April 8th 2010
Politics & the Nation
- Tough days ahead for Kharif season?
- Abnormally hot weather and lower than expected rains are raising the spectre of India facing another water shortage in the coming kharif season.
- The high temperature is evaporating water bodies, including the country's main reservoirs. Data collected in mid-March by the Central Water Commission that monitors the live storage of 81 major reservoirs, shows they had only 32% of total storage capacity, the second lowest since 2006.
Finance & Economy
- What did the US learn from the recent financial crisis?
- It learned that India managed its economy quite well. Take a look at the comment made by Timothy Geithner, the US Treasury Secretary:
- "India has shown that if you avoid the classic mistakes of reform, monetary policy or exchange rate policy and you want the financial sector to grow and meet the growing needs of the dynamic private sector, but don't let them finance their growth by borrowing dollars or relying on short-term capital flows from the rest of the world, then your system is much less vulnerable."
- Base rate conundrum
- There is a tiff between the RBI and the bankers over the guidelines on base rate. The banking regulator is insisting that the final communiqué on base rate should state that "lending rates will be fair and non-discriminatory to all retail and small borrowers (mainly farmers)". Bankers feel that the seemingly harmless sentence in the policy could cause endless feuds between lenders and borrowers. Bankers fear that a borrower with a 15-year loan may move consumer court on the grounds that he/she is being charged a higher interest rate than someone who has taken a 10-year loan.
- The base rate -- the final circular on which was supposed to be issued a fortnight ago -- will be effective from July 1, and will replace the prime lending rate (PLR). While PLR takes into account the cost, profit margin and risk premium, the base rate factors in only cost and profit margin. Under the new arrangement the risk and tenor premia will be charged over the base rate.
- How will globalisation help the poor get out of poverty?
- Take a look at the following answer given by TK Arun:
- Globalisation is and has to be accompanied by two kinds of domestic reform: one, to free people from restraints that prevent them from taking advantage of new opportunities across the globe; and two, to invest people with the capacity to recognise and take advantage of economic opportunities around the world. Understood in this fashion, globalisation is about unleashing human creative potential to satisfy people's needs and wants around the world.
- Should there be a manufacturing strategy for India?
- Arun Maira discusses this question in his very well written article in today's ET. A must read. Two excerpts worth remembering:
- Strategy is about making choices about what to do to achieve the desired results. Choices must be made about which manufacturing sectors will be more important for inclusive and sustainable growth in the next 25 years. Choices must also be made about the best ways to stimulate that growth.
- Strategy-making cannot be left entirely to the market. Policymakers have a vital role to play. However, policymakers cannot shape strategy within an ivory tower cut-off from reality. The task of shaping industrial policy is to elicit information on significant externalities and their remedies.
- An Indian company is world's second largest spirits maker!
- Vijay Mallya-led UB Group said it has become the world's second largest liquor maker after Diageo with sales of over 100 million cases in the last 12 months and is certain to be the number one by next.
International
Science
- The heaviest of the elements
- A team of Russian and American scientists has discovered a new element that has long stood as a missing link among the heaviest bits of atomic matter ever produced. The element, still nameless, appears to point the way toward a brew of still more massive elements with chemical properties no one can predict. Though unnamed, it could possibly be called ununseptium. It will most probably occupy one more square in the periodic table with an atomic weight of 117.
- The team produced six atoms of the element by smashing together isotopes of calcium and a radioactive element called berkelium in a particle accelerator about 75 miles north of Moscow on the Volga River.
- This is expected to positively prove that as newly-created elements become heavier and heavier they will eventually become more stable and longer-lived than the fleeting bits of artificially produced matter seen so far.
Language Lessons
- hectoring: Verb
- Be bossy towards
- eg: For a country long used to Western officials unfailingly hectoring it to accelerate reforms and open up restricted markets and sectors, India's economic managers ...
- scatological: Adjective
- Dealing pruriently with excrement and excretory functions
- eg: The law can also be involved with matters scatological, as was reported in the Capital's newspapers a few days ago.
- risible: Adjective
- Arousing or provoking laughter
- eg: The Sensex, the rupee, confidence that India's growth rate would soon touch 10% — they are all rising. Or merely risible, from the point of view of the poor, who seemingly benefit little from India's economic success.
April 7th 2010
Politics & the Nation
- Maosits make mincemeat of 75 CRPF personnel!
- Take a look at this sad story.
- An editorial comment that is very well reasoned in this context:
- In fact, a frenzied state response is clearly what the Maoists want. Operation Green Hunt has not produced enough violence against ordinary tribal people so far, but still has got the Maoists on the run. This does not suit the Maoists. They claim that Green Hunt is nothing short of the Indian state's war against its own people. The only way to prove that is to get the state to launch a massive assault that does not distinguish between Maoists and tribal people. The cold-blooded massacre of 80-odd policemen is transparently an attempt to provoke brutal reprisal. The blood they spill of ordinary policemen as talisman of their revolutionary earnestness, and the blood they hope would inundate the jungles of central India as the state mows down entire villages in retaliation, as proof of the need for such revolution — thus runs Maoist logic.
- This logic must be defeated, firmly and resolutely, to win the war against Maoism. For that, restraint and logic must temper and guide the force that is used to respond to the latest outrage
- India targeted by Chinese hackers
- Take a look at this report too. This is equally disturbing.
Finance & Economy
- CAG comes hard on Raja; accuses him of causing Rs. 26K crore loss
- The Comptroller and Auditor General (CAG) has accused telecom minister A Raja of causing a loss of over Rs 26,000 crore to the government by disregarding the advice of many experts and persisting with a faulty and outdated policy for issuing new telecom licences.
- Raja, who has survived several calls for his removal over charges of corruption, 'single-handedly' decided to continue with the policy that cost the government Rs 26,685 crore in revenue, CAG has said in its annual report.
- CAG's audit of DoT relates to the issue of new pan-India licences in 2008 at Rs 1,651 crore, a price fixed in 2001 when mobile subscriber base was 45 million and industry valuations were poor. Nine companies were issued licences in a process that was controversial from the very beginning.
- DoT advanced the cut-off date suddenly and then incorporated a first-come, first-served clause which some of the bidders got to know of in advance.
- Some months later, Swan Telecom and Unitech, two of the winners, sold a large stake in their operations to overseas companies at stupendous valuations.
- NREGS to move up the value chain
- The UPA government's flagship job guarantee scheme is all set to target sophisticated and skills-intensive projects, such as watershed development and farm productivity enhancement schemes. The revamped national rural employment guarantee scheme (NREGS) will thus seek to create higher value assets and also impart newer skills to the beneficiaries.
- The idea behind the revamped NREGS is that dependence on it should go down over time. Where durable assets are created, water conservation happens, agriculture productivity is raised and all this is dovetailed with micro-finance, then migration from outside the area is reduced and people go back to farming or other livelihood created by NREGS.
- A laudable objective indeed.
- It is estimated that in 2009-10, nearly 5 crore families would be provided around 300 crore person-days of work under the programme. In four years, the programme has provided nearly 600 crore person-days of work at a total expenditure of around Rs 70,000 crore.
- The markets are rising to record highs
- Investors pushed Indian shares and the rupee to multi-month highs expecting a sustained earnings and economic growth, but the sharp gains have also triggered fears of policy brakes to prevent overheating of the economy.
- Stocks rose to a 25-month high on Monday, tailing a global rally across asset classes after the best US jobs data in three years. The rupee rose to a 19-month high against the US dollar as global investors poured in funds to buy Indian assets.
- The optimism has led to price increases, including in steel and auto, which are threatening to lead to an inflationary spiral that could force faster interest rate hikes.
- Why is the American pharma market so important for our drug companies?
- At a little less than half the size of the world's largest health bill, US pharmaceutical sales are estimated at $315 billion. Almost 40% of the drugs and 80% of medicinal active ingredients consumed in the US are imported.
- That's why Indian pharma companies go after the USFDA approval for their manufacturing facilities. Because unless their manufacturing facilities are USFDA approved, products made in those facilities cannot be exported to the US market.
- India has the largest number of USFDA approved plants outside the US — estimated at 175 now, from around a 100 in early 2007.
- Any alteration to the current systems to meet USFDA's specifications can cost drug companies up to $50 m. The cost of an additional trial, if mandated by the US drug regulator, is pegged at over $50 million.
- On the new regulatory landscape that is causing lot of consternation among the big retailers
- New rules on foreign direct investment in wholesale trade have caused consternation among Indian business houses with big plans for retail such as Sunil Mittal's Bharti and the Tatas and their partners, global giants like Wal-Mart and Tesco. The guidelines have also disrupted plans by India's largest retailer Kishore Biyani to team up with French company Carrefour for a foray into wholesale trading, also known as cash & carry.
- So, what exactly are the new rules?
- The new rules, issued by the industry ministry on March 31, say sales to 'group companies' should not exceed 25% of a cash & carry company's turnover and should only be for 'internal use'.
- But the main irritant is the 25% cap on sales to group companies because some agreements had been structured so that cash & carry companies owned by foreign investors sell the bulk of their goods to Indian owned retailers selling to consumers.
- India allows foreigners to own 100% in companies carrying out wholesale trade but prohibits FDI in retailers selling to consumers. Foreign-owned wholesale traders can sell to shops and restaurants or other retailers but not to individual buyers.
- Know what does STRIPS stand for?
- Registrars and Transfer Agents in Mutual Funds
Language Lessons
- Utterly astounded
- eg: The unique interpretation of the words left most people gobsmacked, scurrying for dictionaries.
- spiel: Noun
- Plausible glib talk (especially useful to a salesperson);
- Verb: Replay (as a melody); Speak at great length (about something)
- eg: Our superpower spiel sounds so hollow when our elite forces are blown to bits and Chinese hackers snoop on our defence secrets.
- exfiltration operation: Noun
- A clandestine rescue operation to bring a defector or refugee or an operative and family out of danger
- privateer: Noun
- A privately owned warship commissioned to prey on the commercial shipping or warships of an enemy nation
April 5th 2010
Politics & the Nation
- Nuclear summit on April 12 and 13
- The summit is the brainchild of the US President Barack Obama.
- Our PM Mr Singh is scheduled to visit Washington on April 12 and 13 for the summit. He is among the 42 heads of state who will take part in the summit. Notably Iran and North Korea are not taking part in the deliberations.
- The summit will include two plenary sessions on April 13, that will focus on national measures and on international cooperation to enhance nuclear security. The leaders will first meet over dinner on April 12 where discussions will be held on the threat of nuclear terrorism. After the summit, an outcome document will be made public on April 13.
- India has continued to be active in the area of nuclear security. Since 2002, India has been piloting a UN resolution on preventing terrorists from acquiring weapons of mass destruction. India has also been collaborating with the IAEA on setting and enforcing standards on physical protection of nuclear material and facilities and combating illicit trafficking in nuclear material. India is also party to the Convention on the Physical Protection of Nuclear Material and is participating in the Global Initiative to Combat Nuclear Terrorism.
- Why is the Census important? Can you cite some of the achievements made by a Census ever?
- The government is spending about 37% of its total annual budget on social programmes. Regardless of which programme we are talking about unless we know the numbers involved and in which village, town, state of the country they live, we will not know how to budget for it. Nor will we be able to ensure effective delivery. And to the right people! This is where the importance of Census lies.
- Indeed the Census is the only source of primary data at the grass roots level on demographic trends, economic activity, literacy, education, housing, urbanisation, fertility, mortality, religion, etc.
- It also doubles up as an exhaustive case-sheet, alerting the government to adverse socio-economic trends, enabling it to take ameliorative action. For instance, it was the decline in sex-ratios that came to light in earlier Census operations that alerted the government to the practice of female infanticide. This led to legislation banning sex-determination tests and several special programmes targeting the girl child were also launched.
- Likewise the Total Sanitation Campaign was launched following the revelation in Census 2001 about the distressing lack of toilets in vast swathes of the country, including urban areas.
- Census 2011 is attempting for the first time ever a national Population Registry. Given what is being attempted — details of usual residence complete with photograph and biometric identity (10-finger prints) — it is going to be a gigantic logistical exercise.
Finance & Economy
- StanChart and Air India accused of shady deal
- High-street banks and bond houses are raising a hue and cry over a recent deal between Standard Chartered and Air India.
- What's the brouhaha about?
- Nacil placed 10-year bonds at an interest rate of 9.13% with StanChart around March-end 2010 . Within a few days, the latter sold a slice of the portfolio to a retirement fund at around 8.70%. The bank thus made a killing from the deal.
- Why are rivals miffed?
- Bond traders say PSUs sell bonds at 60-70 bps above the underlying govt security and there was no reason for Nacil to pay more than 8.70%
- Institutions say there were enough takers in the open market, but StanChart took it on its books because the paper came cheap and could be sold at a higher price.
- What is StanChart's take?
- AI deal was signed in March '09 when the market was difficult. The government guarantee had not come in yet and AI's balance sheet was in a bad shape, which hampered efforts to price the paper at the customary spread over g-secs.
- 3G auctions kicking off on April 11
- The much delayed 3G spectrum auctions are finally likely to take place on April 11.
- 3G services were due for launch in 2007, but have repeatedly been deferred amid troubles over freeing up airwaves and setting bid prices.
- Analysts have billed the auctions as a fiery contest because at stake are airwaves that will enable cellphone companies to break into high-speed internet and video-conferencing services and help them transcend the tribulations of a cut-throat market.
- The bids would be very aggressive and it is unlikely that companies would bid less than a billion dollars, given that the base price is $780 million.
- Telcos now offer services on 2G spectrum, but further allocations in this medium have been on hold till the government finalises a new allotment method. Before March 2009, when the allocations were stopped, telcos got spectrum based on subscriber numbers.
- ICICI, HDFC Bank set to sport 'foreign' label
- ICICI Bank and HDFC Bank, two of the country's biggest lenders in which overseas investors own more than 51% equity, will now be treated as foreign banks, with the government having decided finally not to carry out further changes to its new policy on overseas investment.
- The government's decision will impact future investment plans of these banks in subsidiaries or in sectors where there is a cap on foreign investment. But investments in financial services, including in insurance, which were all made before the new policy was announced in February 2009 will not come under the ambit of the new rules.
- The new rules categorise firms which are either predominantly foreign-owned or controlled as foreign companies. In the case of ICICI and HDFC Bank, foreign investment is over 51% although management rests with Indians. India's foreign investment rules allow for overseas investors to hold up to 74% in private banks through secondary market purchases or through Global Depository Receipts or American Depository Receipts.
- Any new investments made by these banks in subsidiaries or other companies will be treated as foreign investment.
- Several Indian private banks such as ING Vysya Bank, ICICI Bank, HDFC Bank and IndusInd Bank have at least 51% foreign investment. Others such as YES Bank and Federal Bank have foreign investment precariously close to the 51% mark. There is unlikely to be any major regulatory problem since these private banks continue to be governed by the RBI's licensing norms. However, banks will be cramped from investing in sectors that have foreign investment limits, should they wish to do so.
- The rising oil prices give jitters
- Take a look at this write up which gives details on the issue. Oil prices are fast becoming a concern for our economy.
International
- The US is recovering
- Employers in the US created more jobs in March than at any time in the past three years, showing the recovery from the worst recession since the 1930s is broadening and becoming more entrenched.
- Payrolls rose by 162,000 workers, the third gain in the past five months and the most since March 2007, figures from the Labor Department showed on Friday in Washington.
- The Earth Hour
- At the stroke of 8:30pm on Saturday, March 27, nearly a billion people in more than 120 countries demonstrated their desire to do something about global warming by switching off their lights for an hour.
- First organised in Sydney, Australia, in 2007 by the local chapter of the World Wildlife Fund, its popularity and the level of participation (both individual and official) that generates has exploded in recent years — to the point that there is barely a corner of the earth that the campaign hasn't touched.
- Andy Ridley is the person who is credited with the idea of observing the Earth Hour; over drinks with friends in a Sydney pub several years ago. Ridley is also the executive director of Earth Hour Global.
- But what does Earth Hour accomplish?
- Look at what Bjorn Lomborg, a powerful commentator on global warming issue says on the observation of the Earth Hour:
- "Switching off our lights and promising to cut carbon emissions may make us feel momentarily virtuous, but that's all it does."
- Beware of the British libel law
- You can sue anyone for libel in a British court, even if both parties are foreigners, and so is the publication, as long as the disputed material can be accessed online anywhere in England or Wales. Jurisdiction is irrelevant; it doesn't even have to be in English. The onus of proving that it's not libel is on the defendant, and London's courts have a reputation of handing out massive damages.
- If you believe allegations in the American media, there are a bunch of law firms who specialise and thrive in winning libel judgements, with huge fees.
Personality
- James Leape
- He is the Director-General of the World Wildlife Fund.
Language Lessons
- halcyon: Adjective
- Idyllically calm and peaceful; suggesting happy tranquillity; marked by peace and prosperity
- eg: A pile of debt amassed during their halcyon days of growth is crimping a full-out revival of realty companies savouring a sharp uptick in demand after a long spell of duress.
- scrum: Noun
- [Brit] A disorderly crowd of people
- eg: A vast scrum of developers was staring at defaults to mutual funds and banks last year, but the government rescued them by easing lending norms.
- preen: Verb
- Clean with one's bill; Pride or congratulate (oneself) for an achievement; Dress or groom with elaborate care
- eg: ... That would, surely, give some of our politicians something else to preen about.
- slouch: Noun
- An incompetent person; usually used in negative constructions; A stooping carriage in standing and walking.
- eg: Billion-dollar bids will not make the auctions a no-contest, because other companies in the fray are no slouches, said telecom analysts.
April 2nd 2010
Politics & the Nation
- Education is fundamental right for kids aged 6-14
- Education for children aged between 6 and 14 has finally become a fundamental right with the notification of the Right of Children to Free and Compulsory Education Act on Thursday.
- While the notification is an important milestone, the government acknowledged that the real challenge lay in the effective implementation of the Act.
- With education becoming an entitlement, efforts will have to be made to ensure that those on the margins are able to seek redressal.
- It has been a long and arduous journey for this fundamental right. Despite the unanimous support for the move, the enabling RTE legislation hasn't had an easy passage. Work on RTE was started by the NDA government soon after Parliament passed the constitutional amendment in December 2002. The first delay came when the NDA was voted out of power in May 2004. Work on the RTE was then taken up by the Kapil Sibal committee of the Central Advisory Board of Education (CABE). The Sibal draft slated the financial implications, estimated by the then National Institute of Education Planning and Administration, at a minimum of Rs 3,21,196 crore to a maximum Rs 4,36,458.5 crore over six years. This is where the proposed legislation ran into trouble. The question of funding was to hold up the bill for the next four-and-a-half years. The ministry of human resource development then worked to bring down the financial implication of the bill. Finally, whittling it down to Rs 171,000 crore.
- Some excellent words in the context of the dedication of the right to education act:
- Rights, in other words, are not passively dispensed by an enlightened administration to a supine populace, but actively enforced by citizens in exercise of their political agency.
- The point is, the law should be seen as a means of mobilising and empowering the people, rather than as an act of emancipation in itself.
Finance & Economy
- Migrants land sops as labour shortage grows
- Years of migration has depleted the workforce back home, and today, Punjab and Kerala are rolling out the red carpet for immigrant hands from Uttar Pradesh, Bihar, West Bengal and Orissa as their mostly-agrarian economies face stagnation in the face of a crippling labour shortage. Plantation owners in Kerala and the Punjab government say that to retain the immigrant workforce, they will offer provident fund, gratuity and pension.
- PM bats for caution on easing of capital account
- Amid concerns that India may attract a chunk of the money flooding emerging markets, Prime Minister Manmohan Singh said that there are good reasons to be cautious in opening up the capital account. But he was categorical that Indian companies must have the instruments needed to hedge against exchange rate volatility.
- Look at what he reportedly said: "...Growth will occur in an economic environment where India will remain open to the world and Indian companies will operate globally. Management of forex risk would be an important concern in future and the financial system must, therefore, provide our companies with instruments they need to manage these risks at reasonable costs."
Health
- The state of our health
- Take a look at these distressing statistics!!!
- The following lead you to conclude that India's primary healthcare system dysfunctional: the system has failed to deliver basic health services to the poor, notwithstanding numerous schemes launched with fanfare, including the Rashtriya Swasthya Bima Yojana and Health For All.
- The Economic Survey, 2009-10, highlights a shortage of 20,486 sub-centres, 4,477 PHCs and 2,337 community health centres (CHCs) based on 2001 population norm. Only 13% of rural residents have access to a PHC, 33% to a sub-centre, 9.6% to a hospital and 28.3% to a dispensary or clinic. About two-thirds of country's registered hospitals are private.
- The National Rural Health Mission, launched on April 12, 2005, with an annual allocation of Rs 12,000 crore — increased by Rs 2,057 crore in 2009-10 — aims at providing accessible health services to the poorest households in the remotest regions of the country. The Rashtriya Swasthya Bima Yojana claims to have covered 4.5 million below-poverty-line families by issuing biometric cards. In reality, the programmes deliver far short of their avowed claims.
- Over 17 lakh children in the country die annually before reaching their first birthday. India accounts for a fifth of the global disease burden: 23% of child deaths, 20% of maternal deaths, 30% of tuberculosis cases, 68% of leprosy cases and 14% of HIV cases. Tuberculosis kills around 2 million people a year around the world; in India, the disease takes a toll of 4,21,000 lives.
- With almost a third of the country's population living in cities — more than half the number in 23 metropolitan areas — the healthcare infrastructure is far too inadequate. While there is need to raise the availability of doctors from 6,00,000 to 20,00,000 and nurses from 16,00,000 to 44,00,000, some 165 medical colleges annually turn out only about 16,000 doctors in the country.
- THE number of physicians per 1,000 population for the world is 1.5; for India, it is 0.6. Against a world average of 3.98 hospital beds per 1,000 population, Russia has 9.7, Brazil 2.6, China 2.5, and India 0.9. Per-capita per-year in-patient admissions for India aggregate 1.7 compared to 9 for the world and 5.5 in lowincome countries.
- Public health expenditure in the country has been only about 0.9% of GDP — central government 0.29% and state governments 0.61% — which is below the low-income countries' average of 1%, and even sub-Saharan Africa's 1.7%.
- As much as 63% of the entire spending goes to wages and salaries, leaving meagre resources for drugs, supplies, equipment, infrastructure and maintenance.
International
- Manufacturing Inc roars back to life across globe
- Factories in the US, Europe and Asia cranked up production last month, suggesting recovery from a deep recession was taking root in economies around the globe.
- The US manufacturing sector grew at its fastest pace in more than five years last month and activity in Europe bounced higher, with a cheaper euro helping stimulate exports.
- UK manufacturing expanded at its fastest pace since 1994 while China's vast industrial sector also grew in March.
