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The fast growing, globalizing Indian economy is expected to slow down to a pace of 8.7 per cent this year, according to the latest Economic Survey 2007-08. The strong message that it sends out is that maintaining overall growth rate at 9 per cent - that has been the experience of the last two years - is a challenge and raising it further to 10 per cent is a greater one. This deceleration or “some degree of cyclical fluctuation” is occurring against the backdrop of heightened global economic uncertainties, including the prospect of full-blown recession in the US economy.

The fast globalizing economy has also attracted record inflows· of capital. Portfolio and foreign direct investments have been booming and have resulted in a sharp appreciation of the rupee vis-a-vis the US dollar. This has, in turn, affected the competitiveness of India’s exports, with manufactured exports to the US slowing down this year.

Some of this has affected industrial performance that has also moderated this year as in the case of textiles. Consumer durables, too, have been sluggish.

Another important factor behind the overall deceleration of the Indian economy has been the slump in agricultural growth to 2.6 per cent when compared to previous year’s 3.8 per cent. Unless this· is stepped up to 4 per cent, this sector will remain a drag on the transition to double-digit growth.

What are the challenges of sustaining’ rapid growth? The Survey notes the heightened urgency to augment and upgrade infrastructure like roads, ports and electricity generation that can fast emerge as an obstacle to the growth process. This is not easy as it requires the mobilization of huge amounts of capital, the right policy framework and regulators. The success so far in telecom and aviation ought to indicate the way forward in this regard. The far bigger challenge is reforms that have taken a back seat over the last four years. The Survey includes raising foreign equity in insurance, retail trade, green field private rural-agricultural banks, disinvesting the State’s equity in public sector undertakings, phasing out controls on sugar, fertilisers and drugs, free entry of private and public-private partnerships in rail freight companies, allowing private entry into coal mining, changes in the Factory Act to increase the work week to 60 hours and daily limit to 12 hours to meet seasonal demand. There is no doubt that without reforms it will indeed be difficult to sustain rapid growth over the medium term. But the big question is: why is there a weakening will to implement such policy options when the Indian economy is showing signs of flagging? True to form, the Survey sticks to economic rather than political imperatives.

Being the oldest stock exchange in Asia with a rich heritage, BOMBAY STOCK EXCHANGE, is popularly known as BSE. It was established as “THE NATIVE SHARE & STOCK BROKERS ASSOCIATIONS” in 1875. It was given permanent recognition in 1956 by the GOVERNMENT OF INDIA, the first stock exchange in the country to get this status, under the Securities Contracts (Regulation) Act, 1956.

The Exchange’s pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporatised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI).
The BSE Sensex or Bombay Stock Exchange Sensitive Index is a value-weighted index composed of over 4000 stocks with the base April 1979 = 100. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies account for around one-fifth of the market capitalization of the BSE.

The base value of the Sensex is 100 on April 1, 1979 and the base year of BSE-SENSEX is 1978-79.
At irregular intervals, the Bombay Stock Exchange (BSE) authorities review and modify its composition to make sure it reflects current market conditions.
The abbreviated form “Sensex” was coined by Deepak Mohoni around 1990 while writing market analysis columns for some of the business newspapers and magazines. It gained popularity over the next year or two.
The stock market has grown by over ten times from June 1990 to today. Using information from April 1979 onwards, the long-run rate of return on the BSE Sensex can be estimated to be 0.52% per week (continuously compounded) with a standard deviation of 3.67%. This translates to 27% per annum, which translates to roughly 18% per annum after compensating for inflation.

Housing related

1. Associated Cement Companies Ltd
2. Gujarat Ambuja Cements Ltd

Transport Equipments

3. Bajaj Auto Ltd
4. Hero Honda Motors Ltd
5. Maruti Udyog Ltd
6. Tata Motors Ltd.

Capital Goods

7. Bharat Heavy Electricals Ltd
8. Larsen & Toubro Limited

Telecom

9. Bharti Airtel Ltd
10. Reliance Communications Limited

Healthcare

11. Cipla Ltd
12. Dr Reddy’s Laboratories Ltd
13. Ranbaxy Laboratories Ltd

Diversified

14. Grasim Industries Ltd

Finance

15. HDFC
16. HDFC Bank Ltd
17. ICICI Bank Ltd
18. State Bank of India

Metal, Metal Products & Mining

19. Hindalco Industries Ltd
20. Tata Steel Ltd

FMCG

21. Hindustan Lever Ltd
22. ITC Ltd

Information Technology

23. Infosys Technologies Ltd
24. Satyam Computer Services Ltd
25. Tata Consultancy Services Limited
26. Wipro Ltd

Power

27. NTPC Ltd
28. Reliance Energy Ltd

Oil & Gas

29. ONGC Ltd
30. Reliance Industries Ltd

In early February, the US National Academy of Engineering released a report on ‘Grand Challenges for Engineering in the 21^st Century’. The goal is to focus attention on the potential of technology to help the world address poverty and environmental threats. The list includes potential breakthroughs such as low-cost solar power, safe disposal of CO2 from power plants, nuclear fusion, new educational technologies, and the control of environmental side effects from nitrogen fertilisers. The report, like the Gates Foundation’s similar list of ‘Grand Challenges’ in global health, highlights a new global priority: promoting advanced technologies for sustainable development.

We are used to thinking about global cooperation in fields such as monetary policy, disease control, or nuclear weapons proliferation. We are less accustomed to thinking of global cooperation to promote new technologies, such as clean energy, a malaria vaccine, or drought-resistant crops to help poor African farmers. By and large, we regard new technologies as something to be developed by businesses for the marketplace, not as opportunities for global problem solving.

Yet, given the enormous global pressures we face, including vastly unequal incomes, we must find new technological solutions to our problems. There is no way, for example, to continue expanding the global use of energy safely unless we drastically alter how we produce electricity, power automobiles, and heat and cool our buildings. Current reliance on coal, natural gas, and petroleum, without regard for CO2 emissions, is now simply too dangerous, because it is leading to climate changes that will spread diseases, destroy crops, produce more droughts and floods and perhaps dramatically raise sea levels, thereby inundating coastal regions.

The National Academy of Engineering identified some possible answers. We can harness safe nuclear energy, lower the cost of solar power, or capture and safely store the CO2 produced from burning fossil fuels. Yet the technologies are not yet ready, and we can’t simply wait for the market to deliver them, because they require complex changes in public policy to ensure that they are safe, reliable and acceptable to the broad public. Moreover, there are no market incentives in place to induce private businesses to invest adequately in developing them.

Consider carbon capture and sequestration. The idea is that power plants and other large fossil fuel users should capture the CO2 and pump it into permanent underground storage sites, such as old oil fields. This will cost, say, $30 per tonne of CO2 that is stored, so businesses will need an incentive to do it. Moreover, public policies will have to promote the testing and improvement of this technology, especially when used at a large scale.

New kinds of power plants will have to be built to make carbon capture economical, new pipelines will have to be built to transport the C02 to storage sites, and new monitoring systems will have to be designed to control leaks. Likewise, new regulations will be needed to ensure compliance with safety procedures, and to assure public support. All of this will take time, costly investments and lots of collaboration between scientists and engineers in universities, government laboratories, and private businesses.

Moreover, this kind of technology will be useful only if widely used, notably in China and India. This raises another challenge: the need to support the transfer of proven technologies to poorer countries. If rich countries monopolise new technologies, the goal of worldwide use to solve worldwide problems will be defeated. Thus, technological developments should involve a collaborative international effort from the start.

All of this will require a new global approach to problem solving. We will need to embrace global goals and then establish scientific, engineering and political processes to support their achievement. We will have to give new budgetary incentives to promote demonstration projects and to support technology transfer. And we’ll have to engage major companies in a new way, giving them ample incentives and market rewards for success, without allowing them to hold a monopoly on successful technologies that should be widely adopted. This new kind of global public-private partnership on technology development will be a major objective of international policy making in the coming years. Look for new global cooperative approaches to dean energy systems, medicines and vaccines, improved techniques for fish fanning, drought-and-temperature resistant crop varieties, high-mileage automobiles, and low-cost irrigation techniques.

Rich countries should fund these efforts heavily and they should be carried out in collaboration with poor countries and the private sector. Successful technological breakthroughs can provide stunning benefits for humanity. This will be an exciting time to be a scientist or engineer facing the challenges of sustainable development.

The last few years have been momentous for the Indian economy, growing at an average pace of about 8.5%. An important factor directly contributing to this growth momentum is the overdrive of the governments -central as well as the states-in inviting investments, both foreign and domestic. There is no denying that investment remains one of the most important ways to tackle the scourge of unemployment and consequently to take the people out of the crass of poverty. However, a major question that arises is whether capital inflows are sufficient to take a country to the path of all round economic development.

A litmus test for economic progress is not the extent of investment that a country can absorb, but whether it has a business environment that nurtures entrepreneurship and is free from heavy handed political and bureaucratic intervention.

The prosperity of a nation is reckoned not only by the material well-being of its people but whether there exists elements which ensure the fulfillment of human potential, prevention of avoidable sufferings and assurance of human dignity, justice and opportunity so that every citizen is a fulfilled and productive human being.

The greatest challenge, therefore, before the governments is not to chase investments, but pursue strategies that unleash the forces of good governance. I am in no way suggesting that there should be abatement in the zeal to attract investments but my simple contention is that the pursuit of economic development should not and cannot end with investments alone.

As Kofi Annan has said, “Good Governance is perhaps the single most important factor in eradicating poverty and promoting development.” Without good governance, no amount of industrial and market growth can bring a qualitative change in the lives of its citizens. A World Bank study has conclusively established that a strong positive causal effect exists between better governance and economic growth. In fact, even the existing investments need to be nestled through the instrument of good governance or it will fly like a migratory bird!

The ‘Asian Economic Miracle,’ giving 8- 12% GDP growth during the late 80’s and early 90’s ended in an ‘East Asian Crisis’ of 1997. It is established that the flight of capital was basically due to weak financial governance of these regional economies. As former senior advisor to the US Treasury Hilton Root put it aptly, “Capital does not end up in the country that needs it most, but in the one that treats it best”.

While the construct of ‘good governance’ practices cannot be reduced to a dogmatic ‘one-size fits all’ approach, a convergence has developed regarding what is the best prescription for India. Accountability of public officials is of prime importance. Introduction of simple procedures, setting up strict timeliness for mandated activities and swift recourse for redress of unfair actions are some of the measures to be implemented.

The concept of participatory approach is equally important. All government policies in the economic domain must be tailored with the support and co-operation of those affected by it. The ‘communitisation’ of government institutions and public utilities, a unique concept evolved by the government of Nagaland, is worth emulating. Public-private partnership is a good model which inevitably takes into account the aspirations of all stakeholders. The PPP model must therefore, form the basis of government initiatives in all the priority areas such as health, education, public utilities etc.

The importance of rule-based systems for economic life is obvious. However, with a pendency of over 28 million cases in our courts that are not liable to be settled in the next 10 years, given the present state of affairs, governments would do well by promoting alternate dispute resolution mechanisms to mete out quick justice and to bring an element of predictability. Business risks can then be assessed rationally, transaction costs lowered, thus creating an environment conducive to growth and development.

Needless to emphasise, transparency is fundamental to good governance. Adequate information should be freely and easily available to those who will be affected by such decisions. The introduction of Right to Information Act has been a milestone.

However, the government could take a step forward by not only informing when demanded but also by suo moto sharing of information through user-friendly, interactive websites and awareness campaigns through the media.

Adopting the key elements of good governance should therefore run parallel to any effort by the government to boost their bottom lines so that a virtuous circle is created.

The rent -seeking behaviour of the governments and the lack of institutional arrangements to assist in turning natural endowments into a source of long term growth will have the inevitable effect of decline in output. This in turn will lead to increased poverty and heightened inequality within the country, thus constituting a breeding ground for conflicts. Such conflicts can produce incalculable political risks apart from perpetuating economic decline. Many fuel and mineral rich countries, particularly in the sub-Saharan Africa and Latin America, have failed to turn their wealth into assets due to the absence of governing institutions. Political shocks and growth collapses could hardly be averted in these countries.

Simply put, good governance does, in fact pays in economic as well as political terms. The message to the governments is loud and clear!