24.12.2007

• Look at how much money is lying idle in our banks!!
• Over Rs. 1000 crores is lying with banks in India in the form of unclaimed deposits in 1.03 crore inactive accounts.
• Banks term money lying in accounts that have been inactive for over 10 years as unclaimed deposits.
• Language lessons
• A sentence in today’s ET:
• There has always been an unresolvable tension between the party’s hardline and the ecumenical demands on its non-Hindutva allies.
• What is meant by ‘ecumenical’ here?
• It means: concerned with promoting unity among religions
• What is meant by skulduggery?
• Trickery: verbal misrepresentation intended to take advantage of you in some way.
• Nuances in taming inflation
• In a very good article on suggesting the course of action that the RBI should take in the ensuing year, Rohit Prasad gives us some good opinion:
• CPI (Consumer Price Index) places a much greater emphasis on food (46% weight) as opposed to 15% in WPI (Wholesale Price Index). Therefore, CPI tends to be less interest rate sensitive and more affected by supply side movements than the WPI. In other words, the problem of inflation has partly already been solved (since WPI is down and CPI follows WPI with a lag), and the portion remaining cannot be solved through monetary tightening since the CPI is affected by non-monetary measures far more than by monetary measures. In other words, as far as controlling inflation is concerned, it is time for Reddy (RBI Governor) to take a bow and Chidambaram to enter the stage.
• Ever heard of “regulatory capture”?
• It describes a situation in which the regulator does not act in the public interest but is instead driven by concerns of the entities that it regulates.
• What should be the relationship between the regulator and the regulated? How do vested interests seep into regulations, blurring the line between both groups? When does regulation begin to get dictated by interests of those who are being regulated? When does a regulator exactly forfeit its autonomy? Concerns such as these point to what is referred to as ‘regulatory capture’.
• According to public choice theory, the regulated will find ways to capture decision-makers directly or indirectly. The theory of regulatory capture was proposed by Nobel laureate economist George Stigler. The concept found roots in the economics of regulation – where the government is responsible to protect and distribute public goods.
• No more ‘outsourcing’, it is ‘worldsourcing’ that we should learn now. So says William Amelio, the CEO of Lenovo.
• What it refers to is the fact of a product being labeled as ‘Made in India’ or ‘Made in China’, but containing components manufactured in many places all across the globe.
• He feels that this is a powerful emerging market force that can help India set itself on a new course to prosperity and its fair share of the global economy.
• He sees this as a business strategy that smart, ambitious companies use to take the underlying forces of globalization and shape them to maximize the value and quality they deliver to customers worldwide.
• Differences between outsourcing and worldsourcing:
• While the former is a centralized, top-down strategy designed to save money on non-core operations by handing those operations to a third party evaluated by a single criterion: the lowest price, the latter is a global, decentralized strategy designed to drive greater value and quality by distributing an organization’s core functions across multiple global hubs of excellence located wherever the best resources, talent, ideas, and efficiencies exist or can be created.
• The benefit of worldsouring?
• Global companies that worldsource their goods and services are exposed to the probing light and criticism from demanding customers and government regulators in many diverse countries. They create trusted brands by adhering to the highest standards of governance, transparency, compliance and quality.
• Some lucid commentary on the off-budget liabilities
• We have noted about the issue of oil bonds to OMCs on a couple of occasions earlier. Let us look at some commentary on that practice:
• Most of the states having enacted fiscal legislations (FRBM Acts), cannot take recourse to accounting jugglery like issuing bonds to take their subsidies out of their budget books. So, after this fiscal’s performance, it is likely that Centre will be on a weaker wicket when it comes to taking the high moral ground, as it used to do in the past, when it talks of fiscal prudence.
• Issuance of bonds helps fiscal managers to postpone liability to a future date. Over the last decade or so this has been resorted to.
• In effect, this translates to inter-generational inequity – the future generations pay for such acts of fiscal jugglery. Some argue that issuance of oil bonds is a violation of the basic tenets of FRBM Act. Perhaps not in letter, but in spirit.