSTN. But even those filing returns well before the last date have struggled. It is clear that the network had not been fully tested for chinks before July. A ministerial group formed by the GST Council to resolve the GSTN’s glitches gave an assurance last Saturday that 80% of the problems would be fixed...

Shinzo Abe’s decision to call parliamentary elections early could prove to be a gamble Prime Minister Shinzo Abe has gambled his career by calling snap elections to the Lower House of the Japanese Diet in late-October. The term of the House would have ordinarily lasted another year, but he clearly senses a turn in the popular breeze in his favour. Whether the electorate will vindicate his judgment, however, may well depend on the grit and tenacity of his challenger, Tokyo’s first woman Governor, Yuriko Koike. The former television anchor achieved an unprecedented feat last year by taking the city’s top job, trouncing the official nominee of Mr. Abe’s Liberal Democratic Party in a triangular race. Ever since, Ms. Koike, who had served briefly as defence minister during Mr. Abe’s first term in 2006-07, has become accustomed to thriving in a crisis. In a repeat of her growing penchant to take on a male-dominated establishment, Ms. Koike floated a local party earlier this year, which sp...

A State-wide voter paper trail may silence the EVM’s critics, but is a regressive step The Election Commission’s decision to deploy the Voter Verifiable Paper Audit Trail system for all the constituencies in the Gujarat Assembly elections is questionable. This will be the first time VVPAT will be used on a State-wide basis. A costly but useful complement to the Electronic Voting Machine, it allows the voter to verify her vote after registering it on the EVM, and the paper trail allows for an audit of the election results by the EC in a select and randomised number of constituencies. The implementation of VVPAT was to have been undertaken by the EC in a phased manner, but this blanket use appears to have been expedited after a series of unwarranted attacks on EVMs by some political parties and scaremongers. The EC had sought to allay concerns and confront allegations of voter fraud by running through the administrative and technological safeguards instituted to keep EVMs and the voti...

The Union and West Bengal governments and the GJM must urgently begin tripartite talks With a breakthrough ending the 104-day-long blockade in the Darjeeling hills, the Union and West Bengal governments must move forthwith to consolidate the ‘truce’ and address the setback to livelihoods and the local economy suffered over this period. The announcement on ending the bandh came from Bimal Gurung of the Gorkha Janmukti Morcha, which had led the agitation. Union Home Minister Rajnath Singh’s appeal to the protesters and his tentative offer of talks brought about this turnaround, but it is his specific mention of the beleaguered Mr. Gurung, who has been on the run from the West Bengal police, that made the difference. The blockade had severely hit life in the hill districts, and it is clear that local support for the agitation was waning. A section of the GJM, led by Binay Tamang, had shown an inclination to negotiate with the State government. In a move to cash in on the differences wi...

The Nobel Prize for Physics is a recognition of a project involving a rare kind of coordination The 2017 Nobel Prize for physics has been awarded to the LIGO-VIRGO collaboration for their detection of gravitational waves arising from the merger of two black holes. Gravitational waves are ripples in the fabric of spacetime caused by cataclysmic events in the universe such as colliding black holes or neutron stars. Though extremely violent, when these disturbances reach far-off regions in space and time the signals are weak and require extremely sensitive detectors to sense them. The very first detection of gravitational waves was made in September 2015, a signal of a black hole merger 1.3 billion years ago. In other words, the signals took that long to travel to Earth. Hence the observatory offers a way of looking back in time to unravel mysteries pertaining to the early days of the universe’s existence. Since then, the LIGO-VIRGO collaboration has detected such signals four times. J...

By holding policy rates, the RBI shifts focus to the government to give a fillip to growth The Reserve Bank of India’s Monetary Policy Committee has since inception retained its unwavering focus on its primary remit: the preservation of price stability. It follows then that the central bank’s rate-setting panel opted to leave benchmark interest rates unchanged and retain a neutral stance to achieve the medium-term target of keeping Consumer Price Index inflation close to 4% on a durable basis, while supporting growth. Spelling out the rationale for the decision, the MPC felt that with global crude oil prices having “firmed up further” amid a pick-up in demand and tighter supplies in the wake of OPEC’s production cuts, the threat of upward pressure on accelerating inflation has increased appreciably. Add to this the uncertainty posed by the prospects of weaker-than-anticipated kharif crop output and the impact this may have on food prices, and the concerns agitating policymakers will...