Taxing the poor

Subir Roy makes a superb point in Business Standard today:

The government should remove all duties on the import of ingredients and manufacture of vital medicines. Devi Shetty, an iconic evangelical doctor, makes the startling point that “22-25 per cent of the money spent by a person in pain goes to the government. Every policy of the government is made looking at corporate hospitals in Delhi, Madras.” This is clearly an area where the government can and must act. By all means tax the incomes of corporate hospitals but why levy indirect taxes on medicines for the poor?

Power entrepreneurs step in to keep Baghdad humming

BAGHDAD — Some people never complain about Baghdad's daily power outages.

Wathiq Hassoun, 31, is one of a number of entrepreneurs who operate large generators and sell electricity to entire neighborhoods. "It's a great business," says Hassoun, who started his career shortly after the U.S.-led invasion in 2003. His profits have allowed him to buy two houses, one of which he rents out. here

maybe parts of india need this service too!

GM rice

FE reports:

Indian rice exporters are concerned over the growing rejection of genetically modified (GM) across the world. Recently producers in major rice exporting countries - Thailand and Vietnam -signed agreement to keep GM rice out of cultivation. The All India Rice Exporters Association (AIREA) has woken up to the situation and have asked the government not to allow any field trials or commercial cultivation of GM rice in the country. They say that the retention of the country’s image as producer of non-GM foods would largely boost the prospects of rice exports.

“Country earns millions of dollars in foreign exchange due to export of rice. India’s long grain aromatic rice - basmati has a premium market abroad,” said RS Seshadri of Tilda Riceland - a major exporter of basmati rice.

Concerns are probably real, but i wonder what's the need for government to step in and stop field trials or commercial cultivation?

Throwing rocks in our harbours

Business Standard reports:

Accusing developed countries of using the issue of protectionism as a bogey’, Commerce and Industry Minister Kamal Nath said on Monday that India’s annual increase in imports of over 30 to 35 per cent from the United States and the European Union was proof that the Indian economy was not ‘protectionist’.

“Barring some items like wines and spirits where India does have high tariffs, largely tariffs in India are not high. We are unilaterally bringing down our imports duties on manufactured goods from an average 12.5 per cent at present to Asean levels. We can do more, but I want to see what we can get in return [at the World Trade Organisation]. When we unilaterally reduce duties, it is pocketed very easily [by the developed countries],” Nath said at the India Economic Summit.

I will just quote Jagdish Bhagwati (2002) here: But you don't get ripped off. I think that's the wrong way to look at it. My old teacher, a great radical, Joan Robinson at Cambridge used to say, if you throw rocks into your harbor, that's no reason for me to throw rocks into my own. Essentially what she was saying was that it's good for me to have no restrictions--or reduced restrictions on trade because trade leads to gains--true. If your door is closed, you know, I would get less by their trade. But it doesn't mean that I should then close my own door because then I get doubly hurt.

Well, well, it's not just India. FE reports:

Speaking on the sidelines of CII-WEF India Economic Summit, US deputy trade representative Karan Bhatia said, “We are prepared to engage with anyone and everyone on topics like domestic support or on any other subject in the Doha round to resolve problems. But there is no basis for expectations that somehow the US would come forward with a new unilateral offer without seeing any other movement by anybody else.”

Pollution

Anti-dumping duties

Today's BL has an interesting example anti-dumping duties imposed by India on application by, whoelse, other businesses. Here, All-India Rubber Industries Association wants to review the duties because one company which wanted the anti-dumping duties has closed down seven years back, and another which won a anti-dumping case more recently is down because of a fire. Taxes continue.

BL writes:

[out] of the four types of synthetic rubbers as made in India, (SBR-1900, HSR, NBR and EPDM), antidumping duties are levied on three of them.

Mr Thomas said anti-dumping duty was levied on SBR-1900 at the instance of Synthetics and Chemicals Ltd, and the company was wound up some seven years ago, though the levy still continues. It is learnt that while levy on SBR-1500 and 1700 has been withdrawn, that on SBR-1900 still continues.

Asked on EPDM, anti-dumping duty on which was imposed from July 2006 on an application by Unimers India Ltd, the sole manufacturer in the country, Mr Thomas said the quality of the indigenous variety was not up to the standard and supplies to consumers too were quite erratic. He said the availability was just 5,000 tonnes per annum against the industry requirement of around 16,000 tonnes.

The Unimers India plant is now said to be out of operation owing to a devastating fire at the factory premises recently, and that the anti-dumping authority has assured suspension of levy of anti-dumping duty till such time as Unimers is able to commence full production.

Indians love anti-dumping duties. Remember the Friedman quote a few posts back?

Foriegn bank CEOs come together

BS reports

India CEOs of 12 banks form pressure group within IBA.

To make sure their voice is not lost in the corridors of power, the India CEOs of 12 banks have formed a pressure group within the Indian Banks’ Association (IBA).

The group had its first meeting today and will henceforth meet once every quarter.

Sanjay Nayar, CEO of Citigroup in India, is the chairman of this standing committee of foreign sector banks.

The other banks in the group are HSBC, Standard Chartered, Deutsche Bank, BNP Paribas, ABN Amro, Bank of America, American Express, DBS Bank, JP Morgan, Barclays, and Calyon.

On the agenda for today’s meeting were the recent draft guidelines issued by the Reserve Bank of India (RBI) on non-banking finance companies (NBFCs) and priority sector lending, among other issues, banking sources said.

Fine, they have come together to lobby against unfair regulations. But, let's also remember Adam Smith: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."