Indian Current Affairs

30.05.2011

ramkyc@gmail.com (Ramakrishna) — Mon, 30 May 2011 16:07:00 +0530

Politics & the Nation

An interesting debate on whether or not the accused should be jailed before trial and conviction

Take a look at this debate by two eminent personalities on the issue. Worth our attention.

Finance & Economy

Credit default swaps to be allowed in India

Credit default swaps, an insurance instrument partly blamed for the credit crisis and the near sinking of US insurer AIG, will be permitted in India from October with banks, primary dealers and non-banking financial companies’ participation and some strict rules to prevent abuse.
The instrument, popularly known as CDS, which promises the holder payment of money to the insured amount of bond holding in case of a default, is aimed at developing the domestic corporate bond market.
The new guidelines that will come to force from October 24, is framed with safeguards to prevent abuse of position by financial intermediaries to boost their revenues as it happened with currency derivatives that sank many small companies.
Only the market makers or commercial banks will be allowed to buy and sell credit default swaps while the ‘users’ can only buy credit protection, but will not be allowed to sell them. Users may be insurance companies, housing finance companies, provident funds, listed corporates and foreign institutional investors. RBI, which received comments from public, has built-in protection for naive and put the onus on the sellers of CDS to ensure that they educate the buyer on what they are getting into.
The users cannot hold these contracts without having eligible underlying bonds, though the market makers can buy protection without having the underlying bond. The users cannot buy CDS for amounts higher than the face value of the corporate bonds held by them.
Though credit default swaps is only allowed on listed corporate bonds, the central bank has made an exception for rated but unlisted bonds of infrastructure companies.

Some titbits relating to retail in India

It is estimated that about 40% of all farm products in India rot by the time they reach the final point of sale.
India today allows 51% FDI in single brand retail and 100% for wholesale.
The share of organised retail in India is a tiny 4% of the total, opposed to 20% in China, 30% in Indonesia and 55% in Malaysia.

India is facing a problem of plenty in respect of foodgrains

As of May 1, India’s food stocks stand at 27.8 million tonnes of rice, 31.4 million tonnes of wheat and 0.1 million tonnes of coarse grains, adding up to a food mountain twice as large as is required by official buffer stocking norms.

International

What is becoming of the Pakistan state?

Take a look at this assessment from Pervez Hoodbhoy, Professor of Nuclear Physics at Quaid-i-Azam University, Islamabad:
Now, while it is true that the al Qaeda is losing support in Pakistan, this country has become a battleground in which there are several contending jihadi groups. Some are pro-Saudi and pro-Pakistan, like the Lashkare-Toiba, Jaish-e-Muhammad, and Hizbul Mujahideen. Others, like the Tehreek-e-Taliban and the Al-Qaida, are fully engaged in fighting the Pakistani and Saudi establishments. Still others, like the Lashkar-e-Jhangvi and Sipah-e-Sahaba, are largely focused upon killing Shias. In the Federally Administered Tribal Areas, there are many more groups, some of which are more criminal than ideological. It is a terrible mess. Clearly, Pakistan is becoming a dangerous place for many groups. It is most dangerous for Ahmadis, followed by Hindus and Christians. But even for Shias, who had initially been enthusiastic about Islamisation of Pakistan, things have become very difficult. Pakistan has slowly turned into a religious extremist country, although there are still islands of tolerance left here and there. This is the direct consequence of the Pakistani state's desire in earlier decades to breed militancy within its borders.

Language Lessons

hoity-toity: Adjective

Affectedly genteel
eg: The staff found it difficult to deal with the hoity-toity snooty clients.

hoi polloi: Noun

The common people generally

16.05.2011

ramkyc@gmail.com (Ramakrishna) — Mon, 16 May 2011 21:16:00 +0530

Finance & Economy

The case for deregulating savings bank interest rates

Savings bank (SB) deposits interest rate is the only regulated rate and has remained unchanged at 3.5% since March 1, 2003 even as the RBI’s policy rates have moved up and down over time.
Savings deposits account for about 13% of financial savings of the household sector. Presumably, deregulation will improve monetary transmission. In the present context, it will raise both real and nominal rates. It will also encourage product innovation as banks will try to compete, not only on rates, but also on product design as, for instance, by offering differentiated rates depending on the size of the deposit (something they are not allowed to do at present).

Is there a compelling opportunity for India from China?

You must take a look at this interesting op-ed from Manish Sabharwal. It discusses the issue at great length and very convincingly at that. A must read.
Some interesting statistics that he reels out in his article for buttressing his argument deserve a look from us:
Five labour market megatrends that can reward politicians:
The demographic dividend (one million people joining the labour force every month), the increasing unviability of agriculture (56% of our people produce 18% of our GDP), the high incidence of poverty among the self-employed (50% of the labour force), the stagnation of organised employment (8% of the labour force) and the low share of manufacturing employment (12% of the labour force).
India accounted for only 1.8% of global manufacturing value added (MVA) last year versus China at 23.3%. Our per-capita productivity was a disappointing $107 versus China at $842.
Budget 2011 plans a new manufacturing policy that aims to raise the share of manufacturing in GDP from 16% today to 25% in 10 years.

Trends: Users snap deals on discount sites

You would have most probably heard or experienced group buying by now.
Collective buying through the Internet, originally started during the dot-com boom, took off in late 2008 when startups such as Groupon and Tippr offered discounts on small local businesses in US cities. Since then it has become a rage. Today, there are more than 500 group-buying sites worldwide. Internet giants Google and Facebook recently entered the field with Google Offers and Facebook Deals.
Some other sites that enable group buying include: mydala.com, snapdeal.com, taggle, deals and you, sosasta.com, groupon, and tippr.
If you want to check them out, Google for them and explore. This graphic will help you more.

Is moving to a consumption based economy good for India?

No, says Chandran Nair, an Indian origin Malaysian based out of Hong Kong, who shot to prominence with his concept of ‘constrained capitalism.’
His world view deserves our attention and thanks to ET, we have this very well conducted interview. Take a look. Shouldn’t miss this.

International

IMF Chief Strauss Kahn arrested in a sexual assault case

Dominique Strauss-Kahn, the head of the International Monetary Fund and a potential candidate for the French presidency next year, was charged with attempted rape and a criminal sex act on a woman in a New York hotel.
The charges stem from an incident that allegedly occurred on Saturday against a 32-year-old female at a Sofitel hotel in midtown Manhattan. The alleged victim is a maid at the hotel.
Strauss-Kahn was arrested aboard an Air France flight at John F Kennedy airport. Strauss-Kahn, 62, denies the charges and will plead not guilty, according to reports.
Strauss Kahn is a leading contender for the post of French President.

Language Lessons

egress: Noun

(astronomy) the reappearance of a celestial body after an eclipse; The becoming visible; The act of coming (or going) out; becoming apparent
Verb: Come out of

claque: Noun

A group of followers hired to applaud at a performance

conurbation: Noun

An aggregation or continuous network of urban communities

outre: Adjective

Conspicuously or grossly unconventional or unusual

14.05.2011

ramkyc@gmail.com (Ramakrishna) — Mon, 16 May 2011 10:49:00 +0530

Politics & the Nation

Some very good commentary on the Allahabad High Court's judgement on Ayodhya dispute

Yet, the Allahabad High Court tried to clothe a compromise as a form of legal resolution, relying on faith as actionable evidence and doing damage, in the process, to the law and to vital political values. It is necessary and sufficient that the Supreme Court should undo this damage done by the high court. If it can delineate the boundaries of judicial action and leave needed further resolution to the political process, that would be what is required.

What is the best way to compensate the landowners from whom land is taken away for urbanization needs?

While it is true that there is no one ideal solution, what ET suggests in its editorial today is worth our attention:
A viable form of stakeholdership is to transfer ownership of the land in question to a special purpose vehicle (SPV) in which half the ownership is vested in the original owners of the land, while the other half vests with the project developer. The project could pay the SPV lease rentals that reflect the commercial value of the new activity coming up on the land, offering landlosers a steady, certain stream of income. The value of the SPV’s shares would increase as the land rises in value over time and the erstwhile farmers would share in the upside. Further, the landlosers could be organised into production units that deliver assorted services to the new project, adding to their incomes. These should be an integral part of the project.

Supreme Court rules out corrective action in Bhopal gas case

The Supreme Court has refused to change its mind about a 1996 judgment and allow stricter punishments for seven corporate executives convicted for their role in the world’s worst industrial disaster.
Dismissing the curative petition filed by the CBI, it observed “No satisfactory explanation is given to file such curative petitions after about 14 years from 1996 judgment of the Supreme Court.”
In 1996, the Supreme Court diluted the charges against the accused from culpable homicide not amounting to murder to criminal negligence.

Finance & Economy

What went wrong with Economics and Economists?

You must read this op-ed by Bradford Delong. It tries to answer this question in the context of the recent financial crisis that the globe had witnessed. A very interesting read.

Know what is ‘middle income trap’?

This refers to countries that have grown out of poverty and can no longer compete with low-cost producers, but cannot also make the leap to an advanced economy. ADB says that many Asian economies are in danger falling into this kind of trap now.

Managing farm inventories

Today, about 60% of the produced wheat enters the market as marketed surplus. Hence, of the 84 million tonnes, about 50 million tonnes enter the market. About half of this is absorbed through the procurement process by the government, thus leaving just 25 million tonnes for private traders.

International

Personality

Haruhiko Kuroda: Is the President of Asian Development Bank

Is a Lehman moment immanent in Greece?

Many an expert is speaking of a possible “Lehman moment” — a shock so severe that it would cause banking crises and domino bankruptcies throughout Europe -- for Greece.
The fears are genuine. Greece’s debts are officially forecast to hit 159% of GDP in 2012. Sustaining such a burden would require so much austerity that the economy would be crushed for years. Though the country is supported by a 110 billion-euro European Union/International Monetary Fund programme, it is only funded until early next year, and will need to raise 27 billion euros in 2012. The logic for restructuring is compelling because with every month that passes, more bailout money gets used to pay off private debt, helping those who lent to it foolishly at the expense of taxpayers in other countries.
But how to prevent a restructuring becoming a Lehman moment?

First, haircut Greece’s debt by about 40%, so that its peak borrowings are just under 100% of GDP. This will help maintain pressure on the Greek government to go ahead with a privatisation programme that could cut the ratio by another 20 points. It will also serve as an incentive to further reform.
Second, recapitalise the Greek banks. A failure to do this would destroy the country’s financial system and cause depositor runs elsewhere.
Third, recapitalise weak banks elsewhere as soon as the latest Europe-wide stress tests are published next month.
Finally, provide banks with medium-term funding if they can’t raise money in the market.

Language Lessons

cloying: Adjective

Overly sweet;
Verb: Supply or feed to surfeit; Cause surfeit through excess though initially pleasing

praxis: Noun

Translating an idea into action
eg: The EC might, during polls, do a good job of keeping parties and candidates on a leash to end the prevalence of practices like sops-for-votes or plain intimidation, but changing the wider political praxis calls for a re-envisaging of how politics is conceived of, and practiced.

Cry havoc and let slip the dogs of war: Idiom

The military order Havoc! was a signal given to the English military forces in the Middle Ages to direct the soldiery (in Shakespeare's parlance 'the dogs of war') to pillage and chaos.
The term is the predessor of 'play havoc' (with). This is now more common than 'cry havoc' but has lost the force of the earlier phrase - just meaning 'cause disorder and confusion'.

02.05.2011

ramkyc@gmail.com (Ramakrishna) — Mon, 2 May 2011 15:38:00 +0530

Finance & Economy

Should savings bank interest rates be de-regulated?

The savings bank (SB) deposits interest rate is the only regulated rate and has remained unchanged at 3.5 % since March 1, 2003 even as the RBI’s policy rates have varied. The RBI is reportedly toying with the idea of de-regulating SB interest rates. It is interesting to note in this connection that SB deposits account for about 13% of financial savings of the household sector and for 22% of total deposits of scheduled commercial banks.
Deregulating the SB interest rate could enhance asset-liability mismatches, as banks treat a large part of these deposits as ‘core’ deposits and use them to make long-term loans. The share of term loans increased over 2000-09 even as the share of term deposits came down, suggesting maturity mismatches have increased.
The other consequences of deregulation are more competition and volatility. More competition is good and volatility is part of the game.

Some banking stats

Currently, India has 89 scheduled commercial banks— 27 public sector banks, 31 private banks, and 31 foreign banks. Together they account for about 53,000 branches and 17,000 ATMs.

PSU aided SWF in the works

A government panel is considering forming an investment fund bankrolled by state-run companies to help India acquire large natural assets abroad.
The committee of secretaries, which has members from various ministries, department of public enterprises and the Planning Commission, will discuss the composition and size of this fund later this month.
Large state-run companies have huge free cash. Coal India, for instance, could have as much as $10 billion at the end of the 2010-11 financial year.
The finance ministry is also not averse to the idea of setting a sovereign wealth fund given that India’s foreign exchange reserves now stand at about $300 billion. Last year, the government had abandoned its proposal for a $5b sovereign wealth fund, or SWF. Such funds invest globally and are usually funded by foreign exchange assets.
China has aggressively backed its companies in their attempt to acquire natural assets abroad. It has a $300-billion sovereign wealth fund, China Investment Corp.
At present, there are around 50 sovereign wealth funds managing assets worth nearly $3 trillion, the most notable ones being from Singapore, Kuwait and Norway.

Language Lessons

bromide: Noun

A trite or obvious remark; Any of the salts of hydrobromic acid; formerly used as a sedative but now generally replaced by safer drugs
eg: Despite rhetorical bromides about requiring “ministers to unlearn ingrained habits and focus on substance, not rhetoric,” and about “business associations engaging with the granular detail of what companies want”, this proposed Plan B would strengthen the bilateral and regional trade initiatives that have diverted energy and attention from Doha and the WTO.

landau: Noun

A four-wheel covered carriage with a roof divided into two parts (front and back) that can be let down separately

straight as an arrow: idiom

Honest, genuine

29.04.2011

ramkyc@gmail.com (Ramakrishna) — Fri, 29 Apr 2011 12:15:00 +0530

Politics & the Nation

PAC does not endorse MM Joshi's draft report on 2G scam

The United Progressive Alliance on Thursday prevented the adoption of the draft report on 2G spectrum allocation scandal by Parliament’s Public Accounts Committee by managing the support of the Samajwadi Party and the Bahujan Samaj Party in the committee. The PAC meeting which witnessed unprecedented scenes — heated arguments, adjournments and even ‘expulsion’ of Chairman Murli Manohar Joshi by members belonging to the UPA and supporting parties — pointed to the worsening of relations between the ruling side and the Opposition.
Although the meeting did not adopt the report, there is room and precedence for Joshi to present the report to the Lok Sabha Speaker. The rules of PAC allow the chairman to present the report after conclusion of discussions and circulation of the report among panel members. What could also strengthen the hands of Joshi is a precedent set by former PAC chief Buta Singh. In 2004, Buta Singh tabled a report on the coffin scam without even perfunctory discussions with panel members. It would be interesting to watch how Speaker Meira Kumar responds if Joshi decides to present the report on Friday.

Finance & Economy

Percentage of people filing IT returns in India

It is just 3%.

On the status of women and undernourishment in children in India

India is home to about a third of the world’s underweight and stunted children under the age of 5.
What explains undernourishment in children of this age group (even in children from well to do families) in India?
Surveys suggest that this has got to do with our traditional social and cultural values and practices that hurt the health and welfare of our children.
In India, a third of the children have low birth weight. A child’s birth weight is an indicator of the health and nourishment of the mother when she is pregnant as well as her overall health and nourishment as a child and while growing up.
Only a third of the breast-fed children aged 6 to 9 months receive complementary foods in India. This results in retarded growth. Most of the retardation in the growth of the child in India occurs either during the pregnancy or during the first two years after birth.
A sustained long-term dent in child undernourishment can only be achieved by improving the health, opportunities and rights of the mother, the primary caregiver of children. Not just legislative rights but rights to participate in decision-making both at home and outside it, opportunities for social interactions, rights to improve their lives through education and employment.
The historical pattern of the state and status of women in India reveals that it is largely unrelated to economic growth. Let’s look at sex ratio — a number that has been much discussed since the release of the provisional 2011 census results. At 914 women per 1,000 men, the sex ratio at birth is the lowest since Independence.

Debate on banning endosulphan

We have noted about this raging controversy a few days earlier too. Today’s face-off has a good debate and presents two contrasting views on the subject. Well worth our attention. Take a look and draw your own conclusions.
In this context it is interesting to note what POP stands for. Persistent Organic Pollutant. If a pesticide / insecticide is declared as POP under the Stockholm Convention, then the signatory countries to the Convention ban the item.
The Stockholm Convention was adopted in 2001 and entered into force in 2004. It requires Parties to take measures to eliminate or reduce the release of POPs into the environment. The Convention is administered by the United Nations Environment Programme and is based in Geneva, Switzerland.
Meanwhile it is reported that India has agreed to phase out endosulphan at the ongoing meet in Geneva of the Stockholm Convention. This means endosulphan will be listed in Annexe A of the Stockholm Convention on Persistent Organic Pollutants but exemptions will be allowed for crop-pest combinations. It will allow India to continue to use this broad spectrum pesticide.
Chemicals listed in the Annex A of the Convention are banned for production and use due to the threat they pose to living beings, particularly the environment.
This will not come as good news for the Left parties or the Kerala government, both of which have been actively seeking an immediate nation-wide ban on endosulphan.
All exemptions sought by India have been accepted. The listing in the Annexe will take one year to be effective, and the exemptions are valid for five years, with the provision for renewal for another five years. Thus, making the time-frame for the global phase 11 years.

International

Some of the quirky commemorative days that the US follows

National Pretzel Day (April 26)
National Potato Chip Day (March 14)
Pizza Day (February 9)
Hamburger Day (December 21)

Pak favouring MFN status to India?

India and Pakistan announced a path-breaking blueprint to spur trade between the two nations at the end of a two-day meeting of the commerce secretaries of the two countries on Thursday in Islamabad.
Pakistan said it would take immediate steps to ensure that non-discriminatory trade regime is operationalised at the earliest.
India has been seeking MFN status from Pakistan for a long time, which would lead to the country getting the same treatment as other countries in terms of allowing exports. Pakistan so far has been allowing exports from India on the basis of a small positive list of items instead of trading the normal way using a negative list of excluded items. Pakistan said it will move to a system of trade-based on negative list as opposed to the current positive list.
India has already given the MFN status to Pakistan, allowing trade to be done on the basis of a negative list. Pakistan said consultations with business chambers have already begun on replacing the positive list with a negative list and the process would be concluded by October 2011.
The two countries will also set up groups of experts for expanding trade in petroleum products and to enable trade in electricity.

27.04.2011

ramkyc@gmail.com (Ramakrishna) — Wed, 27 Apr 2011 12:45:00 +0530

Politics & the Nation

Government to go ahead with Jaitapur nuclear park

The Centre will go ahead with the 9,900 MW Jaitapur nuclear power park in Maharashtra. A high-level meeting convened by Prime Minister Manmohan Singh on Tuesday decided to set up an autonomous Nuclear Authority of India to address people’s safety concerns.
The proposed Nuclear Regulatory Authority will be an autonomous body answerable to Parliament. It will subsume the Atomic Energy Regulatory Board. The government will introduce a Bill to this effect in the monsoon session of Parliament.
The meeting also decided to provide a higher compensation for displaced people.
Following the Fukushima disaster, there have been apprehensions about the safety of nuclear plants and this added fuel to protests in Jaitapur. The meeting acknowledged the need for better safety standards and decided to put each of the six reactors at Jaitapur under their own operations system. Government leaders said the operational safety review team of the International Atomic Energy Agency will be invited to conduct safety reviews and audit of all nuclear plants.
At present, India operates 20 small nuclear reactors at six sites with a capacity of 4,780 MW, or 3% of total power capacity. It hopes to increase nuclear capacity to 7,280 MW by next year, more than 20,000 MW by 2020 and 63,000 MW by 2032, adding nearly 30 reactors.

Justice PD Dinakaran moves SC to stay probe against him

Sikkim High Court Chief Justice PD Dinakaran has asked the Supreme Court to stay an inquiry against him by a Parliament-appointed panel.
The panel, appointed by the Rajya Sabha chairperson Hamid Ansari after the House initiated impeachment motion against him, had asked Dinakaran to respond to the 16 charges framed against him. The panel is examining charges of corruption, land grabbing, abuse of judicial office and amassing wealth disproportionate to known sources of income against Dinakaran. The three-member panel headed by Justice Aftab Alam of the SC, Karnataka High Court Chief Justice JS Khehar and senior advocate PP Rao had rejected Dinakaran’s plea seeking stay on proceedings till he is supplied with all documents being looked into.
Dinakaran sought quashing of the panel’s order, which rejected his appeal, seeking recusal of PP Rao alleging that he was biased. Dinakaran had said he apprehended that there was likelihood of bias in the proceedings as Rao had earlier campaigned against him when his elevation to the SC was under consideration.
Charges against Justice Dinakaran, who is due to retire on May 9, 2012, were levelled when he was Chief Justice of the Karnataka HC. He was subsequently transferred to the Sikkim High Court.

The only Indian Prince who has been invited to the Prince William and Kate wedding

Raghav Raj Singh, the current maharajsahib of Shivrati, a jagir in the former princely state of Udaipur, is the only Indian aristocrat to be invited to the wedding of Prince William and Kate Middleton in London on Friday.
He is a good friend of Prince William. Singh, a Sisodia Rajput, has played with William at the famed Cirencester Park Polo Club and Windsor Polo Club, both favourites of the Wales brothers.
Wearing a resplendent traditional Mewari sherwani and colourful headgear, he will stand out among the grey morning suit clad men in the congregation. His wife, Shelja Kumari, from the thikana of Umaidnagar in Jodhpur, draped in a classic sari favoured by Indian nobility and heirloom family jewellery is equally likely to stand out.
An alumnus of Mayo College, Ajmer and St Stephen’s, Delhi, Singh did a stint at Cheltenham College in Gloucestershire as an exchange , which should come in handy for his future foray into healthcare and wellness segment in Rajasthan and Delhi.

Finance & Economy

Is it the right time to allow export of food grains?

Yes, argues today's ET editorial. Look at its reasoning:
First, India’s stockpile of foodgrains is now around 45 million tonnes, double the buffer stock that is mandated for food security. A bumper harvest is forecast, after which the government will add another 25 million tonnes to this pile.
Second, the government and its main procuring and stocking arm, the Food Corporation of India (FCI), have proved that they cannot handle such large food stocks. In many places, grains are piled high under plastic sheets, exposed to the weather and rodents. Even after distributing rice for as low as Rs. 1 or Rs. 2 per kilogramme in states like Tamil Nadu and Andhra Pradesh, stocks stubbornly refuse to run down. It is likely that by the time the government decides to do something about this food mountain, worth around Rs. 40,000 crore, much of it would have become dinner for rats.
Three, food inflation is not being driven by foodgrains, but by the spiralling prices of vegetables, edible oil, pulses and milk. Exports of foodgrains will not add to food price inflation at home; indeed, it might help to increase farmers’ incomes.
Finally, the most compelling argument is about prices. The glut has pushed market prices of wheat to below the minimum support price (MSP) of Rs. 1,170 per quintal. Indeed, in states like Uttar Pradesh, wheat is being sold for Rs. 1,050 per quintal, a substantial discount to the MSP. In global markets, wheat is being traded at around Rs. 1,530 per quintal. So, if India lifts its export curbs on foodgrains, imposed after the food price scare last year, exporters can make a nifty profit, storage costs would come down and farmers’ incomes would go up, yielding some incentive to invest in technologies to boost productivity.

RBI fines 19 banks for selling complex derivatives to corporates

State Bank of India, ICICI Bank, Citibank and Axis Bank are among 19 lenders penalised by the Reserve Bank of India for violating currency derivatives norms and selling products to companies which did not understand them. This ends a three-year dispute between banks and small companies burnt by derivatives.
The penalty may be small, ranging from 5 lakh to 15 lakh. But the ruling was a blow to banks since it vindicated the claims of tiny companies that claimed banks sold meaningless contracts to earn fees to boost earnings.
The RBI has been scanning the derivative books of banks for more than a year and had sought information from 22 lenders about these transactions.
The RBI order vindicates the stand of corporates, some of whom had sued banks on grounds of misselling. Others had claimed that some of the contracts were contrary to law, particularly the FEMA. Already, most matters had been settled out of court with banks picking up 25-50% of the losses. This order will hasten the settlement of remaining disputes.
Banks had sold currency derivatives to allow corporates to either improve the earnings on their exports, lower the outgo on imports, or cut the interest and repayment cost on loans. The better exchange rates that such swaps and options offered always came with risks that most corporates either ignored or thought were academic — eventualities that are unlikely to materialise.
Several bets backfired when currencies like euro, swiss franc and yen surged in 2007. By late 2007 and early 2008, when corporates were asked to pay up after the markets moved against them, there was a hue and cry. Private lenders, including ICICI Bank, HDFC Bank, ABN Amro (now RBS), Axis and Kotak were sued by companies. Most cases were settled out of court.
Amid court feuds between banks and corporates, the RBI appointed an inter-departmental group to inspect the trades. The group spotted transactions where the underlier was inadequate while in some cases multiple transactions were done against photocopies of the same document that served as an underlier. In such situations derivative deals are no longer hedges, but pure currency bets.
In some cases, documents on a company’s past export performance that is used to arrive at a hedging limit was not certified by the auditor. The RBI decision will be followed by parties in the case pending before the SC.

International

Compulsory sectoral talks not acceptable, says India

India is examining the latest draft proposals circulated by the World Trade Organisation to bring to life the deadlocked Doha round of global trade talks, but will continue to oppose the US move to make participation in sectoral talks compulsory.
Disagreement between the US and large developing countries, including India, China and Brazil, over sectoral negotiations to eliminate duties on select industrial goods has been identified by WTO director general Pascal Lamy as the biggest issue blocking the progress of the round.
The US has been insisting that large developing countries should agree to eliminate tariffs on some industrial goods through compulsory participation in sectoral negotiations while the opposing countries maintain that it is outside the mandate of the Doha round.

US charges 4 Pakistan based LeT men for 26/11 attack

The US federal prosecutors have charged four Pakistanis — Sajid Mir, Abu Qahafa, Mazhar Iqbal (also known as Abu al Qama) and ‘Major Iqbal’, all from the Lashker-e-Taiba — as conspirators in the 26/11 attacks on Mumbai. The charges filed before an Illinois court on Tuesday mentions an unnamed individual, ‘Lashker member D,’ as co-conspirator.
The accused face six counts of aiding and abetting the murder of US citizens in India, and three of the conspirators named in the indictment —Mir, Qahafa and Mazhar Iqbal — have been charged with conspiracy to bomb public places in India.
The charges against the four LeT men carry a maximum statutory penalty of life imprisonment or death.

26.04.2011

ramkyc@gmail.com (Ramakrishna) — Tue, 26 Apr 2011 12:47:00 +0530

Politics & the Nation

Kanimozhi booked by CBI in the 2G spectrum case

The Central Bureau of Investigation (CBI) on Monday accused Kanimozhi, the daughter of Tamil Nadu Chief Minister Karunanidhi, and Sharad Kumar—both shareholders in broadcaster Kalaignar TV—of conspiring with former telecom minister A Raja to obtain a bribe from entities linked to DB Realty, whose telecom arm (Swan Telecom) is alleged to have received airwaves at below market prices during Raja’s tenure.
All the accused have, in the past, asserted that it was a normal business transaction. They have claimed that DB Group was looking to buy a stake in Kalaignar, but the deal fell through because of valuation differences. But the CBI has refused to accept this account. The chargesheet claims those charged could not produce any agreement or contract to substantiate their claim that the money was meant to acquire an equity stake. The agency also alleges the 'loan' was extended without any collateral. Securities were created only after the CBI registered an FIR.
Further evidence of the irregular nature of the transaction stems from the fact that DB Realty and Dynamix Realty had borrowed from IL&FS Financial Services at interest rates ranging from 13.5% to 16%. But the loan to Kalaignar TV was at an interest rate of 10%, a fact the agency claims buttresses its case that the transaction was tainted.
The money was repaid by Kalaignar between December 2010, just after Raja was questioned by the CBI for the first time, and February 2011, around the time Raja was arrested.
Kanimozhi and Sharad Kumar have been charged under sections of the Indian Penal Code (IPC) and Prevention of Corruption Act, or PCA, pertaining to criminal conspiracy to obtain illegal gratification. Raja, in this case, has been booked for allegedly obtaining illegal gratification.
The promoters of DB Realty, Kusegaon and Cineyug have been charged under a section of the PCA relating to abetting the act of obtaining illegal gratification.

Suresh Kalmadi is put behind bars

On Monday afternoon, the long arm of the law finally caught up with Pune Congress MP Suresh Kalmadi, who was arrested by the CBI for conspiring to award the contract for timing, scoring and result (TSR) system for the 2010 Commonwealth Games to a Switzerland-based company, Swiss Timing Ltd-Omega, at an inflated cost of Rs. 141 crore, causing a loss of some 95 crore to the exchequer.
For Kalmadi, who had earlier this year been sacked from the chairmanship of the Commonwealth Games Organising Committee (OC), the political fallout of the development was immediate. Anxious to limit its political cost, the Congress acted with alacrity and suspended him from the party. He had earlier been removed from the post of secretary of the Congress parliamentary party. There are reports that the former Games OC chairman may be stripped of the chairmanship of the Indian Olympic Association too.
The charge against Kalmadi and his accomplices in the OC is that they had awarded the contract to the Swiss company in a pre-meditated and calculated manner, brushing aside the claims of a competitor, MSL-Spain. The Spanish company, which had quoted a price of about Rs. 46 crore for installing the TSR project at various venues, had provided the system to the 16th edition of the Asian Games held in the Chinese city of Guangzhou last year.
The Swiss company, keen on bagging the contract, had enlisted the services of Faridabad-based company, Gem International, to win over the OC bigwigs. The CBI has collected evidence suggesting that AK Madan, the promoter of Gem International, was the main conduit between Kalmadi and the Swiss firm.
The Swiss company, it is learnt, paid Rs. 23 crore as an initial payment to Gem International for the services rendered by it. It was to pay an additional Rs. 7-8 crore to the Faridabad-based firm, but the filing of the case in the TSR scam put paid to the move.

Finance & Economy

What is the agitation about Endosulphan?

Endosluphan is is an insecticide belonging to the class of compounds called organochlorines. India is one of the largest global producers of endosulfan. It is the supplier of 70% of the world’s endosulfan needs — a market valued at $300 million (Rs. 1,340 crore). Out of the 9,000 tonnes India produces every year, half is bought by the country’s 75 million farmers, making it the world’s largest consumer of endosulfan as well.
But endosluphan is reportedly very toxic and causes lot of collateral damage. Some of the ill effects attributed to endosulphan include disease and birth defects, among humans and animals. The toxicity caused by it is stated to result in cancer, allergies and hypersensitivity, damage to the central and peripheral nervous systems, reproductive disorders and disruption of the immune system.
Though more than 80 countries have banned endosulfan our country has not yet banned endosulphan. It is not approved to be used in rice fields in several other countries. The use is severely restricted in others.
Now the agitation in Kerala against the use of endosulphan is gaining momentum. But the Centre had stated that it is not in favour any ban on the insecticide.
Let's wait for more press to roll out. Then we can think for ourselves to take a stand.

SEBI asks CCI to adopt its buyout norms

Taking note of conflicts in takeover laws, capital markets watchdog Sebi has sought alignment of norms set by the competition regulator with its own regulations.
It has written to the corporate affairs ministry and Competition Commission of India, or CCI, to address the issue and prevent chaos.
The Sebi takeover norms for listed companies make it mandatory for an acquirer, who has triggered an open offer under Sebi rules, to inform the regulator within four days the timeline of the offer. Under the rules prescribed by the CCI, the acquirer has up to 30 days to announce the details of the offer.
The regulator has also flagged the need for reconciling the time given to the acquirer to make an open offer. Under the competition law, the commission can take up to 210 days to clear an acquisition, which would mean that open offer can happen only after the clearance. Sebi’s regulations give an acquirer 55 days to complete the open offer once it is announced.
In absence of an asset transaction thresholds every asset - current assets or fixed asset - that is acquired after 1 June 2011, would have to be notified to the Competition Commission and it could also include issue of bonus, rights shares or even stock or stock-in trade.
The CCI norms also require every deal to be intimated to it even if controlling stake is not being acquired.

The new IIP to has some of the same old problems that beset the old IIP

The new index for industrial production, or IIP, that is expected to be launched soon has not enthused economists as they expect it to have one major flaw of the old index, month-on-month volatility.
The source of this volatility is largely from the capital goods segment, a flaw that the new index has not addressed.
The reason lies in the way the index has been formulated -- it takes into consideration the end product manufactured by companies, including those products that have a manufacturing cycle extending to a quarter or more.
This results in sharp spikes in months in which manufactured products reach the factory gate while equally sharp dip in other months.
These spikes and dips are not necessarily consistent with the investment or demand patterns in the economy making it difficult for analysts to exclusively rely on factory output numbers given by the IIP.
The current IIP series is based on data received from 3,900 sources. The new series will get information from around 4,800 sources and the coverage will expand to 300 items from a current 213 items. The base of the index will be revised from the current 1993-94 to 2004-05.

Investors to get emails as India Inc is set on a green drive

The government has asked corporates to communicate with their shareholders electronically in order to cut down on the use of paper. The move is part of the latest ‘green initiative’ by the ministry, but could also help companies cut costs by obviating the need for paper-based communication.
Under the Information Technology Act, 2000 service of documents in electronic mode is considered valid delivery. The ministry of corporate affairs has directed all companies to maintain a formal register of valid e-mails of all its shareholders where key communication like notices of company meetings can be sent. Currently, companies are required to communicate with their shareholders through the postal route.
The trigger for the move came from a decision of the country’s postal department has decided to discontinue their postal facility under ‘certificate of posting’ route, which allowed companies to send out bulk mails.

On self help groups

Look at this ET in the Classroom column that explains about them.

Language Lessons

adumbrate: Verb

Describe roughly or briefly or give the main points or summary of; Give to understand
eg: For instance, back in the 1950s, it was purposefully adumbrated that we were drawing up five-year plans so that...

25.04.2011

ramkyc@gmail.com (Ramakrishna) — Mon, 25 Apr 2011 13:25:00 +0530

Politics & the Nation

Sri Satya Sai Baba is no more

Sri Sathya Sai Baba, whose message of love, peace and humility, resonated with millions of people including politicians, dictators, businessmen and cricketers, breathed his last on Sunday. He was 85.
We deeply mourn the loss of this great soul which taught humanitarianism to one and all irrespective of caste, colour, creed and religion.
Baba, as he was popularly called, was in poor health for the past one month and died after multiple-organ failure. He leaves behind an enormous spiritual legacy, a wide network of charitable institutions, hospitals, schools, colleges, which some estimate to be worth about Rs. 40,000 crore, and a void in the hearts of many people who consider him to be a living god.
Sai Baba was born on November 23, 1926 in Puttaparthi, but his spiritual journey actually began 14 years later when he announced to his stunned villagers that he was the reincarnation of Sai Baba of Shirdi, who had passed away in 1918. The story quickly became legend andBaba acquired God-like status after he started performing miracles which drew enormous number of followers. Controversy ensued when rationalists and scientists questioned the basis of his miracles and his refusal to allow himself to be tested. An incident at his ashram when police killed four intruders into his room and a BBC documentary which alleged widespread incidents of child molestation at his ashram threatened to sully his image. Fortunately for him and his ashram, the controversies died down and a number of social service activities,such as free treatment to the poor through his hospitals, the education provided by his network of schools and colleges, ensured a steady growth in followers. The poor and the wealthy in India were now joined by western celebrities such as Hollywood actress Goldie Hawn, Sarah Ferguson and Hard Rock Cafe founder Issac Tigrett, who sold his iconic restaurant chain and invested the fortune in Baba’s social activities.
Ironically, the fame and fortune built up by Baba, could now prove problematic as he has died without announcing a successor to his Sri Sathya Sai Central Trust. Speculation has mounted in recent weeks that there will be bitter fight to control the fortune and that the government may step in to take over and run the trust.
In an attempt to calm such fears, the trust issued a four-page release last week detailing how it receives money and listing the names of its trustees. All the institutions are controlled and run by the central trust which has six members, including Baba as the founding trustee. In addition, the council of management of the trust has four advisors.
Dispelling rumours of any differences within the trust, the trustees who had a meeting with the governor,the chief minister and other state authorities on Sunday, assured the government that no interference was required and that the trust’s activities will continue normally without any impediment.
The AP government has already said that it is not interested in taking over the affairs of the trust, which means that the trustees and other important followers will decide on the successor and the future course of action.

Is Civil society's participation in law-making enshrined in the Constitution?

If it is, then why question Lokpal Bill drafters? This is the question that is posed by Pradeep Mehta in his article today in reaction to the articles that appeared in the Press arguing about how the law making process is being taken away from Parliament et al.
World over, including India, the civil society is engaged in law-making, which only enriches the tapestry of a participatory democracy.
Drafting a law is the duty of the executive either suo moto or under an international treaty obligation or when Parliament directs it. This is done through a consultative process to get views of all sections. It is the organised civil society that inputs in the process sometimes as part of a committee or through memoranda and/or hearings. Mass movements, like the one launched by Hazare, too work as catalysts and input providers. The civil society typically comprises of business chambers, trade unions, professional associations and non-government non-profit organisations (NGOs). On all economic legislations, whether new or amendments, often all the four actively participate in the formulation depending on their interest. Business chambers are best endowed in advocacy but the others, including NGOs, are also able to make their views heard. Indeed, it is the legislature that takes the final call, and that process cannot be usurped by any other process, except in cases where international treaty obligations reduce the space, like WTO agreements or UN conventions. In fact, the parliamentary standing committee system practised in India and other countries invite views of the civil society and citizens on Bills that come up for discussion before being sent back to the House for being adopted. The process does not end there, as the government keeps the power of notifying the law in full or parts, depending on the influence of the vested interests.
Take a look at Article 51A of the Constitution. It says that the fundamental duties of citizens as, inter alia, to develop scientific temper, humanism and the spirit of inquiry and reform; and to strive towards excellence in all spheres of individual and collective activity so that the nation rises to higher levels of endeavour and achievement. This is the article which enshrines the participation of civil society in the law making process of the country.

Finance & Economy

GHMC and OSRT

Read this op-ed by Sameer Sharma in full. Worth a read.
It explains how GHMC (Greater Hyderabad Municipal Corporation) has successfully deployed the ubiquitous mobile phone cameras as a tool for improving efficiency of the municipal workers. They have come up with an innovative usage of the cameras for creating an off-site raltime data (OSRT) for the purpose.
Some research stats btw that will be of interest to us:
Jensen, an economist from Harvard University, has found that access to mobile phones had increased fishermen’s profits in Kerala by 8% and brought down consumer prices by 4%. Additionally, studies by Leonard Waverman (London Business School) and Christine Zhen-Wei Qiang (World Bank) have found that a 10% increase in mobile phone adoption in developing countries increases GDP growth by 0.8%.

On boosting manufacture in India

This is a very good article that has some concrete ideas on the subject. Well worth our attention. Some excerpts for us:
To boost manufacturing, two policy areas deserve attention, in addition to infrastructure, skills and the ease of doing business — restricted FDI in retail and undirected government procurement.
The condition of value addition within India for FDI in multi-brand retail can act as a fairly effective instrument for giving a push to globally-competitive manufacturing.
Public procurement is the other lever that can be used selectively in strategic areas to create manufacturing capability. One instance where this approach is being tried is the bulk tender for super critical thermal power plants by NTPC with the condition that the successful bidders should do manufacturing in India.
Another example is the solar mission. The guidelines stipulate that in the first year modules and in the second year, modules and cells should be made in India for plants being put up by private developers.
The policy of defence offsets is another policy instrument for leveraging government procurement.
There have, of course, been enormous benefits from global competitive tendering and this should continue to be the norm.
The one area where we have surely missed the bus in leveraging our humungous business potential to nurture local manufacturing is telecom sector.

The status of Casinos in India

While Sikkim and Goa permit gambling and casinos, union territory of Daman plans to have casinos soon. Sikkim has one casino and has issued letter of intent for one more. Goa has seven offshore casinos operating on vessels and more than a dozen onshore casinos housed in the numerous five-star resorts.
There is no law anywhere in the country that regulates casino culture. In the absence of that, the activity is regulated through executive orders that create uncertainty. Though Sikkim government had enacted a law in 2008, it has to amend it in line with the deficiencies pointed out by FATF (Financial Action Task Force) that recently reviewed India’s money laundering laws.
In what may bring to an end the legal uncertainty around casinos, the centre has asked states to put in place a clear and transparent regulatory framework for gambling and other gaming activities.
The centre has told the states that the legislative framework should provide for a regulator or a commission too. The regulator would also be empowered to issue licences to casinos.
The centre is keen that the legal framework is put in place at the earliest. The urgency to implement comes after the Financial Action Task Force (FATF), a global agency to monitor illicit flows, pointed to the uncertainty regarding regulation of casinos.
The FATF had pointed out that the current regulations did not provide for the statutory fit and proper tests for owners, operators and managers of casinos. Doubts have also been expressed about the authorities, in current situation, to enforce compliance with antimoney laundering rules.

Companies use LLPs as tax smokescreen

Corporates are masking their true identities to jump regulatory hurdles and form holding entities that help them lower their tax burden.
Promoters of at least 30 companies have formed limited liability partnerships (LLPs) by suppressing the information that the newly-floated LLPs would serve as group investment companies — a disclosure that would have called for a no-objection certificate from the Reserve Bank of India (RBI). Instead, they have tweaked the object clause to claim that the LLPs are into businesses like consultancy and broking — a simple manipulation that quickens clearance from the registrar of companies (RoC), the final authority that approves the formation of an LLP.
In 2008, Indian businessmen were allowed to form LLPs, an internationally followed tax-efficient structure that is spared of dividend distribution tax and minimum alternative tax (MAT) on gains from sale of shares. Though the new law was aimed at making life easier for smaller businesses and such ventures as law and audit firms, there was nothing to prevent business houses from converting their investment companies into LLPs.
But when businesses houses applied for such conversion, the RoC insisted on a noobjection certificate from the central bank. Most companies hit a wall as RBI was unwilling to comply with their requests. The banking regulator is keen to monitor corporate investment firms just as it keeps an eye on non-banking finance companies. And allowing them to transform into LLPs would mean losing control over these firms.
Now, corporates have found a way out. An entity that claims to be carrying out consultancy is not required to approach RBI. Since its business is unrelated to activities like share investment, banking, insurance and finance, it can directly approach RoC. An entity that attains LLP status by falsely declaring consultancy as its main business activity is subsequently capitalised by the partners to buy out the shares that is held by the original group investment companies.
However, the possibility of RBI coming out with new rules to stop LLPs from bypassing it is not being ruled out, more so, given its intentions to monitor investment companies. A year ago, RBI announced new rules which meant that group holding companies and investment firms would have to get themselves registered with RBI, fulfil certain criteria and share information on a regular basis. Amid corporate lobbying, the rules were later diluted to an extent to exclude investment companies which do not raise funds. But finance professionals said that even the diluted rules would cover a significant number of companies.

International

India to export petro products to Pakistan

The thaw in relations between India and Pakistan, which started with cricket diplomacy at Mohali last month, could soon see India exporting petroleum products to its neighbour.
India, which has surplus refining capacity, has agreed to export fuels such as petrol and diesel to Pakistan to help the neighbouring country meet its fuel shortfall and open up a new market for large refineries of Reliance Industries, Essar Oil and a new unit in which the LN Mittal Group is a co-promoter.
India imports about three quarters of the oil it consumes, but its refining capacity has expanded rapidly, making it a key player in the international market. Exports of refined products have risen to 51 million tonnes in 2009-10 from 746,000 tonnes in 1999-2000 according to government data.
Commerce secretaries of the two sides are meeting in Islamabad on April 27-28 to renew trade ties between the two countries, which have been at a standstill since November 2008 after the Mumbai terrorist attack. The acrimonious relations between the two neighbours eased last month when Prime Minister Manmohan Singh and his Pakistani counterpart Yusuf Raza Gilani watched the India-Pakistan World Cup semi-final together at Mohali. The two countries have fought three wars since both attained independence in 1947, besides a major skirmish in Kargil between May and July 1999.
Indian officials said increased trade inter-dependence would force the two nations to keep friendly relations, and India was in a position to meet Pakistan’s fuel demand. Pakistan has about 12-milliontonne refining capacity, which meets only half of its annual requirements, while India exports about 25% of its 185-million-tonne refining capacity.
Talks between India and Pakistan to start trade of petroleum products were initiated in 2005 by the then oil minister, Mani Shankar Aiyar, who favoured diesel supply to the neighbour. India had exported some petrochemicals such as PTA and LOBS to Pakistan through the sea route.

Language Lessons

nary: Adjective

(used with singular count nouns) colloquial for 'not a' or 'not one' or 'never a'
eg: So there is nary a protest here at special rules for VIPs …

curmudgeonly: Adjective

Brusque and surly and forbidding
eg: "his curmudgeonly temper"

cogitate: Verb

Consider carefully and deeply; reflect upon; turn over in one's mind; Use or exercise the mind or one's power of reason in order to make inferences, decisions, or arrive at a solution or judgments

23.04.2011

ramkyc@gmail.com (Ramakrishna) — Sat, 23 Apr 2011 16:53:00 +0530

Politics & the Nation

More criticism about the anti-corruption agitation led by Anna Hazare

Take a look at this op-ed in today’s ET by Kuldeep Kumar. While this is pointed out to you to know the counterpoint, you have to draw your own conclusions.

India’s influential in Time 100

Take a look at this. Five Indians figure in the top 100 influential people in the world. Dhoni beats them all hands down with his top ranking.

Narendra Modi will surely have some explaining to do

Look at this report. It says that a senior IPS officer, Sanjiv Bhatt, had stated in his affidavit that Modi had issued instructions to Police to the effect that Hindus be allowed to express their anger against Muslims for the Godhra carnage.

Finance & Economy

Buoyant tax collections

The Centre’s tax collection for 2010-11 has reportedly exceeded the revised estimates by about Rs. 12,000 crore to hit Rs. 7.92 lakh crore.

Some coarse grain related statistics

From the 1970s, as government policy, pricing and procurement heavily favoured wheat, rice and sugarcane, farmers took the rational decision to grow more and more of these, so land under coarse grains shrank rapidly: falling by as much as 1.3% every year through the 1980s, and by 0.76% every year through the 2000s.

About dedicated freight corridor

The Rs 77,000 crore dedicated freight corridor project, scheduled to be built by 2016/17, is expected to ease infrastructure bottlenecks and boost industrial development and international trade as existing railway lines in these regions are running up to 50% more than the designed capacity. The choked railway lines have encouraged a rapid shift to road transport from railways. The National Highway Authority of India's plan to expand the Delhi-Mumbai highway to six lanes would accelerate the shift of cargo from goods trains to trucks, but the new freight corridors are expected to reverse the trend as the railways would be able to offer faster and cheaper transportation.
Look at this graphic for some more details of the project.

Chairman PFRDA

Is Yogesh Agarwal.

Banks betting big on consumer loans

Bank credit to consumers for personal consumption has increased 12.6% to ` 1,17,919 crore as on February 25, 2011, from 1,04,715 crore a year earlier, RBI data show. Loans outstanding on credit cards increased to 6,212.92 crore at the end of February 2011, from 4,923.11 crore a year ago. Credit card spend increased 26.9% in the same period. Industry estimates show average monthly spending on cards averaged 3,000-3,900 this year, up from 2,200-2,400 last year.
Banks are returning to consumer lending after getting hurt during the credit crisis when many customers defaulted. But this time things appear to be different, with better credit information and banks avoiding third-party salesmen who did not do their due diligence.

Language Lessons

doppelganger: Noun

A ghostly double of a living person that haunts its living counterpart

morass: Noun

A soft wet area of low-lying land that sinks underfoot

mirth: Noun

Great merriment

20.04.2011

ramkyc@gmail.com (Ramakrishna) — Wed, 20 Apr 2011 14:03:00 +0530

Finance & Economy

Should licensing period for telecom companies be halved?

Here is a very good debate that is well worth our attention on the issue. Interesting.

First principle on FCNR accounts

Banks allow non-resident Indians to open FCNR, or foreign currency nonresident accounts. An FCNR account is maintained only in term deposit. The account can be maintained only in pound sterling, US dollar, euro and the Japanese Yen. The deposit is accepted for a period not below six months and not above three years. Remittances from abroad are made in foreign currency, in which the account is desired to be maintained. The balances and the interest on this account are exempt from tax. The exchange rate risk is borne by the bank. Repayment of deposit and interest thereon are allowed to be repatriated without any loss due to exchange rate fluctuations for the depositor.

Reflecting pension liabilities and profitability of state run banks

State run banks reportedly are about to take about a Rs. 4,000 cr hit this fiscal with the RBI directing them to provide for the pension liabilities of their retired staffers in the balance sheet for FY10-11.
Banks had made out a case to RBI to amortise the pension liabilities over the next five years to ease the strain on their books. But the regulator does not appear to be convinced by their argument and directed that lenders would have to set aside funds for their pension liabilities in one shot rather than spreading it out.
In February, RBI allowed banks to amortise pension liabilities for serving employees over five years. However, in the same circular, the central bank stated that all amounts relating to retired employees need to be provided in 2010-11 itself. Following this, IBA requested RBI to allow banks to amortise the pension liabilities of retired employees as well.
While rejecting the proposal, RBI told the banks that the norms cannot be eased as in its view, banks should have anticipated the impact and were even aware of these liabilities during wage negotiations. The total pension liability for serving and retired employees was estimated at Rs. 20,000 crore. However, since money needs to be set aside for only those retired employees who had opted for the pension scheme, the impact on the bottomline could be much lower at around Rs. 4,000-4,500 crore.

Lt. Governor of Puducherry to be questioned by ED

The Prime Minister’s Office has cleared an Enforcement Directorate request to question Puducherry Lt Governor Iqbal Singh for facilitating issuance of passport to Pune-based businessman Hasan Ali Khan who faces charges of laundering black money.
The file granting clearance will be sent to the President, who as the Lt Governor’s appointing authority will grant ED permission to question Singh. The questioning will take place in the Puducherry Raj Bhawan.
Even as Singh faces questioning by ED in Puducherry, there are few indications of his impending resignation or removal over the Khan passport case. He has already clarified in a letter to Chidambaram that he had no links whatsoever with the Pune-based stud farm owner and had already recommended his case to the Ministry of External Affairs on the request of senior Congress leader Amalendu Pandey.
Singh said that when he was a Rajya Sabha member from 1992 to 1998, on April 4, 1997, Bihar Congress leader Amalendu Pandey approached him for issuance of passport for someone from the Passport Office Patna on compassionate, health ground as the brother of person seeking passport was ill abroad and the presence of the applicant for looking after his brother was extremely essential.

International

If the US's AAA rating is to be downgraded, what could happen?

Take a look at expertspeak:
Firstly, if the US loses its AAA rating it could prove to be the turning point in a loss of confidence that starts a debilitating move out of not only Treasuries but dollar assets. After all, the US won’t default on debts which it can erase with the flick of the switch on the printing press, but it may well inflate its way to making dollar holdings very bad investments.
Secondly, the lack of alternatives means that a move out of Treasuries, if it ever came, would be hugely distorting for the rest of the world’s debt ecosystem. There simply aren’t enough “safe” alternatives.
Thirdly, the most likely outcome is that the US enjoys a long, slow slide from being everyone’s favorite debt issuer and owner of the main reserve currency to something a whole lot less. After all, being free to borrow cheaply and almost without limit has hardly been an unalloyed blessing. This implies losing the AAA-rating, but maybe only for long enough to teach itself and the rest of the world not to be so dependent upon it.
The transition from a uni-polar financial world to something with more checks and balances will be painful, but in the end beneficial.
BTW the net external debt, a measure of US dependence on foreign creditors, is now at 300% of current account receipts, among the highest of any sovereign.

Pulitzer Prize

Indian American Doctor wins Pulitzer prize

Indian American cancer specialist Siddhartha Mukherjee has bagged a Pulitzer prize for his book “The Emperor of All Maladies: A Biography of Cancer”. Mukherjee won the prestigious prize in the general non-fiction category.
The book has been described as “an elegant inquiry, at once clinical and personal, into the long history of an insidious disease that, despite treatment breakthroughs, still bedevils medical science”. It is a warm, erudite and engaging book. The book is a panoramic history of the disease of cancer and its treatment that is infused with meticulous details.
An assistant professor of medicine at Columbia University and a staff cancer physician at Columbia University Medical Center, Mukherjee had advocated a strong anti-smoking campaign and breast cancer screening to battle the growing incidence of the disease in India. Less than a month after it appeared, Mukherjee’s book, published in the US by Scribner, featured among “The 10 Best Books of 2010” in the New York Times Book Reviews Sunday, a rare feat for a work of non-fiction.
Mukherjee, 40, grew up in New Delhi’s Safdarjung Enclave.
A Rhodes Scholar, Mukherjee graduated from Stanford University, University of Oxford and from Harvard Medical School. He was a Fellow at the Dana Farber Cancer Institute and an attending physician at the Massachusetts General Hospital and the Harvard Medical School.
Three eminent personalities of Indian origin have previously won a Pulitzer. They include Gobind Behari Lal for journalism in 1937, Jhumpa Lahiri for fiction (‘Interpreters of Maladies’) in 2000 and Geeta Anand in 2003 for her work on Pompe disease.

Language Lessons

pere en fils

to work in a traditional manner handed down from father to son
eg: For many years, till these CDs surfaced, nobody was asking questions about the character of the Bhushan pere en fils.

shibboleth: Noun

A favourite saying of a sect or political group; A manner of speaking that is distinctive of a particular group of people

double down: Noun

It refers to a betting technique in blackjack. When you double down on something or someone, it means you are willing to take risk on them.
eg: The real question is whether Beijing is willing to double down on a nation whose balance sheet makes Italy look good.

antsy: Adjective

Nervous and unable to relax

19.04.2011

ramkyc@gmail.com (Ramakrishna) — Tue, 19 Apr 2011 11:47:00 +0530

Politics & the Nation

Election economics

The number of voters in each Lok Sabha seat has shot up from around 3,50,000 in 1951 to 1.3 million in 2009.
For an assembly seat you can legitimately raise and spend Rs. 16 lakh; if you’re fighting the Lok Sabha polls, the number mandated by Parliament goes up to Rs. 40 lakh.
Anecdotal evidence suggests that in the last Lok Sabha polls, candidates spent anything between Rs. 4 crore to Rs. 40 crore to fund their campaigns.

Finance & Economy

On Torrens system

In this system the ownership of land is directly registered by the state. In the system in force now, title instruments are registered, still leaving scope for multiple deeds and unregistered instruments. In the Torrens system, the sovereign is the keeper of all land and title records and the land title serves as a certificate of valid ownership.
Torrens system is considered a better bet to curb benami transactions in properties.

Problems of plenty

Take a look at this op-ed about our rich wheat harvest and how wheat is being sold below the MSP in our mandis in the North.
It is reported that we have about 46 mn tonnes of wheat in our granaries, which is more than double the buffer stock norm prescribed.
The question is -- will the government wake up in time?

BEE plans incentives for energy efficient devices

The Bureau of Energy Efficiency (BEE), an agency of the power ministry, is set to launch a 'super efficient equipment programme' to encourage manufacture of products that are 30-50% more efficient than fivestar labeled goods, considered to be most energy efficient in the country. This programme seeks to promote domestic manufacturing of energy-efficient gadgets by reducing their cost through market incentives.
The bureau, which is in the process of defining specifications for super-efficient refrigerators, air conditioners, television sets and other appliances, will kick off its initiative with companies making fans. It will seek quotations for expected incentives under an open bidding programme and offer cash incentives for each fan to those who qualify. A super-efficient fan should consume just 25-30 watts per hour against 50 watts for a normal fan.
At present, BEE rates electrical appliances on a scale of 1 to 5, with higher star ratings implying more energy savings, or efficiency. Five-star labeled products are costlier by Rs. 2,000-3,000 than four-star labeled products, depending on the product and model.
The super-energy-appliances scheme is part of the government's national mission on enhanced energy efficiency that seeks to achieve annual savings of 19,598 MW of power and 23 million tonnes of fuel and greenhouse gas emissions reduction of 98.55 million tonnes. The mission is one of the eight under the prime minister's national action plan on climate change.

On the inflation spiral and RBI's failure

Central banks the world over, as does our own RBI, do have lot of constraints. After the loosening of the taps on spending by way of fiscal stimulus it is the banks that are left to pick up the pieces. Add to this the constraints that are there, as on our RBI, on the degree of independence they can exercise in their functioning, do add to the cup of woes. But no central bank keeps the real interest rates negative for so long and yet expect to get away from the consequences. That is what has caused the inflation spiral in our country.
In addition, the combination of rising commodity prices, a spillover of the reckless quantitative easing by the US Federal Reserve, structural bottlenecks and a government unwilling to share the burden of reining in prices through tighter fiscal management have contributed their own share for the spiral.

Tax breaks on water conservation on the anvil

In an effort to promote judicious use of water, the government is planning to offer incentives, such as tax breaks, to big industrial users if they are able to reduce wastage of water.
The incentives may feature in the new National Water Policy, which is being prepared by the water resources ministry and the Planning Commission. The policy is likely to be introduced next year. The new policy will encourage sustainable use of water by reducing wastage and promoting recycling.
Industrial wastage of water has emerged as a big concern amid a growing realisation of an imminent water crisis. The per capita availability of water in India is 1,600 cubic metres. A level of less than 1,700 cubic metres is considered a ‘water stressed’ condition and less than 1,000 cubic metres is a ‘water scarcity’ condition. As many as nine out of the country’s 20 river basins are now in a water scarce situation.
India has 2.4% of the world’s area, 16% of the world’s population but only 4% of the total available fresh water.

India gets proactive about attracting SWFs

Sovereign wealth funds (SWFs), which have emerged as formidable global investors and often evoke concerns in countries where they put in money, will soon have a greater play in India. The finance ministry and regulators will change the rules to give these investment funds floated by governments of rich countries more headroom when they buy shares in listed Indian companies. Also, local authorities will treat SWFs emanating from the same country independent of each other—a proposal that is expected to go down well with the two Singapore government owned funds, Temasek and GIC.
The 50-odd SWFs registered in India invested between $8 billion and $10 billion last year. The proposals were recently discussed by the board of capital market regulator Sebi. It was proposed that SWFs belonging to countries that have signed treaties or agreements with India should be allowed to buy up to 20% shares of a listed company without making an open offer to existing shareholders. At present, all entities, except banks and financial institutions like LIC, have to make a minimum 20% open offer after their holding touches 15%.
The suggestions reflect the terms of economic co-operation treaties that India signed with countries like Singapore. It has, however, not been able to implement the terms following resistance from the Reserve Bank of India (RBI), which among other things viewed that funds like Temasek and GIC, owned by the same government, should be treated as investors belonging to the same group.
Most sovereign funds investing in India are registered with Sebi as foreign institutional investors (FIIs). Since no FII or FII group can hold more than 10% in a single company, RBI had said the combined investments of Temasek and GIC should not cross the stipulated limit in India’s second-largest lender, ICICI Bank.
Some notable SWFs operating in India include China's National social Security Fund, Abu Dhabi Investment Council, Australia's Future Fund Board of Guardians, Ireland's National Pensions Reserve Fund, Brunei Investment Agency, New Zealand Superannuation Fund, and Canada Pension Plan Investment Board.

All about the public debt office

Look at this ET in the Classroom column.
While on the subject, did you notice the phrases “merchant banking” and “investment banking” in the column? Do they mean the same? Or do they denote two distinct activities? Can be confusing for experienced people too at times. Take a look at this investopedia writeup on the subject. An interesting read.

International

In defence of nuclear power

A very able defence put up by Bjorn Lomborg. It is a must read. Do so here. Some excerpts worth our attention:
It is worth noting that the worst nuclear disaster in history directly caused only 31 fatalities. The World Health Organization estimates that 4,000 deaths could be linked to the disaster over 70 years, whereas the OECD projects a range of 9,000-33,000 deaths during this period.
But consider that, according to the OECD, every year, nearly a million people die from fineparticle outdoor air pollution. Yet, the massive death toll provokes no discernible fear in the developed world, and receives almost no news coverage.
We see coal as a polluting but reasonably ‘safe’ energy source compared to nuclear energy. Yet, in China alone, coalmining accidents kill more than 2,000 people each year — and coal is a leading cause of smog, acid rain, global warming and air toxicity.
Why is decommissioning of nuclear plants wasteful?
Decommissioning of nuclear reactors may make us feel safer, but we should acknowledge that this will often mean compensating for the lost output with more reliance on coal, meaning more emissions that contribute to global warming, and more deaths, both from coal extraction and air pollution.
Moreover, given that the plants are already paid for, waste facilities are already in place and the high decommissioning cost will have to be paid regardless of timing, the actual operating costs are very low — half or lower per kilowatt-hour than the cost of the cheapest fossil fuels.

16.04.2011

ramkyc@gmail.com (Ramakrishna) — Sat, 16 Apr 2011 15:36:00 +0530

Politics & the Nation

Hijacking Parliament’s role

Anna Hazare’s campaign against corruption has received very wide support all over India and even from Indians residing abroad. The country certainly seems to have missed a point in celebrating Hazare’s victory. CL Manjo brings that out very well in his op-ed today. Take a look. Very well articulated.
It is not Manoj alone who has such reservations. Even the former Speaker of the Lok Sabha Mr. Somnath Chatterjee too has some serious reservations and has articulated his concerns quite well in his piece. A must read.

While on the subject of corruption one more excellent debate

Take a look at this face-off column in today’s ET. It debates whether or not the Lok Pal institution will be sufficient to fight corruption. Some strong views there. Worth our attention.

Some noteworthy thoughts on philanthropy (Excerpted from an op-ed in today's ET)

The distribution and proper utilisation of wealth has engaged the human mind almost as much as its creation. How to ensure an equitable social order in which there is no exploitation and in which wealth is used not only to take care of the poor and needy, but also to bring beauty, art and knowledge to all, continues to be a vexed question. Philanthropy, defined as the creative use of wealth for the long-term benefit of society, without any expectation of a quid pro quo, has been considered a way to take the sting out of the inequitable distribution of wealth.

Binayak Sen gets bail from Supreme Court

The Supreme Court has granted bail to civil rights activist Binayak Sen, awarded life imprisonment on charges of sedition and for having links with Maoists by a Raipur sessions court.
The bench said, “no case of sedition is made out,” during the course of the hearing in the case. “We are a democratic country. He may be a sympathiser (of Naxalites) but it did not make him guilty of sedition”. It rejected the plea of Chhattisgarh government which had opposed Sen’s bail saying that the documents and pamphlets found in his house suggested that he was actively associated with Maoists.

Finance & Economy

Oil economics

It is very well known to us that our PSU oil majors keep losing lot of money on account of their supplying fuel at subsidized prices. Usually it is the Centre which keeps pumping some money into them so that they don't go into the red. Now, the Centre is moving a proposal whereby the States too will have to contribute something for the PSU majors.
In this context, it is interesting to note that the oil sector pays Rs. 110,000 crore in taxes to the Centre and Rs. 81,000 crore to states.

BRICs alternative to the dollar? (Excerpted from today's ET editorial)

BRICs have reportedly reached an agreement to provide credit to each other in local currencies and collaborate in capital markets and other financial services. This is no doubt a step towards finding an alternative to the dollar. But the demand for credit in local currencies within the group is small and is unlikely to be cost-effective either given the dollar’s pre-eminence.
Reserve currencies are not created by fiat; they emerge from historical forces of trade and investment. The dollar is the world’s favourite currency because it is simply the most traded, circulated and accepted currency in the world. Brics or others hoping to supplant the dollar will have to develop large and deep markets, first within their own national economies and then across the world for bonds in those currencies.

Spectrum's potential to GDP

According to a report by Analysys Mason, a 1% increase in broadband penetration could lead to Rs. 162 billion being added to the country’s GDP by 2015. The report suggests that even releasing 5 MHz of additional 3G spectrum per licensee could lead to a 3.3% rise in broadband penetration — which would contribute Rs. 538 billion to the country’s GDP by 2015.

Normal monsoon forecast

India is likely to receive a normal monsoon this year, the South Asia Climate Outlook Forum (SACOF) said in Pune on Friday, providing some cheer to the economy battling rising inflation and high food prices.
The forecast says likelihood of below normal rainfall over the north-western parts and some north-eastern parts of South Asia, but normal rainfall over the southern parts of South Asia, including the islands.
SACOF is an initiative of the World Meteorological Organisation to provide regional information.
India receives most of its rains in June-September, which is crucial for both the immediate kharif crops and also the rabi crops as the quantity of rain decides the moisture content of the soil for the winter crop.
India’s weather department, the India Meteorological Department (IMD), will put out its official forecast on April 19. Initial indications suggest that IMD will also put out a normal monsoon forecast.

Language Lessons

melange: Noun

A motley assortment of things

au courant: Adjective

Being up to particular standard or level especially in being up to date in knowledge

quail: Verb

Draw back, as with fear or pain
eg: She quailed when they showed the slaughtering of the calf.

11.04.2011

ramkyc@gmail.com (Ramakrishna) — Mon, 11 Apr 2011 13:56:00 +0530

Finance & Economy

Employability of our engineering graduates

Software body Nasscom estimates that only a quarter of all engineering graduates are readily employable in the IT sector. Their percentage has grown by a meagre 1% over the past six years.

Policy tiff holds up city-side work at regional airports

The process of developing commercial activities at regional airports has got delayed as the Planning Commission does not agree with the Airports Authority of India’s (AAI) view of keeping the airports’ terminal building out of the scope of commercial development. The delay is also hitting the Authority's plans to augment revenues.
There are two sides to an airport: the airside and the city-side. The airside is directly involved in the arrival and departure of aircraft and includes the runway, aprons, control towers, hangars, aircraft maintenance and refueling facilities, whereas the city-side constitutes commercial facilities around the airport for the benefit of passengers like development of property on the airports’ land, building and maintaining car parking and cargo operations.
In case of privatised airports like in Delhi and Mumbai, the terminal building has also been given to the private investor for development and maintenance. However, in this case, the intent is not to privatise these non-metro airports and retain the terminal building.
For undertaking city-side or commercial development of non-metro airports through private participation, the AAI, along with the Planning Commission and the Department of Economic Affairs (DEA) has been preparing a concession agreement, which is getting delayed because of the Plan panel’s reservations.
Last November, the government approved undertaking city-side development of 24 out of 35 non-metro airports. Together they have about 300-400 acres of land. The AAI is looking to fetch Rs 150-300 crore annually from commercial or city-side development.
Initially, city-side development of 10 airports will be undertaken in Phase-I. The AAI plans to give land around the airports on a lease of 30 years, extendable by another 30 years, on an upfront payment and the remaining part or rentals will be charged in a staggered manner.
Some of the 10 non-metro airports where city-side development will begin in the first phase include those at Ahmedabad, Jaipur, Lucknow, Amritsar, Indore, Vishakhapatnam, Guwahati and Bhubaneshwar.
According to the international airports association Airports Council International (ACI), a minimum of $10 billion of investment in the airports sector is required in India over the next 5-10 years and development of commercial activities at regional airports is a big attraction for investors.

Money laundering watchdog to track all realty deals

All real estate transactions will have to be reported to the country’s anti-money laundering agency once the government amends a key law that seeks to curb black-money transactions.
The government plans to amend the Prevention of Money Laundering Act, which will require property registrars to file data of transactions recorded by them with the Financial Intelligence Unit, or FIU. FIU is the national agency responsible for processing and disseminating information on suspect financial transactions to enforcement agencies across the world.
The government may also bring several other transactions under the anti-moneylaundering act. These may include futures and options trade in commodities.
Real estate transactions in excess of 30 lakh are already reported to the Income-Tax Department, but the government wants to tighten scrutiny of the sector, often accused of rampant use of black money and moneylaundering.
At present, many states rely on circle rates to check the use of black money in land deals. A circle rate is the minimum rate fixed by the government for valuation of a property. But it is not considered foolproof as the rate leaves scope for intra-region variations. The amended law will help track transactions involving funds from tax havens or territories named as “risky” by the financial action task force, or FATF.
FATF is an inter-governmental body set up by the Group of Seven (G-7) nations for creating global policies and framework to combat moneylaundering and terror-financing. India became its 34th member last June.

Performance of ports in India

Performance of India's major ports during the fiscal year 2010-11 was rather pathetic, to put it in brief. The year on year performance of the 12 major ports of the country has registered a mere 1.57% growth, according to data available with Indian Port Association (IPA), the umbrella organization representing the major ports.
Non-major ports in Gujarat have registered a traffic growth of 12.34% over last year with cargo handling rising from 206 million tonnes in 2009-10 to 231 million tonnes in 2010-11, Gujarat Maritime Board (GMB) said.
While major ports claim a capacity of about 642 MT, the combined port capacity of the country stands at 1017 MT as on February 28, 2011.
Among major ports, Kandla has retained the top slot in cargo throughput for the fourth year in a row, handling a whopping 81.88 MT of cargo throughput during FY 2010-11, registering an increase of 23.80 lakh metric tonnes, i.e. 3%, over the last year's traffic of 79.5 MT.
Vizag port came second in the pecking order with the port registering a traffic of 68 MT. During the last financial year (2009-10), the port had handled 65.54 MT against a target of 67 MT.
Among the best turnaround performers, Tuticorin has put forth the best show, registering the highest growth of 8.19% during the year with the port handling 25.72 million tonnes compared with last year traffic. Jawaharlal Nehru Port (JNP) came up second at 5.82% with the port handling 64.30 MT during the year.
Indian containerization has put forth 12.64% jump in container traffic at the major ports. The country's premier container port, Jawaharlal Nehru Port handled a record 4.27 million TEUs during 2010-11 surpassing the previous record of 4.06 million TEUs during 2009-10 by 2.1 lakh containers.

International

India keeps its foot down on sectoral talks

Despite mounting pressure on the member countries to take the stalled global trade talks forward, India is resisting developed world’s attempts to force negotiations on import duties on specific goods, or sectorals.
The US, backed by the EU and Japan, has been pushing for sectoral negotiations if talks are revived, which would force the member countries to completely remove tariffs on a number of products, including machinery and chemicals, which are of interest to advanced nations. This could adversely affect the developing countries.
The chairpersons of the negotiating groups on agriculture and industrial goods of the World Trade Organization, or WTO, are trying to prepare draft negotiating texts by Easter (April 24) that will be starting points for talks. But a lack of consensus on sectoral talks is sure to put a question mark on the chances of members wrapping up the Doha round of negotiations by the year-end, as targeted earlier this year.
India and other big developing countries, such as Brazil and Argentina, have argued that the mandate of the ongoing Doha negotiations was to keep sectoral negotiations voluntary.
For all other goods, tariffs have to be brought down as per the reduction formula agreed upon by all members of the WTO.

It's 50 years since man stepped into space

Tuesday will be one of the most important days in civilization’s calendar. Fifty years ago, on April 12, 1961, cosmonaut Yuri Gagarin stepped into a bus that took him to the then top-secret Baikonur launch pad in Kazakhstan’s desolate grasslands. There, he boarded the Vostok 1 and shot into outer space – the first human being to do so.
Jim Lovell is the first to journey to the moon twice. He is best known as the commander of Apollo 13, which was launched exactly 40 years ago to this day.
Meant to land on the moon, Apollo 13 suffered a catastrophic explosion that prevented it from reaching its destination. Under Lovell’s heroic leadership, the crew squeezed themselves into the spacecraft’s lunar module, using it as a “lifeboat” — which provided oxygen, power and the necessary propulsion — to return safely to Earth.

The dollar being nibbled away at its roots

One must read this development. It has really missed international headlines. But this is one development that is going to have a long term effect on the strength of the dollar.

Language Lessons

bon mot: Noun

A clever remark
eg: Parents, therefore, should chew on the idea of where best to slip in engaging pieces of writing — in relevant languages — so that children can develop a taste of literary bon mots along with their daily dose of muesli, bun-maska or poha.

desultory: Adjective

Marked by lack of definite plan, regularity or purpose; jumping from one thing to another
eg: Principles and tools for conducting productive dialogues, rather than stormy fights or desultory discussions must be deliberately employed in the process.

ack-ack: Noun

Artillery designed to shoot upward at airplanes; An anti-aircraft gun

stasis: Noun

An abnormal state in which the normal flow of a liquid (such as blood) is slowed or stopped; Inactivity resulting from a static balance between opposing forces

08.04.2011

ramkyc@gmail.com (Ramakrishna) — Fri, 8 Apr 2011 13:21:00 +0530

Politics & the Nation

Long live Anna Hazare

Take a look at this very well written ET editorial on what Anna Hazare is trying to do and how the government should respond. Agree fully with the views of the editorial. A couple of excerpts worth our noting:
True, any government can rightly assert that it cannot be coerced into accepting wholesale the demands of activists of any hue, whether it be, as in this case, about defining and enshrining the structure and purview of a national anticorruption ombudsman or anything else for that matter. But it is equally true that the very idea of a social contract includes a government’s authority stemming from the consent of those it governs. Representative democracy, in other words, doesn’t mean that solely those elected to office can claim representative status.

Reforming the IIMs

Recently (sometime in last week of March) we noted about a very critical article that lampooned the government efforts at trying to reform the IIMs. It articulated a fear that they are about to be privatized in the name of reform.
Today, we have a very well written piece by the Director of IIM, Kozhikode presenting a counterpoint. Very well written and worth deserving our attention. You should read it in full. Do so here.

Finance & Economy

On excessive usage of ground water in India

Goldman Sachs estimates that the global water consumption is growing at an unsustainable rate, doubling every 20 years. This situation is particularly precarious in the north-western parts of India, comprising Delhi, Haryana, Punjab and Rajasthan. This unpleasant development is caused by excessive pumping of ground water for irrigation.
The estimated rate of depletion of groundwater in north-western India is 4 cm of water per year, equivalent to a water table decline of 33 cm per year. Of the 1,065 (out of a total of 5,723) assessment units declared critical or over-exploited in the country, almost two-thirds fall in these four states. Water-hungry farms of the region account for over 90% of the ground water use.
Satellite imageries show that this region is experiencing an acute decline in the groundwater table. Studies carried out by the Goddard Space Flight Center of Nasa show that 109 billion cubic metres of groundwater disappeared from the aquifers in the region between 2002 and 2008, which was not expected when monsoon was quite normal.
Annual extraction of ground water in India is to the extent of 210 bcm. It is the highest in the world.
Groundwater irrigates over 60% of net area, meets 90% of drinking water needs.

International

The Muslim world and democracy

What is the reason behind democracy not taking roots in the Muslim world? What caused the rise of religious fundamentalism in the Muslim world?
The following excerpts from today's Cursor column in ET give a plausible explanation. Take a look:
Modernity confronted the Muslim world as colonial rule, cultural domination and religious challenge. A tiny elite colluded with the West and eventually stayed on as rulers and the West’s stooges. More often than not, Sovietbacked Left, if not radical, movements sought to give voice to democratic urges in the Muslim world, inviting repression backed by western powers. Democracy in the Muslim world, in other words, died in the crossfire between superpowers, whose self-referential description of their rivalry as the Cold War ignored the fiery heat that consumed nations, lives and democracy in swathes of the so-called third world.
Absence of democracy and authoritarianism were made somewhat palatable, after the sharp oil price hikes of the 1970s, by improved living standards. But then, the collusion of the authoritarian Arab regimes in the institutional injustice suffered by Palestinians at the hands of Israel accentuated popular resentment. The West used Israel as the visible symbol of its hegemony in the region, converting the tiny state into a lightning rod for Arab anger, bearing the brunt of generalised anti-West sentiments. And since democratic forms of popular expression were banned, collective anger found a religious idiom, feeding all sorts of Islamist movements. Al Qaeda’s founder Osama bin Laden’s original grouse, let us not forget, was US military presence in Saudi Arabia, the land of the holiest two mosques of Islam.

Ever heard of the concept of 'subsidiarity'?

It is the principle of organising functions in a hierarchy of responsibility that devolves power to lower level structures to tackle problems best handled by them, leaving only subsidiary functions to higher levels.

Language Lessons

skimp: Verb

Work hastily or carelessly; deal with inadequately and superficially; Limit in quality or quantity; Subsist on a meagre allowance; Supply sparingly and with restricted quantities

limpid: Adjective

Clear and bright; Transmitting light; able to be seen through with clarity; (of language) transparently clear; easily understandable
eg: Tamiki Hara, a Japanese master of limpid prose...

mien: Noun

Dignified manner or conduct
eg: To display a calm mien in their Zen-like prose they undergo internal turmoil.

cohere: Verb

Come or be in close contact with; stick or hold together and resist separation; Cause to form a united, orderly, and aesthetically consistent whole; Have internal elements or parts logically connected so that aesthetic consistency results
eg: As Japan picked itself up by its bootstraps and its society became more open and cohered with the world...

macron: Noun

A diacritical mark (-) placed above a vowel to indicate a long sound

06.04.2011

ramkyc@gmail.com (Ramakrishna) — Wed, 6 Apr 2011 14:33:00 +0530

Politics & the Nation

Anna Hazare's fast unto death on corruption moves crowds all over the country

Social Activist Anna Hazare launched an indefinite hunger strike against corruption in New Delhi on Tuesday. He asked the government to include more stringent measures in the Lokpal Bill, 2010, meant to tackle corruption in public life.
The ‘fast-unto-death’ by the 73-year-old social activist pushes the government into a corner at a time when it is facing an integrity crisis, following a series of ‘big ticket’ scams and the imprisonment of a cabinet minister.
Hazare and his fellow activists demand that civil society members be made part of the panel that drafts the bill, a demand the government will find extremely difficult to accept, both due to the technicalities and for the uneasy precedent that will be set by such an arrangement.
Hazare’s struggle aims to revive and strengthen the idea of the institution of Lokpal, or a public ombudsman. In 1969, following the success of the office of Ombudsman in eradicating corruption in Scandinavian countries, a Lokpal Bill was introduced in the Lok Sabha. It was, however, not passed by the Upper House. Since then, the Lokpal has been unsuccessfully introduced in Parliament on nine different occasions. The latest iteration is the Lokpal Bill, 2010, drafted by Law Minister Veerappa Moily. The bill is under consideration by a group of ministers headed by finance minister Pranab Mukherjee.
The Jan Lokpal bill seeks overarching powers for the institution of Lokpal at the Centre and Lokayukta in the states. The bill seeks the merging of the Central Bureau of Investigation (CBI) and the Anti-Corruption Bureau into the Lokpal and Lokayuktas. It envisages enhanced punishment (minimum of five years of imprisonment and maximum of life imprisonment) for those found guilty and provides for investigating corruption charges against judges as well as the officers of investigating agencies such as the CBI.

PAC may question Congress

Congress’ rhetorical onslaught against Public Accounts Committee (PAC) Chairman Murli Manohar Joshi and its charge that the body was overstepping its brief in the 2G spectrum allocation investigation has pushed the ruling side into a difficult corner with members of the panel seeking action against the party.
The PAC is getting prepared to submit its report by this month end.

Narmada Andolan faces perjury charges

The Supreme Court has asked the Narmada Bachao Andolan (NBA), why perjury proceedings should not be initiated against it for providing false information under oath.
The court issued the notice on a petition by the Madhya Pradesh government accusing it of making ‘wrong statements’ on land acquisition for Omkareshwar dam Project in Madhya Pradesh. The Madhya Pradesh government had sought initiation of legal actions against NBA for submitting ‘false information’ to the court on the issue of land acquisition from five villages — Dhardi, Nayapura, Guwadi, Kothmir and Narsinghpura.
The petition on behalf of the MP government said NBA had filed an affidavit in February, 2010, making a “wrong” statement that the authorities have taken possession of the disputed 284.03 hectares falling within the five out of 30 villages affected by Omkareshwar Dam Project.
The Madhya Pradesh government maintained the land acquired in the five villages were denotified and returned to the villagers who were using them for agriculture.

Finance & Economy

On identification of the poor

The census to identify the below poverty line (BPL) population is scheduled to take off this year and will aid the government’s public distribution system, proposed national food security scheme and other subsidy-based schemes for the poor. The census identified the BPL beneficiaries, so far, by using a 'scoring method.' This method is supposedly having a higher error rate. The scoring system involved ranking households which were not automatically excluded or included, on a scale of 0 to 10 based on caste, religion, employment, literacy, and presence of debilitating illnesses such as tuberculosis, leprosy and HIV/AIDS. The households were to be placed in descending order, with those with the highest score coming in first.
Now the government is reportedly considering an alternative method of identifying the BPL beneficiaries. It is the ranking of households by a set of deprivation indicators as suggested by the Planning Commission. This also grades the villages by their level of deprivation and provides a map of poverty levels in the country. It ranks the households using seven pointers, of which states will decide on three, to capture poverty in the state. The level of deprivation of a household will govern its position on the BPL list, with those with high deprivation coming in first.
Inclusion in the list will continue till the cumulative percentage of households is less than the state poverty ratio ceiling fixed by the Plan panel based on the recommendations of committee headed by Suresh Tendulkar.
For households that are a point below the deprivation cut off, in case of states where the deprivation cut off does not equal state poverty ceiling, a geographic ranking system has been proposed. In that, villages will be ranked according to average deprivation points. Households would then be included village-by-village, starting from the most deprived till the state poverty ceiling is reached.

Language Lessons

sliver: Noun

A small thin sharp bit of wood, glass or metal; A thin fragment or slice (especially of wood) that has been shaved from something

05.04.2011

ramkyc@gmail.com (Ramakrishna) — Tue, 5 Apr 2011 12:46:00 +0530

Politics & the Nation

There simply was no case for the government to exempt ICC from tax

Today's ET editorial, very rightly, took note of the issue and came out with the opinion that the government should not have exempted ICC from its tax obligations. We strongly support such a line of argument.
Sport is not just celebration of human athletic prowess. It is also business, very prosperous business. There is no reason to exempt sport as business from tax. Cricket has become a money spinner for cash-rich ICC that prides itself as a truly global business organisation. It also earns huge revenues through sponsorship and media rights. And this is not small change. So, there is simply no reason why ICC should not contribute to the tax kitty.
Such tax exemptions are arbitrary and provide political patronage opportunities. They must be eschewed.
Similarly, there is no logic in exempting the Indian Premier League (IPL), an arm of the Board of Control for Cricket in India (BCCI), from paying tax on its income. The BCCI has ceased to promote cricket as a ‘charitable’ activity. It has become a commercial entity with huge revenue streams. Revenue generated from the IPL is shared between the umbrella cricket body and its franchisees. The BCCI also uses only 10% of the surplus money on promoting cricket and the balance is shared with players. Cricketers pay tax on their income from IPL matches. So do franchisees, but not BCCI.
When individuals with even Rs. 3 lakhs as income are paying tax, why shouldn't rich sporting bodies be paying tax? This is atrocious!

The definition of a soft state

India has, for long, been regarded as a soft state. Gunnar Myrdal is credited with inventing this term, intended to mean a country where law enforcement and social discipline are low; by extension, one that is as timid and diffident in its dealings with other nations as with its own citizens.

Finance & Economy

The minimum wages and MNREGS imbroglio

Look at this detailed article that reports about the issue. Well worth a read.

India's external liabilities

India’s external liabilities rose by $22.7 billion in the quarter ending December 2010, over the previous three months, to $628 billion, mainly on account of increase in portfolio investment, FDI and debts. The country’s increase in external liabilities rose to $628.6 billion as on December 31 from 605.9 billion at the end of September, according to RBI data.

Inflation worries

Even as food prices have started to moderate, inflation has now spilled over to manufactured products and is yet to peak, say economists.
Overall inflation as measured by the wholesale price index was 8.31% for February, above the most aggressive estimates of economists, who now believe that it is the start of a phase of generalized inflation.
Core inflation, which excludes more volatile food and energy price changes, is a rough indicator of underlying long-term inflation.
While economists agree that inflation is going to remain high in the coming months, its trajectory has been difficult to predict. The Reserve Bank revised its estimates upwards, for the second time, to 8% for March end.
In February, the Prime Minister's Economic Advisory Council had admitted that the sustained increase in food prices has spilled over to other areas in the economy.
Around the globe, advanced economies have been following loose monetary and fiscal policies in an attempt to bolster growth in their respective economies. As more money chases the same amount of goods, the threat of inflation is imminent. India returned to its growth trajectory fairly quickly, which meant that demand for manufactured and primary goods picked up soon enough. Economists say prices of manufactured products could see a spurt in the coming months, which would push the WPI upwards. Non-food manufactured products have a weight of 55% in the WPI.
Economists also note that the elevated prices of crude oil have not been passed through and are a threat to inflation. And when the international prices are passed on, it would provide a further upward push.

Government moves to fine tune job survey

The government has set up an expert committee of economists and statisticians to fine-tune the labour department's annual employment survey launched last year to enhance its accuracy and effectiveness.
Consultations with the expert group on sampling design and survey, scheduled to start later this month, would result in more than a month's delay in the commencement of the survey, but the results are expected to be out on time by the end of the calendar year.
The expert committee, headed by S P Mukherjee from the Calcutta University, has members from various institutions including the NCAER, Institute of Economic Growth, the Planning Commission and the NSSO.
Nation-wide employment and unemployment survey has so far been the domain of the National Sample Survey Organisation (NSSO) which brings out the data on a five-yearly basis.
Prompted by reports of growing unemployment in specific sectors of the economy worst-affected by the global economic crisis, the labour department decided to carry out a country-wide survey on an annual basis last year to monitor the situation closely and take corrective actions.
Results of the first labour department survey for the period April-March 2009-10 announced in October 2010 revealed a much higher unemployment rate of 9.4% for India's over 400 million workforce compared to 2.8% arrived at by the NSSO survey of 2004-05.
To widen its survey base, the labour bureau this year plans to cover all 629 districts in the country as opposed to only 300 last year and would interview 1 lakh respondents, more than double of last year's numbers.
It would also look at expanding the scope of the survey by including migrant workers and other categories, but a call on this will be taken by the expert group.

Obituary

Sohan Qadri

Sohan Qadri, one of India’s greatest abstractionists in the genre of meditative moorings passed away early in March.
Growing up in northern India, Qadri was exposed to Sufism, Hinduism, and Sikhism. He was initiated into yogic practice at the age of seven. His stay at a Tibetan Buddhist monastery in search of higher truths shaped his sensibility and gave him a Zen facet. He was particularly inspired by Vajryana or Tantric Buddhism which emphasised the notion of sunyata or emptiness.
Qadri was born in 1932 in Punjab, India. He received his MFA from the Government College of Art in Simla, India. He left India in 1965 and travelled through East Africa, North America and Europe. He eventually set up a studio in Zurich before settling in Copenhagen where he lived for 40 years.
Take a look at this full piece in today's ET to have a look at his abstract art.

Language Lessons

quotidian: Adjective

Found in the ordinary course of events

preen: Verb

Pride or congratulate (oneself) for an achievement; clean with one’s bill; dress or groom with elaborate care.

04.04.2011

ramkyc@gmail.com (Ramakrishna) — Mon, 4 Apr 2011 13:16:00 +0530

Politics & the Nation

What's wrong with our Tiger census?

When minister for environment and forests Jairam Ramesh proudly announced the gain of 225 tigers last week, it made happy headlines. Accounting for the Sunderbans figures (70) that were not available in 2008, the minister preened, the population gain was a healthy 295.
But these figures are now suspect and the World Life Institute of India (WII) had admitted that "there has been a mistake in the computation of the standard error for the tiger numbers for the state of Maharashtra."
For decades, foresters studied pugmarks and usually counted more tigers per tiger. Then, in 2002, Project Tiger (now National Tiger Conservation Authority) and Wildlife Institute of India (WII) began replacing the human error-prone pugmark census method with a scientific estimation protocol. It was a landmark initiative.
Nine years later, however, India’s tiger numbers remain equally suspect. So far, more than Rs. 22 crore has been spent during two all-India estimation drives, in 2006-07 and 2010-11, to scientifically evaluate the status of the tiger. And yet all the government churned out were a few gospel figures for media consumption.
Back in 2006, an international team of experts led by John Seidensticker from the department of conservation biology at Smithsonian’s National Zoological Park in Washington, DC did a peer review of the new estimation method. In its report, the team questioned the feasibility of the exercise given that more than 40,000 forest units would have to be sampled, adding that the new method, too, relied on the “integrity of the primary data collectors, data compilers and their supervisors.”
For the record, the new method breaks down the estimation process in three phases. Phase one involves data collection (signs of tiger presence, prey abundance and canopy status) across the tiger landscapes. In the second phase, satellite data is used to assess conditions of habitat. Phase three requires camera-traps to be set up in selected pockets for capturing tiger images to identify the number of individuals in a sampled area. Next, the camera-trap data is extrapolated to arrive at numbers for entire landscapes.
Phase III of the latest count was compromised by too many malfunctioning camera-traps. WII purchased around 500 Moultrie camera-traps for the second all-India estimation, out of which 300-odd malfunctioned.
WII used about 100 cameras to cover just 120 sq. km of Nagarjunasagar-Srisailam tiger reserve in Andhra Pradesh. Only seven tigers were identified in that area. Based on these seven tigers in just 120 sq. km, somehow the estimate extrapolated a figure of 60 for a 2342 sq. km-area of this reserve.
If data was compromised, the analysis was suspect, too. On the extrapolation process, the 2006 peer review cautioned that “there is also no detailed write-up of the technical analysis, explicitly identifying the analytical techniques to be used in each phase of the framework.” In simple terms, it means different results at different estimation attempts, resulting in unreliability. The official count only referred to standard errors of estimated densities and population sizes while offering a range of 1165–1657 tigers. The report did not use the appropriate confidence intervals, which if standardised, would have stretched the limits to roughly 900-1900 tigers, an embarrassingly unreliable range.
While the number game continues, it is important to note that the new protocol does not allow comparison of subsequent results.

Cleansing Ritual

A 5000 year old vedic ritual is about to be performed in a Kerala village -- Panjal in Thrissur District. The Athirathram was last conducted 35 years ago. It is a 12 day ritual that was officially discontinued in the late Vedic period at a time when Buddhism and Jainism were on the rise in India. Nevertheless, a few Namboodiri Brahmin families in Kerala kept up an unbroken 3000 year tradition and this edition of the ritual begins today.
A few individuals have come together to form a trust to put the clock back 5,000 years to perform rituals that many scholars regard as inseparable from the myth surrounding athirathram. There are many including the one called Putrakameshti (blessing the childless couples). But that isn’t first on the priority list of the members of the Varthathe Trust, formed by a group of individuals from India and abroad who think alike. The yagna has more universal ideas to implement in its wish list.
The yagam hopes to achieve two goals — propitiate world peace, and energise and protect the environment by destroying undesirable elements. Fire is believed to cleanse, and that is what this ritual is all about. It involves the chanting of selected mantras from three Vedas, the ancient sacred texts of Hinduism — Rig, Yajur and Sama.
Beginning today, the yagna will be conducted by the best in the business — where ‘best’ means the only ones who can recite the mantras impeccably.
The athirathram, which will cost an estimated Rs 1 crore, is likely to draw more than 15,000 people from all over the world including not just devotees and believers but also scientists, scholars and critics. The star attendee of the event will be Indologist and heritage crusader Johan Frederik ‘Frits’ Staal, a driving force behind the preservation of the world's oldest surviving Vedic ritual athirathram. Staal, emeritus professor of Philosophy and South & Southeast Asian studies at the University of Berkeley in California, announced the existence of this ritual to the world by documenting it in his seminal treatise ‘Agni: The Vedic Ritual of the Fire Altar’.
A team of scientists led by VPN Namboodiri, former director, International School of Photonics, CUSAT, will monitor and analyse the beneficial impact of the historic fire ritual to the environment and people.
Whether it is the shape of the main fireplace or the kind of utensils and ingredients used, every aspect of athirathram stands apart. For example, the main fireplace is in the shape of a bird.
1,000 specially designed bricks are made, special pottery and vessels are designed, darba grass is acquired and so on. The most important offering is somarasa, extracted from somalatha, a herbal plant (Sarcostemma acidum) believed to be the nectar of life. The fire itself is created by rubbing two pieces of wood. Each day will commence with Vedic chanting and homam. On the last four days, the rituals will be held throughout the day and night without a break.
In 1975 as soon as the ritual was over, “a heavy downpour fell over the area which the sponsors claimed was true to tradition and marked the 'success of the ritual”, says Krishna Kumar Namboodiri of the Varthathe Trust.

Finance & Economy

IMF and its double standards

Our politicians and quite a few intellectuals have been crying hoarse for a long time about IMF's double standards. A report by the IEO (Independent Evaluation Office) of the IMF itself now confirms that IMF does indeed follow double standards and suffers from other malaises like toeing the line of the bigger donors, developed countries, groupthink and intellectual capture.
Let's know a bit about these new phrases groupthink and intellectual capture.
Groupthink is the tendency among homogeneous, cohesive groups to consider issues only within a certain paradigm and not challenge its basic premises.
When you are overly influenced (or over-awed) by somedbody's reputation or expertise, you tend to develop a stance which doesn't question their actions, howsoever wrong they may be. That is intellectual capture.

An excellent explanation of how liquidity squeeze reduces inflation (Excerpted from Bradford Delong's op-ed)

The Fed would then cause a liquidity squeeze and so distort asset prices as to make much construction, sizable amounts of other investment, and some consumption goods unaffordable (and thus unprofitable to produce). The resulting excess supply of goods, services, and labour would cause inflation to fall. As soon as the Fed had achieved its inflation-fighting goal, however, it would end the liquidity squeeze.
Asset prices and incomes would return to normal. And all the lines of business that had been profitable before the downturn would become profitable once again. From an entrepreneurial standpoint, therefore, recovery was a straightforward matter: simply pick up where you left off and do what you used to do.

Why NBFCs prosper where Banks cannot?

The share of NBFCs in market capitalisation of financial services companies in the country went up from 14% to 25% in the last decade. Why couldn’t the banks — who can technically do almost everything that NBFCs do — do all those things? The answer does not lie in regulatory arbitrage favouring NBFCs but in a subtle management principle.
The management principle is an age-old dictum: necessity is the mother of invention. NBFCs operate with regulatory constraints. They cannot accept low-cost savings and current deposits. They cannot participate in payment or foreign exchange network. They are discouraged from accepting term deposits from public.
The list is long. In return, NBFCs do not have statutory liquidity ratio (SLR), cash reserve ratio (CRR) and priority sector obligations that banks have. Other than a few areas of capital market exposure, a bank can do everything that an NBFC can do. However, vice versa is not true. How do NBFCs compete and grow from this constrained position? Constraints necessitate innovation. They focus on those areas where banks are uncompetitive or those that banks do not find worthwhile. Such areas are typically ones that require an innovative business model, or expert skills, or higher risktaking, or deep understanding of customer or of an asset being financed. These include the entire spectrum of businesses from infrastructure finance to microfinance.

Telecom push to GDP

Findings reveal that every 10% increase in mobile penetration rate leads to a 1.2% increase in GDP.

An excellent graphic on our state of finances

Look at this.

Language Lessons

skulduggery: Noun

Informal underhand dealing; trickery

eclectic: Adjective

Selecting what seems best of various styles or ideas

pedagogy: Noun

The principles and methods of instruction; The activities of educating or instructing; activities that impart knowledge or skill; The profession of a teacher

mea culpa: Adjective

An acknowledgment of your error or guilt
Interjection: An admission of guilt

02.04.2011

ramkyc@gmail.com (Ramakrishna) — Sat, 2 Apr 2011 14:07:00 +0530

Politics & the Nation

Meira meets Chacko, Joshi on PAC probe into 2G scam

Lok Sabha Speaker Meira Kumar on Friday met Joint Parliamentary Committee (JPC) Chairman P C Chacko and Public Accounts Committee (PAC) head Murli Manohar Joshi to discuss Chacko’s complaint that there is overlap of functions between the two committees probing 2G spectrum scam.
The meeting lasted for close to two hours but no decision was taken on the issue. Chacko complained that PAC was conducting a parallel inquiry in the issue and summoning the same witnesses that JPC would call later.

Finance & Economy

Is there a need for scrapping sectoral caps in FDI?

Yes, argues today’s ET editorial. And we can’t disagree. That kind of FDI policy only appears to have enabled local businessmen to resort to rent seeking.

An excellent article on tackling our power sector ills

This is one article that you can’t afford to miss reading. It may take you half an hour to read. But it is well worth it. Some excerpts for us:
Use of groundwater has increased from almost zero in 1947 to over 60% of net irrigated area. In 1980, canals and tubewells were irrigating about 15 million hectares each. After 30 years, coverage by canal irrigation had remained unchanged despite substantial public investment, while tubewell irrigation had more than doubled to about 35 million hectares.
Of the country’s 5,723 groundwater blocks, as many as 30% are now classified as over exploited, critical or semi-critical, depending on the extent of depletion of aquifers. If the trend endures unabated, 60% of all groundwater aquifers would be in a critical state in 20 years.
In 1960, both India and China used 20 billion cu km (bckm) of groundwater for irrigation; today, China (as well as the US) uses less than 100 bckm, while India uses more than 250 bckm of groundwater.
About 60% of the country’s population is living in rural areas.
Over 60% of the country’s rural population depends on this small share of GDP (17%) that has seen an annual growth rate of only about 2% in the last decade.
Even six decades after Independence, more than 30% Indians do not have access to electricity, and the power sector is characterised by a stubborn energy deficit exceeding 9% and mounting financial losses year after year. In 2008, the sector suffered a loss of about Rs. 32,000 crore, part of which was expected to be paid from a subsidy of Rs. 19,000 crore for supply to agriculture.
If the country wants to sustain its economic growth rate of 8-9%, it needs to add about 70,000 mw of generation capacity for the XIIth Plan (by 2017) and another 75,000-80,000 mw in the XIIIth Plan (by 2022). In other words, India needs to add about 15,000 mw every year in the next decade, compared to its best performance of adding 19,000 mw in five years in the IXth Five-Year Plan.
China added more than 80,000 mw every year in the last five years.
The Achilles’ heel of Indian power sector is not farm subsidy but unmetered power supply.
A World Bank study estimated in 2001 that about 33% of estimated sales to agriculture are commercial losses wrongly attributed to agricultural consumption.

International

Manufacturing in US grows at near 7-yr high

Manufacturing in the US expanded in March at close to the fastest pace in almost seven years, reinforcing signs the industry will propel growth in the world’s largest economy.
The strength in manufacturing is also generating job gains, a necessary ingredient to a sustained expansion.

What a poignant reading!

Look at this piece about Japan’s young! Japan is facing very hard times. There is no doubt about that. But also look at their calm and poised responses! Even in the worst of times, they held their cool and are rebuilding bit by bit. There is so much there for all of us in India to learn. Can we ever become a Japan?

Sport

And finally the Final

Let us say All the Best to India in today’s World Cup final. Incidentally, those of you who are nostalgic of Mumbai can read this piece by Vikram Doctor about Wankhede Stadium.
Just heard that Sri Lanka has won the toss and will bat first.

Language Lessons

covey: Noun

A small collection of people; A small flock of grouse or partridge

01.04.2011

ramkyc@gmail.com (Ramakrishna) — Fri, 1 Apr 2011 15:18:00 +0530

Politics & the Nation

Census 2011 highlights

The population of the country is 1210.19 million of which 623.7 million (51.54%) are males and 586.46 million (48.46%) are females.
The population of India has increased by more than 181 million during the decade 2001-2011 -- almost as much as the population of Brazil, the fifth-most populous nation.
The country now accounts for 17.5% of the world's population, equal to the combined headcount of the US, Indonesia, Brazil, Pakistan, Bangladesh & Japan
Percentage growth in 2001-2011 is 17.64; males 17.19 and females 18.12.
2001-2011 is the first decade (with the exception of 1911-1921) which has actually added lesser population compared to the previous decade.
Uttar Pradesh (199.5 million) is the most populous State in the country followed by Maharashtra with 112 million.
The total number of children in the age-group 0-6 is 158.8 million (-5 million since 2001)
Population (0-6 years) 2001-2011 registered minus (-)3.08 percent growth with minus (-)2.42 for males and -3.80 for females.
The proportion of Child Population in the age group of 0-6 years to total population is 13.1 percent while the corresponding figure in 2001 was 15.9 percent. The decline has been to the extent of 2.8 points.
Overall sex ratio at the national level has increased by 7 points to reach 940 at Census 2011 as against 933 in Census 2001. This is the highest sex ratio recorded since Census 1971 and a shade lower than 1961. Increase in sex ratio is observed in 29 States/UTs.
Three major States (J&K, Bihar & Gujarat) have shown decline in sex ratio as compared to Census 2001.
Kerala with 1084 has the highest sex ratio followed by Puducherry with 1038, Daman & Diu has the lowest sex ratio of 618.
Literacy rate has gone up from 64.83 per cent in 2001 to 74.04 per cent in 2011 showing an increase of 9.21 percentage points.
Percentage growth in literacy during 2001-2011 is 38.82; males : 31.98% & females : 49.10%.
Literates constitute 74 per cent of the total population aged seven and above and illiterates form 26 per cent.

Look at these numbers to get a sense of the mammoth effort involved in the Census operations

Thirty-four crore questionnaires in 16 languages. Twenty seven lakh enumerators, trained in three days. Administrative maps re-drawn into enumeration blocks. Each surveyor went to 150 households in 20 days. Publicity campaign done in 12 languages.
The Census is carried out in over two phases – house listing and population enumeration.
The house listing exercise was carried out last year to identify where people live and the amenities they have. This provided the framework to conduct the population headcount, carried out in February this year.
During the headcount, citizens are asked personal details such as mother tongue, economic activity they are involved in, migration and fertility-related information, whether they belong to a scheduled caste or tribe, etc.
Now, all the filled questionnaires would be scanned and converted into a database.
Errors that creep into the data, due to different languages and font styles of citizens, would be manually corrected.
But that’s not the only correction headache for officials. When asked about religion, for instance, Indian citizens often don’t give simple answers.
The final numbers, officials expect, would be out by May or June 2012. After the final population data is released, the Census office will release 300-odd tables in a sequential manner that will highlight different facets of India’s population – fertility, migration, marital status, workforce participation, et al.

The Judicial Commission to Pakistan may be a non-starter

Take a look at this report for understanding the issue.

Finance & Economy

Long live nuclear power?

Even as we are witnessing the yet unfolding saga in Japan, calls for disbanding nuclear power are gaining momentum. Take a look at this piece penned by GV Ramakrishna in today's op-ed.
The arguments are all very valid. But... Let's revisit the issue sometime in future after all the dust settles.

FDI policy reviewed

Foreign companies that have an existing joint venture in India will not need the permission of the local partner if they want to set up a wholly-owned subsidiary in the same field of business. The government hopes to attract more foreign direct investment by scrapping of this controversial rule and other simplifications in the foreign direct investment policy.
Indian Inc has welcomed the new policy saying it will boost FDI flows, that declined in the past few months.
The regulation called Press note 1, 2005 is a diluted version of the earlier policy (Press Note 18) that gave Indian promoters enough legal tooth to stall its foreign partner from going alone in the Indian market in any line of business. The 2005 policy said the foreign investor would need for a no objection certificate from a local partner only if it decided to go on its own in a similar line of business as existing venture. It also said the rule will not apply to ventures set up after 2005, which were to be governed by the shareholder agreements between the two partners. A number of Indian promoters had invoked this provision to block their foreign joint venture partner from floating fresh ventures. Some of the prominent cases include dispute between the VK Modi group and its US partner Guardian over the latter’s attempt to set up its own subsidiary outside the existing Indian JV, Gujarat Guardian.

An existing confusion removed

The FDI policy review has also clarified on foreign ownership of Indian companies.
ICICI Bank and other banks that have more than 50% foreign investment will be treated as “foreign companies” as per the new FDI policy, imposing restriction on their downstream investments in sectors which are barred for foreign investment.
The other lenders that have more than 50% foreign equity holding are HDFC Bank, Yes Bank, IndusInd Bank, Federal Bank, ING Vysya, and Development Credit Bank.
All the investments by such a company into other ventures or subsidiaries would be considered foreign investment. Thus, such investments would be subject to the restrictions that apply to foreigners.
This could come in the way of investments made by these lenders in sectors where FDI is prohibited, such as pensions.
The new FDI guidelines, issued by DIPP, classify companies into two categories -- companies owned or controlled by foreign investors and companies owned and controlled by Indian residents.
The circular has done away with the earlier categorisation of 'investing companies', 'operating companies' and 'investing-cum-operating companies'.

Vodafone to buy out Ruias for $5 bn

Vodafone and Essar have agreed on an amicable divorce after a four-year marriage marred by bitter fighting, with the British group offering its Indian partner a previously agreed pre-nuptial settlement of $5 billion ( 22,200 crore).
Vodafone on Thursday said both sides would exercise options under which Essar would sell its 33% holding in India’s No. 3 mobile operator by customers, Vodafone Essar, to the world’s biggest mobile phone company by revenues. Industry experts said the contours and timing of the deal, expected to be completed by November, underscored the fractious nature of the relationship between the two sides. The $5-billion figure had been agreed in 2007 when Vodafone bought into the Indian company, and, in the process, granted options to Essar to enable it to sell its entire stake at that value. Essar could sell a part of it at an independently appraised fair value. Essar had a put option allowing it to sell a 22% stake to Vodafone, which held a call option to buy the remaining 11% if Essar chose to exercise its option.
These options were to expire on May 8, after which both sides would have been forced to negotiate a price, which many analysts say would most certainly have been less than $5 billion because the Indian telecom sector has seen a significant downward rerating since 2007. The country’s top mobile company, Bharti Airtel, was valued at $33 billion when Vodafone bought a 67% stake in the then Hutchison Essar in February 2007, but is now valued at around $30 billion, despite adding some 180 million customers since then.
Essar could have let the options expire and hoped to sell its holding to Vodafone or any other buyer at a negotiated price, or offered them via an IPO of shares.

International

An excellent quote

At one time or the other, you would have heard this quote -- “Those who cannot remember the past are condemned to repeat it.”
Remember who is credited with uttering it? Spanish born US philosopher George Santayana.

US Treasury made a cool $23 bn profit from bailouts

US Treasury officials laid claim to an eventual $23.6 billion gain for taxpayers on the entire rescue programme, despite doubts from sceptics about just how Washington crunched the numbers. Treasury officials say they are actually being conservative in their profit projections. But even if that roughly $24 billion estimate proves too optimistic, the trend still represents a major turnabout from the river of red ink critics predicted. The administration itself projected a $100 billion loss only a year ago.
What explains the wild swings between losses and profits? For starters, asset prices improved as the economy rebounded. But some of the gains remain on paper, and profits that haven’t been booked have to be continually adjusted to reflect price swings in the market. Then there are the vagaries of government accounting, like how to properly value complex mortgage securities.

John le Carre withdraws from Booker Prize

First bestowed on Albanian writer Ismail Kadare in 2005, Man Booker International Prize is awarded every two years to recognise a living author’s achievement in fiction and literary excellence.
The winner will be announced at the Sydney Writers’ Festival on May 18. The contest is sponsored by hedgefund manager Man Group Plc (EMG), which also funds the Man Booker Prize for Fiction.

Language Lessons

outré: Adjective

Conspicuously or grossly unconventional or unusual
eg: The proposal by the European Union to ban ‘conventionally fuelled’ cars from its cities by 2050 is admittedly less outré than its infamous diktat regarding the curvature and length limits on imported bananas and cucumbers...

hoof it: Verb

Walk

ingenuous: Adjective

Characterized by an inability to mask your feelings; not devious; Lacking in sophistication or worldliness

31.03.2011

ramkyc@gmail.com (Ramakrishna) — Thu, 31 Mar 2011 19:01:00 +0530

Politics & the Nation

India wins the match but Pakistan walks away with the peace award

Pakistan may have lost the match in cricket; but it surely is going home with near normalized relations with India, if sentiments are any indication.
The signs of near-normalisation were evident when Pakistan Prime Minister Yousuf Raza Gilani reciprocated his Indian counterpart’s initiative and invited Manmohan Singh to visit his country. This will be worked out through diplomatic channels. Sporting ties between the two nations are also set to be revived with Gilani inviting the Indian cricket team to play in Pakistan.

Why is 'merit' not a reasonable consideration when it comes to expecting women to have it for board membership?

TT Ram Mohan explains the point in his op-ed very well today:
For educational institutions or jobs, ‘merit’ is defined in terms of academic performance. A person who has secured the cut-off level of, say, 85% is deemed to be meritorious. A person from a disadvantaged group, who gets 82%, is said to lack merit even if he has managed the performance without paying for expensive tuitions.
In the case of independent directors, claims about selecting people on merit sound even more hollow. First, promoterrun companies in India overwhelmingly prefer to select independent directors from amongst friends and associates.
Secondly, retired bureaucrats, serving or retired corporate executives and celebrities, who are the second-most important source of independent directors, also tend to be people known to the promoter.
Thirdly, independent directors are not so independent of management because it is management that selects them and compensates them handsomely. In this situation, the so-called merit has little bearing on the key outcome, namely, good governance.

Finance & Economy

The issues that need to be addressed by a new policy to revive the PPP mode of executing projects

First, governments, mostly at the state level, allow private players who win in competitive auctions to wangle sweetheart agreements with the state thereafter. This has to stop. There must be no post-bid revisions of the contract.
Second, governments must take away projects, or impose strict penalties on private players if they fail to meet project milestones.
Third, almost every state has its own PPP department, each functioning with its own set of rules. These rules have to be harmonised among states, to make sure that there is no race to the bottom. If states start competing among themselves to give sops to attract projects, the quality of governance and state revenues will slide dramatically.
Finally, land acquisition has become a political minefield. A new law to humanise India’s colonial-era land acquisition rules is to be made. It should provide for some guaranteed income for the dispossessed.

India's strengths and weaknesses in manufacturing

India was the ninth largest manufacturer in the world in 2010 in terms of manufacturing value added (MVA), says the United Nations Industrial Development Organisation, ahead of all emerging markets save China.
But India accounts for just about 1.8% of the world MVA. China accounts for 15.4%, and the US 23.3%.
Similarly, India disappoints on per capita productivity: average output was estimated at $107 compared with China’s $841.6.

Hemline forecasting

Do you know the old saying which says that hemlines go up during boom times and come down with recession?
Mary Quant is credited with introducing miniskirts to the world of fashion. That was sometime in the 1960's.
She was also credited with introducing hot pants.

The impact of oil price on our economy

Experts say that every extra $10 in oil prices increases the government’s borrowing requirements by Rs. 36,000 crore and the fiscal deficit by 0.3%.

Islamic banking

ET in the Classroom on this concept.

International

Economic calculus of Japan’s tragedy

Some snippets from an article that appeared in today's ET. Worth our attention:
Direct losses are currently estimated at between $100 and $200 billion. The 1995 Kobe earthquake resulted in approximately ¥10 trillion in damage (around $102 billion), equating to around 2.5% of Japan’s GDP at the time.
As the level of insurance cover is limited, the bulk of the reconstruction cost will have to be financed by governments and individuals drawing on savings.
Financial markets have assumed that Japan will sell its overseas financial investments including US government bonds (holding of around $900 billion) to finance reconstruction.
The ‘repatriation thesis’ sees US interest rates rising as the Japanese sell dollar bonds and the yen increasing in value as the dollars are converted into local currency. But it is not clear that this actually happened following the Kobe earthquake. Currently, there are no signs that the government, insurance companies or private investors are selling or plan to sell foreign assets to finance the rebuilding.
If the government chooses to finance the rebuilding by raising debt, then attention will be on the increasingly parlous state of Japan’s public finances.
Even before the disaster, Japan’s government borrowing was over $12 trillion, around 200% of its GDP, although net borrowing is around 140%. This debt reflects the effect of two decades of government spending in unsuccessful efforts to restore the Japanese economy to health after the crash of the ‘bubble economy’ in 1989. The cost of re-construction may add additional debt, of as much as 5-10% of the GDP.
Japan’s current debt position is very different from the time of the Kobe earthquake. In 1995, Japan’s debt levels were much lower (net government debt was around 25% versus 140% today). In addition, the global economy was in a more robust position with stronger economic growth. These factors helped Japan absorb the effects of the Kobe disaster. Japan’s three problem Ds, depression, deflation and demography, have now been joined by two new Ds, disaster and destruction.

Language lessons

anodyne: Adjective

Capable of relieving pain; Noun: A medicine used to relieve pain

portmanteau: Noun

A portmanteau is a blend of two (or more) words or morphemes into one new word. A portmanteau word typically combines both sounds and meanings, as in smog, coined by blending smoke and fog. More generally, it may refer to any term or phrase that combines two or more meanings. In linguistics, a portmanteau is defined as a single morph which represents two or more morphemes.

sotto voce: Adverb

In an undertone
eg: The policy, as the Prime Minister sotto voce suggested, was to subsidise mobile users, but a good bit of it ended up in the pockets of spectrum resellers.

29.03.2011

ramkyc@gmail.com (Ramakrishna) — Tue, 29 Mar 2011 19:25:00 +0530

Politics & the Nation

Cricket is after all a game; enjoy it as one

We all know that a cricket match between the traditional rivals -- India and Pakistan -- evokes more than enthusiasm. Is that required at all? The fans on both sides of the border, aside from some ill-thought comments from people on the field too, contribute a lot to the rise in temperature. Today, it’s more important than ever to sit back and enjoy a game of cricket as a game and nothing more. All the best to the game and the spectators. May their wishes be fulfilled.
The following comments by Mukul Kesavan in today’s ET are well worth our notice in this regard. Take them well for their ability to represent the collective feelings of the reasonable people. But enjoy the game as a game.
Most of this (cricket matches between India and Pakistan being reduced to a blood sport sustained by an excitement born of desperation and fear and loathing) has to do with the insufficiently bifurcated histories of India and Pakistan. The quarrel over Kashmir, nightmares like the slaughter of 26/11, the residual Indian belief that Partition was a tragic cock-up and the furious Pakistani rejection of the idea that their nation was a mistake, means that Indians and Pakistanis watch their two countries play in a state of bilious delirium.
The disproportion between fact (losing a cricket match) and feeling, the absurdly inflated sense of joy and despair that characterises any India-Pakistan ODI, makes every such match an occasion to be avoided by sensible people.
Pakistani cricket is so oppressively freighted with nationalism at the moment that it’s unreasonable to expect the team or its captain to treat Wednesday’s encounter as just another game. To be fair to the Pakistanis, hundreds of millions of Indian spectators will also see the match as a kind of proving ground for nationalism.

SC comes down heavily on Government

While looking into the progress report submitted by the ED, the SC observed that the probe should be widened to include the other names that have popped up in ED's report. It has also questioned whether Government had any in principle objection to the formation of a SIT (Special Investigation Team) comprising of officers from various agencies like the RAW, CBI, IB and ED to go into the wider issue of black money being stashed abroad by Indians.
The SC deferred its decision on the formation of SIT till the next date of hearing when the ED is expected to submit another progress report.
Dealing with another case, the Supreme Court has said that political parties supporting an agitation should be derecognised if public property is destroyed during the stir.
The court indicated that it would frame guidelines fixing responsibility on state governments for their failure to deal with agitationists destroying public property.
It asked the Haryana government to explain why it should not pay the loss incurred by Railways during the course of 11-day stir organised by 12 'khap' panchayats against booking of some ‘upper caste’ people in connection with the Mirchpur Dalit killings case.
The court also sought the responses of all parties to suggest guidelines and on fixing responsibility for damage done to public property during agitation.
Though the response of the SC may look too intrusive on the domain of the Executive, the citizenry of the country is expected to back such interventions in the light of the past and present experience wherein the political class (which is supposed to control the executive) has miserably failed to tackle lawlessness and corruption.

Finance & Economy

Why did the financial meltdown happen?

The recent report of the Financial Inquiry Commission set up by the US government provides an exhaustive narrative of the crisis and its proximate causes. It found that just prior to the crisis, there was an explosion in risky subprime lending and securitisation, an unsustainable rise in housing prices, widespread reports of egregious lending practices, a dramatic increase in household mortgage debt and an exponential growth in unregulated derivatives, among many other red flags. The commission also identified widespread failures in financial regulation, corporate governance and risk management, lack of transparency, and a systematic breakdown in accountability and ethics as key causes of the crisis.

Nothing Global about Nelp-IX

Most global oil majors shunned India’s offer of oil and gas blocks as its patchy exploration record and tax worries deterred potential investors, although crude oil’s sustained rally usually encourages companies to hunt for hydrocarbons.
BP’s recent acquisition of a stake in 23 exploration blocks of Reliance Industries had raised hopes that more big companies would bet on the country’s oil and gas sector, but the only large foreign firm that bid for a block in the ninth round of the New Exploration Licensing Policy (Nelp )was BG.
Domestic companies dominated the auction, with ONGC set to win five of the eight highly prospective deepwater blocks while private oil major Reliance Industries is seen as the frontrunner in two.
The government received total 74 bids for 33 blocks from 37 companies, including eight foreign firms.
Of the 74 bids, 41 were from private firms and 33 by state-run companies. Experts criticised unstable fiscal policies and the finance ministry's approach towards taxation as a key reason for the poor response.
The government offered 34 blocks in this round, but one shallow-water block received no bids. Of the 34 blocks, eight are deepwater, seven shallow-water and 19 on shore blocks.
India has awarded 235 blocks in the previous eight Nelp rounds, more than half of them which are held by ONGC and OIL.

Primer on reserves

Take a look at this ET in the Classroom column that appeared in today’s ET.

Environment

Country goes gaga over Tiger population

The 2010 tiger census, unveiled on Monday, raised some hopes for the future of the endangered Royal Bengal Tiger. Tiger population has seen a 20% increase over four years between 2006 and 2010. The All India Tiger Estimation puts the figure of tigers at 1,706. While these numbers would suggest that the previous decline in the number of tigers has been reversed, experts are not convinced. But, even if the increase in tiger population is not contested, what is worrying is the shrinking of the tiger habitat. In 2006, India’s tigers occupied 93,600 square km; it is down to 72,800 square km in 2010.
The previous enumeration undertaken in 2006 estimated the total number of tigers at 1,411. The latest census reveals a 12% increase in tiger population (1,580 tigers) in the area surveyed in 2006. The current census takes into account the 70 tigers in the Sunderbans, which had not been assessed in 2006. New areas in Uttarakhand, Maharashtra and Assam were covered in the 2010 census. Several other areas outside tiger reserves and national parks were also reviewed for the first time.

International

Indian geeks in the US heading home?

Today's ET report says that Indian entrepreneurs in Silicon Valley are finding their dreams imprisoned in an immigration warp.
Over half-a-million highly-educated and skilled immigrants are stuck with temporary, non-immigrant work visas like the H-1B, which don’t allow them to start a company or even change jobs. Pushed to a corner, they come back to India, where the entrepreneurial climate is far from ideal.
These are people with new business ideas, energy and the drive to succeed in an ecosystem that fosters creativity, but their dreams are shattered by a system which believes they are taking away American jobs. But in reality, this is actually hurting job creation in recessionhit US.
Between 1995 and 2005, 25% of Silicon Valley’s startups — which had at least one immigrant founder — employed nearly 4,50,000 people. The companies generated $52 billion in revenue in 2006. Besides losing some of the brightest minds, US immigration is putting Silicon Valley’s innovation hub status in serious jeopardy. So what in a nutshell is the H1-B visa enabling or entailing?
The H-1B visa is a non-immigrant employer-sponsored visa for professionals to work in the US for a maximum of six years.
The US issues just 85,000 H-1B visas each year, and the demand is immense.
Dependent spouses on H4 visas are not allowed to work. They don't qualify for a social security number. Consequently they can't get a credit card, a phone connection, etc. and in some cases even a driver's licence. The social and psychological effects are immense.
H-1B visa holders are glued to their employers. They can't change jobs, leave alone open their own company. And if they lose their jobs they have to leave the US immediately with little notice.
Moves are afoot in US to come up with a Startup Bill to help immigrant entrepreneurs. According to a new bill, startup visas will be available to some groups, subject to conditions:
Entrepreneurs living outside the US: If a US investor agrees to financially sponsor their entrepreneurial venture with a minimum in-vestment of $100,000. Two years later, the startup must have created five new American jobs and either have raised over $500,000 in financing or be generating over 500,000 in yearly revenue.
Workers on an H-1B visa, or graduates from US universities in science, technology, engineering, mathematics, or computer science: If they have an annual income of at least $30,000 or assets of at least $60,000 and have had a US investor commit investment of at least $20,000 in their venture. Two years later, the startup must have created three new American jobs and either have raised over $100,000 in financing or be generating more than $100,000 in yearly revenue.
Foreign entrepreneurs whose business has generated at least $100,000 in sales from the US: Two years later, the startup must have created three new American jobs and either have raised over $100,000 in financing or be generating more than $100,000 in yearly revenue.
The investor must be a qualified government entity or a qualified venture capitalist or an angel investor who is a US citizen: He should have made at least two equity investments of at least $50,000 every year for the past three years.

Language lessons

oafish: Adjective

Ill-mannered and coarse and contemptible in behaviour or appearance

perfervid: Adjective

Characterized by intense emotion

28.03.2011

ramkyc@gmail.com (Ramakrishna) — Mon, 28 Mar 2011 15:58:00 +0530

Politics & the Nation

Are IIM’s about to be privatized?

If you read this op-ed today, that is the impression one gets. The op-ed rails the attempts by the HRD minister to ‘privatize’ the IIMs. Some cogent arguments are put forth. Worth a read; though we may not necessarily agree with all of the criticism. The point is, IIMs being the higher institutions of learning that they have become in India, need to constantly be in the forefront of innovation, research and new ideas. Any attempt -- howsoever misconceived it may look -- at trying to better them, should not be lampooned only for the sake of preserving the status-quo. Let’s study what is really bad in the proposals and then give up the bad ideas. Not all ideas need be or can be bad.
New ideas that are sought to be tried, need not necessarily be seen as attempts at thwarting the academic freedom that prevails in IIMs. Any impression that an institute is good and happy and at equilibrium with itself and the world with the way things stand, is a sure recipe for disaster and decline. By their very nature, academic institutions -- especially of the IIM kind -- should be constantly innovating and experimenting. They should ideally be unhappy with the way things are. It is only then that innovation and research are promoted.
Look at ISB, Hyderabad. Has more interaction with non-academics at the board level brought it any encumbrances in excelling as an institution of higher learning? Why should we fear that such a thing will happen with IIMs?

Finance & Economy

Sunlight and water to planet’s energy rescue?

Look at this interesting interaction. Will we see it in our lifetimes? Grids should be passe. Governments and people will be far better off without grids.

Pension bill tabled in Parliament

The government moved a step closer to initiating the financial sector reforms it promised in the budget with the introduction of the much-awaited pension and factoring bills in Parliament on Thursday.
The much-awaited Pension Fund Regulatory and Development Authority Bill, 2011, will give a greater legal authority to the pension regulator that has been set up through an executive order, and lacks the legislative sanction it needs to develop the pension sector through greater private participation.
The interim regulator currently overseas the New Pension Scheme, or the NPS, which the government hopes will become the flagship scheme for building a retirement corpus.
So far, the scheme has failed to make a dent in the non-government sector. It manages the retirement savings of central government and many state employees who are on a defined contribution scheme.
The bill had failed to get parliamentary approval in the previous term of Prime Minister Manmohan Singh's government due to strong opposition from its then Left allies.
This time the government has decided to play safe and keep the foreign investment issue outside the bill.
The bill has greater chance of getting through this time as it has the tacit support of the key opposition party, the BJP. On Thursday, the bill could be introduced only with the support of the BJP after the Left opposed its introduction in the Lok Sabha.
The Bill was introduced after a division of votes with 115 of the 159 present supporting it, including 30 from the BJP. Earlier, FM Pranab Mukherjee had urged the opposition to support the Pension Bill.
The government also introduced the Factoring and Assignment of Receivables Bill 2011 that will provide for a consolidated legal framework with specific provisions covering all aspects of the factoring business in the country.
The government is also set to notify the expert body, the Financial Sector Legislative Reforms Commission (FSLRC), which has been set up to rewrite the country’s financial laws. The 11-member FSLRC will be headed by retired Supreme Court Justice BN Srikrishna and will hold its first meeting on April 5.
Among other things, the commission will examine the architecture of the legislative and regulatory system governing the financial sector in India and look at the most appropriate means of oversight over regulators and their autonomy from the government.
The commission will submit its report to the FM within 24 months.

How is the NPS superior to EPFO?

The NPS’ organisational structure with electronic accounts portable across jobs and geography, maintained by a single record keeper at a low cost, asset management flexibility as to both assets and managers, ultra-low asset management costs and regulatory oversight make the NPS far superior to the EPFO.

Centre moves to restore fiscal order

The finance ministry has moved to impose fiscal discipline on states by asking them to limit their net borrowings in the new financial year.
It has also asked the Central Statistics Office, or CSO, to provide an estimate of the gross state domestic product, or GSDP, of each state for 2011-12, a reflection of the Centre’s lack of confidence in the numbers put out by the states.
The ministry has asked the states to cap their net borrowings between 3% and 3.5% of GSDP in 2011-12, in line with the recommendations of the 13th Finance Commission.
The Centre had relaxed the fiscal deficit target for states to 3.5 % of GSDP in 2008-09 and further to 4% in 2009-10 in view of the economic slowdown.
But now that the economy is back on track, it wants states to stick to the fiscal consolidation roadmap and achieve the targets set by the Finance Commission.

Language lessons

burnish: Noun

The property of being smooth and shiny
Verb: Polish and make shiny

prole: Noun

A member of the working class (not necessarily employed)

24.03.2011

ramkyc@gmail.com (Ramakrishna) — Thu, 24 Mar 2011 14:10:00 +0530

Politics & the Nation

Rajat Gupta is getting painted into a tight corner

Goldman Sachs Chief Executive Lloyd Blankfein made his much-anticipated appearance at Raj Rajaratnam’s trial, telling jurors that former director Rajat Gupta leaked inside details to the accused hedge fund manager.
Blankfein was called to testify by prosecutors in Manhattan federal court.
The Goldman chief told jurors that Gupta violated Goldman confidentiality policies by revealing to Rajaratnam the board’s June 2008 discussion of a possible merger with Wachovia Corp or an insurance company.
Gupta, a former worldwide managing director at consulting firm McKinsey & Co, has denied the SEC’s accusations and sued the agency last week. Goldman has not been accused of wrongdoing.

Finance & Economy

Country is sitting on grain bomb, warns the CACP

The Commission for Agricultural Costs and Prices (CACP) warned that the country's overflowing grain bins will lead to a crisis if the government did not come up with a plan to dispose of the stored grain.
It said the Centre, which is the biggest buyer of grain in the country, was sitting over huge grain inventories and that the problem will compound further when the wheat procurement begins in a few days. India’s wheat production is expected to touch a record 81.47 million tonnes (mt) this year.
The disclosure is indicative of an increasing concern in the government on the subject and comes barely a year after the country faced an acute grain supply strain, which resulted in double-digit inflation and spiraling food prices.
The CACP computed the cost to the government on the storage of additional grain based on current economic cost of around Rs. 20 per kg for rice and Rs. 16 for a kg of wheat.
According to government estimates, foodgrain harvest in 2010-11 would be to the tune of 232mt, second highest of all time.
The government has set a procurement target of 26.3mt, but storage is woefully inadequate and incentive schemes for the private sector slow and unattractive. The government had sanctioned 150 lakh tonne of additional storage facility, but less than 1% of it has been constructed so far.
Last year, archaic distribution rules forced release of only a small amount of grain despite high inflation. This led to wastage of about 50,000 tonnes of wheat.

On potential growth rate and its link to inflation

Some economists link the persistently high prices to the pace of economic growth. They say Indian economy is expanding at a rate beyond its ‘potential growth rate’. ET examines the concept and its relationship with prices in today's ET in the Classroom column. Interesting concept to learn.

An noteworthy criticism of our petroleum sector

Successive petroleum ministers have been alleged to milking these companies for political largesse. Skewed policies geared towards the vote bank have consistently killed competition, creating an uneven play for both public and private sectors.

How do we take India on a $45 trillion path?

Take a look at this interesting article that appeared in today’s ET. Well worth a read.

Obituary

Liz Taylor

Elizabeth Taylor, the violet-eyed film goddess whose sultry screen persona, stormy personal life and enduring fame and glamour made her one of the last of the old-fashioned movie stars and a template for the modern celebrity, died Wednesday at age 79. She was surrounded by her four children when she died of congestive heart failure at Cedars-Sinai Medical Center, where she had been hospitalised for about six weeks.
Taylor was the most blessed and cursed of actresses, the toughest and the most vulnerable. She had extraordinary grace, wealth and voluptuous beauty, and won three Academy Awards, including a special one for her humanitarian work. She was the most loyal of friends and a defender of gays in Hollywood when AIDS was still a stigma in the industry and beyond. But she was afflicted by ill health, failed romances (eight marriages, seven husbands) and personal tragedy.
Her more than 50 movies included unforgettable portraits of innocence and of decadence, from the children’s classic “National Velvet” and the sentimental family comedy “Father of the Bride” to Oscar-winning transgressions in “Who’s Afraid of Virginia Woolf?” and “Butterfield 8.”
The historical epic “Cleopatra” is among Hollywood’s greatest onscreen fiascos and a landmark of offscreen monkey business.
The London born actress was a star at age 12, a bride and a divorcee at 18, a superstar at 19 and a widow at 26.
Taylor’s ailments wore down the grudges. She underwent at least 20 major operations and she nearly died from a bout with pneumonia in 1990. In 1994 and 1995, she had both hip joints replaced, and in February 1997, she underwent surgery to remove a benign brain tumour. In 1983, she acknowledged a 35-year addiction to sleeping pills and pain killers. Taylor was treated for alcohol and drug abuse problems at the Betty Ford Clinic in Rancho Mirage, California.
Her advocacy for AIDS research and for other causes earned her a special Oscar, the Jean Hersholt Humanitarian Award, in 1993.

International

Global wheat output figures

Global wheat output is estimated to rise by 3.4% to 676 million tonnes in 2011 as high global prices led to an increase in the area under coverage in many countries, United Nation's body Food and Agriculture Organisation said on Wednesday.
The production in 2011 would still be below the bumper harvests in 2008 and 2009. Besides rise in area, FAO expects that productivity would increase in countries which were affected by drought in 2010.

Language lessons

peroration: Noun

A flowery and highly rhetorical oration; (rhetoric) the concluding section of an oration

stupor: Noun

The feeling of distress and disbelief that you have when something bad happens accidentally; Marginal consciousness

23.03.2011

ramkyc@gmail.com (Ramakrishna) — Wed, 23 Mar 2011 16:32:00 +0530

Politics & the Nation

Warren Buffet and Bill Gates are in India

Billionaire investor Warren Buffett said he is looking forward to using the enormous cash pile of flagship firm Berkshire Hathaway to acquire companies in India, which he described as a large, and not an emerging, market.
The Omaha, Nebraska-based Berkshire has made two large acquisitions in the past one year, buying chemicals additive firm Lubrizol for about $9 billion a few days ago and railroad firm Burlington Northern Santa Fe for about $26.5 billion last year. The cash pile on its books is estimated at $38.2 billion.
Buffett will also use the India visit to join his billionaire friend and Microsoft founder Bill Gates on a mission to push wealthy Indians to pledge money for a global philanthropic drive called the ‘Giving Pledge’.
Buffett begins his maiden India trip with a visit to metal-cutting tools maker TaeguTec India Pvt Ltd—his only investment in the country till date—on Wednesday. His other major India connection is the recent tie-up with Bajaj Allianz to sell auto insurance policies.
On Thursday, after wrapping up his Bangalore visit, Buffett will fly to Delhi, where he will hold a joint press conference with Gates and then speak with some leading Later, in the afternoon, he is expected to meet Prime Minister Manmohan Singh.

ED finds Hasan Ali links with politicians and babus

The Enforcement Directorate has found Pune-based stud farm owner Hasan Ali Khan has links with middle level politicians and bureaucrats. Some of these politicians are believed to be from as far as Bihar.
Khan, accused of stashing away black money worth $8 billion in Swiss banks, is being interrogated by ED under the Prevention of Money Laundering Act, or PMLA, and Foreign Exchange Management Act, or Fema. His custodial remand, which came to an end on Monday, was extended by three days by the Supreme Court.

Finance & Economy

Zero rating of taxes explained

A country does not export its taxes and, hence, exports would be zero-rated under GST. This means the final product or service will be spared tax, and taxes paid on all inputs refunded.
The above explanation may sound a little confusing to the uninitiated in taxation. Let’s try a bit. Suppose there is a series of transactions before a commodity is exported. Under GST, at every stage of this series, tax has to be levied, duly deducting whatever tax is paid on the purchase value. When the commodity is finally exported, there is no tax on the sale; but the exporter would have paid taxes on his purchases. When we say exports are zero rated, what it means is that the exporter has to be refunded the tax paid by him on his purchases which were exported out of the country.

Some very good thoughts on chasing black money

Look at this face off column in today's ET. Worth a read. Should not miss it.

Some interesting snippets about our healthcare

According to NSO estimates, upto 79% cost of healthcare in rural areas is due to the cost of medicines and this situation is further compounded by the fact that 78% of the total expenditure on the healthcare is out of pocket with 65% of the Indian population, as per WHO estimates, not having access to modern health care.
Various state governments spend only between 8% and 30% of health expenditure on drugs, thereby leaving patients with little choice but to buy expensive drugs from the market.

GST Bill introduced in Parliament

State governments will enjoy virtual veto power on matters concerning the proposed goods and services tax, with the Centre ceding ground to opposition-ruled states on the Constitutional Amendment Bill in an attempt to build consensus in Parliament. The legislation stipulates that every decision of the goods and services council, a joint decision making body of states and Centre, must be supported by all the members present, giving every state the power to block a proposal.
The government will need the support of a large opposition party or block to garner two-thirds majority in Parliament, needed for making constitutional changes. The new tax regime also needs to be ratified by at least 15 state assemblies. Nine states, mostly ones ruled by main opposition party BJP, have opposed the constitutional amendments citing loss of fiscal autonomy.
The finance ministry seems to have bent backwards to get states to support the legislation that will help it roll out the proposed goods and services tax. The Centre’s position seems to have taken opposition-ruled states by surprise.
The Constitution (One Hundred and Fifteenth Amendment) Bill, 2011 will give the states the power to tax services while the Centre will get the authority to levy tax on retail trade. At present, states do not have the power to tax services while the Centre cannot impose a levy on retail sales of goods.

22.03.2011

ramkyc@gmail.com (Ramakrishna) — Tue, 22 Mar 2011 14:11:00 +0530

Politics & the Nation

On the state of reservation politics in India

Take a look at this very well written ET editorial. A must read. A comment that is worth our noting...
The idea of affirmative action, or positive discrimination in favour of the downtrodden, has been subsumed by patronage politics in India. The reservation policy, in effect, has become a battleground with political parties casting the electorate as competing caste groups and these social groups, in turn, striving for ever more backwardness.

Some facts on phone tapping

Phone intercepts are permissible under Section 5(2) of the Indian Telegraph Act. The Union home secretary or the home secretary of a state can allow interception.
A phone can be tapped for 60 days. Can be extended by another 60 days on credible evidence.
Allowed only for public safety & integrity of the country. Three years imprisonment & fine for unlawful tapping. Penalty could be up to 50 cr.
Between 7,500 and 9,000 phone taps are authorised by the Centre every month. Government says tapping does not exceed six months.

Centre may list about 10 PSUs in FY12

The department of disinvestment plans to list as many as 10 central public sector units that have turned profitable to raise the budgeted Rs. 40,000 crore from disinvestment in the next fiscal.
There are 158 profitable state-run companies, of which only 47 are listed.
The net profit of all the 217 central public sector units rose by 11% to Rs. 92,593 crore in 2009-10, according to data released by the department of public enterprises. These firms had made a net profit of Rs. 83,867 crore in the previous year.

Finance & Economy

Look at our banking strength

As on March 31, 2009, we had 27 public sector banks, seven new private sector banks, 15 old private sector banks, 31 foreign banks, 86 regional rural banks (RRBs), four local area banks (LABs), 1,721 urban cooperative banks, 31 state cooperative banks and 371 district central cooperative banks.
In spite of these impressive numbers, more than half of our population is not having bank accounts.

Rajat Gupta quits as ISB Chairman

It was just yesterday that we were noting about this prospect. Now it is confirmed. Rajat Gupta, the former worldwide managing director of McKinsey & Co, has decided to resign as the chairman of Indian School of Business. Gupta’s resignation comes three weeks after the US Securities and Exchange Commission (SEC) filed administrative civil insider trading charges against him. The ISB executive board will meet on April 2 in Hyderabad to decide on the new chairman.
Gupta, one of the first Indian Americans to become the CEO of a big US firm, has been charged with leaking secret details to Galleon Group hedge fund manager Raj Rajaratnam on Warren Buffett’s plan to invest $5 billion in Goldman Sachs at the height of the financial crisis. The deal helped ensure Goldman’s stability while Galleon Group made a profit of $18 million, according to US SEC charges.
This is not for the first time ISB is in the spotlight for the wrong reasons. In October 2009, an executive board member, Anil Kumar, then director at consulting firm McKinsey & Co, was charged on the same insider trading scheme involving Galleon Group, following which he resigned from the board. In January 2009, ISB’s then dean M Rammohan Rao resigned as dean after Satyam Computer Services founder Ramalinga Raju admitted to inflating profits and revenue. Rao was a member of the Satyam board.

National interest paramount, not MNC's contractual rights; rules SC

The Supreme Court has ruled that private companies cannot complain about violation of their contractual rights by government when national interest is involved in awarding contracts for public projects involving taxpayers' massive money.
A bench of justices VS Sirpurkar and TS Thakur in a judgment expressed anguish at the manner in which the Tehri Pump Storage Plant could not be taken up for the past three and half years due to the legal battle involving two MNCs — Voith GMBH (respondent No.1) and Alstom (respondent No.2).
The apex court passed the judgment while staying an Uttarakhand High Court order which had halted the tendering process adopted by Tehri Hydro Development Corporation after Voith Hydro GMBH challenged the process as being in favour of rival bidder Alstom. In this case, the notice inviting tenders on the prime turn-key execution was issued on August 31, 2007. But the two companies, which were finally shortlisted for the contract, fought legal battles in the high court and the apex court accusing THDC of being biased in favour of the other.