12.01.2008

• Ceasefire between LTTE and Sri Lankan government
• The ceasefire was announced in 2002. The Sri Lankan government has announced its intentions of pulling out of the ceasefire agreement on January 3^rd this year on the grounds that growing violence over the last two years had rendered it irrelevant. The truce formally becomes invalid from January 16.
• FBI has classified LTTE as the most dangerous of the terrorist organizations in the world.
• About residential hotels
• Residential hotels are set to make their debut in India. Wait a minute. Are hotels not the places where we reside while on travel? Residential hotels are a class apart because they combine the flexibility of a vacation home with the service of a hotel.
• DLF will soon come up with India’s first residential hotel with the Hilton Group in Goa.
• Something about oil exploration
• In the year 2000 there were only 12 companies in the exploration business in India working in 7 producing basins countrywide. By the end of 2007, the number has gone up to 49, operating in 10 basins. Yet, even now only about 20% of the country’s acreage is explored.
• Some global biggies in exploration business;
• BG (British Gas) and BP from UK
• ENI of Italy
• Total of France
• Santos of Australia
• Exxon Mobil, Chevron Corp of US
• Royal Dutch/Shell of Netherlands
• India is seen as a low risk area in terms of oil exploration. It usually takes between four to eight years for a company to complete the exploration and development phase and produce the first molecule of oil or gas.
• Our policy allows for 100% foreign investment in the exploration business. The companies can claim income tax holiday for 7 years from the start of production. Zero customs duty on imported equipment needed for petroleum operation.
• See the rapid strides being made by newer modes of banking!
• ICICI Bank has around 55% of the transactions happening through its ATMs, 22% through the internet, 12% through call centre and the remaining through its branches.
• Currently ICICI Bank has 13 mn customers. Of which, there are 2.5 mn active customers.
• How will the subprime crisis impact our IT companies?
• The full impact of the crisis on orders from a segment of the financial services companies may be seen only in the months ahead. That apart, a cut in IT budgets would hurt income growth of the software firms.
• The rational expectation in such circumstances would, however, be that companies would outsource more work to low-cost centres to cut their operating expenses.
• Want a strident criticism of the way we do things in governing our country? Can’t have a better one than this one from Mr. V. Raghunathan.
• Writing about how lax our implementation of laws is, he explains how we seem to be concluding that if we cannot control what is illegal, then we can redefine what is illegal as legal and thus effect a cure to the malady. He gives three examples.
• One, we got used to regularising tax evasion by allowing “voluntary disclosure” every few years. The message was, if you forgot to pay your tax on the cheque from ET for a piece like this, you could be severely hauled up; but if you were smart enough not to pay your taxes ever, the government of India would come to your rescue by showing you an honourable way to turn a new leaf.
• Then we went a little further. We had our banks come down hard and levy a penal interest on any working man who defaulted on a single EMI, or worse, tried to pay his loan sooner than the contracted period. We even had them increase the interest simply in the name of a floating rate even for a regular customer. In comparison, we thought that the large habitual and wilful defaulters would be horsewhipped by our banks. But they simply held camps for such defaulters, giving them interest reductions or even waivers and in most cases even a significant concession on the principal, to ‘help’ them repay their loans. The signal was clear again. There is no point being a small borrower and repaying the loan. The trick, if you had arrived, was to borrow big and default.
• We extended our model to murderers and dacoits too. Whenever our police, paramilitary and military failed to catch them, we learnt to engage them to voluntarily ‘surrender’, with accompanying fanfare, complete with media, cameras and garlands, so that an average citizen could hardly be faulted if he thought murder and mayhem a quicker route to celebrity.
• Those of you, who are not satisfied with the excerpt above, can read it in full here.
• What are the areas where our ethanol blending programme is not applicable?
• Remember the ethanol blending programme of the government?
• It is not applicable in J&K, north-eastern states and our island territories.
• Industrial park scheme extended till March 2009
• The scheme offers a 10 year income tax holiday under section 80-IA (4)(iii).
• The earlier scheme was valid only till March 2006. The new scheme will be made applicable for the period April 2006 to March 2009.
• Sir Edmund Hillary is no more
• The first man, with Sherpa Tenzing Norgay who conquered Mount Everest is no more. He died at the age of 88 yesterday.
• He also rode a tractor to the South Pole, drove jet boats up the Ganges and served his country (New Zealand) as its top diplomat in India.
• He was originally a beekeeper whose acquired mountaineering skills saw him qualified to join a British expedition trying to conquer Mount Everest. He achieved the feat on May 29, 1953.
• He was made a Knight Commander of the Order of the British Empire by Queen Elizabeth in July 1953.
• Coming back to answering Soyuz’s query on our income tax rate of 30% not being low on purchasing power parity basis:
• What it means is that a 30% tax say in US, is not the same as 30% tax in India. Though both are identical figures percentage wise, the tax in India is more than the 30% tax of the US.
• To understand purchasing power parity a simple example often touted is this: If a burger costs say $1 in the US, it should also cost Rs. 1 in India. But it is not so in reality. The purchasing power of the rupee is lower by about 40. Because that is the exchange rate between the US dollar and the Indian rupee. So to purchase the same burger, we end up paying 40 rupees. Get the picture?
• So 30% tax in US will not necessarily be equal to 30% tax in India. Our 30% is far more than the US’s 30% on PPP terms. This is what was being referred to by Shome in his interview.