Indian economy is 55.6% free

Heritage Foundation/WSJ's latest report on Economic Freedom says

India's economy is 55.6 percent free, according to our 2007 assessment, which makes it the world's 104th freest economy. Its overall score is 3.3 percentage points higher than last year, partially reflecting new methodological detail. India is ranked 19th out of 30 countries in the Asia–Pacific region, and its overall score is lower than the regional average.

India enjoys strong fiscal freedom, freedom from government, and monetary freedom. The top individual and corporate income tax rates are moderate, and overall tax revenue is not excessive as a percentage of GDP. Government expenditure is relatively low as well, although a significant amount of total tax revenue comes from state-owned businesses. Inflation is fairly low, but government price controls hinder market forces.

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Doing business

A BS report which begins thus - Stung by a recent World Bank report on the difficulties of doing business in India, the government has held a series of meetings to address the problem areas mentioned in the annual document - has this

Four meetings of the Committee of Secretaries have been held on the issue, with at least nine departments, including economic affairs, revenue, shipping, commerce, financial sector, land resources, and small scale industry being asked to respond to specific issues raised in the report.

In their responses, departments like commerce and industry and revenue have questioned some of the findings. Another meeting is scheduled soon, at which the government hopes to finalise corrective measures.

Way to go!
World Bank report - here

How lobbying starts

BS reports

Even as the government is mulling an umbrella legislation to block investments on security grounds from other countries, 32 Chinese firms in India have come together to form the Chamber of Chinese Enterprises in India (CCEI), which will lobby for Chinese commercial interests here.

The chamber, set up recently in the capital, is the initiative of the Embassy of the People's Republic of China and headed by Hongsen Wang, managing director, Sino Steel India Pvt Ltd.

The formation of this chamber is also relevant in the context of complaints from China on discrimination against Chinese companies by the Indian government.

Sources in Sino Steel India said the chamber would work for the interests of Chinese enterprises and promote high-level business and political talks between the two sides. Currently, there are around 50 Chinese companies in India.

The CCEI will help Chinese companies resolve trade problems with the Indian government.

"It will help Chinese enterprises in appearing as a collective entity and the chamber will represent the companies’ interests to the Indian government," sources said.

According to Ficci Secretary General Amit Mitra, the formation of the Chinese chamber indicated the increasing presence of Chinese companies in India.

An interesting space to watch. (Remember Adam Smith quote here)

Doing business with India

BL reports

The Supreme Court has ordered the Union Government to allow export of pulses by two firms, which were refused permission to send their consignments on the grounds that a ban had been imposed on such shipments from July 22.

Dismissing an appeal by the Centre against rulings of the Gujarat and Delhi High Courts, a bench comprising Mr Justice S.B. Sinha and Mr Justice Markandey Katju, said any prohibitive order promulgated by statutorily could only have prospective effect.

The bench, however, said the Delhi High Court order declaring a notification issued by the Centre on July 4 as ultra vires, was not sustainable. The July 4 notification permitted export of pulses for which irrevocable letter of credit had been opened before June 22, when the ban was decided to be imposed.

Contracts

The case relates to contracts for export of 415 tonnes of pulses signed by Asian Food Industries and for shipment of 3,000 tonnes of chickpea by Agri Trade India Services Ltd, which won a tender floated by the Trade Corporation of Pakistan.

Asian Food had received orders from the Gulf and executed contracts between April 22 and May 2. It also received 20 per cent of the contract amount totalling $2,94,942 as advance for supplying pulses. As per the contract, it had to ship 107 containers, of which 20 were sent between June 22 and 24. The rest were to be sent from Kandla Port between June 23 and June 26.

However, as the Centre took a decision to ban pulses export on June 22 and issued a notification on June 27. This led to the port authorities refusing to allow the consignments despite being cleared by the Customs authorities.

Permission refused

Subsequently, the Centre came up with a notification on July 4 allowing exports of contracts for which the LC were opened before June 22.

Though Asian Food took up the issue with various authorities, it was refused permission resulting in the firm moving the Gujarat High Court. The High Court in its order said the shipments should be allowed as the Customs authorities had cleared and permitted loading of the goods on the ship. Moreover, the bill of lading had also been filed.

In the other case, Agri Trade signed an irrevocable letter of credit on June 24 and on June 2, it filed invoices with the Customs authorities. But again, Kandla port authorities said they would not allow the shipment in view of the ban. A writ was then filed in the Delhi High Court, which asked the authorities to permit the shipment.

It's not difficult to see why a ban should only come to effect prospectively. Forcing people to break the perfectly legal contracts they entered into won't do any good for a country's reputation. Wonder why it's more difficult for some to see that it's equally bad for a government to force people not to get into some contracts in first place.