23.05.2008

  • For many of us, today's ET piece "Levitating commodity prices" may go over our head. But some interesting language snippets that I couldn't resist excerpting for us:
    • George Santayana, the Spanish-born Harvard philosopher coined the oft-quoted phrase: “Those who cannot remember the past are condemned to repeat it.”
    • Writing of the December 1851 coup d’├ętat by Napoleon’s nephew, then the elected President of the Second Republic who a year later crowned himself Emperor, Marx penned: “Hegel remarks somewhere that all great, world-historical facts and personages occur, as it were, twice. He has forgotten to add: the first time as tragedy, the second as farce.”
  • In the context of the government's move to take back oil blocks awarded to Reliance Industries, because the latter failed to stick to the committed work programme, a concept that is worth noting is this:
    • Typically investors in such unexplored blocks have to make huge upfront investments. To tide over the problem of potential operators having to make large upfront investment commitments, there’s the concept of “promote licence” abroad. The arrangement is that promote licensees have a limited period, say, two years after award of the bid, to review data and coagulate the technical and financial capacity required to complete the agreed work programme.
    • Can it really work? My hunch is that bidders will still get a two year period to sit on blocks in a dog-in-the-manger fashion. When they have committed to make certain investments and/or development of the blocks at the time of bidding for the blocks, why is that any laxity should be allowed when they don't stick to their own promises? May be there are strong reasons, which we don't know of. Let us keep watching; may be more details will come out in due course.
  • I can't afford to miss a piece written by a famous author like Jeffrey D Sachs. This time he was writing about the food shortages that are plaguing the world. Some excerpts and my notes.
    • He argues that the poor yields from farms across the globe -- especially the under-developed countries, are due to lack of access to agricultural inputs -- fertilizers, good seeds and capital. Government-run agricultural banks in poor countries once not only financed inputs, but also provided agricultural advice and spread new seed technologies. In spite of the many ills that beset this practice, this practice played a huge and positive role in helping the poorest farmers to escape poverty and dependency on food aid.
    • During the debt crisis of the ’80s and ’90s, the IMF and World Bank forced dozens of poor food-importing countries to dismantle these state systems. Poor farmers were told to fend for themselves, to let “market forces” provide for inputs. This was a profound mistake: there were no such market forces. Poor farmers lost access to fertilisers and improved seed varieties. They could not obtain bank financing. To its credit, the World Bank recognised this mistake in a scathing internal evaluation of its long-standing farm policies last year.
    • The time has come to re-establish public financing systems that enable small farmers in the poorest countries, notably those farming on two hectares or less, to gain access to needed inputs of high-yield seeds, fertiliser, and small-scale irrigation. Malawi has done this for the past three seasons, and has doubled its food production as a result. Importantly, the World Bank, under its new president, Robert Zoellick, has now stepped forward to help finance this new approach. If the Bank provides grants to poor countries to help small peasant farmers gain access to improved inputs, then it will be possible for those countries to increase their food production in a short period of time.
  • Remember the definition of 'treaty shopping'?
    • It is the practice where the residents of a third country claim tax benefits of a treaty that exists between two countries. For example, the India-Mauritius double taxation avoidance agreement. While the agreement is expected to benefit the citizens of India and Mauritius, many third country citizens take advantage of it by routing their investments through Mauritius.
  • TCS bags contract to process passports in India
    • The Ministry of External Affairs processes close to 80 lakh passport applications a year and the number is growing every year at close to 20%.
    • The bid put in by TCS is learnt to be a little less than Rs 200 per passport, giving it around Rs 900 crore in revenues over the six-year duration of the contract, even if the volumes do not grow. The transaction fee of Rs 200 or so will be paid by applicants directly to TCS, which will run the passport centres out of 72 locations in the country.
  • India's spices exports cross the $1 bn mark
    • In 2007-08, spices export touched a new peak with 444,250 tonnes valued at Rs 4,435.50 crore ($1,101.8 million), surpassing the target of 380,000 tonnes fixed by the board. Spices Board chairman VJ Kurian said compared with the last year’s performance, the export showed an increase of 19% in volume, 24% in rupee value and 39% in dollar terms despite rupee appreciation and negative global economic factors. The spices export in 2006-07 was 373,750 tonnes valued at Rs 3,575.75 crore ($792.9 million).
    • What are all included in spices anyway? Pepper, chilli, cardamom, ginger, turmeric, celery, garlic, nutmeg and mace, coriander, cumin, fennel, fenugreek and value added products like curry powder, mint products and spice oils and oleoresins.
  • What is the logic behind our petro companies saying that they will sell branded fuels?
    • Branded fuel prices are not controlled by the government and are normally priced higher than the regular fuel. So, selling branded fuel would mean lower losses. Oil companies incur huge losses on fuel sales as they are forced to sell it at prices below cost.
    • Based on the estimated sales volume for 2008-09, it has been indicated that a Re 1/litre increase on petrol, diesel and kerosene would have an annual impact of around Rs 1,272 crore, Rs 5,352 crore, Rs 1,140 crore, respectively. An increase of domestic LPG by Rs 10/cylinder would help OMCs in saving around Rs 756 crore per annum.
  • Remember anything about Ahimsa silk and Kusuma Rajaiah from Andhra Pradesh? We noted this in our blog earlier also.
    • Now his Ahimsa silk is going places. Ahimsa silk, the ‘humane’ version of the silken fabric made without sacrificing silkworms, is being embraced by those who shun violence. Ahimsa silk is not just luxury. It is a statement which has attracted not just religious sects from the country but even international retail chains like Marks & Spencer, Organic Avenue and US-based environmentallyconscious fashion designers like Deborah Lindquist and Linda Loudermilk, to look towards India for this “peace fabric”.
    • Unlike conventional silk that entails killing of silkworms, ahimsa silk ensures that the moth completes its life-cycle and leaves the cocoon behind for the weavers to handspin the yarn. Despite lacking in texture and lustre of conventional silk and almost twice as expensive, environment-conscious customers across Europe and US have emerged as the patrons of ahimsa silk and take pride in rejecting the gloss fabric to endorse its humane version.
    • Unlike regular silk that costs Rs 200 to Rs 225 per metre, ahimsa silk costs about Rs 500 per metre in the domestic market and Rs 350 to Rs 400 per metre in export market.
  • The new side effect of global warming?
    • Scientists have sounded a grim warning over how global warming could destabilise vast carbon reserves beneath the ocean floor and unleash a catastrophic threat. These carbon reserves exist as clathrates, ice lattices and continental permafrost and are found even under freshwater lakes like Lake Baikal in Siberia. These ice structures may hold trillions of tonnes of methane.

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