25.07.2007

• What could be the consequences of the Doha 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.
• 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 India would need in the next 10 to 15 years.
• 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 UK at present.
• The Sasan mega power project bid
• We noted on why the Sasan mega power project was stuck in a controversy on 23^rd 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 India
• At present there are over 100 PE firms seeking to deploy about $20 bn in India.
• Globally, PE investment is less than 4% of the total public market investments. In India, this figure is estimated to be closer to 2%.
• 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.