10.10.2007

• SEBI allows hedge funds to operate in the stock market
• While the embargo on their operations is lifted, they have to register with SEBI and have to adhere to two criteria:
• The fund must be registered with or regulated by the financial market regulator in its home country.
• It must have at least one year of track record.
• Now it is ITIRs – IT Investment Regions!!
• To bolster the IT and BPO segment’s growth, the government has come up with an ITIR policy.
• How are these different from IT SEZs? IT SEZs can be set up even in a building, while these regions will be large townships with a minimum area of 40 sq km with an IIT to be setup on public private partnership basis.
• Tax free power bonds?
• We have noted that there will be a shortfall of money for completing all of our planned project power production. So the government is coming out with a ‘Vidyut Vikas Patra’ on the lines of ‘Kisan Vikas Patra’. It will mobilize low cost funds for the power sector.
• It would be interesting to know that KVPs have on an average mobilized about Rs. 20,000 crore per annum in the last three years for the government.
• Funds to help poor citizens
• The Financial Inclusion Committee headed by Dr. C. Rangarajan has recommended the setting up of two funds – Financial Inclusion Fund and the Financial Inclusion Technology Fund. These will facilitate the easy availability of credit to the poor.
• Credit needs of the under-banked
• It is estimated that about Rs. 1,35,000 crores of credit is needed for the under-banked population. The microfinance sector in India is meeting about 5% of this annual demand. The microfinance sector is currently touching about 40 mn poor or 15% of the total poor in the country.
• India is home to about 25% of the global poor.
• ‘Repulsive’ pictures to wean away smokers
• The government is coming out with a mandate that tobacco products should carry specific pictorial warnings on them. This will be compulsory from December 1, 2007. The pictures include those of cancerous growth and dead bodies.
• I am at times left to wonder whether the government is taking things too far. Remember our arguments about ‘content police’? Which way is this different from that scenario? After warning people sufficiently, why not leave them to their fate? If they still want to smoke and die; they should not be stopped.
• But then arguments will be put forth about the health of the society as a whole etc.
• In such a case it can also be argued that more livelihoods will be at stake than the number of livelihoods getting affected with ill-health due to consumption of tobacco products. The more livelihoods that I am referring to are the farmers, producers and processors of tobacco products. Dissuading people to keep away from tobacco products is taking away their livelihood; isn’t it?
• Responsible tourism
• This is one more buzzword that we should be prepared to see in the media for some time to come. Kerala has come out with this phrase.
• It defines this as encompassing the judicious use of natural resources, effective waste management practices and pollution control mechanism.
• It also includes sensitizing tourists to local norms and culture and strengthening basic amenities and social infrastructure.
• Cricket
• It was in 1974 that the whole of the Indian team was bowled out for a mere 42 runs in the Lord’s Test.
• Mystery of India’s economic growth
• It is a very good article by SSSA Aiyar in today’s ET.
• In a bid to find answers for the surprising growth recorded after 2003 without any policy impetus, he lists out four theories:
• The tipping point thesis
• Thesis of steady improvement, cloaked by exogenous shocks
• Thesis of manufacturing catching up at last
• The global boom thesis
• But he concludes by saying that none of these explain the growth satisfactorily. There is some truth in all of them, but not the full truth. Therefore there is a need for a deeper study to understand the reasons.
• Basel norms and some corrections regarding risk weights
• Recently we noted that unrated credit exposures attract a risk weight of only 100%. This is the international norm. But RBI has stipulated this risk weight to be 150%. This weight translates to a capital of 13.5% of the exposure. That is for every Rs. 100 lent, for an unrated borrower, the banks will have to provide for a capital of Rs. 13.50.
• The average NPA level of our Scheduled Commercial Banks was at 1.1% in 2006-07. This is far lower than the 5.5% that was seen in 2001-02. 74 of the 82 banks are having less than 2% of NPAs according to RBI’s statistics. Hence there are calls for reducing the stipulation from 150% to 100%.
• Oldest shipwreck in the world found in Alaska?
• The Torrent was a ship that sank off the coast of Alaska in 1867.
• It was carrying about 130 US Army soldiers then. But all of them survived.
• It is interesting to note that Alaska was purchased by the US from Russia in 1867 for about $7.2 mn.
• Physics Noebl Prize for 2007
• Announced to Albert Fert and Peter Gruenberg.
• They have independently discovered a physical effect in 1988 that has led to sensitive tools for reading the information stored on hard disks.
• What they discovered is called ‘giant magnetoresistance.’
• In this effect, very weak changes in magnetism generate larger changes in electrical resistance. This is how information stored magnetically on a hard disk can be converted to electrical signals that the computer needs.