................CH-XCMYK

CHENNAI

BusinessLineMONDAY • DECEMBER 5 • 2016 15THINK

ACROSS

01. Helpful, as criticism (12)08. Not doing anything (8)09. Cease (4)11. Unseemly speed (5)12. One receiving instruction (7)13. Proboscis (4)15. Steering-gear (4)19. Ministers in o�ce (7)20. Shellfish (5)22. In the same place (abbr) (4)23. Synthetic resin (8)24. Night-time drug (8-4)

DOWN

02. Stones (5)03. Type of dog (6)04. Abuse (6)05. Concentrated (7)06. Tried out di�erent things

(12)07. Traditional British fare

(4,3,5)10. Evening-flier (3)14. Die down (7)16. Cuttlefish fluid (3)17. Remove water (6)18. Maintenance (6)21. Spirit in ‘The Tempest’ (5)

ACROSS

01. I have to build first to be ofhelp in criticism (12)

08. Doing nothing at home, I haveto follow the deed (8)

09. The point in print is to getreturn of heaps of money (4)

11. Speed with which the alterationis made, as inside (5)

12. Ran around in a backward sortof dance, he being a tyro (7)

13. Bouquet of wine onerecognises, one is told (4)

15. The elm tops being removed,this may turn craft (4)

19. This maker, skilled in joinery,might be the PM (7)

20. Shellfish that isn’t cooked in apan without a middle (5)

22. One to make an o�er in thesame place shortly (4)

23. Like beat that’s di�erent for asynthetic material (8)

24. Slumbering quietly whenunwell? It’s a knock-out! (8-4)

DOWN

02. Jewels to knock up : ring first(5)

03. The person who devisesexaminations is a dog (6)

04. Bitterly assail the Sappers -quite horrid! (6)

05. One sent packing in theNorth-east for being strained(7)

06. Had a go with Ernie, ex-PM Tedperhaps (12)

07. Original takeaway of spinachif she’s lost direction maybe?(4,3,5)

10. Flutter an eyelid for the manat the wicket (3)

14. U-boat flank will sink down (7)16. With which to write ‘family’

with the first last (3)17. It’s over-exertion for the Saint,

somehow, when about right(6)

18. Down to let go the antithesisof maintenance (6)

21. Shakespearean character thatis in early contents (5)

easy not so easy

ACROSS 1. Trusts 8. Learn 9. Puritan 11. Yearling 12. Heads 15. Tame 16. Try 17. Army 19. Twice 21. Flattery 24. Earthen 25. Deter 26. NursesDOWN 2. Rouge 3. Swindler 4. Slay 5. Alert 6. Mali 7. Snag 10. Nevermore 12. Hate 13. Tap-water 14. Byre 18. Story 20. Crete 21. Fade 22. Ante 23. Yawn

bl two-way crossword 737

SOLUTION: BL Two-way Crossword 736

This may well be a fore-taste of things to come.Even as their team getsready to take o�ce, the

US President and Vice-Presidentelect have convinced CarrierCorp., the heating and air-condi-tioning company, to reversecourse. Carrier was intending tomove a manufacturing plant toMexico for saving costs resultingin a loss of about 1,000 jobs whenthe President-elect’s team con-vinced them to remain in the US,saving all those jobs. Hurrah, Su-perman can go back into thephone booth and change!

The residents of Indiana shouldbe happy that they did the rightthing by voting for the Republicanticket. Mike Pence, the Vice-President-elect whois currently governorof Indiana, must beproud that he hasdelivered.

The papers tell usthat the details of theincentives given tothe company will berevealed very soon. We shall waitfor it with bated breath. But weneed to keep the economists awayfor that grouchy lot have alwayscomplained about the distortinge�ects of such incentives. Surveysof executives have shown thatthey give a lower priority to suchincentives as compared to labourforce, transportation and busi-ness climate factors. Other studiesshow that tax incentives may beokay to rectify market failures,and at best help in recovering in-vestment costs. Otherwise, the ef-fect of incentives to attract or re-tain investment is generallyinconclusive.

Perhaps the Trump adminis-tration can be given the WTO helpline number to call and find out ifthese incentives would be con-sidered subsidies, making a chal-lenge likely in case of exports byCarrier. Or we could refer the ad-

ministration to the on-goingApple Corp. dispute with the EUon the attractive tax advantages itinveigled out of Ireland. The EUwants the money back.

Non-economic distortions alsoabound due to such policies. Adhoc and individualised deals maymake other large employers won-der if they have to first announce amove out of the country, and thenwait for a call from the WhiteHouse dangling carrots for themto remain.

Recall the game China wouldplay with the US before it joinedthe WTO to ensure renewal of theMost Favoured Nation status? Itwould arrest a prominent humanrights activist before the renewaldate, the US would be upset andcall on China to release said per-son, negotiations would begin,and the US would successfully ob-tain the release of the activist in re-turn for renewal of the MFN

status!The Pew Global Atti-

tudes Project in a sur-vey in 2003 across 44countries found thatgenerally most peoplelike globalisation, in-cluding its manifes-tations of trade, fin-

ance, travel, communication, andculture. Support for free marketswas higher at that time in the highincome countries.

I‘m sure a similar survey donenow will show less support fortrade in the developed world. Butpeople are conflicted when itcomes to such choices. For in-stance, in 2003, although peoplesupported free markets, they didnot want large ine�cient enter-prises to shut down due to loss ofjobs.

This is why we elect leaders whohave a vision for the future, and ex-pect them to tell us the bad newsand guide us down a di�cult pathto a better future. The variety weseem to have elected in the USwould prefer to give us fish todaythan teach us how to fish.

The writer is a professor at Suffolk

University, Boston

Hard labourThe real cost of retaining jobs in the US

C GOPINATH

AMERICAN PERISCOPE

december 5, 1996

Nifty co.s’ sales outpace earningsThe financial results of the companies constituting theNSE-50 index (Nifty) in the first half of 1996-97 reflect amixed performance. While their sales growth has beensatisfactory, their earnings growth has been somewhatsluggish. While the automobile and financial sectors havedone well, the core sector comprising steel, power andpetrochemicals recorded a negative growth in earnings.The consolidated 1996-97 first-half results of the Niftycompanies show an earnings growth of 10.77 per cent overthe first half of 1995-96.

US court allows resumption of Indian shrimp importsThe US Court of International Trade has allowedresumption of imports of shrimp from India, Pakistan andChina but continues a ban on shrimp import from Brazildue to inadequate protection of endangered sea turtles.The US customs service has been asked to allow entry ofqualifying shipments from those countries withimmediate e�ect. The court orders of October 8 andNovember 25, on the subject, gave a partial victory to theenvironmental organisation, Earth Island Institute, whichchallenged the State Department’s regulations governingthe shrimp imports.

Revise credit norms for IT industry, RBI toldCommerce Minister, Mr. B. B. Ramaiah, today said hisMinistry had requested the RBI to revise the lending normsto suit the special needs of IT and electronics industry.Inaugurating the IT India ’96 Comdex, the Minister saidthat the Government recognised the electronics industryas a key element in the growth of the economy and wastaking steps to help the IT industry. Tari� barriers werebeing dismantled to link the industry with global markets.

TWENTY YEARS AGO TODAY

BusinessLine

B Demonetisation may bedebated in the Lok Sabhatoday. The Speaker hasadmitted a motion on theissue under a rule that doesnot entail voting. TheOpposition had beendemanding debate under avoting rule and this hadparalysed proceedings of theLower House. Meanwhile, theissue will come up for hearingin the Supreme Court today.

B The SC will rule on the BCCIcase today.The Lodhapanel hassoughtdirectionson removalof all BCCI

o�ce-bearers. It also wants toappoint former Union HomeSecretary GK Pillai as observer.The BCCI is opposing some ofthese reforms.

B The UK Supreme Court willhear the government’s pleaagainst a court ruling that itrequires parliamentaryapproval to start the processof leaving the EuropeanUnion, a decision that couldupset Britain’s Brexit plans. Ifthe SC dismisses thegovernment appeal, it couldderail Prime Minister TheresaMay’s timetable for leavingthe EU.

B LG will launch its new V20premiumsmartphonein India. TheAndroiddevice waslaunched inSan

Francisco in September. Withthe mobile division reportinga fifth straight quarterlyoperating loss in April-June,LG has big hopes on the V20.

B Goa will launch the YuvaSanchar Yojana scheme.Under the scheme, thegovernment will provide freetalktime and internet data tothose between 16 and 30 yearsold. The State Cabinet onNovember 25 had approvedthe programme which is inline with the Digital Indiainitiative of the NarendraModi government.

B BASKAR / VINAY KAMATH

US President-elect DonaldTrump seems to view In-dia favourably and thefact that he has busi-

ness interests in India willstrengthen bilateral ties. But thehostility of his electoral base toimmigration and freetrade could muddy thewaters, says EswarPrasad, Tolani SeniorProfessor of TradePolicy and professor ofeconomics, Cornell University, US.Prasad’s latest book, Gaining Cur-rency: The Rise of the Renminbi waspublished last month. In an e-in-terview, Prasad spoke on Trump’seconomic agenda and demonet-isation in India. Excerpts:

How has the academic

community in the US reacted to

Trump’s shock victory?

This was certainly unexpected inmost quarters. Many inside andoutside the academic communityare still mentally adjusting to thenew reality — and only very slowlycoming to terms with it! There arewidespread concerns about someof the divisive rhetoric espousedby Trump during the electioncampaign as well as his hostility toimmigration and traditional ap-proaches to US global leadership.However, when it comes to manyspecific policy issues, Trump hasoften been on both sides of the de-bate. So there is an apprehensivewait-and-see approach that hastaken hold in academic and finan-cial circles.

Trump has promised to revive

US manufacturing; how does he

propose to go about it?

Trump has promised to spendmore money on infrastructure, re-form the tax system, and reducebusiness regulation. If such goalsget translated into sensible policyactions, they could have a positiveimpact on US competitiveness.This would certainly help US jobgrowth, which has already been

quite robust in the last couple ofyears. But the notion of bringingback jobs that have been lost inthe manufacturing sector and inother industries such as mining isunrealistic. Weakening environ-mental regulations, labour pro-tection, and overall business regu-lation may be good for businesses

in the short run but mayultimately not be good forjob growth, the US econo-my, or for the standards ofliving of much of its popu-lation.

Will he tone down his extreme

rhetoric once he’s in office?

That is certainly the hope. That heis a pragmatic businessman isseen by some people as a positiveattribute. However, Trump’s politi-cal base may demand some ac-tions, such as protectionism orsweeping away financial regu-latory reforms introduced in theaftermath of the global financialcrisis, that could hurt growth andstability. Another notion, that mayreflect the triumph of hope overrealism, is that Trump does notowe anyone — including in hisown party — any favours and cantherefore push forward reformsmore aggressively. Policymakingis inherently messy and requirescareful attention to details, andTrump’s apparent disinclinationto gather information and evid-ence before making decisions iscause for worry.

How are Indo-US relations

especially on the economic

front likely to pan out under

Trump?

Trump seems to view India favour-ably, and the fact that he has busi-ness interests in India willstrengthen the ties. However, the

hostility of his electoral base to-wards immigration and free tradecould make it di�cult to generatesubstantive progress on buildingstronger trade and financial link-ages. A US economy that no longerprovides leadership to the worldon issues such as freer movementof goods, capital, and labourcould a�ect India and indeed therest of the world adversely.

Who in your view is likely to be

the next US Treasury Secretary?

The more important question iswhat sort of policies the nextTreasury Secretary will espouse.Now that the Republican partycontrols the White House as wellas both houses of Congress, theremay be a strong push to transformthe party platform into concretepolicies. Unfortunately, the plat-form is full of measures such ascutting taxes (especially on thewealthy), slashing social expendit-ures while increasing defencespending, gutting environ-mental regulation, androlling back financialregulation. All of thesemeasures could haveharmful long-termconsequences forthe US economy anda�ect its economic,financial, and evensocial stability, asthe benefits ofgrowth could be-come even more con-centrated while the so-cial safety net fraysfurther.

Will Trump dismantle the

healthcare system Obama

tried to build?

Trump made a cam-paign promise

to eliminate Obamacare. While ithas had many beneficial e�ects,Obamacare was in the end a messycompromise that has not “bentthe healthcare cost curve” asmuch as had been hoped for. Still,Obamacare has given over 20 mil-lion formerly uninsured peopleaccess to formal health insurance.Since the election, Trump hasmoderated his attacks on Obama-care, even going so far as to saythat some of its elements mightbe worth preserving in someform. The notion of dismantlingObamacare without a good altern-ative in place would amount toputting politics ahead of sensiblepolicymaking, especially in termsof protecting the economicallyvulnerable segments of US society.

Now, how will this affect the

dollar?

Trump’s election victory has cer-tainly generated consid-

erable uncertainty inglobal financial

markets. Thatworks to the

advantageof the dol-lar, whichremains

the ulti-matesafehaven

cur-rency. No

doubtTrump willnot easily

forego the traditional “strong dol-lar” mantra but at the same timehis emphasis on levelling the play-ing field for trade would suggestthat he wants a weaker dollar. Butof course it is ultimately govern-ment policies rather than rhetoricthat determine currency valuesand exchange rates. On that front,it is likely that the imminent in-terest rate tightening by the Fed-eral Reserve will keep the dollarstrong, especially if the Bank of Ja-pan and European Central Bankloosen their monetary policystances even more aggressively.However, the prospect of increas-ing public deficits under a Trumppresidency could hurt the dollar.

In any case, there is no seriousrival to the dollar, especially in itsrole as the dominant global re-serve currency. Hence, it is un-likely that there will be any majorcurrency realignments in globalfinancial markets as a con-sequence of Trump’s election.

Do you think the

demonetisation exercise in

India will meet its avowed

objectives?

Modi’s move is certainly a boldstrike against corruption and theshadow economy. To be e�ective,however, this measure will need alot of follow-through, particularlyin terms of reducing the pervasiverole of the Government in theeconomy.

If the immediate disruption ismanaged more e�ectively thanhas been the case so far, and ifthere is the right sort of follow-through, then any short-term ad-verse e�ects would be more thano�set by greater confidence in In-dia’s long-term economicprospects that could spur invest-ment. There could also be positivee�ects on the government budgetand on enhancing the role of theformal financial system, althoughhere again the full benefits wouldbe realised only if the Govern-ment pushes forward with tax andexpenditure reforms and clean-upof the banking system.

‘Trump can’t bring back lost jobs’

ZY“Trump’s apparent disinclination to

gather information and evidence before

making decisions is cause for worry.”

ESWAR PRASADAuthor

YZ

O

Author Eswar Prasad, however, says if Trump translates promises into policy actions, the US economy can benefit

BY THE WAY DIPANKAR BHATTACHARYA looks at people and professions