Politics & the Nation
* Single national level entrance exam for students in the offing
o Efforts are underway to hold a single national-level entrance test for students to get admission into engineering, medical and commerce courses from 2013.
o This will smoothen the admission process into engineering, medical, economics and commerce courses and will reduce the burden on students who are appearing in multiple-tests for admission.
o The Council of School Board of Education (COBSE) has reportedly prepared a core-curriculum for senior secondary classes in science and mathematics subjects. A similar core curriculum will be prepared in commerce in three months.
* India to counter Chinese threat by deploying Akash and Agni missiles in North East
o Take a look at this news report. Makes an interesting reading.
o India plans to progressively base six surface-to-air Akash missile squadrons, a few Agni III and Agni V ballistic missiles in the North East to counter Chinese threat.
o China is reportedly upgrading as many as 14 airfields in Tibet, of which at least half are now fully-operational. Its Linzi airbase, for instance, is not even 30 km away from the LAC in Arunachal.
* Lent
o It is a period ahead of Easter which Christians traditionally consider a time of penance and reflection. It's beginning today.
o We have noted about this earlier also in our blog. Take a look at it in the postings on 9th February, 2009 and 22nd January, 2007.
* How do you tackle irresponsible political parties?
o It is a thought provoking essay that deals with this issue. Worth a read. Some excerpts:
o Such unconstitutional acts -- staging bandhs and not allowing movies to be screened for partisan reasons -- are usually perpetrated by parties that cannot win elections but have enough clout to disrupt normal life for the law-abiding majority.
o Parties that behave in unconstitutional ways should, therefore, be banned from participating in elections at all levels — national, state or local — for a period of time whose length should be determined by the nature of the offence and by past behaviour. If it is a first offence, the ban could be for less than a year. However, if the party is repeatedly indulging in serious offences, the ban could extend to 10 years to ensure that the leaders of these outfits realise that there is a price to be paid for being incorrigible.
o The law banning political parties should be drafted in a way to ensure that irresponsible leaders cannot contest elections merely by changing the name of the outfit. One way of doing this is by banning not just the party that behaves unconstitutionally but also all those who have been elected from that party at the national, state or local level.
* A tribute to our democracy
o January 24, 2010, marked the diamond jubilee of one of the most remarkable institutions in the world, the Election Commission of India.
o Last year, it conducted a nationwide election with over 700 million voters — more than the combined population of the European Union and the US.
o Using a million electronic voting machines, Indians voted in 8,00,000 booths — some in very remote locations at altitudes of over 15,000 ft.
o About five million volunteers supported the commission in this mammoth feat of management.
o In this election, as in the many others the commission has organised in the past 60 years, people had faith the election process was fair.
Finance & Economy
* Wine story gone sour in Maharashtra
o An excerpt from a very good news story that appeared in today's ET:
o Wineries in Maharashtra no longer sparkle. More than half of the state’s 58 wineries have either closed down or stopped producing wine due to the glut in the market. Nearly 20 lakh litres of wine, which amounts to 25% of India’s total production, are lying unsold.
o Of the state’s 58 wineries, 32 are in dire straits. From a promised rate of Rs 60 per kg, grapes are now being offered at Rs 25-30 a kg.
o In the past few years, seduced by the promise of an industry that seemed to be both agricultural and glamorous — and also conveniently benefited Union agriculture minister and state political leader Sharad Pawar’s personal fiefdom of Baramati — it poured out the incentives a little too lavishly.
o This started with a slew of concessions to the wine sector, including zero excise, no stamp duty and registration and land at concessional rates. The state appointed the Maharashtra Industrial Development Corporation (MIDC) as the nodal agency to develop winery parks in the two major grape-producing districts, Sangli and Nashik. Wine retailing was made easier through a special wine and beer licence that was available both to individual retailers and supermarkets. And last October, just ahead of the state Assembly elections, the Congress-NCP government topped up its largesse by reducing VAT to 4% from 25% last October.
o Not surprisingly, grape cultivation in the state has been increasing by 10% every year, with currently over 3,000 acres under grape cultivation. Maharashtra has been the single-largest contributor to the Rs 300-crore winery industry in the country.
o France and Italy have an average wine consumption of around 60-70 litres per person a year while it’s 25 litres in the USA, 20 litres in Australia and 4 litres in China, whereas in India it's just about 4-5 ml per person per year.
o Wine producing is as much a craft as it is a business, and this is where many of the winemakers lost their way. The problem starts in the vineyards where most farmers cultivated wine grapes like table grapes, maximising output. Yet, wine requires the opposite approach, with relentless pruning and discarding of grapes so as to focus only on the best. Most of the vineyards ended up producing poor wine, which would have no chance in the export market, and even falls short in the developing domestic market.
* Indian music trends
o Here is a good graphic that gives us a low down on the music trends.
Science & Technology
* World's most precise clock created?
o Scientists claim to have created the world's most precise clock based on the oscillation of a trapped aluminium-27 atom. Built at the National Institute of Standards and Technology in Colorado, it could tick off the 13.7-billion-year age of universe to within 4 seconds.
o The second is currently defined by caesium atomic clocks, but optical clocks promise higher precision because their atoms oscillate at the frequencies of light rather than in the microwave band, so they can slice time into smaller intervals. Such clocks could reportedly help spot tiny changes in physical constants over time.
Music
* Sangeet Natak Akademi Fellowships
o Pandit Jasraj, Kishori Amonkar, Yamini Krishnamurti and Shreeram Lagoo are among six eminent personalities in the field of performing arts who have been chosen for the rare and prestigious honour of Sangeet Natak Akademi Fellowships announced on Monday.
o The General Council of the Sangeet Natak Akademi, the National Academy of Music, Dance and Drama, also chose Lalgudi Jayaraman and Kamlesh Dutt Tripathi for the fellowships.
o There are only 32 Fellows of the Sangeet Natak Akademi at present.
Language Lessons
* praxis: Noun
o Translating an idea into action
o eg: Yet, this incident could well be momentous, or at least its significance must be grasped, and more pressingly, enshrined as praxis.
* argot: Noun
o A characteristic language of a particular group
o eg: The country is, in the argot of banking, too big to be allowed to fail.
* bluster
o Noun: Noisy confusion and turbulence; A swaggering show of courage; A violent gusty wind; Vain and empty boasting
o Verb: Blow hard; be gusty, as of wind; Show off; Act in an arrogant, overly self-assured, or conceited manner
o eg: Amid the bluster, Pakistan expressed willingness to go ahead with foreign secretary-level engagement and said that February 25 was “not a bad date” for talks.
* fawning: Adjective
o Attempting to win favour from influential people by flattery; Attempting to win favour by flattery
o eg: Considering security authorities at London’s Heathrow Airport insist that the see-through images taken on their recently-installed scanners are deleted the moment the person exits the area, the prints of Shahrukh Khan’s images, which he graciously autographed for the fawning personnel (wo)manning the area, are therefore quite inexplicable.
Wednesday, February 17, 2010
Tuesday, February 16, 2010
current affairs 16th Feb 2010
Politics & the Nation
* The Karachi Project of Lashkar-e-Toiba (LeT)
o The LeT has been outsourcing most of its terror operations in the hinterland to IM under what David Coleman Headley had referred to as ‘Karachi project’.
* Know what is a letter rogatory?
o A Letter Rogatory or Letter of Request is a formal request from a court to a foreign court for some type of judicial assistance. The most common remedies sought by Letters Rogatory are service of process and taking of evidence.
Finance & Economy
* Bharti's desire to go global hits a legal block
o It was only yesterday that we were noting about Bharti's planned acquisition of Zain Telecom's assets in all of Africa save two countries.
o That deal is reportedly facing some legal blocks. Take a look at this graphic which gives the details - just enough.
* Does making women own productive assets and giving them a differential treatment in taxation herald a better society?
o Today's ET editorial argues that it does. The arguments it advances to support its viewpoint run like this...
o Owning productive assets would enhance women’s standing in such families. What happens in society’s upper strata tends to influence conduct in other sections of society as well, and gradually, the standing of women across India could change for the better. Some state governments, such as Delhi’s, already offer a lower rate of stamp duty on property registered in a woman’s name.
o Our point is, has the lot of women in Delhi improved because of this measure? We doubt it. Besides, the trickledown that the editorial talks about is hardly likely to happen. If the tax sops are to be given only to bring about a positive change for women, then we think they may not work. They will only make for more wilier men.
o You are not remedying any gender injustice there; you are only going to add another dimension to women's torture. Let men and women sort financial things for themselves. It should not be for government to do such micromanagement. If the woman starts working and earning by going out of the household, lot of power automatically flows her way. This is what can be and should be encouraged. Not such skewed and harebrained policies. Hope the budget stays away from such imprudence.
* Inflation at 15 month high
o Inflation based on wholesale prices hit a 15-month high of 8.56% in January, stretching from food items to manufactured goods.
o Inflation in manufactured products, as measured by the wholesale price index (WPI), went up to a 13-month high of 6.55% for January 2010 from a year ago against 5.17% in December 2009.
* SBI turns seed capital provider
o State Bank of India (SBI) will provide interest-free seed capital of up to Rs 10 lakh to aspiring entreprenuers under a new scheme, SBI SMILE, which is specially targeted to encourage small and medium enterprises in the country.
o The scheme will be in place initially for one year, after which the bank could extend it, if the situation warrants.
o There will be no interest on the seed capital. The bank will offer a five year moratorium on paying the seed capital amount.
o Is it a case of the bank being flush with liquidity? Looks like so.
International
* Era of banking secrecy to come to an end?
o The Steering Group of Global Forum for Transparency and Exchange of Information for Tax Purpose, a body representing 91 countries including members of G20 and Organisation for Economic Co-operation and Development (OECD), has proclaimed that the era of banking secrecy is coming to an end.
o Interestingly, the Forum, which met in India last week, echoed the same sentiments expressed by G20 countries that met in London in April 2009. Originally an OECD offshoot, the Forum was restructured in 2009 to include non-OECD members in its pursuit for complete transparency in international taxation and banking issues.
o The Government of India also is reportedly having a re-look at the many DTAAs (Double Taxation Avoidance Agreements) it had signed with many countries. The government, reportedly, would be seeking amendments in the existing treaties to ensure better intergovernment flow of information on tax and banking matters.
o Globalization and the quantum jump in cyber communication has multiplied the opportunities for generation of wealth and cross- border transfer of income but the tax regimes of countries remain constrained by their jurisdiction limited to national boundaries. As a result, it became increasingly difficult for tax administrations to lay hands on the wealth shifted out of their jurisdiction.
o These offshore financial centers do affect the millions of people living in underdeveloped, undeveloped countries as it reduce revenues available to their governments to carry out developmental projects, such as infrastructure developments, investment in technology and education etc. Interestingly, many experts believe, such shifting of wealth to tax havens are mostly made possible by the clever manoeuvres of well established tax professionals practising in developed countries.
o Since tax evasion erodes the tax base of a country, finding effective measures for tackling this scourge has been high on the agenda of developed countries for some time.
o A study carried out by Oxfam International, a non-government organisation, has estimated that developing countries lose $124 billion annually to low tax offshore havens.
* Euro behind the ills of Europe now?
o Paul Krugman explains very convincingly that it is the adoption of single currency i.e., Euro in the EU area that lead to the present mess in which countries like Greece, Spain and Portugal are finding themselves.
o Well worth a read. Read it here.
Technology
* The difference between digital TV and mobile TV
o Digital TV, the standard that went into effect last year, was developed for stationary televisions.
o Mobile TV, which enables mobile devices to watch TV is somewhat different. The mobile devices must catch a special signal, a slice of the broadcast frequency, and software processes it to display a clear picture on the go.
o The technology will be used on new portable televisions with up to 10-inch screens, and smartphones and laptops with special adapters will also receive the signals. The devices must be within about 60 miles of a broadcast tower for a picture as clear as the television at home.
* Nokia launches mobile money transfer platform
o Nokia, the global leader in the mobile handset industry, on Monday announced the launch of the world’s first money transfer platform through mobiles in India as it enjoys the market leader’s hip and a wide distribution network in the world’s one of the fasting growing handset market.
o Christened as Mobile Money, the service will enable a customer to transfer money to other individuals, pay utility bills as well as recharge pre-paid SIM cards by using their mobile devices. The service will also be available on non-Nokia handsets.
o Consumers will also be able to pay merchants for goods and services through their mobile devices. This is a first-of-its-kind service providing customers the ability to initiate mobile payments through multiple channels such as SMS, IVR, WAP, JAVA and FIRE.
o The potential of the service is enormous as mobile phone users outnumber the bank account holders. India has nearly 500 million mobile phone users and 200 million bank account holders. There are nearly 80,000 branches of banks across the country.
Language Lessons
* pugilist: Noun
o Someone who fights with his fists for sport; boxer
* recce: Noun
o Reconnaissance (by shortening)
o It is also spelt reccy, recco
* dowager: Noun
o A widow holding property received from her deceased husband
* sappy: Adjective
o Ludicrous, foolish; Abounding in sap; [N. Amer] Effusively or insincerely emotional
o eg: ...It might, however, make Britons wake up to the real danger: that it is becoming a sappy nation.
o synonym: maudlin. It also means effusively or insincerely emotional
* The Karachi Project of Lashkar-e-Toiba (LeT)
o The LeT has been outsourcing most of its terror operations in the hinterland to IM under what David Coleman Headley had referred to as ‘Karachi project’.
* Know what is a letter rogatory?
o A Letter Rogatory or Letter of Request is a formal request from a court to a foreign court for some type of judicial assistance. The most common remedies sought by Letters Rogatory are service of process and taking of evidence.
Finance & Economy
* Bharti's desire to go global hits a legal block
o It was only yesterday that we were noting about Bharti's planned acquisition of Zain Telecom's assets in all of Africa save two countries.
o That deal is reportedly facing some legal blocks. Take a look at this graphic which gives the details - just enough.
* Does making women own productive assets and giving them a differential treatment in taxation herald a better society?
o Today's ET editorial argues that it does. The arguments it advances to support its viewpoint run like this...
o Owning productive assets would enhance women’s standing in such families. What happens in society’s upper strata tends to influence conduct in other sections of society as well, and gradually, the standing of women across India could change for the better. Some state governments, such as Delhi’s, already offer a lower rate of stamp duty on property registered in a woman’s name.
o Our point is, has the lot of women in Delhi improved because of this measure? We doubt it. Besides, the trickledown that the editorial talks about is hardly likely to happen. If the tax sops are to be given only to bring about a positive change for women, then we think they may not work. They will only make for more wilier men.
o You are not remedying any gender injustice there; you are only going to add another dimension to women's torture. Let men and women sort financial things for themselves. It should not be for government to do such micromanagement. If the woman starts working and earning by going out of the household, lot of power automatically flows her way. This is what can be and should be encouraged. Not such skewed and harebrained policies. Hope the budget stays away from such imprudence.
* Inflation at 15 month high
o Inflation based on wholesale prices hit a 15-month high of 8.56% in January, stretching from food items to manufactured goods.
o Inflation in manufactured products, as measured by the wholesale price index (WPI), went up to a 13-month high of 6.55% for January 2010 from a year ago against 5.17% in December 2009.
* SBI turns seed capital provider
o State Bank of India (SBI) will provide interest-free seed capital of up to Rs 10 lakh to aspiring entreprenuers under a new scheme, SBI SMILE, which is specially targeted to encourage small and medium enterprises in the country.
o The scheme will be in place initially for one year, after which the bank could extend it, if the situation warrants.
o There will be no interest on the seed capital. The bank will offer a five year moratorium on paying the seed capital amount.
o Is it a case of the bank being flush with liquidity? Looks like so.
International
* Era of banking secrecy to come to an end?
o The Steering Group of Global Forum for Transparency and Exchange of Information for Tax Purpose, a body representing 91 countries including members of G20 and Organisation for Economic Co-operation and Development (OECD), has proclaimed that the era of banking secrecy is coming to an end.
o Interestingly, the Forum, which met in India last week, echoed the same sentiments expressed by G20 countries that met in London in April 2009. Originally an OECD offshoot, the Forum was restructured in 2009 to include non-OECD members in its pursuit for complete transparency in international taxation and banking issues.
o The Government of India also is reportedly having a re-look at the many DTAAs (Double Taxation Avoidance Agreements) it had signed with many countries. The government, reportedly, would be seeking amendments in the existing treaties to ensure better intergovernment flow of information on tax and banking matters.
o Globalization and the quantum jump in cyber communication has multiplied the opportunities for generation of wealth and cross- border transfer of income but the tax regimes of countries remain constrained by their jurisdiction limited to national boundaries. As a result, it became increasingly difficult for tax administrations to lay hands on the wealth shifted out of their jurisdiction.
o These offshore financial centers do affect the millions of people living in underdeveloped, undeveloped countries as it reduce revenues available to their governments to carry out developmental projects, such as infrastructure developments, investment in technology and education etc. Interestingly, many experts believe, such shifting of wealth to tax havens are mostly made possible by the clever manoeuvres of well established tax professionals practising in developed countries.
o Since tax evasion erodes the tax base of a country, finding effective measures for tackling this scourge has been high on the agenda of developed countries for some time.
o A study carried out by Oxfam International, a non-government organisation, has estimated that developing countries lose $124 billion annually to low tax offshore havens.
* Euro behind the ills of Europe now?
o Paul Krugman explains very convincingly that it is the adoption of single currency i.e., Euro in the EU area that lead to the present mess in which countries like Greece, Spain and Portugal are finding themselves.
o Well worth a read. Read it here.
Technology
* The difference between digital TV and mobile TV
o Digital TV, the standard that went into effect last year, was developed for stationary televisions.
o Mobile TV, which enables mobile devices to watch TV is somewhat different. The mobile devices must catch a special signal, a slice of the broadcast frequency, and software processes it to display a clear picture on the go.
o The technology will be used on new portable televisions with up to 10-inch screens, and smartphones and laptops with special adapters will also receive the signals. The devices must be within about 60 miles of a broadcast tower for a picture as clear as the television at home.
* Nokia launches mobile money transfer platform
o Nokia, the global leader in the mobile handset industry, on Monday announced the launch of the world’s first money transfer platform through mobiles in India as it enjoys the market leader’s hip and a wide distribution network in the world’s one of the fasting growing handset market.
o Christened as Mobile Money, the service will enable a customer to transfer money to other individuals, pay utility bills as well as recharge pre-paid SIM cards by using their mobile devices. The service will also be available on non-Nokia handsets.
o Consumers will also be able to pay merchants for goods and services through their mobile devices. This is a first-of-its-kind service providing customers the ability to initiate mobile payments through multiple channels such as SMS, IVR, WAP, JAVA and FIRE.
o The potential of the service is enormous as mobile phone users outnumber the bank account holders. India has nearly 500 million mobile phone users and 200 million bank account holders. There are nearly 80,000 branches of banks across the country.
Language Lessons
* pugilist: Noun
o Someone who fights with his fists for sport; boxer
* recce: Noun
o Reconnaissance (by shortening)
o It is also spelt reccy, recco
* dowager: Noun
o A widow holding property received from her deceased husband
* sappy: Adjective
o Ludicrous, foolish; Abounding in sap; [N. Amer] Effusively or insincerely emotional
o eg: ...It might, however, make Britons wake up to the real danger: that it is becoming a sappy nation.
o synonym: maudlin. It also means effusively or insincerely emotional
current affairs 15th Feb 2010
Politics & the Nation
* Know anything about Azamgarh pilgrims?
o We were a bit surprised about the phrase at first. But as we read on this story, the issue became clear.
o It is about the Congress-wallahs who are making a beeline to Sanjarpur village in Azamgarh district.
o It was visited by Digvijay Singh and he came up with a report in which he portrayed the Muslim youth as taking to the jihadi route because they were victims first. Victims because they were all coming from rural lower middle class families who have sold their assets and borrowed money to educate themselves and yet find no gainful employment.
o The jihadi-as-victim theory has been finding traction in a section of this area after Maulana Aamir Rashadi Madani, founder of the All India Ulema Council, began an agitation over “framing of Muslims in terror cases and fake encounters.”
o The Congress brass in UP appear to have been taken in by this theory. But Rahul Gandhi, increasingly the poster boy of Congress, appears to have remained unimpressed by the articulation.
* Understand the issues involved in Bt Brinjal?
o This graphic gives an excellent insight into the whole issue on allowing Bt Brinjal.
Finance & Economy
* Bharti set to realize its dream of becoming an emerging market's MNC?
o Its bid for acquiring Kuwait based Zain Telecom's assets in all of Africa (except those in Sudan and Morocco) for 49,700 crore was reportedly accepted by Zain's board.
o The acceptance of the offer clears the way for Bharti to carry out a due diligence of the business before a final deal.
o If the deal fructifies, the acquisition will give Bharti a firm foothold in a relatively untapped market and pit it in direct competition with MTN, with which it has tried and failed twice to merge. The African operations in the 15 countries that Bharti is seeking to buy are grouped under an entity called Zain International.
o If it buys Zain’s African operations, Bharti will be catapulted past China Unicom, Sweden’s TeliaSonera, and Germany’s T-Mobile to become the world’s seventh-largest mobile phone company by subscribers.
* The FDI reform measures that were unveiled by Government last week
o The government has decided that the Cabinet Committee on Economic Affairs (CCEA) would need to vet and approve only proposals involving total foreign equity inflow of over Rs 1,200 crore, rather than proposals with a total project cost of Rs 600 crore, as per the rule in force since 1996. Assuming reasonable debt-equity ratios, the new rule means that FDI proposals with project cost adding up to Rs 4,800 crore, or just over $1 billion, no longer need Cabinet-level vetting.
o Another significant reform effectuated has been to dispense with the obligation on a foreign entity to obtain a no-objection certificate from its Indian partner for going it alone or tying up with other partners in the same area of business.
o The government has also brought in some procedural easing. Further approval will not be required if, after initial vetting, the activity is placed under the automatic route or where sectoral caps have been removed or increased.
* Do you have any views on the RBI's directive to the banks about disbanding BPLR and telling them how they should computer the base rate?
o If you are asked such a question in an exam, today's op-ed by Mythili Bhusnurmath offers the best answer. I would give it 100 marks out of 100.
o Take a look. An excellent read.
* What is the case for a probable high inflation in Asia?
o First, there is a risk of potential upside in domestic demand.
o Second, recent exports data have been much better than expected.
o Third, slowdown in investments over the last 18 months at the time when domestic demand has recovered sharply will imply quick rise in capacity utilization.
o Fourth, crude oil and other commodities related inflation pressures (direct and indirect impact) could be much higher during the current cycle.
o Lastly, surplus liquidity in the region remains high.
o Looked at this way, this question-answer method makes no sense at first. But if you read this article in full, the above excerpt will be meaninful for remembering your answer, if and when you are asked to offer an explanation to the question.
International
* Want to understand what went wrong with Greece?
o Read this story. It gives us a lowdown on the situation.
o But to put it simply, it was a case of window-dressing government accounts. With the help of consultants / advisers like Goldman Sachs and JP Morgan Chase, the government of Greece indulged in camouflaging its loans as receipts and sold its future revenue earnings to creditors. This went on for substantially long periods of time and there came a point in time when it could no longer resort to such window-dressing. Hence the bubble burst.
o Now Greece reportedly owes more than $300 bn as debts. For a country whose GDP was $357 bn in 2008, this kind of debt is unimaginable.
o Read the story in full to understand how different players played their part in bringing Greece to its heels.
Agriculture
* Here is a very good essay on how we should be reforming our agriculture sector
o For some of you, agriculture may not hold that much interest. But some of the realities surrounding this sector will surely make you sit up and take notice.
o A very good essay on the whole. Strongly recommend a read. But some excerpts:
o With only 100 million hectares of agricultural land, China produces 400 million tonnes of grain while India averages only 108 million tonnes of food from 146 million hectares of agricultural land.
o The fact is that most farmers and cultivators cannot make the sort of investments needed. Yet, small farms produce 41% of the country’s total grain and over 50% of total fruit and vegetables.
o India produces over 600 million tonnes of food products annually, is the second largest rice and wheat producer, and the largest producer of pulses and milk. However, only about 2% of India’s fruit and vegetable output is processed. Compare this with 70% in Brazil and 60-70% in developed countries. In the foods segment, processed foods account for a mere 2% of the total production. About 30% of farm produce is wasted every year for want of storage, transportation, cold chain and other infrastructure facilities.
o What is the solution being offered by the essay?
+ For the next Green Revolution to succeed, three things are critical: favourable legislation, investments in modern post-harvesting infrastructure, and post-harvest management.
o On what's wrong with the APMC Act:
+ No person or agency is allowed to freely carry on wholesale marketing activities in a declared market area that falls under the jurisdiction of a market committee. This has prevented the development of a competitive marketing system.
+ Consequently, while farmers get a pittance, the mafia makes a handsome profit because the state governments have not yet promulgated the model APMC Act. Till this is done, farmers will continue to be left behind even as the middleman prospers.
Language Lessons
* certitude: Noun
o Total certainty or greater certainty than circumstances warrant
o Synonyms: cocksureness, overconfidence
o eg: Now, this might be heresy for billions of spiritual types the world over, and cause derisory certitude from our own deeply-religious millions, but those perfidious science-wallahs have come up with another explanation for belief in the ineffable.
* elide: Verb
o Leave or strike out
o eg: ...Or, as the people on the other side of the fence would aver, the fear of things retributory is yet to be elided.
* Gaia: Noun
o (Greek mythology) goddess of the earth and mother of Cronus and the Titans in ancient mythology
* cloister
o Noun: Residence that is a place of religious seclusion (such as a monastery); A courtyard with covered walks (as in religious institutions)
o Verb: Surround with a cloister, as of a garden; Surround with a cloister; Seclude from the world in or as if in a cloister
o eg: Responsible for translating, editing, proof-reading and printing the documents, these people are cloistered in the basement of the ministry for a whole week.
* Know anything about Azamgarh pilgrims?
o We were a bit surprised about the phrase at first. But as we read on this story, the issue became clear.
o It is about the Congress-wallahs who are making a beeline to Sanjarpur village in Azamgarh district.
o It was visited by Digvijay Singh and he came up with a report in which he portrayed the Muslim youth as taking to the jihadi route because they were victims first. Victims because they were all coming from rural lower middle class families who have sold their assets and borrowed money to educate themselves and yet find no gainful employment.
o The jihadi-as-victim theory has been finding traction in a section of this area after Maulana Aamir Rashadi Madani, founder of the All India Ulema Council, began an agitation over “framing of Muslims in terror cases and fake encounters.”
o The Congress brass in UP appear to have been taken in by this theory. But Rahul Gandhi, increasingly the poster boy of Congress, appears to have remained unimpressed by the articulation.
* Understand the issues involved in Bt Brinjal?
o This graphic gives an excellent insight into the whole issue on allowing Bt Brinjal.
Finance & Economy
* Bharti set to realize its dream of becoming an emerging market's MNC?
o Its bid for acquiring Kuwait based Zain Telecom's assets in all of Africa (except those in Sudan and Morocco) for 49,700 crore was reportedly accepted by Zain's board.
o The acceptance of the offer clears the way for Bharti to carry out a due diligence of the business before a final deal.
o If the deal fructifies, the acquisition will give Bharti a firm foothold in a relatively untapped market and pit it in direct competition with MTN, with which it has tried and failed twice to merge. The African operations in the 15 countries that Bharti is seeking to buy are grouped under an entity called Zain International.
o If it buys Zain’s African operations, Bharti will be catapulted past China Unicom, Sweden’s TeliaSonera, and Germany’s T-Mobile to become the world’s seventh-largest mobile phone company by subscribers.
* The FDI reform measures that were unveiled by Government last week
o The government has decided that the Cabinet Committee on Economic Affairs (CCEA) would need to vet and approve only proposals involving total foreign equity inflow of over Rs 1,200 crore, rather than proposals with a total project cost of Rs 600 crore, as per the rule in force since 1996. Assuming reasonable debt-equity ratios, the new rule means that FDI proposals with project cost adding up to Rs 4,800 crore, or just over $1 billion, no longer need Cabinet-level vetting.
o Another significant reform effectuated has been to dispense with the obligation on a foreign entity to obtain a no-objection certificate from its Indian partner for going it alone or tying up with other partners in the same area of business.
o The government has also brought in some procedural easing. Further approval will not be required if, after initial vetting, the activity is placed under the automatic route or where sectoral caps have been removed or increased.
* Do you have any views on the RBI's directive to the banks about disbanding BPLR and telling them how they should computer the base rate?
o If you are asked such a question in an exam, today's op-ed by Mythili Bhusnurmath offers the best answer. I would give it 100 marks out of 100.
o Take a look. An excellent read.
* What is the case for a probable high inflation in Asia?
o First, there is a risk of potential upside in domestic demand.
o Second, recent exports data have been much better than expected.
o Third, slowdown in investments over the last 18 months at the time when domestic demand has recovered sharply will imply quick rise in capacity utilization.
o Fourth, crude oil and other commodities related inflation pressures (direct and indirect impact) could be much higher during the current cycle.
o Lastly, surplus liquidity in the region remains high.
o Looked at this way, this question-answer method makes no sense at first. But if you read this article in full, the above excerpt will be meaninful for remembering your answer, if and when you are asked to offer an explanation to the question.
International
* Want to understand what went wrong with Greece?
o Read this story. It gives us a lowdown on the situation.
o But to put it simply, it was a case of window-dressing government accounts. With the help of consultants / advisers like Goldman Sachs and JP Morgan Chase, the government of Greece indulged in camouflaging its loans as receipts and sold its future revenue earnings to creditors. This went on for substantially long periods of time and there came a point in time when it could no longer resort to such window-dressing. Hence the bubble burst.
o Now Greece reportedly owes more than $300 bn as debts. For a country whose GDP was $357 bn in 2008, this kind of debt is unimaginable.
o Read the story in full to understand how different players played their part in bringing Greece to its heels.
Agriculture
* Here is a very good essay on how we should be reforming our agriculture sector
o For some of you, agriculture may not hold that much interest. But some of the realities surrounding this sector will surely make you sit up and take notice.
o A very good essay on the whole. Strongly recommend a read. But some excerpts:
o With only 100 million hectares of agricultural land, China produces 400 million tonnes of grain while India averages only 108 million tonnes of food from 146 million hectares of agricultural land.
o The fact is that most farmers and cultivators cannot make the sort of investments needed. Yet, small farms produce 41% of the country’s total grain and over 50% of total fruit and vegetables.
o India produces over 600 million tonnes of food products annually, is the second largest rice and wheat producer, and the largest producer of pulses and milk. However, only about 2% of India’s fruit and vegetable output is processed. Compare this with 70% in Brazil and 60-70% in developed countries. In the foods segment, processed foods account for a mere 2% of the total production. About 30% of farm produce is wasted every year for want of storage, transportation, cold chain and other infrastructure facilities.
o What is the solution being offered by the essay?
+ For the next Green Revolution to succeed, three things are critical: favourable legislation, investments in modern post-harvesting infrastructure, and post-harvest management.
o On what's wrong with the APMC Act:
+ No person or agency is allowed to freely carry on wholesale marketing activities in a declared market area that falls under the jurisdiction of a market committee. This has prevented the development of a competitive marketing system.
+ Consequently, while farmers get a pittance, the mafia makes a handsome profit because the state governments have not yet promulgated the model APMC Act. Till this is done, farmers will continue to be left behind even as the middleman prospers.
Language Lessons
* certitude: Noun
o Total certainty or greater certainty than circumstances warrant
o Synonyms: cocksureness, overconfidence
o eg: Now, this might be heresy for billions of spiritual types the world over, and cause derisory certitude from our own deeply-religious millions, but those perfidious science-wallahs have come up with another explanation for belief in the ineffable.
* elide: Verb
o Leave or strike out
o eg: ...Or, as the people on the other side of the fence would aver, the fear of things retributory is yet to be elided.
* Gaia: Noun
o (Greek mythology) goddess of the earth and mother of Cronus and the Titans in ancient mythology
* cloister
o Noun: Residence that is a place of religious seclusion (such as a monastery); A courtyard with covered walks (as in religious institutions)
o Verb: Surround with a cloister, as of a garden; Surround with a cloister; Seclude from the world in or as if in a cloister
o eg: Responsible for translating, editing, proof-reading and printing the documents, these people are cloistered in the basement of the ministry for a whole week.
Saturday, February 13, 2010
current affairs 12th Feb 2010
Politics & the Nation
* Want to know the grind through which the budget making officials are put to?
o Then take a look at this news story that lets you on to some details.
* With the High Court of AP striking down the reservations for Muslims, we do need some gyan from the political spectrum on the issue
o Take a look at this debate. Worth a read to formulate our own opinion on the issue.
Finance & Economy
* Why is the budget that is about to be presented is not a 'normal' budget?
o For one, Budget 2009 continued with the largesse of the Sixth Pay Commission already committed in Budget 2008.
o Second, the impact of the worldwide recession of 2007-09 has been felt in the decline in tax revenues in the previous financial year.
o Third, the ‘stimuli’ given in the previous Budget needed to be addressed amid fears of rising Budget deficits.
o Fourth, the finance minister will have to return to the path necessary to implement the direct taxes code from 2011-12.
* OVL team wins 40% in Venezuela oil block
o A consortium led by Indian state-owned oil companies has won a global bid to pick up 40% stake in an important oil block in Venezuela, providing a boost to India’s attempts to secure oil assets overseas.
o ONGC Videsh (OVL), the foreign arm of ONGC, will pick up 11% stake in the Venezuelan field Carabobo-1, while other two Indian partners — Indian Oil Corp (IOC) and Oil India (OIL) will have 3.5% stake each.
o The field has potential to produce 400,000 barrels crude oil per day or 20 million tonnes per annum.
o The field, which is expected to start production by 2013, is likely to achieve a peak production of 400,000 barrel per day by around 2016. The share of three Indian public sector is expected to be about 5.5 million tonnes per annum at peak production.
o Look at this image to get a glimpse of some other major overseas investments by Indian oil companies.
International
* EU seals deal with Greece
o European leaders struck a deal to provide financial aid to Greece, in an unprecedented move to stave off a broader crisis in the 16-nation bloc that shares the euro single currency.
o The details of the package were not expected to be finalised until early next week, when EU finance ministers meet, but the bloc's leaders suggested it could include some form of loans to Greece to help it service its debt and avoid a damaging default.
o As they announced the deal, EU leaders also urged Athens to make deep cuts to its budget deficit to restore confidence in its economy, and the broader euro zone, and prevent its fiscal crisis from spilling over to other high-debt states like Portugal and Spain.
Sport
* Cricket gets IOC approval
o Cricket’s push to be a part of the Olympic Games received a major boost with International Olympic Council granting recognition to ICC.
o The IOC in its meeting here voted to recognise the International Cricket Council and the federations of sport climbing and power boating.
o ICC chief executive Haroon Lorgat has welcomed the decision and termed it as the first step towards cricket’s inclusion in the Olympics.
o Cricket was granted the status of a recognised Olympic sport in 2007, for sports not in the Olympic programme but, which conform to certain criteria, pending a decision for a permanent slot in the Games.
o Cricket was part of the 1900 Olympics in Paris and has not appeared since then. The game was part of the 1998 Kuala Lumpur Commonwealth Games and its Twenty20 version is set to feature at this year’s Asian Games in Guangzhou, China.
Language Lessons
* warped: Adjective
o Used especially of timbers or boards; bent out of shape usually by moisture
o eg: Consider, for instance, the warped pricing regime for the main petroleum products.
* redux: Adjective
o Brought back
o eg: Policymakers were hailed for saving the world from a Great Depression redux through their stimulus efforts.
* squaff: Verb
o To swallow hurriedly or greedily or in one draught
o eg: Aman is arguably Delhi’s most expensive hotel, so quaffing gin there would probably be foolhardy.
* dingy: Adjective
o Thickly covered with ingrained dirt or soot; (of colour) discoloured by impurities; not bright and clear; Causing dejection
o eg: You feel terrible when you have to come to office on Sundays and bump into tourists clicking pictures and enjoying their holiday as you enter your dingy office in North Block.
* Want to know the grind through which the budget making officials are put to?
o Then take a look at this news story that lets you on to some details.
* With the High Court of AP striking down the reservations for Muslims, we do need some gyan from the political spectrum on the issue
o Take a look at this debate. Worth a read to formulate our own opinion on the issue.
Finance & Economy
* Why is the budget that is about to be presented is not a 'normal' budget?
o For one, Budget 2009 continued with the largesse of the Sixth Pay Commission already committed in Budget 2008.
o Second, the impact of the worldwide recession of 2007-09 has been felt in the decline in tax revenues in the previous financial year.
o Third, the ‘stimuli’ given in the previous Budget needed to be addressed amid fears of rising Budget deficits.
o Fourth, the finance minister will have to return to the path necessary to implement the direct taxes code from 2011-12.
* OVL team wins 40% in Venezuela oil block
o A consortium led by Indian state-owned oil companies has won a global bid to pick up 40% stake in an important oil block in Venezuela, providing a boost to India’s attempts to secure oil assets overseas.
o ONGC Videsh (OVL), the foreign arm of ONGC, will pick up 11% stake in the Venezuelan field Carabobo-1, while other two Indian partners — Indian Oil Corp (IOC) and Oil India (OIL) will have 3.5% stake each.
o The field has potential to produce 400,000 barrels crude oil per day or 20 million tonnes per annum.
o The field, which is expected to start production by 2013, is likely to achieve a peak production of 400,000 barrel per day by around 2016. The share of three Indian public sector is expected to be about 5.5 million tonnes per annum at peak production.
o Look at this image to get a glimpse of some other major overseas investments by Indian oil companies.
International
* EU seals deal with Greece
o European leaders struck a deal to provide financial aid to Greece, in an unprecedented move to stave off a broader crisis in the 16-nation bloc that shares the euro single currency.
o The details of the package were not expected to be finalised until early next week, when EU finance ministers meet, but the bloc's leaders suggested it could include some form of loans to Greece to help it service its debt and avoid a damaging default.
o As they announced the deal, EU leaders also urged Athens to make deep cuts to its budget deficit to restore confidence in its economy, and the broader euro zone, and prevent its fiscal crisis from spilling over to other high-debt states like Portugal and Spain.
Sport
* Cricket gets IOC approval
o Cricket’s push to be a part of the Olympic Games received a major boost with International Olympic Council granting recognition to ICC.
o The IOC in its meeting here voted to recognise the International Cricket Council and the federations of sport climbing and power boating.
o ICC chief executive Haroon Lorgat has welcomed the decision and termed it as the first step towards cricket’s inclusion in the Olympics.
o Cricket was granted the status of a recognised Olympic sport in 2007, for sports not in the Olympic programme but, which conform to certain criteria, pending a decision for a permanent slot in the Games.
o Cricket was part of the 1900 Olympics in Paris and has not appeared since then. The game was part of the 1998 Kuala Lumpur Commonwealth Games and its Twenty20 version is set to feature at this year’s Asian Games in Guangzhou, China.
Language Lessons
* warped: Adjective
o Used especially of timbers or boards; bent out of shape usually by moisture
o eg: Consider, for instance, the warped pricing regime for the main petroleum products.
* redux: Adjective
o Brought back
o eg: Policymakers were hailed for saving the world from a Great Depression redux through their stimulus efforts.
* squaff: Verb
o To swallow hurriedly or greedily or in one draught
o eg: Aman is arguably Delhi’s most expensive hotel, so quaffing gin there would probably be foolhardy.
* dingy: Adjective
o Thickly covered with ingrained dirt or soot; (of colour) discoloured by impurities; not bright and clear; Causing dejection
o eg: You feel terrible when you have to come to office on Sundays and bump into tourists clicking pictures and enjoying their holiday as you enter your dingy office in North Block.
current affairs 11th Feb 2010
Politics & the Nation
* RIL contemplating to shift its registered office out of Mumbai?
o An RIL board meeting reportedly discussed this move 'informally.' What could have prompted the move?
o First of all Gujarat has proved to be the darling of business class by being very business friendly.
o Secondly, Mumbai has been losing sheen, as services sectors such as technology and telecom began to get bigger in the national economy, while manufacturing industries such as textiles got crippled.
o Thirdle, soaring real estate prices and infrastructure bottlenecks are making the capital of Maharashtra unattractive.
o Lastly, the recent war-ofwords among politicians on who has the right over Mumbai has caused unease for some.
Finance & Economy
* RBI to introduce new base rate in place of PLR for banks from April 2010
o The RBI is reportedly coming out with guidelines on the concept of 'base rate' for lending by banks. This will be the rate below which a bank will not be permitted to lend.
o At the same time banks are also being given freedom to price loans below Rs. 2 lakhs so that they can compete with MFIs in lending to the financial excluded.
o Some of the highlights of the move include:
+ Each bank to set its own base rate which will be linked to cost of funds
+ Deposits cost, cost of maintaining CRR and SLR and operating expenses to be factored in for arriving at the base rate
+ Banks can now compete with microfinance companies for small loans
+ Floating rate loans will automatically come down when cost of funds for a bank declines
+ Credit pricing set to become more transparent
* Have any idea of the war that is going on between NSE and MCX?
o National Stock Exchnage aka NSE is the leading stock market in India and it also is a promoter of NCDEX a commodity exchange. Multi Commodity Exchange aka MCX is the leading commodity exchange in India.
o With a view to build up volumes in NCDEX, NSE is roping in Jaypee, a Delhi based stock and commodity futures liquidity provider, as an anchor investor in NCDEX. This is because Jaypee reportedly is responsible for about 25% of the trading volumes in MCX.
o If Jaypee is roped in as an anchor investor in NCDEX, its volumes are likely to see a big boost.
o But the proposal is currently under regulatory glare i.e., it has to be vetted by the commdoity markets regulator viz., the Forward Markets Commission.
* An excellent essay on tackling fiscal deficit
o A must read. Good one. Read it here.
o The fiscal deficit is the excess of spending over non-borrowed receipts, financed through borrowing.
* Here is a list of all the things bad about black economy
o Black money has long been regarded the bane of our development process. It results in huge wastage of resources, lowers the rate of growth, leads to criminalisation in society and breakdown of institutions, undermines the capacity of Indian businesses to face the challenge of globalisation, jeopardises our security, leads to poor governance, in short, to every conceivable ill we can think of.
Personality
* Obituary: KN Raj
o He was an eminent economist. He made significant contribution to the preparation of India's first five year plan.
o Former Prime Minister PV Narasimha Rao counted on him for advice when the country’s liberal economic reform process was launched in July 1991, notably on issues such as devaluation of the rupee, focus on farm sector and decentralised planning.
o He was one of the main forces behind the prestigious Delhi School of Economics. He also set up the Thiruvananthapuram-based Centre for Development Studies (CDS).
o He was vice-chancellor of Delhi University, where he worked for 18 years till 1971. Raj also had a brief stint as a journalist for an English daily in Colombo, during which time he covered the aftermath of Mahatma Gandhi’s assassination in Sri Lanka.
o An economist, teacher, researcher, pragmatic reformer, a Marxist and a Keynesian, all rolled into one, Raj was conferred the Padma Vibhushan — the second-highest civilian honour — in 2000.
Leisure
* Tasting whisky
o We are sure many of you know that wine tasting or whisk(e)y tasting are serious professions.
o Those who are curious take a look at this interview that appeared in today's ET. It is given by Jim Murray, who is considered the world's first whiskey taster.
o You will be surprised to know that an Indian whisky made it to the top three in his list of best whiskies. That Indian whisky is Amrut Fusion which is distilled in Bangalore. The first two are: Sazerac Rye 18 year old and Ardbeg Supernova.
Language Lessons
* antipode: Noun
o Any two places or regions on diametrically opposite sides of the Earth; direct opposite
o Adjective: antipodean
* Tweedledum and Tweedledee: Noun
o Any two people who are hard to tell apart
o eg: So, as far as the government crowding out private investment goes, disinvestment and borrowings are like Tweedledum and Tweedledee.
* haiku: Noun
o An epigrammatic Japanese verse form of three short lines
* adieux: Noun
o A farewell remark
* RIL contemplating to shift its registered office out of Mumbai?
o An RIL board meeting reportedly discussed this move 'informally.' What could have prompted the move?
o First of all Gujarat has proved to be the darling of business class by being very business friendly.
o Secondly, Mumbai has been losing sheen, as services sectors such as technology and telecom began to get bigger in the national economy, while manufacturing industries such as textiles got crippled.
o Thirdle, soaring real estate prices and infrastructure bottlenecks are making the capital of Maharashtra unattractive.
o Lastly, the recent war-ofwords among politicians on who has the right over Mumbai has caused unease for some.
Finance & Economy
* RBI to introduce new base rate in place of PLR for banks from April 2010
o The RBI is reportedly coming out with guidelines on the concept of 'base rate' for lending by banks. This will be the rate below which a bank will not be permitted to lend.
o At the same time banks are also being given freedom to price loans below Rs. 2 lakhs so that they can compete with MFIs in lending to the financial excluded.
o Some of the highlights of the move include:
+ Each bank to set its own base rate which will be linked to cost of funds
+ Deposits cost, cost of maintaining CRR and SLR and operating expenses to be factored in for arriving at the base rate
+ Banks can now compete with microfinance companies for small loans
+ Floating rate loans will automatically come down when cost of funds for a bank declines
+ Credit pricing set to become more transparent
* Have any idea of the war that is going on between NSE and MCX?
o National Stock Exchnage aka NSE is the leading stock market in India and it also is a promoter of NCDEX a commodity exchange. Multi Commodity Exchange aka MCX is the leading commodity exchange in India.
o With a view to build up volumes in NCDEX, NSE is roping in Jaypee, a Delhi based stock and commodity futures liquidity provider, as an anchor investor in NCDEX. This is because Jaypee reportedly is responsible for about 25% of the trading volumes in MCX.
o If Jaypee is roped in as an anchor investor in NCDEX, its volumes are likely to see a big boost.
o But the proposal is currently under regulatory glare i.e., it has to be vetted by the commdoity markets regulator viz., the Forward Markets Commission.
* An excellent essay on tackling fiscal deficit
o A must read. Good one. Read it here.
o The fiscal deficit is the excess of spending over non-borrowed receipts, financed through borrowing.
* Here is a list of all the things bad about black economy
o Black money has long been regarded the bane of our development process. It results in huge wastage of resources, lowers the rate of growth, leads to criminalisation in society and breakdown of institutions, undermines the capacity of Indian businesses to face the challenge of globalisation, jeopardises our security, leads to poor governance, in short, to every conceivable ill we can think of.
Personality
* Obituary: KN Raj
o He was an eminent economist. He made significant contribution to the preparation of India's first five year plan.
o Former Prime Minister PV Narasimha Rao counted on him for advice when the country’s liberal economic reform process was launched in July 1991, notably on issues such as devaluation of the rupee, focus on farm sector and decentralised planning.
o He was one of the main forces behind the prestigious Delhi School of Economics. He also set up the Thiruvananthapuram-based Centre for Development Studies (CDS).
o He was vice-chancellor of Delhi University, where he worked for 18 years till 1971. Raj also had a brief stint as a journalist for an English daily in Colombo, during which time he covered the aftermath of Mahatma Gandhi’s assassination in Sri Lanka.
o An economist, teacher, researcher, pragmatic reformer, a Marxist and a Keynesian, all rolled into one, Raj was conferred the Padma Vibhushan — the second-highest civilian honour — in 2000.
Leisure
* Tasting whisky
o We are sure many of you know that wine tasting or whisk(e)y tasting are serious professions.
o Those who are curious take a look at this interview that appeared in today's ET. It is given by Jim Murray, who is considered the world's first whiskey taster.
o You will be surprised to know that an Indian whisky made it to the top three in his list of best whiskies. That Indian whisky is Amrut Fusion which is distilled in Bangalore. The first two are: Sazerac Rye 18 year old and Ardbeg Supernova.
Language Lessons
* antipode: Noun
o Any two places or regions on diametrically opposite sides of the Earth; direct opposite
o Adjective: antipodean
* Tweedledum and Tweedledee: Noun
o Any two people who are hard to tell apart
o eg: So, as far as the government crowding out private investment goes, disinvestment and borrowings are like Tweedledum and Tweedledee.
* haiku: Noun
o An epigrammatic Japanese verse form of three short lines
* adieux: Noun
o A farewell remark
Wednesday, February 10, 2010
current affairs 8th Feb 2010
Finance & Economy
* Divestment figures touch decent figures; government aims high
o The 2009-10 Budget had estimated that disinvestment proceeds would fetch around Rs 1,120 crore.
o But the government has earned Rs 4,260 crore from initial public offers of NHPC and Oil India.
o The recent follow-on public offer (FPO) of National Thermal Power Corporation (NTPC) is expected to bring the government at least Rs 8,300 crore. The other two remaining FPOs in the fiscal — Rural Electrification Corporation and NMDC — are likely to bring in another Rs 20,000 crore.
o In the five years preceding the current one, the government raised just Rs 13,287 crore from disinvestment as against Rs 28,000 crore raised by the BJP-led government in the preceding five-year period. A sum of Rs 38,795 crore was billed as disinvestment receipts in the 2007-08 Budget. This was largely on account of a book transfer of stake in SBI from RBI to the government.
o The government now plans to raise about Rs 30,000 crore next financial year from stake sale in public sector firms to meet a significant part of the revenue shortfall, as it looks to bring down fiscal deficit from the 16-year high of 6.8% recorded this year.
* Some of the excellent recommendations made by the 13th Finance Commission that are worth studying:
o The commission has dumped numerical targets in favour of qualitative ones for the fiscal and revenue deficits. The deficits are to go up in the downswing of a business cycle and come down on the upswing — all the way to a surplus in the case of the revenue deficit — with a council of wise mean moderating any inclination on the part of the government of the day to declare a downswing when there is only an election on the horizon.
o The commission has focused on the government’s liabilities as a proportion of GDP.
* Why is the petro pricing expert group's proposal for an additional excise duty of Rs 80,000 on diesel cars is wholly questionable and ill-advised?
o The committee has justified the additional excise on the grounds that ‘higher excise duty on petrol compared to diesel encourages use of diesel cars’. But the presence of one set of rigidities in petro-products pricing can hardly justify another, and especially so when there is already a panoply of distortions in the oil sector. The fact is that there are pervasive rigidities in market design, product taxation and subsidy levels — and the express policy purpose must be to reduce the extant distortions, not add to them.
o For an excellent critique of the expert group's proposals on oil pricing reform, take a look at this article by Jaideep Mishra. Very enlightening.
International
* Indian IT companies up US hiring
o In the past 12-18 months, around 15,000 US professionals have joined Indian firms across functions — from entrylevel customer care to senior level sales and consulting positions. Most of them had never worked with an Indian company before.
o This trend is expected to gather strength in the coming months, as Indian players strive to address concerns over flight of jobs, besides strengthening their own onsite services delivery capability.
o Today, locals comprise about 30% of the Indian IT employee base of over 100,000 in the US. This is up from just a few hundreds 4-5 years ago, when most onsite needs were met by flying out engineers from India on H1B visas and the local talent was sought only for a few consulting type jobs.
o In fact, most Indian companies hire local talent in what are Tier II cities in the US like Arkansas, St Antonio, Tampa, Kansas City, Alabama, and Buffalo. Talent here is 15-20% cheaper than in big cities, understands the requirements, needs no training to start and service providers creating local jobs are more favourably looked at when pitching for business.
* Two measures that President Obama has proposed to reform their banking sector
o The first such measure is a levy of 0.15% for 10 years on the non-retail liabilities of banks with balance sheets over $50 billion in the US. This measure is estimated to raise $90 billion over 10 years and is intended to part-cover the cost of bailing out the banking system in the US over the last two years.
o The other more radical proposal is to ban proprietary trading by banks and disallow investments in hedge funds and private equity funds, thus ostensibly reducing the chances of requiring a future government bailout.
* Strong criticism about carry trade
o Foreign exchange carry trades — where speculators borrow in a low interest rate currency and then lend or invest in another currency for profit — are increasingly being seen to pose a major risk to international financial stability.
o UK Financial Services Authority chairman Lord Turner has, of late, articulated the need to crack down on this activity since he feels it hardly serves any useful social or economic purpose. He has further suggested that bank capital adequacy standards and liquidity requirements need to be tweaked higher to factor such activity.
o It is common knowledge that the Yen carry trade and more recently, the dollar carry trade have helped speculators create asset bubbles, especially in the developing world.
* Why was there an uptick in commodity prices globally throughout 2009?
o Here is an excerpt from an op-ed that appeared in today's ET that gives a good answer:
o Financial investors poured more than $50 billion into commodity funds in 2009 — more than three times the average annual pace in the 2003-07 boom years — spurred on by excess liquidity in the system and due to a loss of confidence in paper money, preferring ‘hard assets’ instead.
Language Lessons
* imprimatur: Noun
o Formal and explicit approval
o eg: Even the Supreme Court imprimatur hasn’t quelled opposition.
* scupper: Verb
o Wait in hiding to attack; Put in a dangerous, disadvantageous, or difficult position
o eg: And in the early years of this century, a plan to delist Sterlite from Indian bourses was scuppered, after receiving dollops of negative publicity.
* racy: Adjective
o Full of zest or vigour; Marked by richness and fullness of flavour; Suggestive of sexual impropriety; Designed or suitable for competing in a race
o eg: Pachauri’s racy novel raises temperature
* epigram: Noun
o A witty saying
o An epigram penned by Samuel Taylor Coleridge:
+ What is an epigram? / A dwarfish whole / Its body brevity / and wit its soul.
* Divestment figures touch decent figures; government aims high
o The 2009-10 Budget had estimated that disinvestment proceeds would fetch around Rs 1,120 crore.
o But the government has earned Rs 4,260 crore from initial public offers of NHPC and Oil India.
o The recent follow-on public offer (FPO) of National Thermal Power Corporation (NTPC) is expected to bring the government at least Rs 8,300 crore. The other two remaining FPOs in the fiscal — Rural Electrification Corporation and NMDC — are likely to bring in another Rs 20,000 crore.
o In the five years preceding the current one, the government raised just Rs 13,287 crore from disinvestment as against Rs 28,000 crore raised by the BJP-led government in the preceding five-year period. A sum of Rs 38,795 crore was billed as disinvestment receipts in the 2007-08 Budget. This was largely on account of a book transfer of stake in SBI from RBI to the government.
o The government now plans to raise about Rs 30,000 crore next financial year from stake sale in public sector firms to meet a significant part of the revenue shortfall, as it looks to bring down fiscal deficit from the 16-year high of 6.8% recorded this year.
* Some of the excellent recommendations made by the 13th Finance Commission that are worth studying:
o The commission has dumped numerical targets in favour of qualitative ones for the fiscal and revenue deficits. The deficits are to go up in the downswing of a business cycle and come down on the upswing — all the way to a surplus in the case of the revenue deficit — with a council of wise mean moderating any inclination on the part of the government of the day to declare a downswing when there is only an election on the horizon.
o The commission has focused on the government’s liabilities as a proportion of GDP.
* Why is the petro pricing expert group's proposal for an additional excise duty of Rs 80,000 on diesel cars is wholly questionable and ill-advised?
o The committee has justified the additional excise on the grounds that ‘higher excise duty on petrol compared to diesel encourages use of diesel cars’. But the presence of one set of rigidities in petro-products pricing can hardly justify another, and especially so when there is already a panoply of distortions in the oil sector. The fact is that there are pervasive rigidities in market design, product taxation and subsidy levels — and the express policy purpose must be to reduce the extant distortions, not add to them.
o For an excellent critique of the expert group's proposals on oil pricing reform, take a look at this article by Jaideep Mishra. Very enlightening.
International
* Indian IT companies up US hiring
o In the past 12-18 months, around 15,000 US professionals have joined Indian firms across functions — from entrylevel customer care to senior level sales and consulting positions. Most of them had never worked with an Indian company before.
o This trend is expected to gather strength in the coming months, as Indian players strive to address concerns over flight of jobs, besides strengthening their own onsite services delivery capability.
o Today, locals comprise about 30% of the Indian IT employee base of over 100,000 in the US. This is up from just a few hundreds 4-5 years ago, when most onsite needs were met by flying out engineers from India on H1B visas and the local talent was sought only for a few consulting type jobs.
o In fact, most Indian companies hire local talent in what are Tier II cities in the US like Arkansas, St Antonio, Tampa, Kansas City, Alabama, and Buffalo. Talent here is 15-20% cheaper than in big cities, understands the requirements, needs no training to start and service providers creating local jobs are more favourably looked at when pitching for business.
* Two measures that President Obama has proposed to reform their banking sector
o The first such measure is a levy of 0.15% for 10 years on the non-retail liabilities of banks with balance sheets over $50 billion in the US. This measure is estimated to raise $90 billion over 10 years and is intended to part-cover the cost of bailing out the banking system in the US over the last two years.
o The other more radical proposal is to ban proprietary trading by banks and disallow investments in hedge funds and private equity funds, thus ostensibly reducing the chances of requiring a future government bailout.
* Strong criticism about carry trade
o Foreign exchange carry trades — where speculators borrow in a low interest rate currency and then lend or invest in another currency for profit — are increasingly being seen to pose a major risk to international financial stability.
o UK Financial Services Authority chairman Lord Turner has, of late, articulated the need to crack down on this activity since he feels it hardly serves any useful social or economic purpose. He has further suggested that bank capital adequacy standards and liquidity requirements need to be tweaked higher to factor such activity.
o It is common knowledge that the Yen carry trade and more recently, the dollar carry trade have helped speculators create asset bubbles, especially in the developing world.
* Why was there an uptick in commodity prices globally throughout 2009?
o Here is an excerpt from an op-ed that appeared in today's ET that gives a good answer:
o Financial investors poured more than $50 billion into commodity funds in 2009 — more than three times the average annual pace in the 2003-07 boom years — spurred on by excess liquidity in the system and due to a loss of confidence in paper money, preferring ‘hard assets’ instead.
Language Lessons
* imprimatur: Noun
o Formal and explicit approval
o eg: Even the Supreme Court imprimatur hasn’t quelled opposition.
* scupper: Verb
o Wait in hiding to attack; Put in a dangerous, disadvantageous, or difficult position
o eg: And in the early years of this century, a plan to delist Sterlite from Indian bourses was scuppered, after receiving dollops of negative publicity.
* racy: Adjective
o Full of zest or vigour; Marked by richness and fullness of flavour; Suggestive of sexual impropriety; Designed or suitable for competing in a race
o eg: Pachauri’s racy novel raises temperature
* epigram: Noun
o A witty saying
o An epigram penned by Samuel Taylor Coleridge:
+ What is an epigram? / A dwarfish whole / Its body brevity / and wit its soul.
Saturday, February 6, 2010
current affairs 6th Feb 2010
Politics & the Nation
- Rahul's Mumbai visit
- One's in a while we also need to look at such events and read the news reports to get a feel of politics. He is widely reported as having scored political brownie points with the Shiv Sena. Worth a look. Read it the news story here.
- Government mulling retirement age for jet planes
- The government is reportedly coming out with a policy that bans jet planes older than 15 years from flying.
- Carriers operating jets that are more than 15 years old will have to look for replacement soon, as the civil aviation ministry has decided to gradually phase out older aircraft to check noise level around airports.
- The development follows complaints from people living around the country’s busiest Delhi airport about the rising noise levels.
- The new rules are likely to affect foreign airlines more as they would be also be barred from flying aged jets.
- But what are the international norms in this regard? As per the globally accepted norms, the permissible noise is higher level in the vicinity of airports than other locations. India, however, does not differentiate between the noise level around the airport and other areas.
- In the last few years aircraft movement in the country has multiplied with more and more people flying on the back of growing economy and increasing incomes. The Capital’s Indira Gandhi International airport (IGI) now handles as many as 650 aircraft a day.
Finance & Economy
- Why did our stock markets tank yesterday?
- BSE’s 30-share Sensex fell 434 points, or 2.68%, to 15,790.93. NSE’s 50-share Nifty declined 127 points, or 2.61%, to 4,718.65, its lowest since November 4, 2009. In the broader market, losers outnumbered gainers by nearly 5 to 1 on BSE. The MSCI Asia Pacific Index fell 2.6% and its Emerging Markets Index was down more than 2.5%. European and US indices were lower.
- Indian shares were pummelled in a global equities and commodities sell-off, as investors fear that “dynamite” deficits of many governments across the globe may explode in coming months, pushing up interest rates and stall the statesponsored economic revival.
- Investors fear that Spain, Portugal and Greece may find it difficult to manage their deficits as their revival tapers off, and it may hold true for many economies which have huge deficits.
- Also, growth in developed economies, such as the US, without signs of revival in employment, signals that whatever has been achieved by government spending may not be enough to sustain the recovery.
- VIX rises: India’s Volatility index, VIX, which reflects investors’ perception about market risk, rose to 30.07, its highest since September 14. A rising VIX suggests increased risk aversion to stocks.
- Should we keep looking at the West and Japan for best practices in business?
- This article argues that the arrival of the FGIE -- First Generation Indian Enterpreneurs -- on the Indian business firmament has also brought about a sea change and that it is time for us to look inward for the lessons and best practices followed by the first generation entrepreneurs.
- A good idea; no doubt. Worth a read.
International
- What exactly is the crisis brewing in European Union?
- The southern members of the union are facing some tought times -- economically. Their stock and bond prices are tumbling amid investors' fears that heavily indebted countries in the south of the zone may be unable to cope with the fiscal and monetary demands of membership.
- Facing the most severe economic strains since its birth 11 years ago, the euro zone looks likely to hold together for now but the exit of some of its weaker members cannot be ruled out in the long term.
- Many analysts expect the European Union to intervene with some kind of aid for weak members if that proves necessary to keep the zone intact. But economies are diverging so sharply that even if weak members are bailed out, their problems could hurt growth in the zone for years, and conceivably prompt them to abandon the euro later this decade if the costs of membership seem too high.
- The weaknesses of the euro zone’s southern members were masked in its early years by a benign global environment, cheap credit and housing booms. In the financial crisis of 2007-2009, membership protected countries from the worst market turmoil.
- Jhumpa Lahiri gets Obama's nomination
- Indian-American Pulitzer Prize-winning author Jhumpa Lahiri has been appointed as a member of US President Barack Obama’s Committee on the Arts and Humanities, along with five others.
- A fiction writer, Ms. Lahiri’s debut collection of stories, ’Interpreter of Maladies’, received the Pulitzer Prize, the PEN/Hemingway Award, the Addison M Metcalf Award and the New Yorker magazine’s Debut of the Year.
- Her novel, ‘The Namesake’, was a New York Times Notable Book, a finalist for the Los Angeles Times Book Prize and was selected as one of the best books of the year by USA Today and Entertainment Weekly.
- Her latest story collection, ‘Unaccustomed Earth’, won the Frank O’Connor International Short Story Award and the Vallombrosa-Gregor von Rezzori Prize.
Movies
- Look at the staggering figures that Hollywood actors command!
- Take a look at this report. Actors get paid in millions of dollars. Directors are also equally well paid.
- ring-fence: Verb
- Guarantee that funds or an investment will be spent only for a particular purpose
- alack: Interjection
- Exclamation expressive of regret
- geniality: Noun
- A disposition to be friendly and approachable (easy to talk to)
- nous: Noun
- [Brit] Common sense; That which is responsible for one's thoughts and feelings; the seat of the faculty of reason
- eg: In doing all this, Mr Gandhi once again demonstrated the political nous that he has increasingly displayed.
Friday, February 5, 2010
current affairs 5th Feb 2010
Politics & the Nation
- How do we reform the political system?
- Howsoever much we wrack our brains, we will always come up with only one solution to all our political ills. That is reforming the funding system for political parties. Here are some suggestions aired by today's ET editorial on the subject. Worth our noting:
- State funding of recognised political parties, in proportion to the votes they secure, is one method. Extensive deployment of information technology to create an audit trail, open to public scrutiny, for every rupee received by parties is another. Scrapping the firstpast-the-post system in favour of proportionate representation would greatly reduce the need for individual politicians to build war chests and also be a more representative system of democracy.
- Government planning to e-link Indian missions
- The proposal seeks to network 169 missions, 77 immigration check posts, five Foreigners Regional Registration Offices and over 600 Foreigners Registration Offices (FROs) with the Central Foreigners’ Bureau.
- What prompted the move?
- The move comes in the wake of revelations that terror accused David Headley flew in and out of India while paying simultaneous visits to Pakistan and plotting terror attacks.
- Headley had visited India at least five times over the past few years and each time he had also visited Pakistan.
Finance & Economy
- Government unhappy with the poor response for NTPC FPO
- At a hurriedly-called meeting on Thursday, senior officials of DoD, power ministry and NTPC executives voiced their displeasure to the investment bankers on the poor response from the retail and foreign institutional investors.
- The four bankers — ICICI Securities, Kotak Mahindra Capital Company from India, USbased Citigroup Capital and JPMorgan — had been confident of selling these shares at premium at the time of the appointment. However, given the current situation, it is apparent that they are finding it difficult to sell at this price.
- It appears that so far only 20,000 applications have been received from retail investors for an aggregate amount of less than Rs 100 crore. Under market regulator Sebi’s guidelines, the company has reserved 14.28 crore shares for the retail investors aggregating to Rs 2,870 crore at the base price of Rs 201 per share.
- On French auctions
- The ongoing NTPC follow on public offering is reportedly being offered on French auction basis to investors. What does this method mean?
- In this method, the firm announces a minimum (reserve) price. Investors place sealed bids for quantity and price. When the bids are in, the firm negotiates a minimum and maximum price with the market regulator. Any bid above the maximum price is eliminated as a virtual market order. The bidders who bid between the minimum and maximum price are awarded shares on a pro rata basis, each paying the minimum price. In the event that demand for the stock is too high, the IPO may be changed to fixed-price offering.
- Why does the country need a tower policy?
- In the wake of the reported plan by TRAI to come up with a tower policy by June this year, this question is quite pertinent.
- TRAI is looking to stop the mushrooming of cellsites in residential areas that has resulted in standoffs between telcos and city administrations.
- The policy will apply to cellsites or telecom towers in all cities that have a population of over one million and stipulate the distance to maintain from schools, hospitals and tourist attractions. It will also specify the maximum radiation levels for these masts and state methodologies that will be used to measure it.
- How much does the government spend on its flagship schemes?
- Here is a good graphic that gives the details.
- How many MFIs are there in India?
- There are close to 250 MFIs (Micro Finance Institutions) servicing about two crore clients in the country. According to estimates by various independent agencies studying this sector the total loan outstanding at the end of last financial year was above Rs 13,000 crores.
- Steps to check home loan frauds
- In the past, there have been instances where borrowers have forged the title deed and borrowed money from multiple banks by giving duplicate documents (title deed) as security for home loan.
- It is estimated that the banking sector has reported over to Rs 400-crore home loan frauds.
- These issues could be well tackled once a central home loan registry is formed. Under the proposed system, all banks and housing finance companies will provide data on title deed and the home loans borrower to the central registry. Next time, a bank processes a home loan proposal, it will first verify with the central registry if the title deed is clear and not registered in any other entity’s name, or if any other bank has taken it as a security.
- The coming budget is likely to contain some proposals in this regard.
Environment
- A snippet of info about global warming
- The global goal of keeping increase in temperatures to below 2 degrees Celsius requires 15 gigatonnes of emissions abatement by 2020.
International
- Who is the Director General of UNIDO?
- Kandeh K Yumkella
- Is there a bubble in the growing forex reserves of China?
- Look at this article; it certainly feels so. Worth a read. But some excerpts about why growing reserves are a liability:
- One, China is trapped in an arrangement of its own making. As China and other Asian nations buy more and more US treasuries, it becomes harder to unload them without causing huge capital losses. If the dollar collapses, panicked selling by central banks looking to limit losses would shake global markets more than the US credit crisis has.
- Two, reserves are dead money. The wisdom of currency stockpiling came from the chaos of 1997. Speculators sensed authorities in Thailand were sitting on few reserves, and they were right. Their attack on the Thai baht set the stage for an Asian meltdown. Governments spent the 2000s determined not to repeat the mistake.
- Three, reserves add to overheating risks. When policy makers buy dollars, they need to sell local currency, increasing its availability and boosting the money supply. Next they sell bonds to mop up excess money in economies. It’s an imprecise science that often leads to accelerating inflation. The strategy works out to be an expensive one.
- Giacometti's work fetches highest ever price in an auction
- History was made in the global art world at Sotheby’s London auction on February 3.
- Swiss modern master Alberto Giacometti’s rare work, ‘L’homme qui marche I’ (Walking Man I) walked away with the highest tag ever in the history of world art auctions.
- Amid tense bidding, an anonymous telephone bidder coughed up £65 million ($104.3 million) for the bronze statue. The price eclipsed Pablo Picasso’s ‘Garcon a la Pipe’ (Boy with a Pipe) that had fetched $104.2 million in 2004.
- suborn: Verb
- Incite to commit a crime or an evil deed; Procure (false testimony or perjury), Induce to commit perjury or give false testimony
- eg: The bureaucracy has to collude in this process of mobilising political funding, suborning this institution of governance as well.
- dawdling: Noun
- The deliberate act of delaying and playing instead of working
- Verb: Take one's time; proceed slowly; Hang (back) or fall (behind) in movement, progress, development, etc.; Waste time
- depravity: Noun
- Moral perversion; impairment of virtue and moral principles; A corrupt or depraved or degenerate act or practice
- bung: Verb
- Give a tip or gratuity to in return for a service, beyond the compensation agreed on; Close with a cork or stopper; [Brit] (informal) put, throw
- eg: But the presence of one set of distortions can hardly justify bunging in another.
Thursday, February 4, 2010
current affairs 4th Feb 2010
Politics & the Nation
- In defence of the Executive.
- Many administrative / executive actions are often coined "politically motivated" and they become the butt of criticism. Here is a defence of such actions:
- All actions of politicians everywhere are politically motivated, meaning they are intended to gain popularity. But because something is popular does not make it wrong. It is more likely that something that is intended to please a narrower constituency, such as bankers or businessmen, is wrong. In a democracy, the job of politicians is to please the broader public, not narrow constituencies.
- So, if it is your wont to keep criticizing political actions, better think twice before you do so.
- An excellent piece on what we, as a society, should be aspiring for.
- Penned by Kiran Karnik this is one piece that all of you must read. It raises some very pertinent questions and makes a strong case for a more civilized democracy.
- Panel on Telangana set up
- The Centre announced the Telangana panel, which would consider the demand for splitting Andhra Pradesh. The government, however, is yet to frame the terms of reference for the panel headed by B N Srikrishna, a retired judge of the Supreme Court.
- The panel will meet with groups of people and political parties in Andhra Pradesh on the issue of the formation of a separate state out of the Telangana region.
- The government decided on constituting an experts panel after a January meeting of different political parties to discuss the issue failed to arrive at a consensus on the formation of a separate state of Telangana.
Finance & Economy
- Cane payments to rev up rural economy?
- Sugar companies are set to nearly double their payments to cane growers to as much as Rs 40,000 crore this year. This is likely to result in greater
- Sugar companies in states like Uttar Pradesh, Maharashtra, Karnataka and Tamil Nadu, which compete for cane, are willing to pay record prices, as they boost inputs to benefit from more than a quarter-century high sugar prices due to short supply.
- The impact of such a huge transfer of funds from one segment of the society to another is that it could trigger a wave of spending thus creating a multiplier effect, similar to the one that payment of salary arrears to government staff did last year, which boosted earnings for companies and changed the lifestyle of millions.
- Though the central government fixed a ‘fair and remunerative price’ of around Rs 130/quintal for cane, farmers were paid more due to shortage. Sugar factories in UP paid Rs 245/qtl, in Maharashtra Rs 300/qtl, and Rs 200 in Tamil Nadu.
- Farmers have reportedly sold about 160 mn tonnes of cane to factories this year.
- Kirit Parikh panel submits its report
- It suggested a clean break from the past with market-linked prices for auto fuels and a sharp increase in the prices of kerosene and cooking gas.
- If the recommendations of the expert group, chaired by the former Planning Commission member, are implemented, it will result in annual savings of over Rs 30,000 crore at current levels of under-recoveries for oil companies.
- The argument for keeping diesel prices artificially low has been that any increase in the price of the fuel will be passed on, stoking inflation. But the panel was of the view that this should be compared with the inflationary impact of subsidies, which would be similar.
- Take a look at a gist of the recommendations in this graphic.
- The government’s track record, so far, suggests that it has been unwilling to swallow the bitter pill. A 2005 report by a panel headed by C Rangarajan recommended the elimination of subsidy on cooking gas and restricting it to only poor families for kerosene. The suggestion was not implemented.
- A similar recommendation by a panel chaired by former bureaucrat BK Chaturvedi was also ignored.
- On why capital controls are bad
- Capital controls are not the best way of dealing with unwanted flows. Apart from being distortionary, they are not foolproof. They could also send wrong signals and hence should not be adopted as the first resort.
- Alternatively, the RBI could buy up dollars and then try to sterilise the rupee funds created, putting upward pressure on interest rates.
- The SEBI can even ban participatory notes that facilitate investment by entities not eligible to invest directly in India.
- Ever heard of Coco in banking parlance?
- It stands for contingent convertible capital. It is nothing but debt that converts into equity when banks run into trouble.
- This idea is aired as it should provide banks with an instrument that is cheaper and yet provide an equity cushion in times of crisis. In practice, however, it could end up being nearly as costly as equity and raising banks’ cost of capital sharply.
- You will appreciate in this context, this piece written by TT Rammohan in defence of curbing banks' size. Recommend reading it. If you had to answer a question like "Is there need for curtailing the size of banks?" Or something similar, then it would be a very befitting answer.
- What is DSGE?
- It stands for Dynamic Stochastic General Equilibrium. It is a methodology reportedly used for the first time by IMF to model various ‘macrofinancial’ linkages, such as the exchange rate and inflation, in the conduct of monetary policy in India.
- Broadly speaking, the idea is to analyse activities in the ‘micro’ domain to explain aggregate economic phenomena, such as growth, business cycles, and the effects of monetary and fiscal policy. Besides, DSGE models are dynamic, looking at how the economy evolves over time. Also, they are stochastic, taking into account how the economy is affected by random shocks such as sub-optimal policy design, oil price spikes and technological change etc. The plan is to use a few key variables for more accuracy in models.
International
- On why India should oppose US stay in Afghanistan
- Today's op-ed seems to be full of articles that are worthy of our attention and becoming must reads. Look at this piece by Larry Pressler. It strongly argues that India should be raising its voice against US for the latter's continued occupation of Afghanistan and military support to Pakistan.
- Social networking to wipe out email?
- That is what research reports by Gartner are saying.
- Gartner predicts that by 2014, social networking services will replace email as the primary vehicle for interpersonal communications. Social networking will prove to be more effective than e-mail for certain business activities such as status updates and location, it says.
- debonair: Adjective
- Having a sophisticated charm; Having a cheerful, lively, and self-confident air
- eg: "a debonair gentleman"
- Here is a picture that portrays the meaning of the word very well.
- sublime: Adjective
- Inspiring awe; Worthy of adoration or reverence; Of high moral or intellectual value; elevated in nature or style;
- surreal: Adjective
- Characterized by fantastic imagery and incongruous juxtapositions; Resembling a dream
- jocund: Adjective
- Full of or showing high-spirited merriment
- eg: "a poet could not but be gay, in such a jocund company"
Wednesday, February 3, 2010
Current affairs 3rd Feb 2010
Politics & the Nation
* Much ado about tea logo
o The young and dashing Minister (of State for Commerce) that he is, Mr. Jyotiraditya Scindia appears to be wanting to give an equally dashing update to the long used and staid tea logo used by our Tea Board.
o Mr Scindia called for a replacement for the tea plucker logo introduced back in 1976 to represent and certify tea made in the country.
o What are the issues involved?
+ The minister indicated that there is a need to make it a more contemporary one. Mr Scindia plans to create an umbrella brand for Indian tea, which is more vibrant, youthful, exciting and visually connects the rich heritage of Indian tea. A lady carrying a burden on her back has some negative connotations, which need to be changed, according to this line of thinking.
+ However there another school which says that logo is not of much importance in export markets. People of this school feel that the Tea Board should instead go for extensive campaign in target market to promote Indian tea.
+ Also, there is the problem of getting the new logo registered in all the export markets to check misuse. The current logo, introduced as a marketing symbol, is protected under copyright as well as certification trade mark.
o India, the largest producer of tea, has been brewing the drink since the time of Valmiki and is mentioned in Ramayana. India exported 169.3 million kg of tea and had earned a foreign exchange of Rs 2311.13 crore in the first 11 months of 2009.
* Foreign workers and work permits
o So far, we have been reading about work permits being restricted for foreigners in US or other developed countries. But now it appears it is time for India to play the game. Vis-a-vis the Chinese mostly. But nationals from other countries will not be far away from being caught in the trap.
o Take a look at this news story. Worth a read. It will get us started on the kind of issues, pros and cons of such restrictions.
Finance & Economy
* SEBI pulls the plug on liquid plus (aka ultra short-term) schemes
o SEBI directed that investors in these schemes should value their investments on MTM basis. Let's get a quick lesson on the issue:
o What are liquid plus schemes?
+ Liquid plus schemes are schemes that invest in money market and debt securities of over three months. Such schemes comprise almost 40% of the mutual fund industry's assets under management of Rs 7.59 lakh crore.
o Why are they popular?
+ The schemes have managed to fetch 5-5.5% annually while liquid schemes and banks' short-term fixed deposits have fetched 4-4.25%. Also, such schemes only carry a dividend distribution tax of 14% for individuals and 22% for corporates, whereas interest income on fixed deposits is taxed at 33%.
o What did SEBI do now?
+ The capital market regulator has directed mutual funds to value money market and debt securities with maturity over 91 days — the instruments that constitute this scheme — on mark-to-market basis. In other words, fund houses will have to factor in any drop in securities’ prices on a daily basis to calculate a scheme’s NAV or net asset value (which reflects the price of a mutual fund unit).
o What's the impact of Sebi's move?
+ Sebi's step will bring NAVs of these schemes closer to the market prices. It would result in higher volatility in returns from such schemes and could dramatically reduce its attraction among investors.
* A look at how corporates access non-banking channels to meet their short term credit needs.
o RBI's monetary policy review reveals that there was an alarming shrinking of bank credit over the past 12 months. This is surprising because every other economic indicator seems to be growing: GDP, industrial production, exports. Total credit flow from scheduled commercial banks (SCBs) over the past 12 months (as on January 16, 2010) amounted to Rs 3,66,832 crore, showing a growth of 13.9%. In the preceding 12-month period ended January 15, 2009, total credit of Rs 4,76,514 crore flowed from banks, showing a growth of 22% over the comparable period.
o What does this suggest? It suggests that corporates have been able to tap the non-banking channels for their credit needs -- especially of the shorter variety. How?
o The non-banking sources include: commercial paper and other forms of corporate debt issued to mutual funds, non-banking finance companies and insurance companies (particularly Life Insurance Corporation), private equity placements to qualified institutional buyers, foreign direct investment, some equity issued in overseas markets in the form of American depositary receipts and global depositary receipts and some selective external commercial borrowing.
o Here’s a look at the numbers put out by RBI: private placements raked in Rs 81,617 crore till September, CPs issued to non-banks got corporates Rs 47,744 crore till end-December, FDI till November brought in Rs 1,20,837 crore. Interestingly, LIC’s net investment in corporate debt, infrastructure and social sector amounted to Rs 35,326 crore till end-December.
o Got a macro picture of how the wheels of the economy keep moving?
* Change in base year to spruce up fiscal deficit figures?
o Thanks to the revision in the base year to 2004-05 for national accounts from 1999-2000, the fiscal deficit for the current year is likely to drop to 6.5%, other things being equal.
o With the revision in the base year, the GDP at market prices for 2008-09 is estimated at 55,74,449 crore as against Rs 53,21,753 crore estimated in the earlier series and used in the fiscal deficit calculations in budget for 2009-10.
o The government had assumed a 10.05% growth rate in GDP (at market rates). If the same rate of growth is assumed for the current fiscal, then the absolute GDP at market prices will be 61,59,766 crore in the new series, against Rs 58,56,569 crore assumed in the budget.
o Assuming that the fiscal deficit remains at Rs 4,00,996 crore, on a higher GDP the deficit as a percentage will drop to 6.5%, against 6.8% provided in the budget, giving the FM a straight statistical advantage of 0.3 percentage points.
o To put it simply, with this upward revision in the country’s income under the new series has brought down the fiscal deficit relative to the GDP.
* What's the debate surrounding the GBS?
o Take a look at this graphic. It gives you a lowdown on the issue.
* On floating rate interests
o Here is a good primer on them. Worth a look.
* Want to understand the difference between various types of SB accounts?
o Take a look at this graphic. It's right on dot in making us understand the difference.
Society
* Be careful with your status messages and tweets
o If you are a tweeter (i.e., a person using Twitter) or a person using some other micro blogging sites like Facebook, then you must read this news story. It will be an eye-opener. Don't ever think that it happens in some far away land in some white country. It can happen right here in India to you or anyone of us.
Language Lessons
* peccadillo: Noun
o A petty misdeed.
o eg: It took a razor-sharp swipe by Bill Gates to turn the spotlight once again on Italian Prime Minister Silvio Berlusconi, perennially in the news anyway for his peccadillos and, more recently, corruption charges.
* tomentum: Noun
o Filamentous hairlike growth on a plant; A network of tiny blood vessels between the cerebral surface of the pia mater and the cerebral cortex
* coiffure: Noun
o The arrangement of the hair (especially a woman's hair);
o Verb: Arrange attractively
* wicker: Noun
o Slender flexible branches or twigs (especially of willow or some canes); used for wickerwork; Work made of interlaced slender branches (especially willow branches)
o eg: The lady in black & white with a wicker-basket of three tea leaves strapped to her head may soon fade into history as the government eyes a more contemporary image for Indian tea abroad.
current affairs 2nd Feb 2010
Politics & the Nation
- Remembering Normal Borlaug
- If you were asked to write a piece on Norman Borlaug, would your piece be looking like the one that is penned by Ajay Shriram? Very good one. Normally we would find ourselves at a loss after the first few sentences on his being the father of green revolution. This piece gives an in-depth look into Norman Borlaug and his work. A must read.
Finance & Economy
- Why is the RBI contemplating capital controls?
- To avoid stark economic imbalances due to the role played by fund flows in worsening inflation, boosting asset prices and destroying industry competitiveness.
- The thinking arises amid the recent developments wherein countries such as Taiwan and Brazil, in a limited way, have imposed what is popularly known as the Tobin Tax. This is a tax on a transaction to deter speculation.
- Look at this graphic which sums up the issue for us very well.
- Here is an excellent graphic on subsidies
- It gives a macro picture of the state of subsidies in India. Take a look.
- Are you still drunk on the positive news about our banks' brand values?
- Then it is time, says Moody's, for you to shake up and see the start realities. Look at this graphic which explains more about this statement.
International
- What are the takeaways from the recently concluded World Economic Forum at Davos?
- An excerpt from today's article in ET puts it very correctly and effectively. Take a look...
- Amid the multiplicity of voices, opinions and often conflicting viewpoints, the vague contours of a new world order emerged. Forget flat worlds, globalisation, decoupling, G20s or G7s. It’s all about interconnected, differentiated, and diverse. Forget double dips, the new shape on economic recovery is LUV — the L-shaped recovery of other developed nations, U-shaped recovery of the US, and the V-shaped recovery of the emerging nations. While banking and financial services hogged the headlines and topped the agenda — often to the disgust of other constituents — there’s more.
- After the global recession, if anything, the cards are falling into completely different patterns. The world has split up into those who base their economic model on consume and borrow, like the US and UK, and those who save and produce, like China, India and rest of Asia. Those who export and trade, like China and Eastern Europe, and those who have strong domestic markets, like India.
- Name the country that has announced its intention of issuing a high tech passport for each of the sheep residing within its borders.
- Kyrgyzstan.
- Surprised? Read more on that here.
- Adverse news about UBS sends jitters down Swiss spine
- UBS is so big that if it collapses, it would have negative consequences for the Swiss economy. UBS is stated to be having liabilities worth several times the GDP of Switzerland. From this you can get a picture of the size of UBS.
- At the heart of UBS's troubles appear to be two developements -- one is its settlement of tax dispute with the US government which is forcing it to give data about 4450 clients to the US government and the other is the possibility of Germany buying data of about 1500 possible tax evaders with Swiss bank accounts.
- The other development that is likely to disturb the applecart for UBS is the possibility of its losing the banking license in US.
Obituary
- Subir Raha
- This former CMD of ONGC (2001-2006) died of cancer in New Delhi.
- draught: Noun
- A current of air (usually coming into a chimney or room or vehicle); A serving of drink (usually alcoholic) drawn from a keg; A large and hurried swallow; The depth of a vessel's keel below the surface (especially when loaded); A dose of liquid medicine; The act of moving a load by drawing or pulling
- eg: Salaries across India Inc are expected to rise at a healthy pace this year, as a draught of strong economic growth lifts consumer sentiment and spurs corporate boards into rewarding key people and hire exciting talent.
- drought: Noun
- A shortage of rainfall; A prolonged shortage
- eg: "when England defeated Pakistan it ended a ten-year drought"
- groggy: Adjective
- Stunned or confused and slow to react (as from blows or drunkenness or exhaustion)
- snigger: Noun
- A disrespectful laugh
current affairs 1st Feb 2010
Politics & the Nation
- Hakimulla Mehsud dead?
- Pakistani Taliban chief Hakimullah Mehsud has reportedly succumbed to injuries sustained in a U.S. drone attack earlier in January. Reports have been doing the rounds, particularly in Pakistan’s tribal belt, over the past few days that Mehsud was seriously injured in a U.S. drone attack in Shaktoi area of North Waziristan on January 14 that killed at least 15 militants.
- However, Interior Minister Rehman Malik maintained that the government had “no verifiable information” to confirm Mehsud’s death.
- If reports of Mehsud’s death are true, it will be a major blow to the militant outfit that is yet to come to terms with the death of its former leader Baitullah Mehsud in a similar drone attack in August last year.
- Shiv Sena and RSS at logger heads
- With the RSS taking up the cause of North Indians residing in Mumbai vigorously, the stage is set for trouble in Mumbai in the near future.
- But RSS and the Sena appear to be on the same page when it comes to dubbing the Khans as pro-Pak for their speaking up for Pakistani players in IPL.
Finance & Economy
- SEBI acts tough on multi-class share entities
- SEBI has reportedly put on hold registration of close to 50 investors who are organised as ‘multi-class share entities’ in tax havens like Mauritius.
- What is a multi-class share entity?
- Similar to a mutual fund, a multi-class structure allows distinct pools of investments — just like the various schemes of an MF — under an umbrella asset management company. The investors putting money in the various pools, which are referred to as cells by market participants, can have different fund managers pursuing different investment strategies.
- Why did SEBI resort to this?
- The fear is that while the umbrella firm gets registered as an FII or a sub-account — a special purpose vehicle formed in Mauritius to access Indian stock exchanges — the regulator may have no control over the different pools or cells under the firm. And once a multi-class share entity is registered, it can go on adding new cells which, outside the regulatory radar, can be the conduits for round-tripping.
- It is worthwhile to note that SEBI had banned PCC (Protected Cell Company) structures in ’99-00; but foreign investors can set up multi-class structures which, as legal entities, are a little different from PCCs. How different?
- The similarity between the two is that each cell has separate accounts and losses suffered by one pool cannot be recovered from another. The key difference is: in a PCC, each cell is legally ringfenced and bankruptcy faced by one cell will not impact the other cells; but in a multiclass share entity anyone suing a cell has to sue the entire company and not the shareclass.
- With the budget making process having entered the final laps, want to know something about the key people behind the budget making process?
- Can't get a better write up than this one that appeared in today's ET. Take a look.
- How is inflation bad for economy?
- Apart from making people get less goods for more money, it has other negative effects.
- It impacts savings and investment decisions (people see no value in saving when the value of their saving is declining and businessmen find it hard to take investment decisions in an uncertain environment). Beyond a certain threshold, inflation has a deleterious impact on growth, long-term.
- What factors are likely to spoil the growth party for 2010-11?
- The answer is an excerpt from today's ET op-ed by Mythili Bhusnurmath.
- One, the reversal of monetary accommodation can’t be effective unless there is also a rollback of government borrowing. The sharp rise in government borrowing during the current fiscal could be managed partly through liquidity infusion and partly because of fortuitous circumstances (credit off take slowed at the same time). Neither of the factors is likely to come to the government’s rescue next year. The yield on 10- year government securities is close to 8%, suggesting declining appetite for government paper, despite surplus liquidity.
- Two, there is still considerable uncertainty about the pace and shape of global recovery, of what might happen when governments around the world withdraw their fiscal stimulus.
- Three, the future trajectory of food and oil prices remains uncertain. In the case of food, much depends on the behaviour of the south-west monsoon. If rainfall is inadequate, food inflation will worsen and overall inflationary pressures will intensify. Oil prices, again, could make or mar our recovery. But there’s no way of foretelling whether global prices will rise or fall when the global economic outlook is so uncertain.
- 20 Indian banks make it to the list of big banks by brand value
- SBI’s brand value more than tripled to $4,551 million, up from $1,448 million in 2009 helping it grab the 36th spot in the list.
- ICICI Bank, the country’s largest private bank, joined it in the Top 100 list with a 130% jump in its brand value at $2,164 million.
- Take a look at this list. Interesting.
- Australian Open
- Roger Federer beat Andy Murray in straight sets, 6-3, 6-4, 7-6 (13/11). The world number one clinched victory in a gripping tie-breaker, 13 points to 11, when Murray frittered five set points and the Swiss claimed it on his third match point.
- Britain's frustrating chase for a first male Grand Slam winner since Fred Perry last won 74 years ago, thus came to an end. It is now 279 Grand Slam tournaments since Perry beat American Donald Budge in the 1936 US Open final.
- Federer has now won 16 Grand Slams in the span of 27 majors and has lost only six finals in that time.
- 11th South Asian Games
- Those of you who have an interest in the South Asian Games can read this to get a peek into our performance.
- They are going on in Dhaka currently.
Music
- Rahman wins two Grammy awards
- He shared the 'best compilation soundtrack for a motion picture' Grammy with lyricist Gulzar for the Slumdog Millionaire soundtrack. "Jai ho" was judged the best motion picture song.
- "Jai Ho" has been sung by Sukhvinder Singh, Mahalaxmi Iyer, Tanvi Shah, Vijay Prakash and Rahman himself.
- This is Rahman's first Grammy win and the musician joins the league of stalwarts like Pandit Ravi Shankar, Zakir Hussain, Vikku Vinayak and Vishvamohan Bhatt, the previous Grammy winners from India.
- quagmire: Noun
- A soft wet area of low-lying land that sinks underfoot
- eg: The London conference on Afghanistan seems to have drawn the contours of the new policy to try and resolve the quagmire.
- gloss: Noun
- An explanation or definition of an obscure word in a text; An outward or token appearance or form that is deliberately misleading
- eg: ...It is also, diplomatic gloss apart, a setback for India’s own objectives and its stated position that such differentiation is not only facile but contrary to the very aims of the whole ‘war on terror’.
- aplomb: Noun
- Great coolness and composure under strain
- punch bowl: Noun
- A large bowl for serving beverages; usually with a ladle
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