ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Towards Reform of Land Acquisition Framework in India

Current land prices are highly distorted owing largely to regulatory constraints and the process of compulsory acquisition. This paper brings out the core elements of the reform - the need to define "public purpose" ex ante for compulsory acquisition of land, the measures that would allow the market price of land to play its correct role, and the approach to valuation. It also argues for an independent valuer when compulsory taking is involved and methods of valuation to ensure that the landowner, including the farmer, gets the correct value for his land in both compulsory acquisition and in voluntary sale. There is a need for a parallel non-compulsory framework for acquisition and for developing key elements of the same.

Competition, Regulation and Strategy

The IT industry (both software and hardware) is characterised by 'vast consumer side scale and scope economies' which are incomparably larger than in other industries with supply side network economies like pipelines or electricity distribution. In IT the supply side economies are also incomparably larger because the marginal cost of an additional unit of the software or hardware especially the former is very small. But its uniqueness arises on the demand side. The interaction of these two economies, in a situation of heightened technological dynamism, imposes a greater degree of contingency, and hence path dependency in the developments in the industry as a whole. It makes possible giants like Microsoft and CISCO. Even as they extract a significant part of the scale economies in the form of large profits, such firms are competitive in the more relevant dynamic sense. In this respect these industries are therefore distinguished from nearly all other prior industries. Traditional anti-trust like regulation or price regulation is entirely outmoded for the development of these industries. Strategies with the most potential would involve promoting inter-firm linkages, promoting industries with the least need to be in contact with other firms, in fresh clusters. The costs of disassociation are too large even for large countries attempting to have a role in the evolution of IT industries, so that closed-door approaches are almost entirely unworkable.

Competition Policy in India

The objectives of competition policy in India are the creation of an active competitive environment and to aid and abet the process of creating globally competitive firms with enhanced investment and technological capabilities. To achieve these objectives, the government will need to play a proactive role. Rather than restricting themselves to issues conventionally covered by competition law, the authors consider, as part of competition policy, all those policy instruments that impinge on the promotion of competition in markets. Consequently, policies relating to trade, investment and technology development also come under the purview of competition policy insofar as they impinge on the process of competition. The formulation and implementation of an effective competition policy in the current context is a difficult task as it needs to be consistent with other policies which are transforming India into a liberal open economy.

Regulatory Strategy and Restructuring

True reform and restructuring of any state electricity board in India would have to address the enormous leakage of revenue from the system. This would call for privatisation of distribution, and change in the institutional mechanism for the administration of the subsidy. Rather than the detailed regulatory mechanisms which are being pushed by the central government and the regulators, light and price-cap type regulation would suit India better. A model plan for change is put forward for the Gujarat State Electricity Board, which is quite general and could easily apply to other SEBs. A complete separation of distribution from generation is neither necessary nor desirable. Existing IPP contracts would have to be extinguished and methods to carry out the same are suggested. The danger of mounting regulatory risk, either shutting out private power production, or resulting in massive tariff increases taking place are real.

Why Not Push for a 9 Per Cent Growth Rate

Sebastian Morris One quite indisputable gain of the reform has been the increasing openness of the economy. The rise in the openness ratio began in the mid-1980s and accelerated in the 1990s, following the depreciation of the currency in 1990-91. However, the 1997-98 budget and the current exchange rate policy, it is argued here, will lead to a stagnation in the openness ratio, unless corrections are made. A bolder investment programme and a fairly large depreciation of the currency would lead to a sustainable growth in excess of 9 per cent. Without such correction, growth is likely to fall after a year to less than 6 per cent and would bring back the situation of a

Political Economy of Electric Power in India

Sebastian Morris Since the cancellation of the Dabhol Power Project (DPP), the debate about electric power in India has come into the public view, raising hopes that corrective measures can be taken to have a viable, cost effective and growing power industry, A critical examination of the recent policy changes especially as regards the Independent Power Projects (IPPs) reveals that there are many dysfunctionalities in this policy particularly in the enormous and quite unnecessary burden it places on the balance of payments, and in the additional constraints against improvement and change in the state sector. It would be damaging to indigenous power equipment manufacturers, particularly the BHEL, just when it is showing the potential to be an important international player in the industry.

Political Economy of Electric Power in India

Political Economy of Electric Power in India Sebastian Morris Since the cancellation of the Dabhol Power Project (DPP), the debate about electric power in India has come into the public view, raising hopes that corrective measures can be taken to have a viable, cost effective and growing power industry. A critical examination of the recent policy changes especially as regards the Independent Power Projects (IPPs) reveals that there are many dysfunctionalities in this policy particularly in the enormous and quite unnecessary burden it places on the balance of payments, and in the additional constraints against improvement and change in the state sector. It would be damaging to indigenous power equipment manufacturers, particularly the BHEL, just when it is showing the potential to be an important international player in the industry.

Prospects for FDI and Multinational Activity in the 90s

This paper discusses the implications of trends and patterns in foreign direct investment and-of the policy and structural changes in India for foreign direct investment in India in the 90s. It is argued that while the FDI inflow into India is likely to increase, it would never be anywhere near the $ 4 billion or so per year that is anticipated by the government and hoped for by business. By contrast, international subcontracting by foreign firms could play a major role in manufactured export growth. This is an aspect which, while vitally important for Indian manufacturing, has attractea little attention in terms of policy.

Holding Companies, Performance Contracts and Task Orientation in Public Sector

and Task Orientation in Public Sector Sebastian Morris Two mechanisms being actively pursued to reform the system of public enterprises in India are the holding company and the performance contract or the memorandum of understanding. While these have no doubt been useful elsewhere, this paper suggests that the true content of these mechanisms, whatever the stated objectives and however good the design, are already showing signs of being distorted and ritualised to serve the purpose of keeping the public enterprise system in a state of disorientation.

Multinational Affiliates in India-Why Are They Different from Indian Firms

Multinational Affiliates in India Why Are They Different from Indian Firms? Sebastian Morris Multinational Enterprises in India-Industrial Distribution, Characteristics and Performance by Nagesh Kumar, Routledge, London and New York, 1990, pp x +141.

Cost and Time Overruns in Public Sector Projects

Delays and cost overruns in public sector investments can raise the capital-output ratio in the sector and elsewhere, bringing down the efficacy of investments. Yet there are no estimates of the delays and cost overruns, and of their opportunity cost.

Foreign Direct Investment from India-Ownership and Control of Joint Ventures Abroad

Ownership and Control of 'Joint Ventures' Abroad Sebastian Morris The phenomenon of foreign direct investments (FDI) from India is substantial and systematic enough to warrant attention. In this empirical study, the pattern and nature of control exercised by the Indian parents, local parties, and possible transnational capital and local-government equity participants is estimated and analysed. Indian control over }he 'joint ventures' is quite large, larger than what the average 30 per cent Indian participation may seem to indicate. There is little portfolio investment from Indian firms. Transnational capital based in India has hardly ventured abroad, yet indigenous capital when it had the entrepreneurial initiative has extensively collaborated with transnational corporations, chiefly in the larger ventures abroad. Collaborations with local governments have also helped the Indian parents to exercise control over large enterprises with much less financial commitment and with little interference from the governments.

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