Indian Current Affairs: 10.03.2008

Remember the name Suresh Nanda? He is accused of receiving kickbacks in defence deals (Barak missile deal). His son Sanjeev Nanda is accused in the BMW hit and run case.
They were arrested in a Mumbai hotel while bribing a tax man who was investigating a case against them.

If we look at the record salary offers that the IIM graduates and others from next rung of colleges are getting, we are left to wonder whether civils is worth the slug at all!!
IIM, Calcutta: Rs. 1.36 crores
IIM, Ahmedabad: Slot zero saw each graduate having 3 jobs in hand.
FMS, Delhi student offered $105,000.
It is these figures that make me wonder aloud.
How long can idealism hold its own against such temptations?

If you are asked to state the objective of this committee, you can perhaps repeat what is given in today’s ET:

It is to liberate banking sector from the shackles of the command and control regime of the pre-reform days.

Some more snippets worth out attention:
The relative productivity of agriculture has been going downhill over the years with around 56% of the national workforce earning their livelihood from agriculture but contributing only a fifth of the country’s GDP.
Government estimates place the irrigation potential of the country at 140 million hectares which is nearly the same as the net sown area. However, 60% of the net sown area is rain-fed and has low productivity levels. This area needs an urgent access to irrigation. Credit is an important input in the agriculture economy and despite a mandated target of 18% of net bank credit being made available to agriculture, the achievement is just about 12%. Studies by the National Sample Survey Organisation show that as of 2003, non-institutional credit amounted to 42.3% of the total indebtedness of farmers, the bulk of which was from money lenders at usurious interest rates and a smaller proportion from traders.
Small and marginal farmers account for 80% of indebted farm households.
About 51.4% of the farmer households were not indebted to either formal or informal sources of credit, suggesting that a large portion might be financially excluded.

For one, it does not address the distress of the majority of small and marginal farmers — those who access informal non-institutional credit and others who have no access to any credit.
Secondly, it short-changes the more conscientious farmers who have probably sold their family silver to repay overdue loans.
And most importantly, debt waiver strikes at the root of the credit culture because borrowers would henceforth hesitate to repay loans in the continued expectation of such schemes.

Arun Maira is one of the CEOs (He is CEO of Boston Consulting Group in India) whose columns I read and respect a lot.
You know what makes them different from normal / average people like us? In spite of their busy schedule they are able to find time to read and write.
In his article today he was referring to a book by Fred Polak: “The Image of the Future”.
Anybody who read this book?
Of later, in addition to blogging I am trying my best to catch up with general reading – as much as possible. Been able to gobble up a book a fortnight. Should see how long can I keep up this tempo.

A good article that I recommend reading on this appeared in today’s ET. Read it here. Some excerpts worth our note:
Developing countries are far less dependent today than they were in the past on the US as an export destination. Exports to the US account for only 8% of China’s GDP, 4% of India’s, 3% of Brazil’s and 1% of Russia’s. And these economies together contributed 40% of global GDP growth last year. The US contribution to global growth was just 16%.
Emerging markets collectively sent more than half their total exports to other emerging markets.
In fact, China by itself absorbed more than 15% of all emerging market exports, a little more than what the US did.
In other words, India’s real economy can and is decoupled from a slowing US. But the financial markets are not. Perceptions of risk general, rather than country-specific make fund managers to pull their resources out of emerging markets and transfer them to the US and the EU. It will take demonstrated high growth over a few years in India, even as US growth slows down, for the global investment community to determine that India can, indeed, offer a safe haven for investments even as growth in the west slumps.

The government should borrow money and inject it into the economy, causing additional consumer spending that, in turn, leads to more people being employed to produce those goods and services.
Hence it is often touted as a remedy for an economic slowdown.
But some interesting arguments against it from Mythili Bhusnurmath:
Consumer spending is a consequence of economic growth, not the cause of it.
Deficits don’t drive the economy. Rather it is the other way around. If the economy is strong, deficits tend to fall because tax revenues rise and people are not clamouring for government programmes. If the economy is weak, deficits rise because taxpayers have less taxable income and people are more likely to want money from the government.

Indian Current Affairs