Steel makers succeed

BS reports:

The Centre may impose export duty on iron ore exports at a level acceptable to steel makers, said Anwarul Hoda, member Planning Commission and head of committee set up to review the minerals and mining policy.

He said that the level of export duty would be determined after a consultation process. Hoda was speaking on the sidelines of IMME 2006, a mining summit organised by the Confederation of Indian Industry.

The Hoda committee has recommended that export duty be levied on exports of iron ore in lump form with iron content above 65 per cent. However, the steel industry wants duty on ore having iron content of 62 per cent and above.

Or may be no!

Another report says

A high-powered Committee of Secretaries (CoS) has failed to arrive at a consensus on the controversial issue of restricting iron ore exports from the country and has put the ball back in the government’s court.

In a recent CoS meeting, “it was decided that since it is not possible to reach a consensus on restricting ore exports, the same may be decided by the government appropriately,” official sources said.

Sweeping powers for govt in drug law: HT

HT reports:

A planned law to control drug prices which raised fears of backdoor nationalisation in the industry seeks to confer the government with sweeping powers to regulate the production, supply, distribution and the maximum retail prices of both bulk drug intermediates and end-use formulations. Differences have already erupted within the government over the Bill.

The Chemicals and Fertiliser Ministry has come out with the draft Drugs ( Price Regulation and Control) Bill, 2006, a copy of which was obtained by Hindustan Times.

The Bill categorically states that “government, by order, may provide for regulating the production, supply and distribution” of bulk drugs or formulations if the government feels that it is necessary to do so.

Section 3 of the Bill also seeks to confer the government with powers to impose a ceiling on the maximum sale price or control the price in any manner of "any individual, class or category of drug or formulation" for any period of time. This is irrespective of whether a drug is manufactured in India or outside.

Subsidies and cotton

FE reports:

Strongly defending farm practices in the US, Johanns (the secretary in the US department of agriculture) said that in the US about 60% of farmers did not depend on any subsidy. There was no subsidy for beef, poultry, pork, fruits and vegetables, he said, adding that only 40% of farmers get the benefit of the subsidy regime.

In the US, it was the soybean and cotton growers who take the chunk of 93% of the subsidy, he said

When pointed out that Indian farmers would be adversely affected by opening up of markets to the cheap subsidised goods, Johanns said: “Indian textile industry imports cheap subsidised cotton from the US and make huge profits.”

Subsequently, when he was told that it was the industry that had prospered on account of cheap imports while the Indian cotton growers were in distress, Johanns did not have any satisfactory answer.

I am not sure if the distress of cotton growers is because of cheap imports. Anyway, those who have been complaining that US has been throwing billions of dollars to protect 0.7% of labour force, can now take some consollation that it's actually 40% of that 0.7%

India open to halting corn exports

FE/Bloomberg reports:

India may accede to a demand from poultry farmers and other users of corn to ban exports of the grain amid a domestic shortage caused by a fall in production, trade minister Kamal Nath said on Friday.

India may import corn for the first time in five years to meet a shortfall of at least 1 million tonne.

Production may fall 15% from a year earlier to 12.8 million tonne, Amol Sheth, president of All India Starch Association said on November 13.

“I’m open to it. The agriculture ministry is looking at production figures,” the trade minister told reporters in New Delhi.

Government jumping in everytime someone complains about rising prices will result atleast in one big problem. It would discourage development of the institutions, the financial infrastructure that might help people to take on these risks.

Milton Friedman d.2006

Favor and harassment are counterparts in the Indian economic scheme. There is no significant impairment of the willingness of Indian capitalists to invest in their industries, except in the specific industries where nationalization has been announced, but they are not always willing to invest and take the risks inherent in the free enterprise system. They want the Government to support their investment and when it refuses they back out and cry "Socialism".

Thus Milton Friedman, back in 1956. The entries in this blog show not much has changed.

Do check out his memorandum to Indian government.

state backed enterprises beating global competition

"The rise of mega companies is also part of a concerted Kremlin effort to lend a competitive edge to Russian industry and extend its reach into global markets.

Back in the 1990s, way before he became Russia's leader, Mr. Putin wrote a paper for his Candidate of Science degree where he argued that globalisation "demands all possible state support for creating strong financial-industrial corporations with an inter-sector profile on the basis of resource extraction enterprises." These entities should be "capable of competing on equal terms with Western multinational corporations." It is this programme that Mr. Putin is implementing today. He has consistently pushed for consolidation in "strategic sectors" under state control."

"The idea is to create 30 to 40 large holding companies in a range of fields in which the state will control at least 50 per cent of the shares." an article from The Hindu.

the words sound nostalgic to me. russia is today trying why india tried and failed - and india got the idea from russia in the first place and russia had failed in its earlier attempt!

are most humans wired in such a way that they can learn from history!

Tax to punish?

MJ Antony makes a case against Madhya Pradesh Motor Karadhan Adhiniyam which imposes a tax of Rs 1500 a seat a month on motor vehicles without permits, and those that run on unauthorised routes or make authorised trips, saying that there is a distinction between fees and taxes. And that taxes should not be used as a penalty.

What about taxes on polluters? It's also tax as a penalty; tax as a fee for negative externalities, is it not? Your thoughts.

Here is an interesting news, by the way, also from BS

In a novel way to check factories from flushing waste into a river, it has now been made mandatory for industrial units in the Baddi and Barotiwala industrial towns of Himachal Pradesh to build fish ponds.

The treated waste water flowing out from each factory in these towns will now have to flow into a fish pond. And only if fish survive in that water will it be allowed to flow into the nearby Sarsa river.

I know i am being cynical, but i wonder how scientific it is, and if it will have any unintended consequences. Some questions: First of all, what about the dilution that takes place once the treated water flows into the river? Then, are there some kind of fishes which are more resistant to pollution than others? Suppose fishes can survive polluted water for lets say two three days, Will we be seeing a story sometime in the future that fish sales go up in Baddi and Barotiwala, say every 15th because that's around the date when PCB guys come to check?

Heard about rat farms? I dont know how true the story is, but when a state government wanted to eradicate rats and offered to give money for every rat that was pelted, people in that area actually started rat farms!