- In today’s Discover It blog, I reproduced for you the opinion of Dr. Montek Singh Ahluwalia as it appeared in ET about
’s economic reform path. It is a must read for getting a bird’s eye view of the progress over the decades. Take a look at it here. India
- CCDs – what are they and why are they in the news?
- Compulsory Convertible Debentures. It has become a fashion for companies to issue CCDs to foreign funds and agree to buy them back after 2 or 3 years at a price fixed today. Such CCDs are shown as FDI, even though the underlying structure is no different from a pure loan. This allows companies to overcome restrictions on partly and optionally convertible debentures and preference shares.
- LPO business
- Legal Process Outsourcing. It includes functions like legal research, litigation support, contract drafting & review and paralegal services.
- The margins in this business are higher at about 30 to 40%, against 12 to 15% in the BPO industry.
- Law is turning a hot career pick
is currently producing about 70,000 lawyers a year. India ’s civilian aircraft needs and some pointers India
- An estimate by Boeing, a leading manufacturer of aircraft puts the requirement of
for aircraft at 911 planes over the next 20 years. India
- What a number? Do you see any connect? 9 – 11? This should be enough for US to start investigating into all matters connected with
and Boeing :) I am just kidding. India
- Boeing says that to make an MRO operation successful, it needs to service about 200 aircraft. MRO by the way stands for Maintenance, Repair and Overhaul.
- An estimate puts that about 21000 aircraft would be needed by the world in the next two decades.
- Plans for Prasar Bharati bifurcation
- One proposal that is doing rounds is that it will be split into two corporations – an Asset Corporation and Programming and Broadcasting Corporation. While the former will hold all the assets, the latter will oversee programming and other operations.
- Director General of Foreign Trade
- Mr. RS Gujral
- No tax on reverse mortgage
- You know what is reverse mortgage; don’t you? If you want to have a recap, take a look at it here.
- CBDT has now clarified that the payments made in reverse mortgage whether in lump sum or in installments will not be treated as income and that no tax would be payable on such payments.
- Credit to GDP ratios
– 40% India
- US – 250%
– 150% UK – 150% China – 75% Thailand
- This is the ratio of total credit advanced by the banks in the country to its GDP (Gross Domestic Product). The higher this ratio, the greater is the economic activity induced by the banking system. Some see it as a measure of banking efficiency.
- An interesting term to learn today, from the ‘First Principle’ column of ET.
- A technical group to review the legislation on money-lending that was set up by the RBI has recommended that the rule of damdupat should be incorporated in the legislation by all the states. What this principle says is that the maximum amount of interest chargeable by the lender should be restricted to maximum of twice the outstanding principal, irrespective of the amount of interest accumulation.
- Is there any need for insuring films or film making? This could perhaps evoke varied reactions from you, I am sure. Take a look at my take on the subject in today’s Discover It blog.
- Gross refining margins
- These are essentially the difference between the value of crude oil and the refined petroleum products.
- For RIL (Reliance Industries Limited), these are very high – at about $15.4 per barrel during the last quarter. In contrast, the regional bench mark – the refining margins in
stood at $9.5 per barrel. Singapore ’s tax to GDP ratio India
- It is at around 12 to 13% of the GDP, in contrast with the 22 to 23% ratios seen in the developed countries.
- Something about
- All of you would be dreaming of entering this place sometime soon in your careers. Let’s learn at bit about it from a traveller’s perspective.
- There is an interesting story about its coming into being:
- During the reign of Aurangazeb, Ram Rai, Guru of the Udasi Sikhs was ordered to retire to the wilderness. Then he pitched his tents here and also built a temple. Around these two sites, grew up the town popularly known as Dehra. The dun or doon means the low lands at the foot of the mountain range.
- In addition to the famed
that you all dream of entering, it also houses a number of other institutions. Take a look at them here. Mussorie Academy
- What is ‘Open Source’ software?
- Many of you would have heard about this. But are you clear what it actually means? It is often mistaken as software that is being given away for free. Well, that is only half of the story. Not all ‘free’ software are ‘open source’. Similarly not all ‘open source’ need be freeware.
- The basic character of ‘open source’ software is that its code is thrown open to the public. So whoever gets the software also can see the source code and modify/alter/customize it to suit their needs. Not only that, they can even make their modifications as part of the software itself and call it a different ‘distribution’ of the software.
- Are you able to now see the connect between various ‘distributions’ of Linux software? The core Linux is offered to the world for free by Linuz Torvalds, its creator. A number of individuals and companies have modified the code to make their own different versions of Linux ‘distribution’. That’s how you get to see the Red Hat Linux, Mandrake, Ubuntu Linux etc.
Goais back in political turmoil
- The ruling government appears to have lost its majority. The BJP now claims that it has the support of about 20 MLAs in the 40 member assembly.
Goahad seen about 19 Chief Ministers since 1961. It was granted statehood in 1987.
- World’s largest wind farm in
, US Texas
- A plant of about 3000 MW size is being built there. It is unique for one more thing. It has the capability to pump air in underground storage, so that it can later be used to generate electricity, when natural wind power is not enough to run the generators.
- How much do Americans spend on pampering their pets?
- A whopping $41 bn per year.
- This amount is more than the GDP of many countries of the world. The GDP of only the top 64 countries of the world is higher than this figure.
- Director General of BSF
- Border Security Force: AK Mitra
- Names of some of the important stock indices of the world
: Shaghai Composite China : Bolsa Mexico : Bovespa Brazil : Hermes Egypt South Africa: FTSE Africa : KOSPI Korea : TAIEX Taiwan
- I am presuming that you know the highly popular indices of US,
, France, India etc. UK
- Geet Sethi
- Is famous for his 8 World Billiards titles.
- I found an interesting comment by Montek Singh Ahluwalia in today’s ET on our economic reform process. Take a look at it in today’s Discover It blog here.
- About VC funds
- Currently there are around 44 VC (Venture Capital) firms investing in
- In 2006, the total VC investment was around $506 mn.
- AIDS policy
- For a population of about a billion (1.12 bn to be precise) we have about 40.2 mn workers or about 40% of the population.
- Look at it in another way – 40% of our population supports the remaining 60%.
- For such an important contributing portion of our population, we need to have very subtle policies in handling HIV patients among them.
- Temasek Holdings
- We have noted about this company in our blog at one time or the other. It is an investment arm of the
government. It has a corpus of abour $86 bn. Singapore
- Its investment goal is invest a third in
Singapore, a third in Asiaand the remaining in developed economies.
- Temasek is currently headed by Ms. Ho Ching. She is the wife of
’s Prime Minister Mr. Lee Hsien Loong. Singapore
- How many copies of Windows Vista were sold by Microsoft?
- About 60 mn as the end of June.
- NTPC’s LNG deal with
- We are all following the Natural gas pricing issue for quite some time. While it is still burning, NTPC reportedly has struck an agreement with
for supply of LNG (Liquified Natural Gas) at $2.97 per mmBtu. Nigeria
- Something about the sugar industry
- Sugar companies are exporting sugar at a furious pace to stay profitable.
- Open market prices of sugar have plunged below the price of levy sugar!!
- The sugar mills get a hefty export subsidy from the Centre and the States (mostly
Maharashtraand Karnataka) and the ISEC – Indian Sugar Exim Corporation.
- Ban on sugar exports was lifted in January 2007. The ban was originally imposed in 2006 to check rising domestic prices and soaring inflation.
- Tax to GDP ratios
- The tax to GDP ratio of central excise and services is 3.9%.
- The sales tax to GDP ration is 5.9%.
- Asian atheletics championships at
- Chitra Soman bagged the first gold for
in the 400 m run. India
- Anju George won the silver in long jump
- Update: Thanks for the comments posted below this post. I made the necessary correction. Originally I noted that it was Gold. But alas, it was not. She won only a silver.
- Do you remember the Mashelkar Committee report controversy? It is back in news because there is tiff between Mr. Mashelkar and the government over the issue. Let’s have a recap of the issue. Take a look at what I noted for you in today’s Discover It blog here.
- Natural gas rates to be decided by the regulator
- Do you remember that we noted sometime back that the Petroleum and Natural gas regulator does not have the power to decide on natural gas tariff?
- The Committee of Secretaries on gas is likely to recommend the job of approving gas pricing formula to the regulator. This would be in compliance with the norms under the exploration policy which allows the regulator to approve the pricing formula if the government assigns it the job.
- The PNGRB – Petroleum and Natural Gas Regulatory Board has started functioning from June this year. Its mandate is to regulate downstream activities including refining, processing, storage, transportation, distribution, marketing and sale of petroleum products and natural gas.
- It has Mr. L. Mansingh as Chairman. Members are: LK Singhvi, BS Negi, Sudha Mahalingam and YPC Dangay. Ajay Tyagi is the Member Secretary.
- FII investments which are more nearer to FDI in classification
- Investments into public issues or QIPs (Qualified Institutional Placements), pre-IPO placements that are subject to lock-in are two types of investments which are very close in nature to FDI. The former because a lot of it goes into capital expenditure. The latter because of the lock-in.
- Should money lenders be involved in rural lending?
- Take a look at what appeared in ET today here. It is an interesting debate in the context of RBI’s model law which was outlined by the committee headed by SC Gupta.
- Deepak Kapoor is the next Army Chief
- He is set to succeed the present Chief of Army Staff General J.J. Singh on September 30th.
- Dr. Amartya Sen honoured with German award
’s Meister Eckhart prize is conferred on him for his work on human development theory. Germany
- The prize is named after the 13th century German theologian and mystic.
- Asian atheletics champions
- They are currently going in
Amman, the capital of . Jordan ’s tally included India
- JJ Sobha’s silver for heptathlon
- Sinimole Paulose’s silver for 800 meters run
- Preeja Sreedharan’s silver for 10,000 meters run
- Private labels and retail trade
- What is a ‘private label’ in retail trade
- These are brands owned by the retailer and made in-house to compete with mainstream brands. They are available only in the respective retailer chain. Almost all large global retailers like Tesco, Sainsbury, Wal-Mart etc., have their own private labels as they give better margins than if they sell it for other manufacturers.
- Business confidence index in
- The ET compiled business confidence index has fallen 9% in the June quarter to its lowest level in the past 11 quarters. Soaring interest rates and an appreciating rupee seem to have played spoil sport.
- Our country’s oil owes
- Our oil marketing companies are currently making under-recovery of about Rs .195 crore every day.
- The Indian basket of crude oil has averaged $72.31 per barrel this month. While this so, ONGC sells domestic crude at only $50.21 per barrel to refining companies.
- ONGC bills its customers in dollar terms. Therefore, a stronger rupee helps in softening crude prices in rupee terms for the refiners. This helps the upstream company in easing some of the subsidy pressure.
- Are we a high-tax country?
- The general feeling among many is that we are a high-tax economy. How do we arrive at this conclusion?
- While the world average rate of corporate tax is 33.2%, in
it is 35%. In contrast, in Asia Pacific it is 30.1%, India Latin America28%, OECD countries 28% and EU 24.2%.
- But certain still higher corporate tax levying countries include:
51% Japan 53.2% Italy 57.5% Germany 40% US
- Rubbery metal; can there be a thing like that?
- Yes. Researchers at the
in US have come with an exotic material which is a composite consisting of ceramic particles embedded in a metal matrix. The metal provides strength and stiffness, while the ceramics have a curious property known as ferroelasticity. This means that vibrations are converted into tiny rotations of crystals within material. Universityof Blacksburg
- Compare and contrast ECBs and FCCBs?
- If you are asked such a traditional question, what could your answer be? Many of you have asked me this question. I did my best to answer it. But I came across an excellent piece on this. I couldn’t resist giving you the link to it. I could find it only in the e-paper. Follow this link. Then navigate to page 19. You will find it in the “Simply Speaking” column on that page. You should be registered to read it; but registration is free.
- Simpsons; who? You ask me? The Simpsons is an animated American sitcom (a humorous drama based on situations that might arise in day-to-day life) created by Matt Groening for the Fox Broadcasting Company. It is a satirical parody of the "Middle American" lifestyle epitomized by its title family, which consists of Homer, Marge, Bart, Lisa, and Maggie.
- Why is it news now? It is heading for the big screen i.e., it is being made into a movie for the big screen.
- An estimate of
’s borewells India
- An estimate by the New Scientist says that there are about 21 mn borewells drilled in our country.
- They are depleting the water tables in most parts of the country.
- Who is a speleologist?
- A person who studies caves in any of their scientific aspects.
- What could be the consequences of the
round falling through? What could be achieved by it? What would be consequences of mushrooming bilateral and regional trade agreements? One time or the other these questions would have bugged our minds in the last one year of our blog coverage. Take a look at an expert’s answers for these questions. In today’s Discover It blog here. Doha
- Dr. Raghuram Rajan panel on financial reform
- Government, having realized that the reforms process has come to a halt, has constituted a panel headed by him for looking at reforms that
would need in the next 10 to 15 years. India
- He was a former Chief Economist at IMF and is acclaimed for his work in finance. He is currently the Eric J Gleacher distinguished service professor of finance at the University of Chicago and is the academic fellow 2007 at the Centre for Analytical Finance, ISB, Hyderabad.
- Percy Mistry committee on making Mumbai an international financial centre
- One of its prominent recommendations is a single financial service regulator for banking, insurance, commodities and capital markets. Such a system exists in the
at present. UK
- The Sasan mega power project bid
- We noted on why the Sasan mega power project was stuck in a controversy on 23rd June, 2007. Revisit it here.
- The successful bid by the Globeleq-Lanco consortium has been rejected by the special EGoM (Empowered Group of Ministers) headed by Sri. Sushil Kumar Shinde, looking into the issue.
- Sasan can either go for a rebid or it can award the contract to the second lowest bidder.
- Reservations for SSI sector
- Yesterday, we noted something on this subject. And today we have an interesting ET editorial on the subject. I recommend strongly that you should read it. Do so here. Some interesting snippets worth remembering from this are:
- From nearly 900 items reserved for manufacture in the SSI sector in te late 1990’s, the list has been pruned to 114 items.
- The usual justification for the SSI reservation policy is that labour-intensive, small scale manufacturing rather than mechanized, large industrial production is the right model for India if more jobs are to be created in the manufacturing sector to enable people to shift out of the farm sector. The editorial gives a sound account of how this argument is fallacious.
- Private Equity scenario in
- At present there are over 100 PE firms seeking to deploy about $20 bn in
- Globally, PE investment is less than 4% of the total public market investments. In
, this figure is estimated to be closer to 2%. India
- The problem of impossible trinity. ???
- Do you remember our noting about ‘the impossible trinity’ in the context of the East Asian Financial crisis? Let’s revisit it again in view of the subtle change in constitution of the ‘trinity’ in the current Indian context.
- During the East Asian financial crisis, the central bankers discovered that they could not defend their currencies, place capital controls and retain control over interest rates. This is the impossible trinity.
- In today’s context, they are realizing that they cannot have a non-appreciating currency, free capital flows and high interest rates.
- Village money lenders may be in for tough times
- The RBI constituted committee headed by SC Gupta has come out with a model law which seeks to register money lenders with states and force them to lend at cheaper rates.
- Over 27% of loans taken by rural households are from money lenders. The interest they pay vary between 24% to an unbelievable 1000%.
- Let’s see what turns and twists it takes.
- In today’s Discover It blog, I have noted for you something about PL 480 programme. Take a look at it here.
- Export rules for FDI in SSIs
- At present, FDI in sectors reserved for SSIs (Small Scale Industries) is permitted only if the company concerned agrees to export 50% of its production.
- Foreign investors have been demanding that export obligation on investment in these areas should be scrapped.
- Around 144 items have been reserved for SSIs. Indian exporters are not able to compete in the global market as SSI reservation hinders economies of scale.
- Deepening of the bond market
- In accordance with the Deepak Parekh committee’s recommendations the government and the RBI seem to have come to an understanding in allowing banks to invest more in unrated debt paper.
- At present banks are not allowed to invest more than 10% of their total investment in unrated bonds.
- Government is also planning to change the methodology of rating infrastructure projects and SPVs so as to facilitate investments in the sector.
- Security restrictions on FDI
- Only yesterday we noted that we are trying to emulate the
by enacting a law which is similar to the Exon-Florio Act. US
- Today’s editorial in ET argued about why we should not have such an act. Take a look:
- As it is we are not having good FDI figures to speak of. The $16 bn FDI that we have seen in the just concluded financial year pale in comparison with the $60 bn that
attracts. When the infrastructure sector needs about $450 bn in investments spread over the next five years, anything that can negatively impact investment flow into China needs to be resisted. India
- We should always try to emulate the ‘best’ practices; but not the worst practices from the developed world. The Exon-Florio Act is an example of a worst measure. In any case a sparing use of such an equivalent Act in
cannot be guaranteed. India
- Ownership makes no difference to creation of jobs and prosperity and these are what matter in any progressive society and economy. So imposing legislative restrictions on ownership should be desisted.
- Well, what’s your take on this subject? Let me hear your views through the comments feature or the shout-box on the blog.
- Sub-prime mortgage woes in US
- We covered it for quite some in our blog. It refers to giving loans to borrowers with poor credit histories or high levels of debt.
- Investment bankers that are likely to take biggest hit because of their underwriting of such sub-prime mortgages include:
- Merrill Lynch
- Lehman Brothers
- I answered two of your shout-box queries in a kind of longish way. Take a look at the answers in today’s Discover It blog here.
nuclear deal US
- The agreement seems to have been hammered out finally by both the sides.
- The 30 page document that the negotiators have drafted, has to be approved by the Indian and US governments.
- The approval process in
typically will follow this path: It will first be reviewed by the AEC (Atomic Energy Commission). Then it goes to the PM and gets final approval from the Cabinet. India
- National Authority to regulate blood collection
- The government has decided to set up a NBTA (National Blood Transfusion Authority) to regulate blood collection and distribution system in the country.
- Exon-Florio Act of the
- It arms the
government with powers to block acquisition of any American company by a foreign investor. It was there on US ’s statute book since 1988. America
- Countries like
China, Canada, Australiaand also have similar laws to check foreign investments. Thailand also is thinking of coming out with a similar enactment. This is contemplated with a view to block takeover if there is threat to national security. India
- What is meant by patois?
- The word is used to describe a language considered as nonstandard. Depending upon the instance, it can refer to jargon or slang, as well as to pidgins, creoles, dialects, and/or other forms of native or local speech. In many cases, class distinctions are drawn between those who speak patois and those who speak the standard or dominant language.
- If you want to know what is ‘factoring’ in business, you have an excellent article explaining it in today’s ET. It is published on page 7.
- Factoring is a service whereby the provider, known as the Factor, offers to take up the accounts receivable (collection of the money for goods and services sold) – in the form of invoices raised – on behalf of the seller, for a fee. This frees up the seller to focus on other aspects of his/her business. It becomes particularly important for small and medium businesses who may not have adequate working capital to work with large corporate buyers.
- The problems that ‘factoring’ is encountering right now in
- Absence of clearly defined regulations that recognize factoring.
- The comfort level of buyers is another issue that factors have to contend with.
- Globally factoring is a growing business with a cumulative turnover of 1.3 trillion Euros last year.
’s share in this is very small at 3.6 bn Euros. India
- These are financial instruments whose value is based on another security. Options and futures, for instance, are financial instruments used in derivatives transactions.
- Investment norms for life insurers and non-life insurers in
- At present, life insurers have to invest 50% of their investible assets in government securities, 15% in infrastructure bonds and similar instruments while holding a discretionary control, subject to conditions, on 35% of the assets.
- General insurers’ discretionary quota stands at 45% of the investible assets.
- There are about 16 companies in the life segment and 15 in the non-life segment in
. India Code Energy Conservation Building
- This is being made mandatory for all new commercial buildings from the next financial year.
- The power ministry is targeting to bring down power consumption by commercial buildings to below 40% of the current usage. If fully implemented, this could help in saving 1.7 bn units annually.
- The Energy Conservation Act, 2001 which came into force on March 1, 2002 is aimed at making
an efficient user of energy and the ECBC under the Act is aimed at achieving total energy efficiency in buildings and establishments. India
- The code is applicable to buildings with demand greater than 500 KW.
- The overall share of the commercial sector in electricity consumption is about 7 to 8%. It has been growing at a rate of about 12% over the last few years.
- Some challenges being faced by
- Though it is witnessing a massive economic upturn in recent times, the country with 17% of the world’s population, still accounts for only 1.8% of the world’s income.
- Of its over 1 bn inhabitants, approximately 300 to 350 mn are below the poverty line, 75% of them in rural areas.
- Agriculture still employs over 60% of the population, but accounts for only 22.6% of GDP.
- Due to heavy and increasing population burden on the land, land holdings in most parts of the country are small and fragmented, making agricultural practices economically unviable.
- F1 racing: European Grand Prix
- Watched this race on TV? It was really inspiring. Actually F1 races will present to the layman a picture of high-tech and well-prepared teams making lot of brouhaha over something that appears a bit innocuous. When the gizmo (the car) is high-tech, when it has no tethers on fuel consumption and when it is backed by top-class mechanics to look into its health continuously, what is the big deal about driving such a vehicle fast? At least this is what I thought, until yesterday, when I had a chance to watch this particular race. It was all raining and the visibility was so poor that it is a miracle that the 13 cars that remained in the race survived any crash at all.
- In the end anyway what matters is winning. And for us remembering who won the race. It was Fernando Alonso of McLaren team that won the race.
- The race was held at Nurburgring.
- In today’s Discover It blog, I have noted something on how
should respond to climate change challenge. Take a look at it here. India
- Transfer pricing
- It refers to the pricing of goods and services within a multi-divisional organization, particularly with regard to cross-border transactions.
- The tallest horse in the world
- A Belgian horse named Radar. It is 79.5 inches tall.
- Withers: is the equestrian term for the top of the horse’s shoulder.
- Popularizing Nainital
- This hill station is Uttaranchal was reportedly popularized by a European merchant from Shahjahanpur called Mr. Barron who disclosed its beauty through an article in 1839.
- Death bonds
- This is one of the most macabre investment schemes devised by Wall Street.
- It is the nickname for life-settlement-backed security.
- What are “Life settlements”? These are arrangements that offer people the chance to sell their policies (life insurance policies) to investors, who keep paying the premiums until the sellers die and then collect the payout. The sellers sell them because, if they decide to stop paying the premium and surrender the policy back to the issuing life insurance company, they will get very little. So to get a better value for the premium already paid by them, they sell to interested investors.
- So in Wall Street the craze now is for investment funds to buy such policies, pool them into bonds, and selling the bonds to pension funds, college endowments, and other professional investors.
- Estimates put the figure for this market in 2005 at $10 bn, in 2006 at $15 bn and $30 bn in 2007.
- In contrast the size of the mortgage market is $1.9 trillion.
- Viaticals business
- This is similar to the Death bonds that we have just seen above. Viaticals means cash derived from sale of an insurance policy by a terminally ill policy holder. The policy holder is expected to live no more than two years or sometimes a maximum of 5 years.
- As AIDS spread during the 1980’s, patients turned to the viatical settlements market to unlock insurance money to pay for their care. But advances in medicine during the 1990’s extended patients’ lives and this market petered out.
- Many a time I am asked this question. What is securitization?
- Assets (say like the insurance policies that I just now referred above) are pooled together and then sold off in the form of bonds or pieces of bonds. The assets can be anything – insurance policies, debts and mortgages etc. By collecting many different assets, the risk is dispersed. Even if a few don’t pay off, the rest will.
- Chairman CIBIL
- S. Santhanakrishnan
- CIBIL: Credit Information Bureau (
) Limited. India
- What does it do?
- It gathers comprehensive credit information pertaining to both commercial and consumer borrowers, to a closed user group of Members. Banks, Financial Institutions, Non Banking Financial Companies, Housing Finance Companies and Credit Card Companies use CIBIL’s services. Data sharing is based on the Principle of Reciprocity, which means that only Members who have submitted all their credit data, may access Credit Information Reports from CIBIL.
- Beach volleyball
had inaugurated its first beach volleyball court. Hyderabad
- The sport took birth in
in the 1920’s. Santa Monica, California
- It became an exhibition sport in the 1992 Olympics and a regular event in 1996.
- I have answered some of your shout-box queries in today’s Discover It blog. They were about hawala and money laundering, hedge funds, negative net worth and Web 2.0. Take a look at them here.
- Composition of the WPI
- The Wholesale Price Index comprises of three categories:
- Fuel, power and lubricants (14.23%)
- Manufactured products (63.75%)
- Primary articles (22.02%)
- The figures mentioned in the brackets are their weights in the index.
- Biometric PAN cards are on the anvil
- With a view to eliminate duplicate PAN cards, the government is coming out with biometric PAN cards. Fingerprints or retinal scans will be used to uniquely identify individuals applying for PAN cards.
- There are about 13 lakh duplicate PAN cards in the country.
- 360 degree profiling of tax payers
- It involves mapping of information gathered about tax payers through annual information returns regarding bank accounts, credit cards, mutual fund investment, purchase of property and share market to investigate tax evasion.
- Secretary of the Empower Committee of State Finance Ministers
- Satish Chandra
- How much do Post Offices make on selling small savings schemes?
- For selling NSCs, they make Rs. 33.27 per certificate, irrespective of value. They earn Rs. 117.89 per postal savings deposit, irrespective of the size of the deposit.
- What are invisibles? Some of you have asked me this question with reference to our forex earnings.
- Take a look at SSSA Aiyar’s article in today’s ET. He discusses how about $23 bn in
’s BoP account remain unexplained by RBI. India
- Let’s keep a tab on the issue.
- Read the article here.
- What is Political Islam?
- In an interesting article Najeeb Mubarki explains this concept. He says that it is a modern reactionary movement. In its social, economic and political content, it is the result of an aborted project of modernization, and the decline of the secular nationalist movement which would have delivered this modernization, mainly in the Muslim countries in
West Asia. This political Islam spans varied forces – the reformative flexibility of a Khatami in Iran, the stridency of Islamic Jihad in , the social/democratic credentials of Hamas, and even the tribal atavism of the Taliban. Palestine
- Home equity business
- The practice of offering loans against house property.
- This is different from a normal housing loan. When a bank offers loan against a freehold house, taking the house as security, it is called home equity business.
- This is highly developed in the
- Many of you would have heard about holding companies. Let’s take a look at why they have become the flavour of the season. Look here.
- You shouldn’t miss today’s article by Hasan Suroor on the Muslim dilemma. Take a look at it here. Do you see any pattern in this? It takes a Muslim to write something critical about Muslims. Only a Muslim country gets the courage to storm into a Masjid and restore law and order. It takes only an SC to really challenge some policies which have outlived their utility!! I am referring to Mayawati and KG Balakrishnan. Only a woman gets the courage to refuse reservations for women. Here I am referring to one of our own readers who was against women reservation.
- Supreme Court to know the connection between affirmative action and railway tenders!!!
- Indian Railways appears to be taking affirmative action too far. It has provided reservation to SCs, STs and OBCs and minorities in awarding commercial contracts relating to catering tenders.
- Article 16 provides for reservation in public employment.
- Article 15(5) deals with reservation in education.
- It would be interesting to watch whether awarding commercial contract falls within the scope of the above articles.
- The Court has asked the Attorney General, who was appearing for the Centre to explain the reason for extending reservations in awarding commercial contracts. Let’s see what turns and twists it will start taking now.
- Attracting FDI into
- Do you know that there is a body called the Investment Commission of India? Take a look at it here: http://www.investmentcommission.in/
- It was set up in the Ministry of Finance in December 2004 by the Government of India, and has Mr. Ratan Tata as Chairman and Mr. Deepak Parekh and Dr. Ashok Ganguly as members. It was set up to enhance and facilitate investment in
. The Commission makes recommendations to the Government of India on policies and procedures to facilitate investment, recommends projects and investment proposals that should be fast tracked / mentored and promotes India as an investment destination. India
- FDI in courier industry
- The proposal of the Department of Posts to restrict the FDI in courier industry to 49% has not found favour with the investment commission.
- At present FDI in courier services stands at 100%.
- FDI in agriculture sector
- At present FDI up to 100% is permitted under the automatic route in select areas such as floriculture, horticulture, development of seeds, animal husbandry, aquaculture, services related to agriculture and allied sectors, and cultivation of vegetables and mushrooms under controlled conditions.
- Money laundering
- We have noted something about money laundering sometime back. Today we look at its definition once again:
- It is the practice of moving illegally acquired cash through the financial system to make it legal.
- There is a body called the FIU – Financial Intelligence Unit established in the Finance ministry which takes steps to prevent money laundering activities in
- Its guidelines now require insurers to report suspicious transactions including those which could be ‘structuring deals.’
- ‘Structuring deals’ are those which are artificially carved into several transactions to avoid reporting requirements.
- Paying insurance premiums in cash is one activity which lends itself to money laundering easily. Generally people opt for big ticket life insurance policies and pay one time premiums running into thousands, at times lakhs of rupees (in cash aka ‘black’ money) and discontinue the policies after a couple of years. The money returned from LIC is shown as ‘white’ money.
- CCRI – Central Coffee Research Institute
- It has come out with a new variety of Arabica. This variety can resist the coffee leaf rust disease (CLRD), an ailment that facilitates infestation by the white stem borer.
- It also yields 1200 Kg per acre compared to 700 to 750 Kg for normal Arabica.
- It refers to the practice of traders using the unrealized profits from the positions they have built upon any securities using funds borrowed from a broker. While it provides the trader with an opportunity of earning far more profits than what his net worth would allow, it also accentuates the fall in a bear market.
- Constitution of RRBs
- Many a time I wondered about this. Today’s ET has revealed this:
- State governments hold 15%, Commercial banks 35% and Central government owns 50% in RRBs.
- RRBs were on par with co-operative banks earlier in taxation. Both were exempt from paying tax on their profits. But budget 2006-07 has brought RRBs into tax net.
- The government is thinking of recapitalizing 29 RRBs with about Rs. 1,850 crores, as they have acquired a negative net worth.
- Centrally sponsored schemes
- A centrally sponsored scheme (CSS) is one in which specific purpose grants are extended by Centre. These funds are channeled directly to the district administration and local bodies. There are about 150 such schemes.
- Airbus CEO
- Thomas Enders
- EADS CEO
- Louis Gallois
- EADS is the holding company of Airbus.
- Is won by
. It beat Brazil in the finals. Argentina
- I noted some salient points about natural gas pricing from an article that appeared in today’s ET. I recommend reading it once. Look at the salient points in today’s Discover It here.
- Bonus stripping
- The act of buying shares at cum-bonus price and selling at ex-bonus price to book capital loss is called bonus stripping.
- The steps involved are:
- An investor holds/buys cum-bonus shares.
- Holds them till stock becomes ex-bonus when share price gets adjusted on the basis of ratio.
- Ex-bonus adjustment is followed by the record date which is fixed to ascertain bonus entitlement.
- Investor sells his original holdings fully/partly after the record date and books capital loss.
- New bonus shares are credited to investor’s demat account.
- Capital loss is set off against capital gain at the end of the financial year.
- Indian households’ investment patterns
- The Indian households are having an increasing exposure to equities. The share of stocks and debentures in their savings has increased to nearly 5% by March 2006 from 1.1% in the previous year.
- Problems in the
- Growing current account deficit
- Negative household savings
- Over-valued asset markets, notably housing
- Over valued currency
- The lessons that remain unlearnt, with regard to the East Asian Financial crisis
- Joseph Stiglitz, a Nobel laureate in economics lists them out as below.
- The first is that capital market liberalization – opening up developing countries’ financial markets to surges in short-term ‘hot’ money – is dangerous. It was not an accident that the only two major developing countries to be spared of the crisis were
Indiaand . Both had resisted capital market liberalization. Yet today, both are under pressure to liberalize. China
- The second is that in a highly integrated world, there is a need for a credible international financial institution to design the rules of the road in ways that enhance global stability and promote economic growth in developing countries. With the IMF so dominated by the
US(it is the only country with a veto) and Europe(which, by custom appoints its head), the Fund was long seen as representing the interests of international creditors. Its past failures have underscored its limitations.
- While answering one of your queries about the need to study the India Gazetteer, I came across the beautiful link: http://dsal.uchicago.edu/. It is Digital South Asia Library. This is where you will also find a link to the Imperial Gazette: http://dsal.uchicago.edu/reference/gazetteer. It is just for reference. Trying to read it from cover to cover is like trying to read a dictionary.
- Today’s ET had a good article on
’s strengths and weaknesses. I noted something from it for you in Discover It. Take a look at it here. China
- How many trucks are plying on Indian roads?
- About 3 million.
- Taxation issue of MNC BPOs
- The Supreme Court has settled the issue of taxation of foreign companies setting up captive BPO units in
. Delivering its verdict in the Morgan Stanley case, the court held that the IT department could not tax part of the global revenues of a foreign company by attributing it to its India-based BPO. The parent company therefore does not risk being taxed in India if it compensates its local BPO on an arm’s length basis. India
- India-US defence deal
and US are close to signing an agreement under which their armed forces will provide each other logistics support on a reciprocal basis. India
- US has offered to
a giant landing ship, USS Nashwill for sale. It is of the same class as the USS Trenton that was bought by the Indian Navy. India
- Amulya Ganguli’s “Mayawati: Now the bad news” is worth a read. This piece discusses some unsavory aspects of the rise of the regional leaders from the subaltern classes, once hailed as the spread of democracy.
- One comment worth noting from this article is: “Mayawati is not alone in believing in the philosophy of pandering to the popular craving for circus and not bread, which also guided the Roman emperors.”
- Ramanujan Number
- Do you know that 1729 is known as Ramanujan Number? He discovered that it is the smallest number that can be expressed as the sum of two cubes in two different ways. 1729 = 13 + 123 + = 93 + 103.
- It is the branch of science dealing with study of decay-resistant remains of certain plans and animals. The term was introduced by Hyde and Williams in 1944, on the basis of the Greek words ‘paluno’ meaning to sprinkle and ‘pale’ meaning dust.
- Why are Latin Americas called so even though the language spoken there is Spanish?
- The term
Latin Americawas coined in the 1860’s when the French emperor Napolean III was trying to extend French imperial control over the whole region. He and his ministers used the term to try to suggest at least some degree of cultural similarity between the region and . The region consists of people who speak Spanish, Portuguese and French. These languages (together with Italian and Romanian) developed from Latin during the days of France Roman Empireand the Europeans who speak them are sometimes called ‘Latin’ people. Hence the term Latin America.
- Muttiah Muralitharan of Sri Laka became the second bowler in cricket history to take 700 test wickets.
- The first one is Shane Warne of
with 708 wickets to his credit. Australia
- One of you pointed out in our blog comments that I have missed out on the prize given to our President by
. Really sorry for missing out on that one. UK
- President APJ Abdul Kalam has been chosen for the prestigious British award -- King Charles II Medal -- in recognition of his extraordinary contributions to scientific advances in
- Kalam is only the second head of State after Japanese Emperor Akihito to be honoured with the award given by the Royal Society.
- Vehicle thefts in
- India has one of the highest vehicle theft cases – with one being stolen every 5 minutes, as per the National Crime Records Bureau – and the total loss is estimated to be over Rs. 1000 crores by the industry.
’s R&D India
- Last year corporate
spent 2.5 times more in paying for technological know-how than in developing their own. India
- The two years before that, they paid close to 10 times for technology/IP than in developing their own.
- Some notable R&D activity going on in
- They are spending about Rs. 300 crores on advanced building materials research. These materials might mitigate the usage of steel in construction.
- They are researching about Titanium. It is a light and corrosion-free material that can be combined with aluminium or iron to make alloys used in aircraft, space vehicles or even medical equipment used in endoscopy or angioplasty.
- Is working on novel proteins and is still in early stages of development.
- It takes about 12 years on an average for a new drug to travel from the lab to the patient, and costs an estimated $802 mn in the process.
- It costs over $35 mn to develop a new IT chip with a specific application. The time spent is a minimum of two years.
- The global market for semiconductors and electronic systems is $1.2 trillion (2006). The Indian market is just $30 bn.
- Operation Artemis
- It is a EU peace mission in
- (European) reinforcement of African capabilities in prevention, crisis response and conflict resolution.
- Multiplication trick
- All of you would be aware of our vedic mathematics capabilities. Videos explaining multiplication tricks are available on YouTube. I found this one quite interesting. Take a look…
- Today I noted something about the SEBI-NSDL standoff relating to CRA activity of NSDL. Take a look at it here.
- Customer service in telecom sector and TRAI’s stinker
- In an evaluation of the performance of telecom service providers TRAI found that none of them are meeting standards laid down by it.
- As per TRAI benchmark, only one out of every 200 calls (0.5%) made from one operator’s network to another can get disconnected.
- In so far as customer complaint handling is concerned, the operators’ call service centre has to answer at least 80% of the calls (voice to voice) within 60 seconds and 95% of the calls within 90 seconds of the customer calling the respective call centre.
- Sops for exporters
- We have noted in Discover It blog the reasons why there is no need to give sops to exporters. Take a look at what we noted here. Government thinks otherwise and has announced sops.
- It has announced a package of Rs. 1,400 crores. It includes a hike in drawback rates on most items and inclusion of some more items in the drawback list. DEPB rates have also been increased.
- Government has also released Rs. 600 crores to clear all arrears related to reimbursement of terminal excise duties and Central Sales Tax.
- Stamp duty rationalization for bonds
- Stamp duty is levied and collected by the states, but the rates are determined by the Centre as provided for in the Stamp Duty Act.
- At present stamp duty is levied at an average rate of 0.375% ad-valorem on debentures while promissory notes attract a duty of 0.05%. The rates vary across states.
- The proposal now is to keep the minimum levy at 0.05%, which can go up depending on the tenor. There will be a cap of Rs. 0.25% or Rs. 25 lakhs whichever is lower.
- The move is expected to bring down the cost of raising debt funds in states which levy stamp duty at a higher rate.
- Intellectual property arbitrage
- It is a process by which revenue is generated in jurisdictions which contain less restrictive forms of intellectual property protection at the expense of those jurisdictions which contain tougher forms of protection.
- The case of
and US on copyright protection of software exemplifies this. India
- Reservations and participatory growth
- It is a thought provoking article and is a must read. More of this is still to come.
- Take a look at it here.
- ET on the web had a surprising new look today!!!
- Bank of
- Toshihiko Fukui
- I was asked to explain how blending ethanol will have a stabilizing effect on sugar prices. Look at the explanation I gave in today’s Discover It blog here.
- Land titles
- Reportedly about 90% of the land in
does not have clear titles. India
- Top pharma companies by market share in
- Cipla: 5.05%
- Ranbaxy: 5.04%
- GSK: 5% (Glaxo Smith Kline)
- Five country maritime exercises in
Indian Ocean India, Australia, US, Japanand Singaporewill hold maritime exercises in the Indian Oceanin September. Chinais sure to have strong reservations over these, as it feels that the main aim of this grouping is to contain ’s growing military prowess. China
- Corporate Social Responsibility (CSR)
- Many of you would have read about this as part of your curriculum somewhere in Degree or PG. Today’s article (rather industry opinion) in ET about it gives a contextual perspective about the subject. I recommend a cursory glance. I am not able to find the web resource for it. But its title is “Brands in
don’t walk the talk when it comes to CSR”. India
- CSR is taken only to provide a facelift to the company’s public image. It should be realized that CSR is much more than that. Companies must be catalysts for social development.
- CSR encompasses care for the environment and strong ethical practices. Business is part of society and society is part of business. Ultimately companies are made up of citizens: employees, shareholders, and partners. People for whom the company which they own, or which they work for impacts their existence. Not just in monetary terms, but in terms of overall well-being. So how their company acts and is perceived is important to all of them.
- Model farmers in Andhra Pradesh
- The government is coming out with a scheme of identifying some as model farmers. Each such farmer is expected to cover about 200 farm holdings. They will act as facilitators for various agriculture extension schemes. Besides, they will also educate other farmers on how to bring down cost of cultivation, increase yield and crop planning.
- While the model farmer may be similar to ITC’s sanchalak model, there is a difference. The government hopes to pay the model farmer a monthly salary of Rs. 1000. But ITC’s sanchalaks earn based on their performance.
’s logistics industry India
- It is estimated to be $73 bn. Accounted for about 13% of the GDP in 2006.
- India-Russia CECA
- Both the countries are getting closer to clinching a CECA – Comprehensive Economic Cooperation Agreement.
- The pact is expected to cover goods, services and investment.
- Container Security Initiative
- This is a security initiative from the
. What it envisages is to ensure that the exports meant for US from various countries are free of weapons of mass destruction. The plan envisages pre-shipment screening of containers meant for US at the exporting or transiting ports for WMDs. US
- Integrity pacts
- Coal India Limited, following the footsteps of ONGC has decided to sign an Integrity Pact with its vendors. This is an initiative actively encouraged by Transparency International to combat corruption in public contracting across the world.
- Bond, the name is James Bond
- It is now going to have a new novel authored by Sebastian Faulk.
- The title of the novel is “Devil May Care”.
- It will be the 15th officially endorsed Bond book.
- 12 of the books were published during Ian Fleming’s life time. The 13th was published in 1965, and the fourteenth in 1966.
- A famous management lesson delivered 30 years ago
- Harry Levinson asked executive to imagine, on one side, a carrot dangling from a string and on the other, a stick. “What would you expect to see in middle,” he asked? The answer is a donkey. He said that management systems based on the principle of carrot and stick are basically designed for donkeys.
- Strategic crude oil project for
- It is set to take off.
- Proposal is to store 5 mn tonnes of crude oil in three sites – Mangalore, Vizag and another site around Mangalore.
- It is estimated to cost Rs. 11,267 crores – both for the construction of the facilities and crude.
- It is the main international football tournament for
South America. It is organized by CONMEBOL, South America's football governing body, and is being held in Venezuelabetween June 26 and July 15, 2007, being the first time that will hold the tournament. The winner may represent CONMEBOL at the 2009 FIFA Confederations Cup. Venezuela Braziland have reached the finals. Let’s wait and watch the final on 15th July. Argentina
- One of you asked me to write something about women’s reservation. I took a shot at it in today’s Discover It blog. Take a look.
- Lal Masjid stormed
- The Pakistani military stormed the masjid and ended the seize. Ghazi and 50 others are the casualties.
- Mining policy
- In the beginning of the year, the government levied a duty of Rs. 50 per tonne of iron ore fines having iron content of up to 62% and Rs. 300 per tonne for fines with higher iron content.
- The mining industry is for allowing unbridled export of the ore, saying that what it exports are only fines for which there is no domestic market. The steel industry wants the exports to be capped at 90 mn tonnes, the 2006 level.
- The Hoda committee has recommended free export of ore.
- ATF pricing issue
- Aviation Turbine Fuel which is the fuel for aircraft is very costly in
. It costs 65% higher in India compared to international benchmarks. Even within the country, the rates vary from airport to airport. India
- As the cost of ATF comprises about 40% of an airline’s operating costs, the industry now wants that the AAI (Airports Authority of India) should buy out the distribution infrastructure of PSU oil companies at the airports and provide equitable access to private players.
- ATF consumption has roughly doubled over the last 5 years with about 22% growth rate per annum.
- Ever wondered how to launch a well-informed attack on the policies or behaviour of somebody? Take a look at today’s criticism on our Prime Minister’s misplaced (nay, pure populist) sympathies while pontificating on the investigations in to the
terror suspects. I really liked the second paragraph. Take a look here. UK
- In the same article you would come across words like Wahhabism. What is it? The web tells me that it is a conservative and intolerant form of Islam that is practiced in
; "Osama bin Laden and his followers practice Wahhabism." Saudi Arabia
- The Wahhabis consider the Barelvis inferior as they persist with ‘un-islamic’ practices like ‘Shab-e-barat’ involving visiting and lighting candles at mazaars – a custom opposed by puritanical sects like Ahl-e-Hadis. Militant outfits like Lashkar-e-Taiba, Tabligh-e-Jamaat and Deobandis draw their inspiration from Ahl-e-Hadis.
- Who are Barelvis? Barelwi (Barelvi) is historically the term for the residents of
, in the state of Uttar Pradesh. In modern usage, it usually refers to the followers of Imam Ahmed Rida Khan Barelwi, an important Muslim scholar of the late nineteenth and early twentieth centuries. More commonly, Barelwi is used as a pejorative term by South Asian Wahhabis to refer to non-Wahhabi Sunni Muslims. Bareilly
- What is a mazaar? It means grave.