31.12.2007

A very happy, prosperous and successful new year to you all.

• Harley Davidson to enter India
• Perhaps every youngster’s dream, driving a Harley Davidson is likely to be within the realm of possibility. But what held it back so far?
• One word describes it all: homologation. Remember, we noted about this word sometime back? While dealing with Project Natrip and ARAI.
• India’s policy hitherto had been that the tests needed to be carried out (homologated) only in the ‘country of origin’ of the product. But now the DGFT has relaxed the testing norms that allow US made bikes to be tagged with a EU homologation certificate for sale in India.
• Some wonderful thoughts on economic reforms
• The champions of reform often fail to come up with any clear articulation of what they mean by reform. Reform is presented as a series of discrete policy changes – tax reform, capital market reform, trade and investment liberalization, labour market flexibility, deregulation of banking, opening up to foreign investment, privatization of public enterprises, cutting wasteful government expenditure, etc – rather than as a coherent strategy aimed at generalized emancipation of the people.
• The ultimate goal of reform must be understood as liberating human productive potential from assorted constraints, to help every man, woman and child realize his/her capacity to create something new.
• The ability to translate an idea into reality depends on three things:
• Physical infrastructure: power, roads, telecom etc.
• Institutional support: a supportive rather than stifling administration, security of life and property, a financial sector that mediates savings efficiently to those who would generate additional incomes using the capital, sufficient supply of talent, ability to forge and enforce legal contracts
• A culture that encourages entrepreneurship instead of playing safe all the time.
• “The financial sector can take a big leap forward in the next couple of years in terms of financial inclusion.” Comment.
• Yes, it can for two reasons:
• One is the penetration of mobile telephony. Nimbler banks feel that mobile phones would take banks closer to the customer than a ‘no frills’ account.
• Closing of the technology gap. The mobile handsets will be seeing a glut of java-based applications which will provide the interface for facilitating banking transactions on ordinary handsets.
• Chief of IEA
• Nobuo Tanaka
• India’s solar energy potential
• India has about 300 clear, sunny days in a year. According to CII estimate, most parts of the country receive 4 to 7 kwh of solar radiation per square meter per day making it over 5000 trillion KW per year. This is far more than the total consumption of the country.
• Entry loads on mutual fund schemes
• Entry load is a charge levied by mutual funds when an investor steps in.
• Open ended mutual funds charge between 2 and 2.5% of the amount invested as entry load to meet their marketing costs, distribution commissions, etc.
• Close ended schemes are permitted to charge up to 6% as initial issue expenses that are amortized over the life of the scheme.
• SEBI is reportedly toying with the idea of doing away with the entry loads on open-ended schemes.
• CBSE Chairman
• Ashok Ganguly
• What would be the benefits of adopting IFRS by India?
• Apart from becoming a part of the international movement in adopting the standards, the significant benefits include:
• Encouraging capital flows
• Reduction in cost of compliance for enterprises
• Lower cost of capital
• A boon to professionals enhancing their status, acceptability and mobility across the globe
• KPO/BPO businesses will flourish
• It’s been a long time since we read a piece from Bradford Delong. Writing about the subprime consequences he talks of three crises and their cures. The piece may be too much for non-finance guys. Take a look at it here.
• A full scale financial crisis is triggered by a sharp fall in the prices of large set of assets that banks and other financial institutions hold. This can happen in three possible ways and the cure is different for each.
• First, when investors refuse to buy assets at normal prices not because they suspect the economic fundamentals, but because they fear other will panic, forcing everybody to sell at fire-sale prices.
• Second, when investors recognize the asset prices should never have been as high as they were, or that future productivity growth is likely to be lower and interest rates higher.
• Third, a bursting bubble or bad news about future productivity or interest rates drives the fall in asset prices.