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
