• I noted something about the global economic ramifications of the bailing out of the banks that had to undertake massive write-downs in the wake of the recent subprime crisis. This is from a piece written in today’s ET. Do look at in our Discover It blog.
  • There is one more piece on according the MES (Market Economy Status) to China in today’s Discover It blog. Look at it here.
  • Death of a bank
    • Ever heard of IIBI. It is Industrial Investment Bank of India. It was set up under the Companies Act, 1956, in March 1997 (by converting the erstwhile Industrial Reconstruction Bank of India), and is fully owned by Govt. of India.
    • Now it appears to be on the death bed. Its board has decided to sell the entire loan book at one go. That is, it will auction both the good and the bad assets for cash.
  • Criticism on NREGS (National Rural Employment Guarantee Scheme)
    • We have been noting about this flagship scheme of the UPA government for quite long. We have been fed on positive information about this so far. But take a look at the criticism levelled against it by the CAG (Comptroller and Auditor General).
    • The CAG has conducted a six-month performance audit and found that:
      • Only 3.2% of registered households availed the mandatory 100 days employment.
      • The average employment provided under the scheme has been 18 days.
    • Is there a case for winding this up in view of this? I don’t think so. It is not just this scheme; take any scheme formulated by a government and I am sure you would see a slow adoption and slow implementation. The government would do well to press on with it while rectifying the mistakes pointed out in its implementation.
    • One aspect that is worth paying attention to in regard to such schemes is that the civil society (that is NGOs – Non Governmental Organizations) should be alive to instances of cornering of government outlays by patronage networks aligned to oppressive hierarchies at the grassroots and agitate against them. Governments per se cannot help there.
  • On subsidies
    • We have been noting for quite sometime on the ill effects of subsidies and the way their administration needs a thorough revamp. If you read today’s article by Asutosh Misra, you would surely sit up and doubt whether or not you were arguing about subsidies per se. Once in a while, we do need articles like these to enable us to take stock of our stand on a particular issue. Some noteworthy points from this piece:
    • Subsidies should never be seen as free lunch for the beneficiaries at the expense of the exchequer. The government is not giving anything from its own pocket. Subsidies are funded by the taxpayers, who in turn benefit from them. Why not treat subsidies as dividend payments for the taxpayer and as a partial social security net for the less privileged?
    • Subsidies provide a cushion to all and sundry. If you remove subsidies, price of not only beneficiary goods but other items are sure to go up. It will have a domino effect. It will be proved in the end, that subsidies are smaller price to pay.
    • Subsidies and free-market principles do not constitute a contradiction in terms. The subsidies system does, however, need tweaking to end pilferage and wastage. The trickle-down benefits of reforms may reach the grassroots one day but right now subsidies are the life buoy on which the common man survives. A thing that keeps afloat his hopes for a brighter and better tomorrow.
    • What a forceful argument; eh?
  • International Potato meet ends
    • India’s first International Potato Convention held at Kolkata has come to an end.
    • The journey of potato is interesting. It is believed to have originated in the Andes, Peru and Bolivia in South America. The world got to know about it when the Spaniards introduced it in their own country in the 16th century.
  • Development should not be seen only from the perspective of costs; at all times.
    • Andhra Pradesh perhaps is the first state to empower tribal women in a very unique way. In the tribal villages of Vetamamidi, Pinjarlakonda and Metlapalem in East Godavari district, work is in full swing on a mini-hydel project to harness the Yeleru river for power generation.
    • The project envisages ensuring that the benefits out of water bodies in the forest areas reach the local tribals. An all-women 20 member project committee elected by the grama sabha will own and manage the power station. The cost of each mini-unit is Rs. 5.8 crores. The Ministry of New & Renewable Energy has granted Rs. 3.1 crores as subsidy and the balance is given as loan by NABARD.
    • While economic purists may argue that it is money being thrown down the drain, can we afford to ignore the social angle that is there to it? I believe this is one excellent example of empowering the tribals. If the country takes up more such projects that harness the local resources for their social and economic benefit, issues like naxalism will peter out on their own.