04.04.2008

• Centre’s options on containing prices
• In a bid to reign in inflation the Centre is considering re-introducing some of the Nehruvian era measures viz., price controls and stock limits.
• The finance ministry has proposed that ministries and departments should be vested with the authority to impose price controls on essential commodities such as steel and cement. It recently asked the Cabinet Committee on Prices to issue a notification authorising ministries to invoke section 18G of the Industrial Development & Regulation Act, 1951, which would allow price ceilings to be imposed.
• This Act was last used in the 1970’s to control inflation. Section 18G was to be repealed in 1990’s after liberalisation. But it was retained when Congress members insisted it should not be given up as it was part of the Nehruvian legacy.
• ICAI to launch new 2-year course
• In a landmark decision, the institute with membership of over 1.45 lakh has decided to launch new course to train at least 50,000 candidates a year. Candidates, after completion of course and training for about two-year duration, will get the tag of ‘Accounting Technicians.’ Any 10th standard student can register for entrance examination and start preparation on his own. Subsequently, he can appear for the examination after appearing in the 12th standard exams.
• The plan it appears is to have four papers covering accounting, law, general commercial knowledge, business communication, cost accounting, financial management and direct and indirect taxation. Eligible students would be required to attend classes and undergo IT training for prescribed period. Then they can appear for the examination any time after nine months of registration. After clearing the examinations, students would have to avail practical experience for 12 months in accounting.
• This is one excellent measure that will make many people employable. Remember the arguments about appropriate technology and appropriate skilling of people? This is one such measure. Understanding industry’s needs better, will make it easy to come up with relevant courses and skills that will be readily employable.
• Is it possible to regenerate our tooth?
• Researchers seem to have made substantial progress on this front.
• Take a look at this piece; it is worth reading.
• Australia may hire Indian farm hands
• The chances of Australian farm labour market opening up to Indians are bright as the two countries are keen on a trade agreement
• As Australia may not be keen to open up in a big way, a window could be established in the Comprehensive Economic Co-operation Agreement planned by the two countries
• Australia has already relaxed visa rules to allow tourists from certain countries like the UK to work in the country for limited periods of time
• If the Australian farmers persist with their demand, further flexibility in visa rules and work permits could be in the offing
• Measures to avoid a subprime like crisis in India
• If you are asked to state the measures taken by Indian authorities to avert a subprime like crisis, what could your answer be?
• This article that appeared in today’s ET would provide you enough material to answer such a question. Take a look.
• The RBI is convening a meeting of bank CEOs, the IBA, Nabard, cooperative banks, experts and a few NGOs to discuss and spread the concept of financial literacy. This arises out of the feeling that the crisis could have been avoided if borrowers were more aware of their liabilities and risks. RBI expressed its intent to make credit counselling a part of banks’ fair lending codes. Globally, credit counselling already exists in the US, the UK, Canada, Australia and Malaysia
• If it is already existing in the US, then the occurrence of subprime crisis in spite of that doesn’t give us any comfort; isn’t it? Why is the RBI contemplating a failed solution? I wonder.
• Should Salwa Judum be disbanded?
• Though at least initially I was sceptical about the success of the concept, I am thoroughly disillusioned now and actively want such attempts to be not tried at all. I am talking of Salwa Judum, the failed experiment that is taken up in Chattisgarh to counter the Naxal menace.
• In contrast, AP seems to have notched up commendable progress in containing the Naxal menace. The only thing that needs to be ensured is that there should be as less an interference as possible when it comes to controlling law and order. Once such a free hand is given to the security agencies they will usually succeed in putting down insurgencies. Of course, there should be adequate vigil over the free run that is given to them, as without such a vigil, even the security forces are likely to degenerate into a bunch of lawless gun-trotting marauders. Let’s look at some coverage on the issue that appeared in today’s ET. Worth an excerpt:
• The apex court, while hearing a petition challenging the establishment of Salwa Judum, has rightly observed the state giving “arms to some persons” would mean it is “abetting in a crime if these private persons kill others”. A democratic state is a keeper of the sovereignty of the people. Any attempt by it to arm one section against another constitutes a clear violation of this principle. It’s time governments realised that Maoist insurgency indicates a crisis of sovereignty for the Indian state. And there is no way it can be overcome without first rendering state institutions inclusive and functionally democratic through a politically-driven process of social transformation. The Chhattisgarh government has, however, only served to deepen this crisis by aiding and abetting the Salwa Judum.
• Modern republics claim legitimacy, and therefore sovereignty, through two principles: democracy and the rule of law. The arming of civilians tears away the last shred of these two principles, already shaken by conflict, because it openly throws the state’s power behind a group of people. This group is now totally unaccountable: protected from their own community by the state, protected from the militants by the security forces and protected from the law by their position as government allies.
• This naturally encourages brutal and inhuman violence; in Bastar, for instance, it has meant killings, rapes and razing villages to the ground. Thus the “lawfully established government of the land” ends up patronising lawlessness.
• Any armed conflict is, as the army’s generals themselves have pointed out, fundamentally a political conflict. Just and long-term solutions will also have to be political — not based on military force, and certainly not based on “self-defence” that often becomes nothing more than organised crime.
• Regulating the regulators
• In a good article Tina Edwin makes some points which are worth our noting:
• A general feeling is that bureaucrats would continue to hijack all the regulatory jobs if the selection process is not changed.
• In this context, the Pay Commission has a few suggestions to offer to revamp the selection process. Its advice includes excluding the secretary of the ministry/department concerned from the selection board, as ministry/department is seen to be a stakeholder.
• The Pay Commission has also recommended a contractual tenure for members of the regulatory body and de-linking pay and allowances from government salaries.
• Blending the experience of professionals with deeper understanding of various disciplines and real life experience in dealing with challenges of running a business with administrative and law-making skills of a bureaucrat is necessary to improve the quality of regulation. Besides, the government should consider creating a cadre of regulators by drawing young people from various disciplines, who over the years, with better understanding of nuances of regulation, can go on to become regulators.
• Direct Market Access
• Investors in Indian markets can soon have direct access to the exchange’s trading system, albeit through the broker’s infrastructure, a practice very popular in developed markets.
• Capital market regulator SEBI issued a circular saying only institutional investors would be allowed to access this facility in the first stage - called Direct Market Access (DMA).
• The facility will bring down costs for the institutional investor as well as help in better execution by cutting on time spent in routing the order to the broker and issuing the necessary instructions.
• A review of the working of this facility shall be undertaken after six months (to enable non-institutional investors to avail of this facility) from its introduction.
• Direct Market Access will also allow execution of various products based on quantitative and algorithmic models that were not possible earlier, most commonly used by hedge funds and proprietary traders.
• In electronic financial markets, algorithmic trading, also known as algo, automated, black-box, or robo trading, is the use of computer programs for entering trading orders with the computer algorithm deciding on certain aspects of the order such as the timing, price, or even the final quantity of the order.
• SEBI has clarified that brokers using DMA facility for routing client orders shall not be allowed to cross trades of their clients with each other.