Liberalization

In general, liberalization (or liberalisation) refers to a relaxation of previous government restrictions, usually in areas of social or economic policy. Liberalization of autocratic regimes may precede democratization (or not, as in the case of the Prague Spring). In the arena of social policy it may refer to a relaxation of laws restricting for example divorce, abortion, homosexuality or drugs. Most often, the term is used to refer to economic liberalization, especially trade liberalization or capital market liberalization.

Liberalization and privatization

Although economic liberalization is often associated with privatization, the two can be quite separate processes. For example, the European Union has liberalized gas and electricity markets, instituting a system of competition; but some of the leading European energy companies (such as EDF and Vattenfall) remain partially or completely in government ownership. Liberalized and privatized public services may be dominated by just a few big companies, particularly in sectors with high capital costs, or high sunk cost, such as water, gas and electricity. In some cases they may remain legal monopolies, at least for some part of the market (e.g. small consumers). Liberalization is one of three focal points (the others being privatization and stabilization) of the Washington Consensus's trinity strategy for economies in transition. An example of Liberalization is

the "Washington Consensus" which was a set of policies created and used by Argentina

Privatisation and Commercialisation of Water Resources and Ser vices in India: An Overview
Since 1991, large-scale changes have been initiated in Indias economy with the liberalization, privatisation and globalisation of almost every aspect of the economy. Background Since 1991, large-scale changes have been initiated in Indias economy with the liberalization, privatisation and globalisation of almost every aspect of the economy. While this process began in 1991 itself in sectors like power, in the water sector it has started recently. 17 years after the blind and hasty liberalization and privatisation, the power sector is in a mess. The reforms have been a disaster, with severe power shortages and rocketing electricity tariffs, locking the country into expensive contracts for years to come. All this has now

been acknowledged even at the official level. Instead of learning from the process, an almost exactly similar process of liberalization, privatisation and globalisation is being undertaken in the water sector. Modes of Reforms In India, reforms in water sector are taking place through two modes. The first mode is outright privatisation of water services through either BOT projects or management contracts. This mode is being used for industrial water supply and urban water supply projects. The second mode, which is more insidious and will have a far-reaching impact, is through the water sector reforms. Outright Privatisation This includes BOT projects, Concessions, Management Contracts, Private Hydropower Projects and so on. There are several such projects ongoing or in pipeline in the country. Some such projects are the Shoenath river in Chhattisgadh, the Tiruppur project in Tamil Nadu, the proposed private management contracts in the K-East ward in Mumbai. Then there are many private hydropower projects already built or in pipeline like Allain Duhangan in Himachal Pradesh, Vishnu Prayag in Uttarakhand, Maheshwar in Madhya Pradesh, etc. The International Finance Corporation (IFC) is supporting the Allain Duhangan project. In case of private hydro projects the companies have been given control over the rivers this has caused losses to many communities living in the downstream areas of the river. Database Part 1 and 2 lists the private projects in hydropower and water supply and sanitation, respectively.

The Case of Proposed Privatisation of Delhi Jal Board

The privatisation of Delhi Jal Board (DJB), the public water utility, was proposed to be taken up under the Delhi Water Supply and Sewerage Project funded by the World Bank (US$ 140 million). In 2002 the Bank gave a loan of US$ 2.5 million for a study to be taken for reform and restructuring of DJB. The Banks favoured consultant, Price

Waterhouse Coopers (PWC), was appointed to conduct the study for the reforms course through a skewed process, which was revealed later by investigations carried out by Parivaratan. Some of the implications of reforming the DJB are listed as following Water supply management of 21 DJB zones to be handed over to private companies. Tenders for 2 zones were called in February 2005 DJB employees would be reporting to the private company. Huge increase in expenses due to high management fees (Rs.5 crore per company per year) and lack of control of DJB over companys expense accounts. To meet the increased expenses water tariffs would have been raised upto 6 times of the prevailing rate. Rs. 1200 per month in middle class localities, Rs. 350 per month in slums Even though company would have been managing the supply, the responsibility for water supply to each zone would still remain with DJB. Studies also showed that companies would be given bonuses in lieu of achieving targets, like reduction of NRW, which were essentially bogus. As per the contract between the DJB and the company, the time duration for grievance redressal was to be 20 days, at present it is 24 hours to 3 days. No improvement in quality, since the company would have used similar procedures and equipments to test water quality as DJB. No free or subsidized water to poor and vulnerable sections of the city. Accountability of the company would have been negligible.

The Proposed Privatisation of Water Distribution in K-East Ward, Mumbai

The process to privatise distribution in K-East ward of Mumbai began in January 2006, the time when the World Bank awarded a contract to Castalia, a French consulting firm to develop a pilot project for privatisation of the water system of the K-East ward of Mumbai. The World Bank, through PPIAF, a multi-donor agency run by the Bank and mandated to promote privatisation of services in developing countries, has given US$ 692,500 for this. The population of the ward is about 1 million and it is one of the profitable wards in terms of collection of water supply charges in Mumbai. If successfully implemented the pilot would be extended to the whole city. Due to the growing opposition to the privatization, the Municipal Corporation of Greater Mumbai claims that it has now asked Castalia to suggest all options and not just privatisation. However, various options presented by the consultants recently at the Second Stakeholders meeting show a clear preference for private involvement in the operations. Due to huge opposition and protests by the groups based in Mumbai, like Mumbai-Paani the privatisation project is stalled.

Swajaldhara (The Rural Water Supply Program)

One of the widely implemented interventions by the World Bank is in the rural water supply sector through the program funded by it called Swajaldhara. This scheme is being implemented across many states in India for improving access to safe and clean drinking water in the villages. Reports and studies suggest that these are following the principles of full recovery of operation and maintenance costs and some contribution in the capital expenses of the scheme from the villagers. People who are not able to pay are just left out of the scheme and have to find there own sources of water. Reports also suggest that quite a few of the schemes have fallen in the hands of the local strongmen or private contractors who charge the people for supplying water.

Reforms and Restructuring The water sector reforms or restructuring are following the same line as the power sector reforms in the country, and indeed, are similar to the water sector reforms all over the world. These policies, pushed by the World Bank and ADB, have the underlying thrust of converting the whole sector into a market. While the water sector in the country desperately needs reforms, in the World Bank led prescription they invariably mean only one thing: Transformation of the water sector into a commercial operation Changing the basis from social responsibility to a commodity to be bought and sold They invariably include: Unbundling (separation of source, transmission and distribution) Independent regulator to free the sector from political interference Steeply increasing tariffs Full cost recovery Elimination of subsidies Cutting off supplies for non-payment Retrenchment Privatisation Sector Participation (PSP) and Public-Private Partnerships (PPPs) Allocation of water to highest value use through market mechanism Almost invariably pushed by the World Bank, ADB, DFID Policy prescriptions, restructuring process, even legislation being drafted by highly expensive international consultants

While reforms are supposed to be a solution to the existing water problems, they are mostly concerned about only the financial side. Moreover, hardly ever are these reforms based on a detailed study of the root causes of the problems. Studies are conducted with recommendations already known. Thus, the same sets of reforms are prescribed not just for different parts of the country but indeed in different parts of the world. Reforms in various stages are going on in many states in India. Database Part 3 gives a list of the states where reforms are ongoing, the World Bank and ADB loans associated with these reforms, and some features of these reforms. States undergoing the most extensive and comprehensive reforms include Madhya Pradesh, Maharashtra, Karnataka. Since water is a state subject, major part of the reforms are going on at the state level. The Central Government has also taken many measures for privatisation and commercialisation in water sector, like: 1991 Power Sector Opened for Privatisation : PSP in Hydropower 2002 New Water Policy Calls for PSP in water 2004 Guidelines for Urban Water & Sanitation Sector Reforms and PPP 2005 Financial Support to Bridge Viability Gap of Private Projects 2005 Pushing PSP in urban water supply through schemes like JNNURM and UIDSSMT 2006 Formation of India Infrastructure Finance Corporation Limited (IIFCL) for providing 20% of funding to infrastructure projects 2008 Formation of India Infrastructure Development Fund (IIPDF) for financing upto 75% of the project development expenses

Madhya Pradesh Water Sector Reforms

The water sector in Madhya Pradesh (MP) is being restructured under the Madhya Pradesh Water Sector Restructuring Project loan given by the World Bank to the Government of MP (US$ 396 million) in 2005. Highlights & Implications of MPWSRP Commercialization of the Sector. The whole sector turned into a market Full Cost Recovery and Increase in Tariffs Elimination of Subsidies Creation of the State Water Tariff Regulatory Commission (SWaTReC); draft Bill for legislation is ready to be presented in the state assembly Constitution of the State Water Resources Agency (SWaRA) Large Scale Retrenchment Privatisation of irrigation - 25 Minor and 1 Medium irrigation scheme in the first phase Forcible New Legislation

Maharashtra Water Resources Regulatory Authority (MWRRA)

Interestingly, in the neighbouring state of Maharashtra under the reforms and restructuring project funded by the World Bank, the water regulator (MWRRA) has already been constituted and has also initialized its operations with a lot of inputs from the World Bank. The Authority was constituted in June 2005 but started its work from May 2006. Apart from tariff setting, one of the principle functions of the Authority is to determine water entitlements for various categories of use and users, and to fix the criteria for trading of water Entitlements or Quotas on the annual or seasonal basis by a water Entitlement holder. In other words, setting up a market for water entitlements. It has taken up 6 pilot projects to work out the entitlements including 2 major irrigation project.

Impacts The impacts of these reforms are felt by all sections, but the poor families, and vulnerable sectors like agriculture will be worst hit. Even middle class will feel the pinch. Impacts include: Severe increase in price hikes leading to many not being able to afford even water for domestic use Non-payment or inability to pay will lead to disconnection Disconnection means people will shift to lesser quality supply if available. Else, serious political unrest Agriculture sector, already in severe crisis, will be pushed even more into distress as water prices for irrigation zoom Dismantling of common public facilities meant for the poor like handpumps, public standposts etc. System transformed to cater to only paying customers. Those who cant pay the (steep) charges, will be thrown out or on the periphery Ultimately capture of water resources by those who can pay Huge profiteering by private companies Sale of public infrastructure built over generations with the use of public money for pittance Likely private control on community sources of water like groundwater, rivers etc. Large scale retrenchment of public sector workers Little likelihood of major problems of the sector being solved, including financial problems, quantity and quality of supply, equitable and affordable supply, protection and enhancement of resources

Why Reforms There has been a shift in the discourse and practise of privatisation of water in the last several years. The initial attempts at classic, direct privatisation resulted in huge political backlash all over the world. Many companies also found making profits not so easy. Making profits needed higher tariffs, which poor people could not afford. Continuing supply meant lesser profits, and disconnection led to social unrest. The political backlash and difficulty in making profits resulted in the shift in the rhetoric to pro-poor privatisation and Public Private Partnership (public takes the risks, private takes the profits). This has not been sufficient and the political backlash and difficulties in making profits did not go away. Hence, the push for sector reforms. In this, the private players are not immediately on the scene. The whole responsibility of taking and implementing unpopular and harsh decisions falls on the Government and public bodies. These include the all the measures outlined above The idea is to make the sector fully commercial, the blame and the political backlash to be taken by the Government, and then bring in the private sector. This is the route now taken to ensure private profits, to protect private sector from burden and risks of social responsibility. Also, the water sector reforms must be seen as a direct part and parcel of the larger neo-liberal agenda of globalisation and privatisation.

The World Bank as a Knowledge Creator The World Bank, along with some of the other bi-lateral donors is also playing another very significant role in the sector privatisation and

commercialisation. That role is in the creation of the intellectual and other support to build up the rationale and justification of privatisation through research and studies. The Water Sector Reforms are being forced upon the country as solutions to deep rooted and long standing problems. To make these policy prescriptions appear as solutions, these should appear as well researched and studied. Towards this end, the World Bank has been carrying out huge amounts of research and studies either on its own, or through consultants. For example, the World Bank currently hosts a program called Water and Sanitation Program on behalf of several international donor agencies. In India, this program has come out a series of research studies on how to address the problems in the water sector urban and rural water supply, irrigation and so on. It is not surprising that such research consistently throws up the clichd prescription of privatisation and liberalisation for any sector, notwithstanding the vast evidence to the contrary. This is what we can broadly call creating the intellectual and theoretical base for the package of privatisation, corporatisation, globalisation. How important the World Bank views its role in creating the intellectual base for pushing privatisation and globalisation is clear from its current Country Assistance Strategy (CAS) for India for 20052008. This CAS determines the strategy and priorities of the Banks lending to India for these three years. Among the three key Strategic Principles which under pin the Bank Groups work in India is the that The Bank will also aim to substantially expand its role as a politically realistic knowledge provider and generator.

The Effects of Trade Liberalization on Schooling in India

By Eric Edmonds & Nina Pavcnik

Indias trade liberalisation in the 1990s produced large gains, but it imposed significant costs of

adjustment on communities with industries that lost tariff protection. A new study shows that those communities educational attainment lags behind the rest of India due to the intersection of trade adjustment, poverty, and schooling costs.

India has experienced a substantial economic boom over the last twenty years. Associated with this economic expansion has been a dramatic increase in schooling attendance. Less than half of rural children age ten to fourteen attended school in 1983. By 2000, nearly three out of four were in school. Many factors have influenced India's economic growth and the concurrent increase in schooling. India's radical restructuring of its trade policy, including the August 1991 tariff reductions, have likely played a role in this boom. Prior to the 1991 reforms, average tariff rates in India exceeded 80 percent. The August 1991 tariff reforms were agreed to by the Indian government as a part of an IMF stabilisation package, following decades of tariff policy stagnation. The reforms reduced the average tariff to 30 percent by 1997 and reduced the large dispersion of tariff rates across industries. Non-tariff barriers to trade, such as import licenses, were also largely eliminated, albeit with some delay. Declining tariffs and increased international competition likely benefited Indian households through lower prices, improved quality and variety of goods and inputs, and increased specialisation of production. However, the benefits of trade reform were not equally distributed across India. A recent study by Petia Topalova (2005) of the International Monetary Fund documents that Indian communities with a concentration of industries that lost protection have experienced smaller declines in poverty than the national trend. Why would communities with a concentration of industries losing tariff protection not experience poverty declines as large as experienced elsewhere? There is an adjustment process that occurs with the loss of tariff protection, and adjustment may take time. Topalova's study documents that workers in industries that experienced larger declines

in tariffs observed declines in their relative wages, and it appears that adults in affected communities do not experience the same increases in income as experienced in communities better positioned to take advantage of the tariff declines. Patterns of trade adjustment similar to India have documented in countries as diverse as Mexico and Morocco. Trade liberalisation, poverty, and schooling The trade adjustment process appears to have affected the education of children who were school-age during the adjustment period. In India, the schooling and literacy of school-age children appears to have been attenuated in areas with a greater concentration of industries that lost protection relative to other parts of India. Nilgiri district in the Indian state of Tamil Nadu is an interesting example. Prior to the passage of the 1991 tariff reforms, employment in rural Nilgiri was heavily concentrated in tea. In 1991, forty-seven percent of the employed population in rural Nilgiri was directly involved in tea cultivation and another eleven percent of the employed population was in closely related industries. The 1991 reforms reduced tariffs on imported tea from eighty to twenty-four percent in 1997. While poverty declined across almost all of rural India in the 1990s, the fraction of the population living in poverty in Nilgiri actually increased eleven percent and schooling attendance declined by fifteen percent. Many other changes may have occurred in Nilgiri during this period besides the decline in tariff protection on tea. However, across Indian districts, we see a pattern similar to what the Nilgiri example suggests. Places where employment was more concentrated in heavily protected industries have not experienced the same declines in poverty as elsewhere in India. They also have not experienced the same increases in schooling. Importantly, this association between tariff changes, schooling, and poverty does not seem to be explained by changes in other aspects of economic or education policy. It does not appear to be due to pre-existing time trends in schooling or poverty nor the out-migration of more educated and wealthier

individuals from areas where heavily protected industries were concentrated. In communities with concentrations of industries losing protection, schooling increases lagging behind the national average seem due to the relationship between poverty and tariff reductions. Schooling improvements might be attenuated if the returns to schooling decline in affected communities or if more lucrative employment opportunities become available to children. Neither appears to be case in the present context. If anything, returns to education may be rising in communities losing protection more than in other communities. Some children work more, but this work is largely by girls in household domestic chores. Illiterate adult males and women, two groups who are often substitutes for child labour, do not appear to be working substantially more. Interestingly, far more often than working in the formal labour market, children who do not attend school appear to combine that lack of schooling with a lack of work. Schooling costs Why would children not work if poverty is an important reason that they are not attending school? Many writers document the low wages paid to children. While some assert this reflects discrimination against children it may also owe to the fact that children are not very productive workers. The economic returns to working might be minimal, but schooling is expensive. One recent study put direct schooling costs for one child as seven percent of annual income for the poorest decile of the Indian population. Importantly, these schooling costs are concentrated in certain times of the year. Hence, poor households who have difficulty borrowing and saving may see the child's most important economic contribution as the avoidance of schooling costs. In fact, it appears that the effects of Indian tariff reforms on schooling are smallest in districts where schooling is less costly. Imagine two communities with identical concentrations of the same industries that lost protection. In the community located in a state with school feeding programs, girl scholarships, and overall lower schooling costs,

the adjustment process appears to have no impact on schooling. That is, schooling costs appear to be the reason why there is a link between poverty, schooling, and Indian tariff reform. Conclusions Because the Indian tariff reforms appear to affect schooling principally through their effect on local poverty rates, it is possible to extrapolate from the Indian tariff reductions to gauge how important poverty reduction has been in driving India's rise in schooling. It appears that falling poverty can account for half of the increase in schooling that has occurred in India over the 1990s. The remaining growth in schooling may owe to changes in schooling costs, increases in perceived returns to education, or changes elsewhere in the economy in the economic opportunities to children.

Free trade crushes world's poorest farmers: British charity

LONDON (AFP) Free-trade development strategies designed by the International Monetary Fund (IMF) and the World Bank have devastated poor countries and left their farmers worse off, a British aid group said in a report. The hardline policies of liberalization and privatization, backed by Britain and other Western governments, have led to a suicide "epidemic" among Indian farmers and inflicted terrible social costs in other developing countries, Christian Aid said. In its report, the London-based group urged Prime Minister Tony Blair to use Britain's temporary presidency of the G8 group of leading industrial countries and, from July, of the European Union to "bring about a radical change of direction" in development policy. "It is a scandal that the British government has backed policies and pumped British taxpayers' money into schemes which have contributed to poor Indian farmers killing themselves and Indian workers being laid off in huge

Free markets and poverty: since 1980, as the world has deregulated its markets, income gaps have widened.

Why is this record heralded as a success?(Statistical Data Included)

FOR BETTER THAN TWO DECADES, THE ORTHODOX recipe for global growth has been embodied in the so-called Washington Consensus. This approach, advocated by the United States and enforced by the World Bank and the International Monetary Fund (IMF), holds that growth is maximized when barriers to the free flow of capital and commerce are dismantled and when individual economies are exposed to the discipline, consumer markets, and entrepreneurs of the world economic system. Proponents of this view have contended that the free-market approach to development will also alleviate poverty,

Uncertain Success: The Political Economy of Indian Economic Reform.

The Indian government since 1991 has implemented economic reforms to reduce state ownership, globalize and liberalize the economy, and open up to greater trade. Although the these reforms have resulted in an improved economy, many remain skeptical about the effectiveness of these reforms after the Congress party, which was voted out in 1996. Introduction Over the last decade and a half, and especially since 1991, India has been implementing economic reforms to liberalize and globalize the economy by reducing state ownership and control and by opening up to greater trade, foreign capital

Whose Independence? The Social Impact of Economic Reform in India.

India, after 50 years of gaining its independence, has improved much in terms of its cultural, economic, and social conditions. Its economy has opened up to trade and there is an increase in GDP. Despite all these improvements, India still face difficulties concerning its high unemployment, poverty, corruption in government, and social unrest. Introduction 1997 is the 50th year of India's independence, an appropriate time to critically assess the social, cultural and economic condition and independence of the country. Viewed from the wide boulevards of its cities

This Food Retail Profile of India Provides a Comprehensive Over view of the Market and Industry

DUBLIN, Ireland -- Research and Markets (http://www.researchandmarkets.com/research/cb37a8/food_retail_prof il) has announced the addition of the "Food Retail Profile of India" report to their offering. Food retail sector of a country comprises primarily hyper/supermarkets, hard discounters, city center and department stores and traditional outlets. Over the last few decades, food retail sector across the globe has experienced a trend towards market consolidation and shift towards a more organized sector from unstructured ones. Driven by the liberalization policy in emerging markets of Asia and Latin America and globalization of the trade, today food retail sector is one of the most vibrant sectors in the world. Over the next decade or so, food retail sector is likely to see steady growth in North America and Europe and further consolidation and above global average growth in emerging markets, especially in China, Brazil, Russia and India. Synergyst's Food Retail Profile is a comprehensive report focusing on the food retail sector of a particular country including current industry size, market structure and trends. Report further presents competitive analysis of the food retail sector with the help of brief profiles of leading players and their strategies followed by the future prospects of the sector. Key Topics Covered: I. EXECUTIVE SUMMARY II. ECONOMIC CONDITIONS a. Economic Overview b. Trends in Retail Industry c. Government Policies d. Future Prospects III. INTRODUCTION TO THE FOOD RETAIL SECTOR a. Market Definition b. Background of Food Retail in India c. Market Structure d. Market Trends and Developments IV. MARKET COMPETITION a. Competitive Scenario b. Profiles of Leading Players c. Strategies for Foreign Players

V. INDUSTRY FORECAST VI. APPENDIX AND GLOSSARY LIST OF TABLES AND FIGURES - GDP and Household Disposable Income - Economy and Food Retail - Retail Sector in India (2001-2010) Food Retail Sector in India (2001-2007) - Market Share of Leading Players (2007) - Forecast of Food Retail Sector in India (2007-2010) COMPANIES COVERED - Food Bazaar - Spencers - Foodworld - Nilgiri's Trinethra - Subiksha - Reliance Retail

Designing a Pro-Active Stance for India in the Doha Development Agenda Negotiations
Overview: In this paper, author first summarizes the framework that has been agreed upon as the basis for the WTO Doha Development Agenda (DDA) negotiations. It then discusses briefly the design and mission of the WTO and the economic effects of multilateral trade liberalization. Thereafter, it discusses the conditions for India's realization of the maximum benefits from the DDA negotiations and the implications for broader Indian domestic policy reforms. This paper then set out the recommendations for India's pro-active involvement and negotiating strategies in the DDA negotiations for multilateral trade liberalization in agricultural products, manufactures, and services, and for improvements in WTO rules governing trade and related issues.

Liberalized Investment in India After Scrapping of Press Note 18

18th November 2005 Author: Alishan Naqvee Liberalized Investment in India After Scrapping of Press Note 18 In January 2005, Indian Prime Minister announced scrapping of the contentious Press Note 18 pertaining to foreign financial or technical collaboration under the automatic approval route with effect from January 2005. The scrapping of Press Note 18 has been was hailed as, and has proved to be, a positive step towards further liberalising foreign direct investments regulations in India. A. Press Note 18: In terms of Press Note 18, the automatic route (which requires no prior regulatory approval) for foreign investment was not available to foreign investors having an existing or previous venture or technology transfer/trade mark agreement in the same or allied field in India. Investors having a previous or existing venture or technology transfer/trade mark agreement in the same or allied field in India required prior Foreign Investment Promotion Board (FIPB) approval for such investment. To obtain FIPB approval, the foreign investor had to give detailed circumstances in which they found it necessary to setup a new joint venture/enter into new technology transfer (including trade-mark) and the onus was on such investors/technology suppliers to provide the requisite justification as also proof to the satisfaction of the FIPB that the new proposal would not in any way jeopardize the interests of the

existing joint venture or technology/trade-mark partner or other stakeholders. In implementing Press Note 18, the Indian Government, in practice, required a letter/certificate from the existing Indian joint venture partner that it had no objection to the foreign partner's new investment proposal in the same or allied field. Press Note 18 was issued In the wake of the liberalization policy of the Government of India which allowed 100% foreign direct investment in almost all sectors of the economy without prior regulatory approval. Prior to the "opening up" of these sectors to 100% foreign direct investment, joint ventures were the popular mode of foreign investment in India in view of ceilings on foreign investment in several sectors. The objective of Press Note 18, it appears, was to protect the Indian joint venture partner against the prospect of the foreign joint venture partner walking out of the existing joint venture and joining hands with another Indian party or establishing its wholly-owned Indian subsidiary. B. Scrapping of Press note 18: In terms of Press Note 1 of 2005, new JVs and technical collaborations will no longer be governed by the provisions of Press Note 18. Pursuant to scrapping of Press note 18, the above restrictive provisions of Press Note 18 have been done away with for all future joint ventures in India between Indian and their foreign partners. In the new dispensation, new joint ventures and collaborations are being based on the free will of partners without any Government interference. An interesting development of Press Note 1 of 2005 is the acknowledgement that Indian companies as well as their foreign partners may contractually safeguard their interests in JVs through provisions in JV/collaboration agreements which tackle 'conflict of interest' situations, for example, where a JV partner decides to invest

in another JV or a fully-owned subsidiary in the same field of activity. C. Non-Applicability to Existing JVs: The joint venture existing at the time of scrapping of Press Note 18 however continues to be protected by a few provisions of Press Note 18. Venture capital funds have however been exempted from the requirement of having to obtain a no-objection certificate from local partners for new investments. Similar freedom has been extended to sick companies and joint ventures where either the domestic or foreign venture partner hold less than 3% shareholding. International Finance Institutions and foreign direct investment proposals in the Information Technology sector had been exempted from the applicability of Press Note 18 in the year 2001 and 2000, respectively. The need for consent from both domestic and foreign venture partners will apply in the case of existing JVs only if the proposed sector of investment is the 'same' as the existing JV. Earlier, the need for consent also applied to proposed investments in an 'allied' sector as the existing JV. For purposes of Press Note 18, 'same' field means those activities, which are covered under the same four digit National Industrial Classification 1987 (NIC) code, while 'allied' field refers to those actitivities covered under the same three digit NIC code.

Tags: venture partner, foreign investors, onus, investment promotion board, foreign investment promotion board, government of india, indian government, foreign direct investment, automatic approval route, liberalization policy, sectors of the economy, allied field, foreign direct investments, investment proposal, technical collaboration, indian prime minister, technology suppliers, regulatory approval, technology trade

BSP defends forex liberalization By Michelle Remo Philippine Daily Inquirer First Posted 22:27:00 01/18/2009 Filed Under: Macro Economics, Foreign Exchange Markets, Central Banks MANILA, PhilippinesMaking it easier for foreign exchange to exit the economy may seem ill advised at this time when the economy is feeling the pinch of the global crisis. But the Bangko Sentral ng Pilipinas insists that it has good reasons for liberalizing foreign exchange regulations. For the countrys monetary authority, relaxed rules on foreign exchange transactions would signal to the capital market that it was confident the economy was resilient amid the global turmoil. Normally, when there is economic difficulty, foreign exchange regulations are tightened instead of relaxed, BSP deputy governor Diwa Guinigundo said. This is to prevent badly needed foreign funds from easily moving out of the country. But he said the BSP was adopting a different method of keeping whatever investments are left and enticing more to come. By relaxing the rules, investors wont be afraid to come in because they know they can easily pull out money if they want to, Guinigundo explained. Relaxed rules will actually help generate confidence among foreign investors, he added. During the meeting of its Monetary Board last Thursday, the BSP approved the third and final phase of liberalization of foreign-exchange regulations.

The reforms, to be implemented 15 days after publication in a newspaper of general circulation, are contained in the new Manual of Regulations on Foreign Exchange Transactions. With the reforms in place, banks will no longer be required to submit to the BSP reports on the sale of foreign currencies to entities wanting to invest abroad. Also, private banks will no longer be required to seek BSP approval when tapping foreign loans with a maturity of at least one year. Banks will likewise be allowed to delegate to custodians the registration of foreign currencies used in buying peso-denominated government securities and time deposits maturing in at least 90 days.

The Textile Industry in Ghana and Trade Liberalisation

Introduction The textile industry in Ghana was once a very booming industry, which once employed about 25000 workers. Most of these companies produced high quality materials, designs and very good textile brands, which sold, so well on the local market as well as other markets in the West African sub- region. Wax prints produced by these companies were in high demand on the Ghanaian market because they are use in making traditional apparels like the Kaba and other exquisite wears. The Industry was not only a source of employment to many Ghanaians but also contributed significantly to the countrys Gross Domestic Product, (GDP). In recent times the industry has gone through some difficult times resulting in shutting down of production lines of most of the companies in the industry. A lot of workers had been made redundant as a result of these shut downs. Ghana Textile Print, (GTP) which once produced a very good textile brand the

GTP brand is reported to have shut down its spinning and weaving departments and laid off many of its workers. This was a company, which was known to have competed with multinational textile companies in the past. The story is not different for Ghana Textile Manufacturing Company limited (GTMC). GMTC shut down its production line way back in December 2005. Juapong Textile also went into administration and its production lines shut down completely. It opened its production line briefly under the name Volta Star Textiles but could not cope with the competition. Some of the companies which are still operating are believed to be importing gray baft and semi-finished/ bleached cloth for printing in Ghana. One such company is Printex which is believed to be producing below capacity. The only surviving local textile company in the industry is Akosombo Textile Limited, (ATL) but the story doesnt look good for that either. (The Financial Times Limited 2007) Bail Out Plans for the Industry Considering the fact that the textile industries in Ghana once contributed significantly to the Gross Domestic Product, (GDP) and was a source of employment for many Ghanaians, this statistics were quite worrying. There was therefore an appeal from the stake holders in the industry to the government to bail out the companies in order to save the industry from total collapse. The government responded to their distress call and came out with some bail out packages, which could possibly transform the industry to its former glory. One significant bail out package put in place by the government was to acquire one of the distress company GMTC at a cost of $ 1.5 million. This company which was almost in ruins was to be refurbished and fitted with hitech factory, and rented out to ten new indigenous medium garments and textiles companies. It is expected these new producers will produce textiles for both the local industry and for exports to America under AGOA (Ghanaian Chronicle 2006-01-24). Also the government gave its backing to ABC Textiles; a UK based Textile Company in building a 10-million-dollar new production

facility at the Akosombo Textile Limited (ATL) factory. This facility will be used to produce wax prints for the local market as well as other markets. ABC Textiles owners of the plant have plans of expanding its market in the West African sub-region. In 2003, the government reduced duties on imported textile inputs from 10 per cent to five per cent with plans to abolish totally in the 2006. (GNA Protection of the Textile Industry The government has also put in place plans to curb the influx of textile products from other African countries. In order to achieve this, plans are underway to turn Takoradi Port into a single import corridor for all African Textile Prints (ATP) coming into Ghana. According to government reports when this plan is put in place all commercial imports of African prints through unauthorised routes, particularly the land borders, would be confiscated. Furthermore CEPS and Ghana Standards Board (GSB) shall subject commercial African prints imported through the Takoradi Port to 100% physical examination. Finally the government has established a New Economic Intelligence Task Force to check and deal with all cases of trade malpractices in Ghana, including but not limited to the textile sector. (The Chronicle (Ghana), 05.19.2005) Support for the cotton industry One area of the industry which the government decided to focus its attention on is the cotton industry because this forms the bedrock of the textile industry in Ghana. In fact the cotton farmers feed the textile industry with raw material. For them to remain in business they need a constant supply of raw material and at a competitive price too. The government gave out a bailout package of an amount of GH2.6m to the Ghana Cotton Company Limited (GCCL) to purchase cotton from local farmers in the three Northern Regions of Ghana and also to support the farmers for the 2009/2010 crop season. As part of the support twenty (20) brand new tractors were given to the farmers.

The government also promised 20 billion cedis in the form of agro inputs to around 10,000 cotton farmers in the three northern regions. It has also promise to provide funds for procurement of certified cottonseeds and ploughing of lands. A total of 10,000 hectares is likely to be cultivated within the year. An amount of 4.6 billion cedis has already been released to the GCCL for ploughing and procurement of 300 tons of certified cottonseeds, which had been imported from Burkina Faso for distribution to the farmers. A further sum of 16 billion cedis has been earmarked to support farmers in the three cotton companies mentioned above. A process has been scheduled for completion by July 20, 2006 for the inputs to be provided to the farmers through the companies. (allafrica.com) Causes of the collapse of the Textile Industry Trade liberalisation It has been argued by the industry watchers that the near collapse of the textile industry in Ghana could be attributed to the trade liberalisation policy. They are of the view the liberalisation led to the influx of textile products from China and other countries. These textiles are relatively cheaper compare to those produced in Ghana and therefore made it impossible for the local producers to cope with the competition. Besides some of these products are made with Ghanaian motives, which made them, look like they are produced in Ghana. Consumers cannot therefore differentiate between these products and those made in Ghana. To make matters worse local retailers prefer to sell these brands because they are affordable to local consumers and fly off the shelves quicker. Well, one could argued that it is very good idea to protect the industry from external factors. This is because the industry form part of the production sector of the economy. Its not good to have the economy dominated by the service sector i.e. (banking, insurance transport etc). However experts like David Ricardo (a classical economist) are of the view that trade protectionism flies against the theory of comparative advantage, which suggests that opening up world markets, and reducing trade barriers (trade

liberalisation) would lead to gains from trade for all concerned. Besides trade liberalisation is not a bad thing at all but its the way it is handled. Trade liberalisation simply put means reducing trade limitations such as tariffs, quotas and non-tariff barriers (e.g. regulations, legislation etc) that make it difficult for foreign competitors to sell goods into another country. It has its good sides as well as the bad ones. What needs to be done is to balance the equation between trade liberalisation and trade protectionism because its also not good to introduce trade protectionism policies. Influx of Textile products. Competition in the textile industry in the distance past was just among the local companies but the equation has now changed. These companies now have to compete with influx of textile products from China and other countries. These products offer value for money and are affordable. To compete with these foreign products will mean the local producer reducing their retail prices. This will mean they will be under pricing their product and this will have adverse effect on their profit margin. Its been argued that the most of the textile companies use obsolete and out date machines that is why they are finding it very difficult to compete with the foreign textile products. Assuming this is true what it means is their cost of production will increase due to loss of man-hours as result of machine breakdowns and stoppages in production lines. This cost is likely going to be passed onto the consumer. Also the old machines are likely going to be less efficient. This will lead to the companies not meeting their production target for any given period. What this means they will be delays in meeting orders and this could result in customer dissatisfaction. Imperfect Market The market in Ghana could be described as an imperfect market during the period under review. This created a very difficult situation for the textile industries to operate. An imperfect market is where information is

not quickly disclosed to all participants in it and where the matching of buyers and sellers isn't immediate. Generally speaking, it is any market that does not adhere rigidly to perfect information flow and provide instantly available buyers and sellers. (www.investopedia.com) It could be argued that the trade liberation policy was not communicated properly to the textile companies. Probably they were not given enough time to prepare for it or they were not consulted. The information on the policy needed to be made available to the retailers as well as the consumers. In fact all the stake holders in the industry need to have access to any information on any policy that could affect the industry and this includes the cotton farmers in the three northern regions of the country. The absence of any thing of this sort will make the market imperfect. Some Suggested Solutions Costing System In order for these companies to survive in these turbulent times they need to apply very effective costing system to reduce their cost of production. They need to have terms and methods of allocating and apportioning fixed production overheads into various cost centres, using an appropriate method and then reapportioning the fixed overheads from the service centres into the production centres so that the costs can then be absorbed. One Such method they could consider using is the Activity Based Costing Activity Based Costing Activity-Based Costing (ABC) is defined as a costing model that identifies activities in an organization and assigns the cost of each activity resource to all products and services according to the actual consumption by each: it assigns more indirect cost (overhead) into direct cost. Activity base costing methods is the fixing of overheads for various categories of cost centres, for example canteen or maintenance costs; need to be shared out to various cost centres. ABC as costing system recognises that activities consume resources and products consume activities (R S Kaplan and W Bruns, 1987). Application of the Activity Based Costing will mean these company needs to have terms and methods of allocating and apportioning fixed production overheads into various cost centres, using an appropriate method and then reapportioning the fixed overheads from the service centres into the production centres so that the costs can then be absorbed. First and foremost they need to identify their

cost centres, profit centres and investment centres. Direct labour and materials are relatively easy to trace directly to products, but it is more difficult to directly allocate indirect costs to products. Where products use common resources differently, some sort of weighting is needed in the cost allocation process. (R S Kaplan and W Bruns, 1987) The costs from the production centres then need to be absorbed into the standard cost per unit using an appropriate method. For this paper this method will usually (but not always) be on a per unit basis, on a machine hour basis or on a labour hour basis but others are possible. The use of ABC will allow the managers of the textile companies to better understand and get the true costs associated with business activities at each of its revenue and cost centres. These companies have profit centres like business and marketing department etc. These centres have both revenue as well as cost centres. They are therefore viable centres, which generate most of the revenues. An effective activity based costing system will help increase the revenue generation of these centres. Activity based costing will also enable the managers to better examine their business activities that are indirectly associated with their service delivery like information systems, customer support, electricity, security, marketing, transport services and maintenance. It will thus make it easier for them to be accurate in assigning costs. They will be in a better position to assign cost for the operations of their cost centres since these centres do not bring any revenue. It will also help the managers to identify inefficient product, department and activity and therefore allocate more resources on profitable product, department and activity. ABC will also help to control the cost at individual level and on departmental level and to find unnecessary costs. The only problem is ABC has been found to be a very high-cost accounting technology. Installing an ABC system is technically complex, requiring talented personnel and a considerable amount of time. Though its been argued that ABC has lost ground to alternative metrics, such as Kaplan's Balanced Scorecard and economic value added its still widely in used. Finally it will be unwise for these companies to use full costing, because in practice full costing tends to use past cost and to restrict its consideration of future cost to outlay cost. It also provides a long - run relevant cost which gives information that relate only to the narrow circumstance of the moment

(Mclaney and Atrill 2005) Just in Time (JIT) Another way which these companies can cut down cost is to eliminate waste in their production set up. Waste is defined as any activity performed within a manufacturing which does not add value to the product (FTC Foulks Lynch 2005). One way by which the companies could reduce waste is to apply Just in Time (JIT) system of production. JIT is described as a system of production, where actual orders serve as a signal for when a product should be manufactured (Henry Ford 1923). The use of JIT by the companies in the textile industry will help them produce only what is required, in the correct quantity and at the correct time. They will make sure their supplies are delivered right to the production line only when they are needed. For example they make sure they receive exactly the right quantity of cotton (their raw material) for one days production. Their suppliers need to deliver the cotton to the correct loading bay on the production line within a specific time slot. This will help to reduce their stock levels of raw materials, components, work in progress and finished goods. Experts are of the view inventory is an incurring costs, and doesnt have any value. In fact inventory is regarded as one the seven wastes which are; overproduction, waiting time, transportation, processing, motion and product defect. These companies should make the effort of holding lower stock because this will save them some rent, insurance cost and space. For example Juapong Textile is reported to have `heap of gray baft stacked in its ware house with no hope of buyers (The Financial Times Ltd). This will definitely cost the company some rent as well as insurance premium payment. Holding of less stock will free their working capital, as this will not be tied in stocks. Working Capital is the capital available for conducting the day to day operation of an organisation. This usually refers to short-term net assets- stock, debtors and cash less short term creditors (FTC Foulks Lynch 2005). When these companies tied their working capital in stocks what will happen is their cash flow (which is regarded as the life blood of any business) will be affected and this could lead to lost in other investment opportunities.

The use of JIT will prevents the build-up of unsold textile products product that can occur with sudden changes in demand in the Ghanaian market. Production is very reliant on suppliers and if stock is not delivered on time, the whole production schedule can be delayed. The correct implementation of JIT can lead to dramatic improvements in returns on their investment (www.tutor.net) Exploring other Markets One other area that is worth considering by these companies in order to remain in business is to explore the market beyond the boundaries of Ghana. Seeking for new markets is very good business strategy. The aim of every business unit is to make profits and maximise shareholder wealth. In certain circumstances however, opportunities elsewhere would have to be exploited so as to achieve this outcome. In achieving their goals various factors impinge either on the success or failure of most business units. These factors mainly have to do with deliberate government action, which adversely affects the fortunes of these companies. In the case of the textile industry in Ghana its the trade liberalisation policy introduced by the government. Most of the companies in the Textile Industry in Ghana have been crippled and others have completely wound up due to the governments liberation policy that had adversely affected these companies. One market that is worth exploring is the market in Singapore. Domestic market In Singapore Singapore has a large domestic market of 3.6 million people, which just like Ghanaians will like to wear dress made from local textiles. Apart from that the lifting of quotas by the US and other wealthy countries to limit imports from developing nations under the General Agreement on Tariffs and Trade, (GATT) place Singapore in favourable market in the apparel industry. Atmi, a USA based textile industry group, (now defunct) predicted that the end of the quota could accelerate growth of the textile industry in Asia and the collapse of the industry in the USA. The group predicts that 630,000 jobs in textiles, apparel and related industries could be lost by 2006 in Americans. Atmi

reports went on to say the end of the quota could lead to the collapse of the US textile and apparel industry with orders moving to Asia. The Ghanaian textile companies can capitalise on the situation and move now. The country has a large population and therefore has ample labour to spare. This cheap labour will be a good incentive to the Ghanaian companies. The caution here however is that the labour may be unskilled and this may lead to high operational losses to the companies as a result of the learning curve. The companies can anyway weigh these losses against the benefits it will derive from the cheap labour and the overall effect determined on the activities of the company. (MAS report 2002) Domestic Interest rate in Singapore One area that makes Singapore attractive is the domestic interest rates. This has been relatively low and stable since 2000, the domestic three-month inter bank rate currently the Singapore the inter bank SIBOR 2.5%. With such a low interest rate the Ghanaian companies can thus borrow from the Singaporean banks and invest it into the expansion programme. However Singaporean commercial banks have the tendency of giving loans to individuals rather than to the business sector. It is known facts that loans granted to professional and private individuals in Singapore grew to doubledigit rates in 2000. Nevertheless the intense competition between banks, which came as a result of the liberalisation of the banking sector in Singapore, lending to the manufacturing sector has gone up in the last few months of 2000. In the first quarter of 2001, loans growth rose to 7.1%, compared with 4.7% in 2000, although this was partly on account of DBS Finances integration with DBS Bank. Adjusting for its effect, loans to nonbank customers would have grown by a slower rate of 4.7% in the first quarter of 2001. (MAS report 2002) Financial risk and Economic risk Singapore under the Monetary Authority of Singapore Act (MAS) has taken several measures to maintain exchange rate stability. The floating exchange policy was introduced. Currency restrictions were also lifted. The prohibition

of advance payment on import contracts and opened an inter bank market for foreign exchange was also lifted. However Enterprises under current Singapore currency regulations are obliged to sell a certain percentage of their hard currency to the government. This measure is aimed at maintaining exchange rate stability. The problem, which arises out these situations, is that foreign companies may find it difficult to raise foreign exchange to import essential parts to keep their business running. The risk here will lie in the value of the funds, which Ghanaian companies will want to repatriate to Ghana. Assuming the companies are going to price their exports in cedis (Ghanaian currency) then they will not be wholly affected by the foreign exchange regulation as well as fluctuations. However, if they decide to charge the Singapore dollar for exports then fluctuations may have a serious effect their profits. Conclusion It is time the textile companies in Ghana start considering expanding to other markets in the West African sub region as well as other markets. For instance they could consider expanding to the market in Singapore in order to take advantage of the predictions by Atmi, (the textile industry group). Atmi predicted a boom of the textile industry in Asia from 2004 onwards as a result of the end of GATT quotas. According to the report the end of the quota will result in the collapse of the US textile and apparel industry in the USA and orders for textiles products will then move to Asia. However the danger is that investing in another country has its intricate complexities based on the fact that international trade does not only have to do with finance and profits but has to do with social and culture issues. The companies must weigh the advantages of going into Singaporean market against the threats they may face before taking a decision.

Privatization

Privatization is the incidence or process of transferring ownership of business from the public sector (government) to the private sector (business). In a broader sense, privatization refers to transfer of any government function to the private sector including governmental functions like revenue collection and law enforcement. [1] The term "Privatization" also has been used to describe two unrelated transactions. The first is a buyout, by the majority owner, of all shares of a public corporation or holding company's stock, privatizing a publicly traded stock. The second is a demutualization of a mutual organization or cooperative to form a joint stock company.[2]

Origin of the term

It has been claimed that the term was first used in the 1930s by The Economist in covering German economic policy.[3][4]

[edit] History
In Ancient Greece, the government contracted out almost everything to private sector.[5] In Roman Republic, private individuals and companies supplied nearly everything, including tax collection, supply the army, religious sacrifices and construction. However, Roman Empire created stateowned enterprises. For example, much of the grain was eventually produced on estates owned by the Emperor. Some scholars suggest that the cost of bureaucracy was one of the reasons for the fall of Roman Empire.[5] Churchill's government privatized British steel industry in the 1950s. West Germany's government started a large-scale privatization, including selling its Volkswagen majority share to small investors in a public share offering in 1961.[5]

Arguments for and against privatization

[edit] Pro-privatization

Proponents of privatization believe that private market factors can more efficiently deliver many goods or service than government due to free market competition. In general, it is argued that over time this will lead to lower prices, improved quality, more choices, less corruption, less red tape, and quicker delivery. Many proponents do not argue that everything should be privatized. According to them, market failures and natural monopolies could be problematic. However, some Austrian school economists and anarcho-capitalists would prefer that everything be privatized, including the state itself. The basic economic argument given for privatization is that governments have few incentives to ensure that the enterprises they own are well run. One problem is the lack of comparison in state monopolies. It is difficult to know if an enterprise is efficient or not without competitors to compare against. Another is that the central government administration, and the voters who elect them, have difficulty evaluating the efficiency of numerous and very different enterprises. A private owner, often specializing and gaining great knowledge about a certain industrial sector, can evaluate and then reward or punish the management in much fewer enterprises much more efficiently. Also, governments can raise money by taxation or simply printing money should revenues be insufficient, unlike a private owner. If there are both private and state owned enterprises competing against each other, then the state owned may borrow money more cheaply from the debt markets than private enterprises, since the state owned enterprises are ultimately backed by the taxation and printing press power of the state, gaining an unfair advantage. Privatizing a non-profitable company which was state-owned may force the company to raise prices in order to become profitable. However, this would remove the need for the state to provide tax money in order to cover the losses.

Performance. State-run industries tend to be bureaucratic. A political government may only be motivated to improve a function when its poor performance becomes politically sensitive, and such an improvement can be reversed easily by another regime. Improvements. Conversely, the government may put off improvements due to political sensitivity and special interests even in cases of companies that are run well and better serve their customers' needs. Corruption. A monopolized function is prone to corruption; decisions are made primarily for political reasons, personal gain of the decisionmaker (i.e. "graft"), rather than economic ones. Corruption (or principal-agent issues) during the privatization process - however - can result in significant underpricing of the asset. This allows for more immediate and efficient corrupt transfer of value - not just from ongoing cash flow, but from the entire lifetime of the asset stream. Often such transfers are difficult to reverse. Accountability. Managers of privately owned companies are accountable to their owners/shareholders and to the consumer, and can only exist and thrive where needs are met. Managers of publicly owned companies are required to be more accountable to the broader community and to political "stakeholders". This can reduce their ability to directly and specifically serve the needs of their customers, and can bias investment decisions away from otherwise profitable areas. Civil-liberty concerns. A company controlled by the state may have access to information or assets which may be used against dissidents or any individuals who disagree with their policies. Goals. A political government tends to run an industry or company for political goals rather than economic ones. Capital. Privately held companies can sometimes more easily raise investment capital in the financial markets when such local markets exist and are suitably liquid. While interest rates for private companies are often higher than for government debt, this can serve as a useful constraint to promote efficient investments by private companies, instead of cross-subsidizing them with the overall credit-risk of the country. Investment decisions are then governed by market interest rates. State-owned industries have to compete with demands from other government departments and special interests. In either case, for smaller markets, political risk may add substantially to the cost of capital.

Security. Governments have had the tendency to "bail out" poorly run businesses, often due to the sensitivity of job losses, when economically, it may be better to let the business fold. Lack of market discipline. Poorly managed state companies are insulated from the same discipline as private companies, which could go bankrupt, have their management removed, or be taken over by competitors. Private companies are also able to take greater risks and then seek bankruptcy protection against creditors if those risks turn sour. Natural monopolies. The existence of natural monopolies does not mean that these sectors must be state owned. Governments can enact or are armed with anti-trust legislation and bodies to deal with anticompetitive behavior of all companies public or private. Concentration of wealth. Ownership of and profits from successful enterprises tend to be dispersed and diversified -particularly in voucher privatization. The availability of more investment vehicles stimulates capital markets and promotes liquidity and job creation. Political influence. Nationalized industries are prone to interference from politicians for political or populist reasons. Examples include making an industry buy supplies from local producers (when that may be more expensive than buying from abroad), forcing an industry to freeze its prices/fares to satisfy the electorate or control inflation, increasing its staffing to reduce unemployment, or moving its operations to marginal constituencies. Profits. Corporations exist to generate profits for their shareholders. Private companies make a profit by enticing consumers to buy their products in preference to their competitors' (or by increasing primary demand for their products, or by reducing costs). Private corporations typically profit more if they serve the needs of their clients well. Corporations of different sizes may target different market niches in order to focus on marginal groups and satisfy their demand. A company with good corporate governance will therefore be incentivized to meet the needs of its customers efficiently.

Privatization - Experiences In India

(Paperback - 9-jan-08) by

Janardhan Rao N Amit Singh Sisodiya

The PSUs were created to play a pivotal role as envisaged in the economic model adopted by the country in the post-independence era, inspired essentially by the Soviet socialist model. A large number of PSUs were set up across sectors, which have played a significant role in terms of job creation, social welfare, and overall economic growth of the nation; they rose to occupy commanding heights in the economy. Over the years, however, many of the PSUs have failed to sustain their growth amidst growing liberalization and globalization of the Indian economy. Loss of monopoly and a protectionist regime, and rising competition from private sector competitors have seen many of the government-owned enterprises lose their market share drastically. In many instances, many of the PSUs have found themselves unable to match up to the technological prowess and efficiency of private sector rivals, although many have blamed lack of autonomy and government interventions for their plight. However, the big question is: Is Privatization a cure-for-all ills affecting the PSUs? Perhaps not. It is not as the global experiences like the ones in UK and Brazil suggest. As far as Indias experience is concerned, it would be too early to arrive at a conclusion. Despite the countrys nascent privatization program, experiences related to cases like VSNL and Balco suggest that privatization can yet work. The book attempts to explore privatization, in the context of India and its progress, so far. It also

discusses the various lacunae past disinvestment cases suggest and potential models that could help overcome that. The book also contains case studies that provide insights into some of the PSUs that have been successfully privatized.

Meeting Chinas energy needs through liberalization

China needs more oil. But the country should get it the way other big consumers do: purchases on the open market.
JUNE 2006 Ivo Bozon, Subbu Narayanswamy, and Jonathan R. Woetzel

China's rapid rise to become the world's second-largest petroleum user has understandably raised concerns among the country's leaders about its ability to secure the oil supplies it needs to sustain the current economic boom. These leaders worry that the world has entered a prolonged period of tight energy supplies and high prices, and their response has been to send China's national oil companies on a multibillion-dollar global shopping spree for petroleum reserves. A much more efficient and less costly strategy would be to reform the state-controlled petroleum sector, open it to foreign investment, and integrate the country into the global system that supplies Japan, the United States, and other big energy consumers. This growing appetite for oil is propelled largely by the new love of the emerging Chinese middle class: the automobile. In 2006 China became the world's second-largest auto market, with sales of more than 5 million vehicles. By 2015 more than 100 million cars could be plying the country's roads. Demand for gasoline and diesel fuel is likely to

grow by 6 percent a year, and Chinese oil imports will rise from three million barrels a day at present to ten million barrels a day by 2020as much...

Economic analysis shows city's long term, privatized parking deal gave up future millions for cash now
Economist says leasing meters gives up millions
By Hal Dardick | Tribune reporter February 5, 2009

Mayor Richard Daley reaped a windfall and avoided further budget cuts when he secured fast-track City Council approval of a 75-year lease of the parking-meter system, but an economist's analysis concludes he also gave up hundreds of millions down the line. The complex agreement, the first of its kind in the United States, nets the city a one-time cash payment of nearly $1.2 billion when the deal is closed this month. But the city could have earned $1.5 billionin today's dollarsif it

kept the meters and simply raised rates to the same levels it granted the winning bidder, according to H. Woods Bowman, a professor of public service at DePaul University. That's nearly $300 million more than Chicago Parking Meters, a limited liability corporation formed by Morgan Stanley to operate the meters, will pay upfront, Bowman said. "There's nothing that would prevent the city from doing what the private sector is doing," Bowman said, noting aldermen already took heat for approving the rate increases in the deal. "So, why are they doing it?" said Bowman, a former state legislator and Cook County chief financial officer who is researching Chicago's unprecedented privatization efforts. "They would get an awful lot of money over 75 years. The reason they are doing it is because they can get the money now and close their budget gap." Pete Scales, spokesman for the city's Budget and Management Office, said Bowman's calculations don't take into account the risk of such a lengthy lease. "Obviously, if the city believed we could achieve a better financial result by keeping the system in house, we would not have pursued this transaction or accepted the winning bid," Scales said, noting the company also must pay for parking meter system upgrades. Jonathan Peters, an associate professor of finance at City University of New York who studies public-private partnerships, said such a risk calculation is routine. Though many aldermen griped about being given just 48 hours to review the dealwith administration officials saying it was time to pounce before interest rates went up and lowered the city payment all but five voted for it. Most viewed the deal as "a silver bullet" to the revenue shortfalls in these tough economic times, said Ald. Rey Colon (35th), who voted against it and said the city should have maintained control of the meters. "

When the deal closes, the city will get a check for $1.2 billion. Of that, at least $325 millionand as much as $649 millionwill be used to pay daily city operating expenses between now and 2012. Another $100 million would go into a "human infrastructure fund" to finance programs for the poor. Bowman said that when governments lease major assets, they should put the bulk of the revenue in reserve funds to generate income or spend it for one-time expenses, like major infrastructure projects. Peters agreed. "You don't sell your house to buy lunch," he said. "You sell it to change your lifestyle. It's a long-term asset."

Corporate policies
Definition
Usually, a documented set of broad guidelines, formulated after an analysis of all internal and external factors that can affect a firm's objectives, operations, and plans. Formulated by the firm's board of directors, corporate policy lays down the firm's response to known and knowable situations and circumstances. It also determines the formulation and implementation of strategy, and directs and restricts the plans, decisions, and actions of the firm's officers in achievement of its objectives.

Overview: Our Corporate Policies

Diversity Policy Employee Volunteer Policy Anti-Corruption Policy Satisfaction Policy Anti-Client Harassment Policy

Corporate Policies - Diversity Policy

We are committed to developing and utilizing the diverse talents and energies of all our employees. We respect our employees and all people throughout the world who are touched by our company without regard to their differences or similarities. Our actions and behaviour must demonstrate and confirm our respect for each other and each other's contributions. Our differences and similarities include but are not limited to: age and experience; culture (individual and group); economic status; education and training; gender; job level; job tasks and responsibilities; lifestyle, including marital and family status; personal style; physical and mental abilities; race, nationality and ethnicity; religion; and, thoughts and perspectives. To reinforce this commitment in our daily work, all company activities, policies, practices and procedures are to be carried out in accordance with this policy. Each employee is personally responsible and accountable for ensuring that her/his actions and behaviour reflect this policy.

Corporate Policies - Employee Volunteer Policy

We believe it is our responsibility as a good corporate citizen to help strengthen the communities in which we live and work. Consequently, we encourage our employees to become involved in their communities, lending their voluntary support to programmes that enrich the quality of life and opportunities for all citizens. The following guidelines are for L.B. Associates (Pvt) Ltd employees who serve as volunteers in community programmes that are either of personal interest or are corporate-sponsored initiatives: 1. Corporate-Sponsored Programmes, which are those programmes whose goals are considered of strategic importance to the company and for which the company has provided funding. 2. Time Away From Work, which allows employees to become involved in their communities, requires approval from management. 3. Personal Development. If community service fills a company business need and is part of an employee's development plan, the activity will be considered an objective in the performance management process. Involvement in corporate-sponsored programmes and initiatives is not mandatory.

Corporate Policies - Anti-Corruption

We simply REFUSE TO PAY BRIBES, even if it means losing a potential contract or advertisement. Statements we live and work by:
1. Prefer a loss to a dishonest gain. The one brings pain at the moment, whereas the other for all time. Thomas Jefferson 2. Work joyfully and peacefully, knowing that right thoughts and right efforts will inevitably bring about right results. - James Allen 3. Fail with honour rather than succeed with fraud. - Sophocles

Corporate Policies - Satisfaction Policy

L.B. Associates has always strived to create mistake-free publications. All publications go through three levels of independent proofreading and other scrutiny. However, since there is a human factor involved, mistakes may occur. We turn over all contracted publications in dummy form to the client for final checking prior to going to press, but mistakes may still slip past the most experienced of proofreaders. If a mistake is unacceptable - embarrassing to the client, or if it changes the meaning of the message - we have never hesitated to reprint. If a mistake occurs in an advertisement, and the mistake is unacceptable to the advertising client, we offer an additional exposure at no cost in a forthcoming publication as long as payment is received for the one in which the mistake occurred. If the client does not want an additional exposure, then money is refunded. Proper English Grammar - English is our mother tongue, but not necessarily that of our clients. We therefore apply proper English grammar where necessary. After editing, we show our corrections to the client to ensure that our interpretation does not change the actual message.

Corporate Policies - Anti-Client Harassment Policy

WE DO NOT INTRODUCE Immigration Agencies, Property Dealers, Service Providers, Employment Agencies, Travel Agents, Interior Designers, Photographers, Car Hire Agencies, Tailors or any un-named entity to our Client Base. It has been perceived that we have close relations with the Diplomatic Community of New Delhi due to our publications. And indeed we do have close relations with personnel from many diplomatic missions, but these are strictly business relationships. We developed these relationships over time through our own efforts and integrity, and not by an introduction from an outside source. We will not compromise the trust that we have earned by introducing people or agencies to our clients.